CLK Kitchens & Joinery Pty Ltd v Commissioner of Taxation

THE FACTS 9 Despite the applicants' submission to the contrary, there is no real relevant controversy in the circumstances which led to the Commissioner issuing the Estimate Notice in respect of the PAYGW amounts and, subsequently, the DPNs to Mr Karananos. Although the applicants sought to raise doubts and allege controversies about the facts, on examination the essential facts on which the issues turn are sufficiently clear and uncontentious. 10 The affidavits filed in support of the proceedings provide significant background as to the Australian Taxation Office's discovery that, over a number of years, CLK Kitchens had sequentially utilised the services of several associated labour hire companies to provide workers to it and that nearly all of those companies had become insolvent with substantial obligations relating to those workers remaining owing to the Commissioner. Although not relevantly disputed on this application, it is not necessary to reach any conclusion about those broader background facts. As the discussion which follows shows, it is only the bare essential facts concerning the operation of CLK Kitchens and CLK Services which are relevant to this determination. That said, those background facts give context to the subsequent investigation by the ATO and the issuing of an Estimate Notice to CLK Kitchens in a substantial amount even though the company had not reported any, or any significant, PAYGW liabilities.

The operations of the companies 11 Mr Karananos was, relevantly, the sole director and shareholder of the two relevant companies. The first was CLK Kitchens, which operated a kitchen joinery business (Stat Dec [44]-[45]). In its business it undertook all of the tasks required for the carrying out of the kitchen joinery operations, including the manufacturing and installation of kitchen joinery. It was previously called "Mayneline Kitchens & Joinery Pty Ltd". The second company was CLK Services Pty Ltd (CLK Services) (previously called Mayneline Services Pty Ltd) which, so it was said by the applicants, was a labour hire entity which provided labour hire services (ie workers) to CLK Kitchens. 12 Relevant to this matter, in the period from 1 March 2016 to 31 January 2017, Mr Karananos caused CLK Services to provide workers to CLK Kitchens such that the latter could carry on its joinery business. During this time, CLK Kitchens paid amounts to each of the workers who performed the services. Those amounts were equal to the wages that they were due to be paid by CLK Services, net of PAYGW amounts. The payments were made at the direction of CLK Services. It may have been that CLK Kitchens also paid amounts to other persons who were employed by CLK Services but whom did not provide services for CLK Kitchens, although that is not relevant for present purposes. 13 Neither CLK Kitchens nor CLK Services remitted PAYGW amounts in respect of the wages paid to the workers. At no time did CLK Kitchens file any Business Activity Statement (BAS) or end of year return indicating that it withheld PAYGW amounts in respect of those workers. The Commissioner has estimated that for the period from 1 March 2016 to 31 January 2017, the amount which was withheld by CLK Kitchens and not remitted to him was $587,354.00. 14 It is apparent that in late January 2017, prior to the issue of the Estimate Notice and DPNs, the business of CLK Kitchens was sold to an entity called Mayneline Kitchens & Joinery (NSW) Pty Ltd. That latter company also seems to have some association with Mr Karananos. CLK Kitchens has apparently ceased to trade.

How CLK Kitchens paid money to the employees of CLK Services 15 Mr Karananos, in his capacity as director of each company, arranged for CLK Kitchens to advance the payments and distribute them to the workers as their wages on behalf of CLK Services using what was called a "batch payment facility". In his affidavit of 15 June 2018, Mr Karananos describes the process of these payments as follows: (a) CLK Kitchens reported to CLK Services the hours worked by each relevant worker. (b) CLK Services calculated the wages payable to each worker and provided that information to CLK Kitchens. (c) CLK Kitchens utilised its "batch payment facility" with the National Australia Bank (NAB) to pay each of the workers the amount of money directed by CLK Services. That amount equalled their wages net of the PAYGW amounts. The funds used for paying the workers belonged to CLK Kitchens. (d) As between CLK Services and CLK Kitchens, it is apparent that the amounts so paid by CLK Kitchens to the workers were treated as an advance to CLK Services. 16 In its bank records, CLK Kitchens described the amounts it paid to the workers as "wages". 17 The workers were issued with payment summaries in respect of their wages and, for the period in question, the payment summaries were issued by CLK Services. 18 Mr Karananos has also deposed that the liability of CLK Services arising on the payments made to its employees by CLK Kitchens was set-off against CLK Kitchens' liability to CLK Services in respect of the labour hire services. 19 CLK Services reported, but failed to pay to the Commissioner, the quantum of the PAYGW amount which totalled $670,613 for the period from 1 March 2016 to 31 December 2016. It is not in contention that it did not report any PAYGW amounts for the month of January 2017. 20 CLK Kitchens did not report any relevant PAYGW amounts to the Commissioner.

Administration of CLK Services 21 Subsequently, an administrator was appointed to CLK Services. A deed of company arrangement (DOCA) was offered to the creditors, who voted to accept it. The Commissioner proved in the administration for the PAYGW amounts and superannuation guarantee charges which had been reported by CLK Services. He also voted in relation to the DOCA. No dividend was paid to the Commissioner in respect of the outstanding PAYGW amounts, as a consequence of the DOCA. Some money was received in relation to outstanding superannuation guarantee charges.

Issue of the Estimate Notice 22 On 11 July 2017 and under cover of a letter of the same date, the Commissioner issued to CLK Kitchens an estimate of the PAYGW amounts which he asserted had been withheld by CLK Kitchens as the payer of the wages to the employees of CLK Services and which had not been remitted to him under s 16-70. The notice, which is referred to in these reasons as the Estimate Notice, was addressed to CLK Kitchens, referenced s 268-15 of Schedule 1 to the TAA and was headed "Notice of Estimate of Liability Payable to the Commissioner of Taxation - PAYG Withholding Amounts". It identified that the delegate had estimated the unpaid and overdue PAYGW amounts which CLK Kitchens was liable to pay to the Commissioner. Those amounts were specified in a table which set out monthly periods from 1 July 2011 to 31 May 2017. The total of the amount payable was not stated but was apparently $19,475,997.

Issue of the Director Penalty Notices 23 On the basis of the Estimate Notice given to CLK Kitchens, pursuant to s 268-20(1) the amount identified in the estimates was due and payable by CLK Kitchens on 11 July 2017, being the date when the estimate notice was given. As a result, pursuant to ss 268-20(1), 269-10(1), 269-15(1) and 269-20(1), (2) and (5), Mr Karananos was required to cause CLK Kitchens to comply with its obligations by the end of the day on 11 July 2017, after which he became subject to a penalty which was equal to the unpaid PAYGW amount. 24 By reason of s 269-25, the Commissioner would be unable to commence proceedings against Mr Karananos for the outstanding penalty unless a penalty notice was given and, after the lapse of 21 days, the penalty was not remitted by action taken by Mr Karananos pursuant to s 269-15 to cause CLK Kitchens to pay the PAYGW amount, enter administration or begin the process of winding up. 25 On 12 July 2017, the Commissioner issued two DPNs to Mr Karananos under s 269-25 in respect of the PAYGW amounts identified in the Estimate Notice which had been given to CLK Kitchens. The first notice was given in respect of the monthly liabilities of CLK Kitchens for the period from 1 July 2011 to 28 February 2017. The second was given for the period 1 March 2017 to 31 May 2017. 26 On 18 July 2017, Mr Karananos provided to the Commissioner what he said was a statutory declaration pursuant to ss 268-40(2), 268-40(4) and 268-90(2). The content of that document is pivotal in this matter and is considered below. 27 On 20 July 2017, Mr Logan, the solicitor for the applicants, sent an email to the Commissioner seeking to have the DPNs withdrawn pending the consideration by the Commissioner of Mr Karananos' statutory declaration. 28 The following day, 21 July 2017, the Commissioner wrote to Mr Logan advising that the notices would not be withdrawn. It was noted that the majority of the monthly liabilities for PAYGW amounts of CLK Kitchens had not been reported, so were subject to the "lockdown provisions" such that the director's penalty could only be remitted by the payment of the outstanding amount. It was further stated that the Commissioner undertook not to take any action against CLK Kitchens or Mr Karananos until a review had been completed. 29 The Commissioner concluded that the statutory declaration did not comply with the requirements of the identified sections in that it did not "verify" the required facts with the consequence that the estimates were not reduced. (See paragraphs 14ff of the affidavit of Ms Nicholson of 29 September 2017.) It should be observed that it is the effect of the statutory declaration itself that determines whether it is effective under s 268-40, and not any determination of the Commissioner. 30 On 18 August 2017, the audit section of the ATO issued a shortfall penalty notice to CLK Kitchens for its failure to remit the PAYGW amounts. 31 On 12 January 2018, Morgan Conley Solicitors were provided with a letter prepared by Ms Anita Owens of Worrells Solvency and Forensic Accountants. In that letter, Ms Owens purported to calculate the PAYGW amounts for which CLK Kitchens would be liable based on certain identified assumptions. Ms Owens attached a schedule which set out the PAYGW amounts which she asserted should have been withheld by the company had the identified assumptions existed. Importantly, the material provided by Ms Owens was able to show the actual amounts of all wages paid which produced a different result to that reached by the application of benchmark figures which had formed the basis of the Commissioner's estimate. On 1 February 2018, Morgan Conley provided that letter to the Commissioner. 32 Between 1 and 9 February 2018, the applicants provided further supporting bank statements to the Commissioner as well as a submission as to the correct calculation of the PAYGW amount in relation to the services provided by the workers. The bank statements of CLK Kitchens disclosed the payment of various amounts to the numerous workers were made with the reference "wages". 33 As a consequence of the receipt of further material, the Commissioner determined to reduce the estimate of the PAYGW amounts for the months between 1 July 2011 and 31 January 2017. Further, the Commissioner accepted that CLK Kitchens sold its business and ceased trading from 31 January 2017. On that basis, the Commissioner took the view that it did not have any further PAYGW liability from after that date. 34 On 14 March 2018, the Commissioner sent to CLK Kitchens a document entitled "Notice of Reduction of Estimate of Liability Payable to the Commissioner of Taxation - PAYG Withholding Amounts". It identified reductions in the monthly liabilities stated in the Estimate Notice for the period from 1 July 2011 to 31 January 2017. Also sent on that day was a notice revoking the estimates made in relation to the monthly PAYGW amount liabilities for the period from 1 February 2017 to 31 March 2017. The reductions and revocations had the consequence that the estimate total was reduced to $4,485,450.00. 35 On 21 March 2018, a further statutory declaration was given by Mr Karananos and CLK Kitchens to the Commissioner. The applicants claim they were entitled to give this declaration because a new estimate had been made. The Commissioner did not reduce or revoke any estimates as a consequence of receiving that declaration. 36 Subsequently, the Commissioner accepted that CLK Services paid the PAYGW amount in respect of employed workers for the periods from 1 April 2016 to 31 August 2016. As a result, on 9 November 2018, the Commissioner issued revocation notices for the estimates in relation to those periods. 37 The consequence of the above is that the estimates which remain in contention in these proceedings are in respect of the monthly PAYGW amounts for the months from 1 March 2016 to 31 January 2017, save for those periods referred to in the previous paragraph. The total of the estimates still in dispute is $587,354.00.

SUMMARY JUDGMENT PRINCIPLES 38 Section 31A of the Federal Court of Australia Act 1976 (Cth) makes provisions for the granting of summary judgment in favour of a respondent. Relevantly, subs (2) and subs (3) provide: (2) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if: (a) the first party is defending the proceeding or that part of the proceeding; and (b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding. (3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be: (a) hopeless; or (b) bound to fail; for it to have no reasonable prospect of success. 39 Similar provisions are found in r 26.01(1)(a) of the Federal Court Rules 2011 (Cth) although the tests to be applied are identical in the relevant respect: Zippo Manufacturing Co v Jaxlawn Pty Ltd [2011] FCA 1125, [20] per Gordon J. In the Commissioner's written submissions, Dr Schulte of Counsel summarised the principles on which s 31A (and the concomitant rule) operate in the following manner: a) the moving party bears the onus of persuading the Court of its entitlement to have the proceeding determined summarily: Australian Securities and Investments Commission v Cassimatis (2013) 220 FCR 256 (Cassimatis) at 271 per Reeves J; b) the intention behind the enactment of s 31A is to lower the bar for obtaining summary judgment below the level of an application or defence being "manifestly groundless" or "hopeless" - the inquiry required is whether there is a "reasonable" prospect of prosecuting or defending the proceeding, not an inquiry directed to whether a certain and concluded determination could be made that the proceeding would necessarily fail: White Industries Aust Ltd v Commissioner of Taxation (2007) 160 FCR 298; Spencer v The Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118 (Spencer) at 139 per Hayne, Crennan, Kiefel and Bell JJ; c) the assessment required by 31A of whether a proceeding has no reasonable prospects of success necessitates the making of value judgments in the absence of a full and complete factual matrix and argument, with the result that the provision vests a discretion in the Court. That discretion includes whether to deal with the motion at once or at some later stage in the proceedings when the legal and factual issues have been more clearly defined: Kowalski v MMAL Staff Superannuation Fund Pty Ltd (2009) 178 FCR 401 at 408-409; Butorac v WIN Corporation Pty Ltd [2009] FCA 1503 at [19] per Buchanan J; Cassimatis at [50]; d) despite the threshold for summary dismissal having been lowered, the discretion must still be exercised with caution: Spencer at [24] per French CJ and Gummow J and [60] per Hayne, Crennan, Kiefel and Bell JJ; e) Reeves J in Cassimatis further explained at [46] that: …the determination of a summary dismissal application therefore does not require a mini-trial based upon incomplete evidence to decide whether the proceedings are likely to succeed or fail at trial. Instead, it requires a critical examination of the available materials to determine whether there is a real question of law or fact that should be decided at trial. Each application for summary judgment or summary dismissal has to be determined according to its particular circumstances. What is required is a practical judgment of the case at hand. The relevant circumstances will partly depend upon the stage which the proceedings have reached. Among other things, this will affect the materials available to the Court considering the application, for example, whether pleadings have been exchanged, or discovery of documents has occurred. 40 The applicants did not relevantly assert any disagreement with the principles there identified and it is convenient to accept them for the purposes of the hearing. That said, it must be acknowledged that that Commissioner's application for judgment is not without some complexity or length. That is reflective of the applicants' challenge in each proceeding to what it says are, at least, six relevant decisions and four relevant acts which they say constitute "conduct". 41 At first blush one might question the appropriateness of bringing a multi-faceted application for summary judgment in the way in which it has been. For most matters the nature of summary dismissal hearings differs vastly from that of a trial and it is often doubtful in complex cases that the full relevance of the factual matrix can be appreciated in the adumbrated process. Although, from the amount of the material filed and the length of the submissions, this case might be thought to fall within these observations, on closer examination that is not so. It was submitted on behalf of the applicants that the Court cannot engage in an evaluative exercise when it is not properly taken through the relevant material. However, whilst that may enliven the Court's discretion not to deal with the matter at all, if the relevant material has been made available and the issues identified, it is not inappropriate to consider whether judgment should be given. Mr Marks QC for the applicants urged the Court to exercise the discretion in the manner implied by Barwick CJ in Theseus Exploration NL v Foyster (1972) 126 CLR 507 (Theseus Exploration) at 515, where his Honour said: Although I have reached a clear conclusion as to the lack of validity in the respondent's submission that the appellant was unable to recover the amount claimed, I would not be prepared to hold that the judge erred in the course he took. Equally, however, I would not have thought him in error if he had granted the appellant's application for summary judgment. The case was one which, in my opinion, could have been disposed of upon legal argument upon the application. But it was for the judge to be satisfied that there was a matter to be tried. Whilst there were no facts to be decided, it was open to the judge, in my opinion, to take the view that the extent and complexity of the matters of law and of argument thereon warranted a hearing. 42 Mr Marks QC submitted that in the present case it was necessary for there to be determinations of questions of fact although specific ones were not identified. However, the reference to facts being decided in Theseus Exploration was a reference to contentious facts. The position is entirely different where the evidence relating to the relevant facts is not contentious and those facts emerge from the evidence adduced. If the facts which are contentious are irrelevant to the matters on which the proceeding can be decided, it would seem futile to have a trial to resolve them. 43 In this matter it is true that a large amount of material was adduced in evidence. However, much of it was not directly relevant to the resolution of issues on which the proceeding can be determined. Whilst Mr Marks identified a number of facts which he claimed his clients did not agree with, those matters were either not relevant to the final determination or were not truly matters of contention. Moreover, as is the nature of applications for judicial review of administrative action, the factual matrix of relevant events is not usually the subject of much disputation. Here, the central issues turn on the efficacy of the statutory declarations of Mr Karananos. In relation to those, Mr Marks QC submitted that they could not be satisfactorily considered on a summary judgment application because each included hundreds of pages of attachments. He also said the Commissioner had not taken the Court through them to demonstrate that they were not to the effect of s 268-40(2) or (4). However, despite the volume of the attachments, they were simply evidentiary of the statements sworn to by Mr Karananos. A perusal of them discloses that, of themselves, they did not add to the matters to be considered in determining whether the declarations had the requisite effect. 44 When considering an application such as the present, care must be taken before ordering summary judgment to ensure that no unfairness arises by depriving a party of the benefit of a trial where the resolution of contentious facts might determine the outcome of the proceedings: Foodco Management Pty Ltd v Go My Travel Pty Ltd [2002] 2 Qd R 249; Queensland University of Technology v Project Constructions (Aust) Pty Ltd (in liq) [2003] 1 Qd R 259 and Bernstrom v National Australia Bank Ltd [2003] 1 Qd R 469. However, where the relevant facts are settled and the respective rights of the parties turn on a question or questions of law, the approach in Spencer v Commonwealth of Australia (2010) 241 CLR 118 requires the Court to give judgment in advance of a trial regardless of the fact that the question so raised is attended with some difficulty: Jessup v Lawyers Private Mortgages Ltd [2006] QSC 3, [22]; Commonwealth Bank of Australia v ZYX Learning Centres Ltd (2014) 103 ACSR 476, [71], see also [57]-[69]; SK Foods LP v SK Foods Australia Pty Limited (in liq) (No 3) (2013) 214 FCR 543, [115]-[117]. That said, were the question of law to be one of great complexity summary judgment could be refused in favour of the determination of the matter at trial after a full hearing. 45 Whilst all of the above principles are appropriate and should be accepted, it must be kept in mind that many of them evolved in a practice where summary judgment applications were heard in Chambers along with other interlocutory applications. It was often considered that if the matter was not able to be fully argued within a period of two hours it was not appropriate for summary determination. Indeed, that appeared to be part of the applicants' submissions (Transcript p 52 L25-26). There was good sense in such a rule of thumb which dove-tailed with the high degree of confidence which had to be reached before judgment was granted. However, in the context of modern case management principles and the retention of matters on a single judge's docket, the above principles might not apply with their full rigour. Here, the application for summary judgment was set down for hearing over a full day and there is nothing which suggests that the parties were limited in the manner or extent to which they were able to make submissions as to the factual or legal issues which arose. Written submissions were filed before the hearing comprehensively dealing with the issues in dispute. No party submitted that longer time was required to ventilate the issues. Further, as Dr Schulte for the Commissioner submitted, the directions given in this matter have had the consequence that the evidence which the parties intend to adduce at trial has been filed and served. The facts as they exist on the material now will remain the same at any trial subject to the question of cross-examination (if any). 46 Although from time-to-time the applicants said that matters needed to be explored by cross-examination, the relevance of the allegedly necessary cross-examination was not made clear.

An overview of the PAYG scheme 47 An overview of the PAYG system was given by the Full Court in Perdikaris v Deputy Commissioner of Taxation (2008) 172 FCR 412 at [3] as follows: As from 1 July 2000 a new tax system, known as Pay‐As‐You‐Go or PAYG, was introduced. Under this system a payer is required to withhold amounts from salaries and wages paid to a payee, which are then to be remitted by the payer to the Commissioner. The payee then becomes entitled to a credit against his or her tax debts for the amounts collected. In lieu of a Group Certificate, a PAYG Payment Summary is issued by the payer to the payee at the end of the financial year. The Summary records, amongst other things, the total tax withheld in respect of the payee. The Summary is returned to the Commissioner together with the employee's tax return to enable a credit to be made for the amount withheld and remitted by the employer to the Commissioner. See also Cassaniti v Federal Commissioner of Taxation (2010) 186 FCR 480 (Cassaniti) at [12]-[29]. 48 The ability of the Commissioner to recover the amounts withheld is enhanced by the operation of Divs 268 and 269. The progenitor of Div 268 was Pt VI Div 8 of the Income Tax Assessment Act 1936 (Cth) (ITAA36), which had been introduced in 1993. The purpose of that division was to promote the timely and efficient recovery of amounts that had not been remitted to the Commissioner despite a liability to do so. That regime implemented a process whereby the Commissioner was entitled to estimate the PAYGW amounts owing by an entity and the entity was required to pay that amount unless it took particular steps to reduce it. 49 The old regime was repealed effective 1 July 2010 by operation of the Tax Laws Amendment (Transfer of Provisions) Act 2010 (Cth). That legislation introduced the new estimate provisions in Div 268. The object of that new regime is identified by s 268-5 in the following manner: 268-5 Object of Division The object of this Division is to enable the Commissioner to take prompt and effective action to recover: (a) amounts not paid as required by Part 2-5 (Pay as you go (PAYG) withholding); or (b) unpaid superannuation guarantee charge that has not been assessed. 50 The operation of Div 268 was recently assayed by Ward CJ in Eq in Deputy Commissioner of Taxation v Armstrong Scalisi Holdings Pty Ltd [2019] NSWSC 129 at [59]-[73] (Armstrong Scalisi Holdings), and that analysis is adopted for the purposes of these reasons. In general terms, the Division operates by allowing the Commissioner to estimate the PAYGW amounts owing by an entity and obliging the entity to pay the estimated amount regardless of whether the underlying liability is in fact owing, subject to the entitlement of the entity receiving the estimate to take steps to verify that the amount is not owing. An important aspect of the new regime is that it establishes two liabilities: the underlying liability to pay the withheld amounts; and the liability which arises when an estimate is made. Although a payment in respect of one will cause a reduction in both: s 268-20(3), they are, for all purposes, separate and distinct. Despite the Chief Justice's comprehensive analysis, for the purpose of the present matter some more needs to the said of the withholding regime and the concomitant estimate regime.

The relevant statutory provisions 51 The statutory provisions applicable to this matter are, generally, those set out in Divisions 268 and 269 of Schedule 1 to the Taxation Administration Act 1953 (Cth). That said, the primary obligation to withhold PAYGW is imposed by s 12-35 of Sch 1 to the TAA, which provides: An entity must withhold an amount from salary, wages, commission, bonuses or allowances it pays to an individual as an employee (whether of that or another entity). 52 That provision makes it pellucid that the obligation to withhold is imposed upon the person or entity which makes the payment of the salary, wages, commission, bonuses or allowances to the employee, even if not the employer: Cassaniti at [31]. The entity obliged to withhold the amount is then required to remit the amount to the Commissioner: s 16-70. That section provides: When and how to pay amounts to the Commissioner 16-70 Entity to pay amounts to Commissioner (1) An entity that withholds an amount under Division 12 must pay the amount to the Commissioner in accordance with this Subdivision. 53 It is also necessary to consider the definitions relevant to withholding and "withholding payment". For the purposes of the TAA, s 995-1 of the Income Tax Assessment Act 1997 (Cth) (ITAA97) defines the expressions "amount withheld" and "withholding payment" as follows: amount withheld by an entity from a withholding payment means: (a) an amount that the entity withheld from the payment under Division 12 in Schedule 1 to the Taxation Administration Act 1953; … withholding payment means: (a) a payment from which an amount must be withheld under Division 12 in Schedule 1 to the Taxation Administration Act 1953 (even if the amount is not withheld); … withholding payment covered by a particular provision in Schedule 1 to the Taxation Administration Act 1953 means a *withholding payment consisting of: (a) a payment from which an amount must be withheld under that provision (even if the amount is not withheld); … 54 In Price v Commissioner of Taxation [2019] FCA 543 (Price), Thawley J summarised the detailed consideration of Edmonds J in Cassaniti from [161] to [173] as to what relevantly constituted a withholding. His Honour's summary was as follows: (1) The word "withhold" is not defined in the Act. In this legislative context, it connotes "deprivation, the holding back of something due to the employee, resulting in the reduction of a gross amount to a net amount which is paid to the employee". The process by which a withholding takes place might be revealed or evidenced by: (a) actual funds held by the payer on behalf of the employee pending payment to the Commissioner; (b) but, more usually, only in the wage records and books of account of the payer as an accounting entry: at [161] to [163]. (2) Where an amount has been set aside by the payer and is quarantined in a bank account pending its remission to the Commissioner, clearly the presence of the funds so designated will demonstrate that a withholding has been made. The remission of the amounts withheld will invariably lead to the same conclusion: at [164]. (3) In the usual case, where the withholding is reflected in accounting entries, the question whether a legitimate process of withholding has occurred will depend upon a close examination of the books and records and the surrounding circumstances. A mere journal entry in the absence of other evidence may not be sufficient evidence, having regard to the surrounding circumstances, that there has been a payment of salary and wages and a withholding from that payment: at [165]. (4) Documents demonstrating compliance with reporting requirements of the statutory regime will constitute contemporaneous documentary evidence from which it may be inferred that a withholding has occurred: at [169] and [172]. Relevant reporting requirements include:  pursuant to s 16-150 of Schedule 1, the payer is required to give notification to the Commissioner of the amounts it was required to pay to the Commissioner under s 16-70(1) on or before the day on which the amount is due to be paid (regardless of whether it is paid);  pursuant to s 16-153(2) of Schedule 1, the payer is required to give an annual report to the Commissioner in the "approved form" being a summary of payments withheld not later than 14 August after the end of the financial year. (5) Conversely, a lack of compliance with such provisions is a matter from which an inference may be drawn, depending on the entirety of the circumstances, that a withholding was not made: at [169] and [172]. 55 It is, perhaps, useful to refer to that part of the decision of Edmonds J where his Honour said: The expression "withhold" is relevantly defined by the Oxford English Dictionary to mean: To keep back; to keep in one's possession (what belongs to, is due to, or is desired by another); to refrain from giving, granting, or allowing. Formerly with dat. of person. (The current sense.) It is clear that the prevailing sense is one of deprivation, the holding back of something due to the employee, resulting in the reduction of a gross amount to a net amount which is paid to the employee. Accordingly, no credit will be available to the payee if they have received a gross amount. There must be a process by which this withholding takes place. It may be reflected in actual funds held by the payer on behalf of the employee pending payment to the Commissioner; on the other hand, and more usually, it may only be reflected in the wage records and books of account of the payer as an accounting entry.

Withholding and remitting obligations 56 The withholding regime and the remitting regime impose complementary but separate obligations and it is appropriate to consider how they work in a series of stages.

The obligation to pay 57 The withholding regime provides an exemption to the obligation of an employer (or other person obliged to pay an employee's wages) to pay the employee the full amount of their wages entitlement: s 16-20. The employee's entitlement, whether it be contractual or otherwise (at general law or statute), is to have their employer pay their salary or wages or procure some other person to pay it.

The obligation to withhold 58 However, for the purposes of facilitating the collection of tax, the PAYG system requires those who pay wages or salary (or the other things identified in s 12-35 and elsewhere in Div 12) to withhold certain amounts in respect of the employee's taxation liabilities: s 12-35. Presently the amount to be withheld is not material. 59 To "withhold" means to keep back. In this context, it must mean to pay some amount of the contractual obligation (ie gross wages or salary) to the employee, but not all of it. The amount not paid is the withheld amount (see s 16-5 for a statutory indication to the effect that withholding occurs at the time of payment). The withholding of the amount or the paying of it to the Commissioner discharges the entity paying the wages or salary from all liability to pay the amount to any other entity: s 16-20 and, perhaps, s 11-5. 60 If the entity which is required to withhold amounts fails to do so, they are liable to the payment of a penalty on conviction (s 16-25(1)) and to an administrative penalty of the amount which they failed to withhold (s 16-30). 61 There are, at least, five relevantly possible scenarios which might arise in relation to the obligation to withhold and/or to remit.

Scenario 1 62 If a worker is paid none of his contractual entitlement, it could not be said that any amount has been "withheld": the employer or person who was supposed to pay has simply failed to pay the worker. The Commissioner has no remedy, which ultimately reflects the fact that if the workers do not get paid, they do not have income on which tax is payable. (If the worker later sues or proves in a winding up and gets paid, the liquidator who pays the amount in respect of the wages is liable to withhold: Deputy Commissioner of Taxation v Applied Design Development Pty Ltd (in liq) (2002) 117 FCR 336 (Applied Design Development).)

Scenario 2 63 If a worker is paid all of his contractual entitlement, then, again, none has been withheld. The employee might have to declare and pay tax on their wages or salary, but that matters not to the payer. The payer who has not withheld in accordance with s 12-35 has however committed an offence, and is liable to penalties for the failure to withhold (including an administrative penalty in the amount which was not withheld): ss 16-25(1) and 16-30(1).

Scenario 3 64 If a worker is paid part of his contractual entitlement, being the complement of the amount required to be withheld under s 12-35, then the correct amount has been withheld. The employee has received the net amount of their wages and, as the payer has complied with s 12-35, the employee is unable to sue the payer for the remainder: s 16-20(1).

Scenario 4 65 If a worker is paid part of his contractual entitlement, but more than the complement of the amount required to be withheld under s 12-35, then an amount less than the correct amount has been withheld. The employee may be obliged to pay additional tax in the future when lodging a return. The payer has, however, not withheld enough to comply with s 12-35 and so has committed an offence, and is liable to penalties for the failure to withhold: ss 16-25(1) and 16-30(1). The liability under s 16-30(1) is only to the extent of the failure to withhold.

Scenario 5 66 If a worker is paid part of his contractual entitlement, but less than the complement of the amount required to be withheld under s 12-35, then an amount more than the correct amount has been withheld. The employee can sue for the rest he was entitled to be paid, as s 16-20(1) will only protect the payer for what they were "required" to withhold. However, the payer has still complied with s 12-35 in relation to the amounts which were required to be withheld.

The obligation to remit 67 Those who withhold amounts "under Division 12" must pay them to the Commissioner: s 16-70(1). 68 In scenarios 1 and 2, no obligation arises under s 16-70, as no amount has been withheld. 69 In scenarios 3 and 4, the payer must pay all of the amount they withheld to the Commissioner under s 16-70. 70 In scenario 5, it seems that the payer must only pay the amount they were required to withhold (and not all of the amount they actually did withhold) to the Commissioner. (However the possibility of a requirement to pay even the excess amount actually withheld in light of the different language in s 16-70 ("under") vis-à-vis s 16-20 ("required by") is an interesting question that is unnecessary here to resolve. It might be that the intention is that the excess to which the employee is entitled should go to the Commissioner so that it may later be refunded to the employee, in case of administrative errors by employers otherwise jeopardising their wages or salary.)

Enforcement of the obligations 71 In considering the ability of the Commissioner to enforce, the distinction between the obligation to withhold and the obligation to remit must be kept in mind. The obligation to withhold is enforced by ss 16-25 and 16-30. The second obligation, being that to remit (ie to pay any withheld amount to the Commissioner) is enforced by a different procedure including the estimate regime. 72 Section 268-10(1) relevantly provides: The Commissioner may estimate the unpaid and overdue amount of a liability (the underlying liability) of yours: (a) under section 16-70 in this Schedule (requirement to pay the Commissioner amounts you have withheld under the Pay as you go withholding rules); … 73 The underlying liability is the liability to pay the Commissioner under s 16-70. If the payer did not withhold ((as in scenarios 1 and 2) whether or not they were obliged to and are otherwise liable under ss 16-25 and 16-30), there will be no liability to the Commissioner under s 16-70. 74 But the mere fact of a payer having no underlying liability to withhold does not mean the Commissioner may not make an estimate under s 268-10: see eg s 268-25(a) where it expressly contemplates that no underlying liability might exist but the obligation to pay the estimate remains. The Commissioner is entitled to make estimates that are inaccurate or imperfect, subject to s 268-10(2) and (3). 75 However, if, for example, the payer receives an estimate and responds by providing a statutory declaration to the effect (the sufficiency of which is discussed elsewhere) that they had paid the workers all of their contractual entitlements (ie their gross salary) and failed to withhold anything as required by s 12-35, then the estimate would be revoked by operation of s 268-40(4). Such a declaration would amount to an admission on oath of the commission of an offence in s 16-25. If false, it would amount to an offence under s 11 of the Statutory Declarations Act 1959 (Cth) for which the maximum penalty is 4 years' imprisonment. 76 If such a statutory declaration were made, the Commissioner would be left without recourse to the PAYGW amount which was not withheld, but nevertheless entitled to pursue the payer for the offence under s 16-25 and for the administrative penalty under s 16-30 (which is equal the amount not retained). 77 The Estimate Notice provisions do not exist to enforce the obligation to withhold. They operate where there has been a withholding (being the payment of any part the employee's full entitlements) and are there to enforce the obligation to pay withheld amounts to the Commissioner. 78 The practical reality is that the Commissioner will not always know in advance whether there has been a non-compliance with s 12-35 or s 16-70. That is why he is entitled to issue an erroneous Estimate Notice which, despite the error, gives rise to an immediate liability. It also underscores the reason the recipient of the notice must provide a sufficient factual basis in their statutory declaration to reveal the real facts (rather than assertions as to legal conclusions) so that the Commissioner has the factual basis on which to proceed. If those facts reveal the failing is under s 12-35, although the Estimate Notice might be revoked by operation of s 268-40(4), the Commissioner is then informed appropriately to pursue his remedies under s 16-30. 79 So, through the Estimate Notice regime, the Commissioner is either paid, is informed of the fact he needs to be paid in another way, or obtains the information which shows that there has been no non-compliance at all. And he gets that payment or information promptly. 80 In understanding the above, the means of achieving the purpose of prompt and effective action to protect the revenue can be seen.

The possible responses to the receipt of an estimate 81 Where an entity receives an estimate from the Commissioner under s 268-15, depending on the circumstances there are a number of possible avenues for revoking it on the basis that the recipient is not liable to remit any amount under s 16-70. First, a statutory declaration (or affidavit: s 268-40(1), table items 2 and 3) might verify facts to the effect that the entity was not obliged to withhold amounts under s 12-35 (in that it did not pay any amounts referable in any way to wages or salary). If that were established, any amount withheld by the entity could not have been withheld "under Division 12" such that there would be no non-compliance with s 16-70 by failing to remit. Secondly, the entity, whilst accepting that it was obliged to withhold PAYGW amounts, may verify facts to the effect that no amounts were withheld. While that may expose the entity to penalties under ss 16-25 and 16-30, it would nevertheless cause the estimate to be revoked. 82 The first avenue identified is not to suggest that the estimate is a process for enforcing the obligation to withhold, it is merely to acknowledge that the performance of that obligation is an antecedent step to the obligation to remit. 83 In the challenges mounted by the applicants in this case, the alleged lack of legality was directed to the issue of whether CLK Kitchens was obliged to withhold PAYGW amounts. No allegation was made that the Commissioner's decisions or conduct were invalidated because CLK Kitchens did not withhold any amount.

CONSIDERATION 84 In his written submissions, Dr Schulte identified five separate and distinct issues or groups of issues which were said to arise in this matter. Although the applicants asserted the existence of others, the five identified are a convenient context in which to discuss most questions requiring determination.

Issue 1: Was the Commissioner entitled to make the estimates? 85 The issues between the parties under this heading can be approached as three subordinate questions: (1) Does s 12-35 oblige CLK Kitchens to withhold PAYGW amounts, so that it is capable of having an underlying liability under s 16-70 such that the Commissioner is entitled (and it is not unreasonable for him) to estimate liability for those amounts under s 268-10? (2) Was the amount calculated by the Commissioner an "estimate" he is entitled to make for the purposes of s 268-10? (3) Has the Commissioner made a binding election to pursue CLK Services for some underlying liability such that he is not entitled to estimate CLK Kitchens' liability for PAYGW amounts?

Does s 12-35 oblige CLK Kitchens to withhold PAYGW amounts, so that it is capable of having an underlying liability under s 16-70 such that the Commissioner is entitled (and it is not unreasonable for him) to estimate liability for those amounts under s 268-10? 86 The jurisdictional error alleged in ground 2(a) of the 2FAOA in the first proceeding was that the Commissioner's estimate was not reasonable as required by s 268-10(2), in essence (as appears from the submissions) because: (a) CLK Kitchens was not the actual employer of the workers so it was not liable to withhold PAYGW amounts; (b) that it did not pay the workers directly; and, albeit somewhat inconsistently, (c) that it only paid them on behalf of CLK Services. 87 The Commissioner relies upon s 12-35, set out above, which provides that the obligation to withhold PAYGW amounts falls upon the entity which actually pays the wages or other amounts to a person "as an employee", regardless of whether or not that entity is the employer. He further relies upon s 16-70, which requires an entity who withholds under Div 12 to pay the amount withheld to the Commissioner. 88 Relying on these provisions, the Commissioner submits that there are three relevant questions to be considered, being: (a) Did CLK Kitchens pay wages to the workers as employees (whether of itself or another entity)? (b) Were those wages paid net of tax withheld? (c) Did CLK Kitchens report and remit its PAYGW liabilities to the Commissioner? 89 The Commissioner submits that the applicants have admitted that CLK Kitchens was the entity which paid the wages of the employees. The following evidence supports that: (a) In a statutory declaration given under the Statutory Declarations Act 1959 (Cth), Mr Karananos stated that CLK Services employed all of the employees but that Mayneline Kitchens & Joinery (NSW) Pty Ltd (MKJNSW) undertook the bulk of the operation of the joinery business. (As the facts identified above show, it is the evidence of Mr Karananos that CLK Kitchens transferred its business to MKJNSW and ceased trading from 31 January 2017.) (b) In his statutory declaration, Mr Karananos did acknowledge that CLK Kitchens had previously operated a similar kitchen joinery business. He said: 44. The Taxpayer [CLK Kitchens] previously owned and traded a business called Mayneline Kitchens & Joinery (the business). The Taxpayer was part of a larger group trading using the Mayneline name. 45. Mayneline Kitchens & Joinery (NSW) Pty Ltd (MKJNSW) (of which I am also a director) conducted the bulk of the group's work, including but not limited to contract negotiations, product development, shop drawings, working drawings, site check measurements, submission of samples, finalising details, development and manufacturing approval of componentry, quality control and assurance, assembly, and site control and installation of componentry and all coordination meetings/management and logistics control. 46. MKJNSW, in trading its previous business, called upon the services of three labour hire companies (Five Star Labour Hire Pty Ltd ACN 153 967 527 (Five Star), Marsden Services Pty Ltd ACN 606 872 511 (Marsden) and CLK Services Pty Ltd ACN 111 780 897 (formerly known as Mayneline Services Pty Ltd) (CLK Services) who supplied the labour of their staff to the Taxpayer. 47. CLK Services employed employees to provide labour hire services. 48. The Taxpayer, MKJNSW and CLK Services had access to a batch payment facility with the NAB which enabled the Taxpayer to process payments as a batch entry, which had been used by the Taxpayer to pay creditors and subcontractors of the group. Inter-group accounts would deal with any liabilities as between entities. 49. As such, the Taxpayer would process as an advance, amounts directed by CLK Services. 50. The advance would be repayable upon the issuing of a tax invoice from the Taxpayer to CLK Services. 51. The Taxpayer invoiced CLK Services on a monthly basis for the amounts advanced by the Taxpayer to CLK Services. CLK Services would invoice MKJNSW for the labour hire, so that MKJNSW could provide its services as set out above. 52. The invoices reference "reimbursement" as that is what the invoice was for - a reimbursement for monies advanced by the Taxpayer for and on behalf of CLK Services. 53. The Taxpayer was no more paying an individual salary or wages than NAB who provided the batching facility. 54. The Taxpayer looked to the labour hire company for reimbursement for the funds advanced and released to the labour hire company's workers. Neither the Taxpayer nor the bank were liable to pay an employee salary or wages. (c) The above matters were also deposed to in an affidavit of Mr Karananos filed 26 July 2017. (d) The bank account statements of CLK Kitchens reveal that when it paid amounts of money to the employees of CLK Services it recorded those amounts as "wages". The amounts in question, which were paid weekly, were the amount of each worker's wage entitlement less the PAYGW amounts. (e) In an affidavit of 15 June 2018, Mr Karananos: (i) identified at paragraph 13.8(c) the process by which the labour hire companies would pay the wages of the workers: The labour hire companies' staff would then calculate the wages payable to each employee and provide the Taxpayer with the amounts to be paid by them to each of the labour hire companies' employees. (ii) stated at paragraph 13.12: The labour hire company invoiced the Taxpayer for the net wages weekly and this was set off against the labour hire company's liability to the taxpayer so far as funds had been drawn on the Taxpayer's account by the Bank processing the labour hire company's payroll. (f) In an affidavit of Mr Tim Logan, a solicitor in the employ of Morgan Conley Solicitors, who act for the applicants, it was stated that: On 12 January 2018, Anita Owens of Worrells Solvency + Forensic Accountants, provided a letter to MCS which calculated the potential PAYG withholding tax due on wages paid to employees working for labour hire companies engaged by the Taxpayer. (g) The letter and analysis of Ms Owens identified the wages paid to numerous employees over the period including 1 July 2016 to 31 January 2017. The names of the employees identified by Ms Owens as being the employees of the labour hire company match the names of the persons to whom CLK Kitchens paid money from its bank account with NAB over the same period. 90 The evidence before the Court demonstrates in relation to the period under consideration that: (a) The persons who undertook work for the purposes of operating CLK Kitchens' joinery business were employees of CLK Services, the labour hire firm. (b) CLK Services provided the services of the workers to CLK Kitchens (and perhaps other companies in the group, such as MKJNSW). (c) The labour hire company would calculate and advise CLK Kitchens of the amount of wages payable to each of the workers. (d) On a weekly basis, the workers were paid money by CLK Kitchens for their services. (e) In its bank statements, CLK Kitchens recorded the amounts paid to each of the workers as "wages". (f) The funds used to pay the wages emanated from an NAB account maintained by CLK Kitchens from which batch payments were made and, in the words of the applicants' solicitor, the batch payments were "made by" CLK Kitchens on behalf of CLK Services. Mr Marks QC for the applicants very properly acknowledged that the funds came from the bank account of CLK Kitchens and were deposited in the accounts of the workers (Transcript p 12 L15-18). (g) The payments were treated as an advance by CLK Kitchens to CLK Services and each month an invoice would be given by CLK Kitchens to CLK Services in respect of the amount so advanced. (h) The amounts invoiced were the amount of the workers' net weekly wages. Again, Mr Marks was candid in acknowledging that he was not in a position to dispute that the amount paid was the amount owing to the employees as wages less the PAYGW amount (Transcript p 12 L32-33). (i) The invoice would refer to a "reimbursement" being of the amount advanced to CLK Services' workers made on behalf of it by CLK Kitchens. 91 The above facts, which were derived almost exclusively from the applicants' material, appeared clearly following the hearing. However, the matter before the Court is for judicial review of the impugned decisions and conduct such that the evidence concerning the actual facts is far less important than the legality of the Commissioner's decisions and conduct or the efficacy of the applicants' responses to the receipt of the estimate. For instance, the actual facts concerning the operations of CLK Kitchens and CLK Services are irrelevant when ascertaining whether Mr Karananos' statutory declaration complied with the statutory requirements. The distinction must be kept in mind, particularly when considering the applicants' submissions concerning alleged factual disputes.

The Commissioner's submissions 92 The Commissioner submitted that he was entitled to make an estimate of the unpaid withholding liability of CLK Kitchens under s 268-10. He submitted that, pursuant to s 12-35, CLK Kitchens was liable to withhold the PAYGW amounts and, under s 16-70, pay the amounts to him. He submitted that CLK Kitchens was paying salary or wages to the workers as employees and, because of the words "whether of that or another entity" in s 12-35, it was irrelevant that they were employed by CLK Services. 93 The Commissioner submitted the fact that the workers who were paid wages by CLK Kitchens were not its employees or that CLK Services provided the payment summaries to the employees did not alter the liability of CLK Kitchens. He submitted that the obligation to withhold simply falls upon the entity which pays any amount of salary or wages. This issue was considered by Brereton J in Re Plutus Payroll Pty Ltd [2017] NSWSC 1360 (Plutus) at [28]-[29] where his Honour said: [28] That objection [being an objection to a GST assessment] asserts that after about January 2017, the first defendant entered into an arrangement with some of the other defendants, whereby the first defendant paid directly to employees, superannuation accounts and a solicitors' trust account, amounts said to be owing by it to the other defendants. This amounts to the first defendant paying wages and superannuation on behalf of some of the other defendants. The first defendant contends that it was not liable to pay PAYGW in relation to those payments, because it was providing the payments as a service to the other defendants. [29] However, TAA, Sch 1, s 12-35, provides that an entity must withhold an amount from salary, wages, etc it pays to an individual as an employee whether of that or another entity; thus, the obligation to withhold falls upon the entity making the payment to the employee, regardless of whether or not it is the employer. Accordingly, Mr Thomasen's statutory declaration does not disclose facts upon which the underlying liability to pay PAYGW never existed; and as a matter of substance, is not "to the effect" that Plutus Payroll's PAYGW liability never existed. 94 The construction preferred by Brereton J accords with the natural meaning of the words used in s 12-35 and it has been followed in subsequent cases. However, as is discussed below, the real question is not whether CLK Kitchens failed to withhold PAYGW amounts from the wages of employees. It is whether the statutory declaration verified facts which negated or reduced CLK Kitchens' "underlying liability", being the liability of the estimate recipient to remit amounts which it has withheld as PAYGW amounts.

The applicants' submissions 95 The applicants submitted that the above construction of the words of s 12-35 was too wide. In paragraph 38 of their written submissions they said: The respondent does not explain how an amount may be "wages" or "salary", rather than simply an amount of money provided by a financier, where the Company had no contractual relationship with a worker justifying characterising amounts as "wages" or "salary". 96 That submission fails to confront the fact the periodic amounts paid by CLK Kitchens to the workers were, unquestionably, payments of their wages. Indeed, as identified above, Mr Karananos admitted that the labour hire companies informed CLK Kitchens of the amount of each worker's wages and CLK Kitchens would then pay them that amount. The amount so paid was obviously the net amount as, once the amounts were paid to the workers by CLK Kitchens, it invoiced CLK Services for "reimbursement" of the net amount of the weekly wages. That was the foundation of the estimate made by the Commissioner and it was verified by Mr Karananos in his statutory declaration. 97 There can be no serious argument against the proposition that the money paid to the workers by CLK Kitchens was paid as wages to them as employees. There was no question that the payments discharged the liability of CLK Services to the workers for the work performed by them, save in respect of the PAYGW amounts. That is the effect of the evidence identified above and there was no suggestion that the entitlement of the workers to their wages was discharged in any other manner. The internal arrangement between the companies was that the wages obligation of CLK Services would be discharged by CLK Kitchens paying its money to the workers or using its credit to pay them, and then seeking reimbursement. 98 The submission that the scope of the above interpretation of the section may have the result that a bank, which causes money to be used to meet the wage or salary liability of employees, is also liable to withhold PAYGW amounts is misconceived. In support of this argument the applicants relied upon Deputy Commissioner of Taxation v Applied Design Development Pty Ltd (in liq) (2002) 117 FCR 336. That case concerned whether a liquidator who pays amounts owing to employees by a company being wound up is required to withhold PAYGW amounts under s 12-35. After considering the statutory scheme, Mansfield J identified the issue as one of the characterisation of the payment in question and whether it was the payment of "wages" to the person "as an employee". His Honour held that the payment was of that character regardless of whether it was paid by the company or the liquidator under the latter's statutory obligations. He said (at 340 [12]): That is because s 12-35 does not impose the obligation to withhold the prescribed amount by reference to the identity or character of the entity that in fact pays the employee. Indeed, it specifically provides for the possibility that one entity may make a payment of salary, wages, commission, bonuses or allowances to an individual, being an employee of another entity. So much can be concluded from the text of the provision, and support for that conclusion can be found in the contrast between s 12-35 and its immediate predecessor, s 22lC(lA) of the ITAA: see Beckwith v The Queen (1976) 135 CLR 569 at 578-583; 12 ALR 333 at 340-344 per Mason J. It relevantly provided: "Where an employer pays to an employee salary or wages, ... the employer shall, at the time of paying the salary or wages, make a deduction from the salary or wages ..." That provision only imposed an obligation to withhold a taxation amount in circumstances where a payment was made by an employer to an employee. The authorities cited by both parties in the present application were determined in relation to that section or its ancestors, and are therefore largely concerned with the question whether the entity making the payment for salary or wages could be properly characterised as an employer. That is an issue that is not directly relevant to the present application, which turns on the question of whether the payment made on 10 July 2000 could be properly characterised as a payment in the nature of wages made to M in his capacity as an employee. 99 In relation to the characterisation of a payment as being of wages to an employee, his Honour identified (at 342-343 [25]) that even if the debt, comprised of wages owing which were enforceable pursuant to contractual rights, has been transformed into a statutory right upon the liquidation of the employer, the nature of the payment as a payment in respect of the services rendered by an individual may be unaltered by the effect of insolvency legislation. It followed that nothing turned on the fact that the payment in that case was made by way of dividend and pursuant to the employee's statutory right to receive it. The consideration given for the payment was the rendering of services as an employee and that gave rise to the employee's entitlement to prove for the debt. That led to the conclusion that the payment was in the nature of wages or salary. 100 There is nothing in the reasons of Mansfield J which supports the argument advanced by the applicant. The contrary is true. As his Honour said, the question is one of the characterisation of the payment made. In the present case the payments by CLK Kitchens to the employees effected a discharge of the wages or salary obligation which had arisen by reason of the employees providing consideration by undertaking work. The manner in which the discharge of liability arose was by the authorised transfer of money or credit from CLK Kitchens' account to the employees' accounts as is demonstrated by the bank statements. As the employees were credited with a sum of money a similar amount was debited in CLK Kitchens' account. None of that is contentious. It should be kept in mind that the effect of this in discharging the wages liability arose only because CLK Kitchens was authorised by CLK Services to do so. The mere transfer of money was not enough. It was only the intercompany arrangement giving CLK Kitchens the authority to discharge the wages debts which caused the transfers of funds to have that effect. 101 The mere fact that the payments were made by CLK Kitchens on behalf of CLK Services and that, as a result, the credit balance between those two entities was altered, makes no difference as far as s 12-35 is concerned. The payment by CLK Kitchens discharged the wages obligation owed to the employees of CLK Services and was a payment of the wages. Indeed, the fact that CLK Kitchens was using its credit or financial facilities to discharge the debt supports the conclusion that it was paying the wages. It was not merely authorising the use of CLK Services' money to discharge the debt, but was actually discharging the debt itself by use of its credit. (It might be said that even if a person uses the funds of another person to discharge a wages obligation, they are still paying wages to an employee under s 12-35. But that question does not need to be answered.) 102 The suggestion that the bank which caused the transfers to take place paid the wages of the CLK Services employees within s 12-35 is unreal and contrary to the ordinary meaning of the words used in the section. Many transactions are undertaken through the medium of a bank or other financial institution, but to suggest that it is the financial institution which has discharged a liability is misunderstand the role of the financial institution. Banks and financial institutions merely operate credit facilities whereby debtors are able to discharge their financial obligations to creditors through the medium of money or credit transfers. The transfer by the financial institution does not, of itself, discharge anything. It is the mere mechanical transfer of money or credit. The ability to discharge an obligation arises from the authority of the payer to do so. Whilst the bank requires a mandate from its customer to transfer funds from an account, it is the customer's authority to discharge a debt which is crucial to the efficacy of the transaction. In the ordinary course, the transferring bank has no authority to discharge a debt; in this case a wages debt. Its authority is to transfer money. It is only the customer with the relevant authority (in this case CLK Kitchens) which, through the medium of its bank, discharges the wages debt and can be said to have "paid the wages". 103 The well-established concept of a payment is "a gift or loan of money or any act offered and accepted in performance of an obligation": Goode on Payment Obligations in Commercial and Financial Transactions, Sweet & Maxwell (3rd ed) 2016, [2-01]. However, a debt can only be discharged by payment with authority. Only the payer who has authority to discharge a debt can mandate a bank to pay money in its discharge: Goff & Jones on the Law of Restitution, Sweet & Maxwell (7th ed) 2007, [1-018]. The bank, of itself, merely transfers the money and it is the entitlement of the payer to discharge the debt obligation which is essential to the efficacy of the transaction. So much is well established: Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd [1980] QB 677; Commercial Bank of Australia v Younis [1979] 1 NSWLR 444; K J Davies (1976) Ltd v Bank of New South Wales [1981] 1 NZLR 262 and Bank of New South Wales v Murphett [1983] 1 VR 489. 104 In other words, as Mansfield J said in Applied Design Development, the question is one of the characterisation of the transaction as the payment of "wages" to the person "as an employee". The concept of the "payment of wages" necessitates the conclusion that the duly authorised payer intends that the transfer of money will discharge the wages debt, the intention of the payer being critical to the efficacy of the payment: Filgate v Thompson (1874) 5 AJR 124. The bank or financial institution has no intention to discharge the wages debt. It has no authority to do so. All it does is transfer its customer's money (or credit) for its customer. Here it cannot be said that NAB had any intention to discharge the wages debt of the workers who had earned that entitlement as employees. The relevant intention was that of CLK Kitchens which had the intention of discharging the wages debt, it being authorised to do so. 105 Moreover, the discharge of the wages debts did not occur with the bank's money or credit. It occurred as a result of CLK Kitchens' money or credit being used to pay the amount to the employees. Its funds or credit diminished to the extent that the employees' funds were enhanced. In that sense the only characterisation of the transactions was that CLK Kitchens paid the wages to the individuals as employees. 106 The applicants submitted that the Commissioner's reliance on Plutus was erroneous. It was said that in that case there was an admission by Plutus that it was paying the wages of employees as a service to other companies in the group and that it was paying them directly. It was further said that this was not similar to the present case but the relevant difference is difficult to ascertain. Here, Mr Karananos' statutory declaration identified that the inter-company arrangements were to the effect that CLK Kitchens would, using its money and funds, discharge the wages debts of CLK Services to the employees, although not including the PAYGW amounts. Whether that amounts to a "service" or an "intercompany arrangement" is a distinction without difference. The applicants also focused attention on the reference in Plutus to the payments being direct. Again, the relevance of that in the context of the argument is not clear. Here the payments were direct into the accounts of the employees. There is nothing in paragraph [28] of the reasons of Brereton J in Plutus to suggest that the payments were made otherwise than through the medium of a financial institution. 107 It was also said that the decision in Plutus did not deal with the obligation of the Commissioner where a statutory declaration had been provided by the recipient of an Estimate Notice. Although a statutory declaration was made in that case, it did not disclose facts upon which the underlying liability to pay withheld amounts never existed or that the relevant sum was a lesser amount and for that reason did not revoke or reduce the amount of the estimate. The part of Brereton J's reasons dealing with that matter is not relevant for the purposes of considering the operation of s 12-35 although it assumes importance later in these reasons. In the recent decision in Armstrong Scalisi Holdings, Ward CJ in Eq reached a substantially similar conclusion on this point. That case is discussed further below. 108 It follows that there is no merit in any of the applicants' submissions in this respect.

Commissioner's entitlement to issue estimates 109 On the undoubted facts of this matter, which are derived from the evidence of the applicants and the statutory declaration of Mr Karananos, there is no doubt that s 12-35 applied to the payments by CLK Kitchens to the employees of CLK Services with the consequence that when CLK Kitchens paid the employees' wages it was obliged to retain the PAYGW amounts. That is the correct characterisation of the transactions and it is in accordance with the manner in which the section was construed by Brereton J in Plutus and by Mansfield J in Applied Design Development. 110 It follows from the above that CLK Kitchens was subject to the withholding obligation and liable to report and remit the withheld PAYGW amounts under ss 16-70 and 16-150 of Schedule 1 to the TAA. Again, there is no doubt that it did not do this. Indeed, in paragraph [43] of his statutory declaration dated 18 July 2017, Mr Karananos admitted that the company did not report or remit any amounts. That failure enlivened the Commissioner's power under s 268-10 to make an estimate of the unpaid withholding liability. 111 More importantly, the Commissioner made and gave the estimate to CLK Kitchens relying on the above construction as to the operation of ss 12-35 and 16-70. There was clearly no error in him doing so and his decisions based upon that premise are not vitiated for that reason.

Was the amount calculated by the Commissioner an "estimate" he is entitled to make for the purposes of s 268-10? 112 The applicants submitted that the Estimate Notice was invalid because it was not based on any actual estimate by the Commissioner, however, the basis of that submission was not clearly identified. It was further submitted that this "feature demands cross-examination", but again, there was no indication of the topics which required elucidation by cross-examination. 113 It is important to observe that the power of the Commissioner to make an estimate is granted in unconfined terms. Unlike other remedial action which he is empowered to pursue by Part 4-15 of the TAA, the power is not conditioned on the formation of a "reasonable belief" or otherwise of an identified state of facts. The only requirement is that the amount estimated is, in the Commissioner's view, reasonable. Although such a power may be thought to produce injustice in some cases, that possibility is negated by the ability of the recipient of the estimate to reduce or revoke any liability by immediately taking steps under s 268-40. 114 In this case CLK Kitchens had not reported the vast bulk of the wages it paid to the workers as wages. It is apparent that it considered the labour hires as the employees of CLK Services and it did not claim to have retained any PAYGW amounts. It appears that it considered that it had no employees. The Commissioner necessarily had little information on which to make an estimate and it follows that the process of estimation would have involved a "broad brush" approach. 115 The applicants submitted that the evidence which demonstrated that no estimate had been made was an email of 28 June 2017 exhibited to the affidavit of Mr Mason (an ATO officer) sworn on 28 September 2017. In it, a Mr Condon of the Employer Obligations, Small Business team of the ATO advised two other officers that his team had calculated the withheld PAYGW amounts of CLK Kitchens (formerly called Mayneline Kitchens & Joinery) at 49.5% of the combined total of benchmark wages for cabinet makers and the actual contractor expenses claimed by CLK Kitchens for each year. A spreadsheet was attached explaining the calculations and the months to which they related. It was also observed that, as there were neither sales nor contractor expense figures available for 2017, Mr Condon had used the 2016 figures for both years. 116 The attached spreadsheet identified CLK Kitchens' sales figures for the years 2012 to 2016 and contractor expenses for the period 2012 to 2015. It also identified the wages expenses of the business in the period from 2012 to 2016. Taking those figures, the analysis assessed the reported wages of CLK Kitchens as a percentage of a benchmark figure and identified that the wages reported by the company had been below the "low" benchmark figure, and often significantly so. On average it was 50% below the benchmark. An analysis was also undertaken of the combined contractor and wages expenses of CLK Kitchens in the period from 2012 to 2016 and it was observed that they were generally around the average of the benchmark figures for wages only, save in one year. The obvious inference was that the contractor expenses of the business were actually wages which was, after all, the basis of the estimate. Indeed, that is the effect of the evidence contained in Mr Condon's affidavit. (Affidavit of Mr Condon of 28 September 2017, para 32). That being so, an estimation of CLK Kitchens' annual wages was made by applying the benchmark percentage for wages (at the low end being 22%) as a proportion of sales and adding to that the actual contractor expenses reported by CLK Kitchens. That was done for each year from 2012 to 2016. A rate of 49.5% was applied to the resulting figures to ascertain the PAYGW liability on the estimated wages paid for each year. That rate was used because CLK Kitchens had not supplied any details of the tax file number (TFN) declarations for the employees it was paying. It appears the Commissioner therefore assumed in calculating the estimated liability that CLK Kitchens had acted in accordance with the law and withheld at the rate required. That does not seem to be an irrational or unreasonable assumption. The estimated figures of the annual PAYGW amounts were broken down into monthly amounts for the years 2012 to 2016 and, as the text of the email identified, the figures for 2016 were applied to 2017 on the basis that there were no sales figure for the year ending 30 June 2017. The total of the withheld PAYGW amounts for the period from 2012 to 2017 was calculated as $19,475,997. 117 The affidavit of Mr Condon explained that, following investigations in to the use by CLK Kitchens of labour hire companies which were subsequently placed into insolvency with outstanding PAYGW liabilities, he had a meeting with the officers of the Significant Debt Management Team. In that meeting it was concluded that, in the absence of reliable figures for net wages paid or actual withholding amounts, the best method of making a reasonable estimate would be to use benchmarking information which was kept and maintained by the ATO on its website. A copy of the relevant benchmark figures is attached to Mr Condon's affidavit. For the 2015 year it identifies that for cabinet makers the cost of labour for businesses with a turnover of more than $900,000 was 22% to 30%. Mr Condon explained that he used the low benchmark rate of 22% given that this was in addition to the reported contractor expenses (Affidavit of Mr Condon of 28 September 2017, [33] and [35]). 118 The email of Mr Condon of 28 June 2017 to Mr Mason gives a brief explanation of the manner in which he made the preliminary estimates in relation to the PAYGW amounts and the information in it became the basis of the Estimate Notice issued on 11 July 2017. 119 An issues paper was prepared and sent to CLK Kitchens, albeit after the giving of the Estimate Notice, identifying the manner in which the estimate of $19,475,997 was made. In it CLK Kitchens was advised that: The Commissioner will have regard to anything thought to be relevant for the purposes of making an estimate and will be influenced by the pattern of remittances in the past and the particular circumstances in each case. In your circumstances we have relied on industry benchmarks to determine your gross wage liability as a percentage of gross sales reported on activity statements lodged. The benchmark for your industry and turnover range is between 22% and 30%. To determine your gross labour costs we have applied a benchmark of 22% of gross sales plus reported contractor expenses on income tax returns you lodged. … As you have not submitted tax file number declarations for workers paid it is considered that you do not hold completed declarations. You are therefore required to withhold at the top tax rate plus Medicare. 120 The statement in the latter paragraph appears to be a correct statement of a payer's obligations in relation to the withholding of PAYGW amounts where the employee has not provided the payer with a TFN as was the case here. This is further discussed below. 121 The applicants did not respond to the position paper delivered to them. Mr Condon's evidence was to the effect that he would normally receive better information upon the sending of such a document and could then make the necessary reductions to the estimate if required. However, here no further information was provided.

The applicants' submissions that no valid estimate was made 122 It appears that the applicants' real complaint in relation to the manner in which the estimate was made was that the email of Mr Condon ended with the statement "Can you let me know when the notices issue as I am sure they will generate quite a response". It was submitted that this rendered the calculation of the amount a "provocation" rather than an estimate. It was further said that the amounts calculated against benchmark figure could not be estimates because they did not accord with certain dictionary definitions of the expression estimate. Reliance was placed on the definition found in the Oxford English Dictionary being, "An approximate judgement based on considerations or probability, respecting the … amount … of anything." The Macquarie dictionary definition was to a similar effect. 123 Save as is identified below, no submission was made suggesting that the demonstrated method of estimating the amount of the PAYGW amount was not appropriate or did not amount to an estimate. The estimate was based on the information which the ATO officers had at their disposal and no submission was made to the contrary. It was not suggested that any step in the process of estimating the amount was somehow unreasonable or illogical or contained some element which might suggest that Mr Mason or Mr Condon acted in excess of power. 124 It is apt to keep in mind, as the definitions relied upon by the applicants make clear, estimations are approximations and the accuracy of the approximation will depend upon the quality of the information on which the estimate is made. Necessarily, an estimate involves an assessment of the facts known at the particular time and the giving of weight to the various factors which might affect the conclusion. The weight so given is a matter of judgment with the result that reasonable persons may reach significantly different estimates of the same subject matter even when they assess the same criteria. Necessarily, an estimate may be reasonable regardless of whether it applies the relevant integers conservatively or liberally. The boundaries of what might be called a reasonable assessment are necessarily wide so as to take into account the weight different persons might give to different criteria and the expectation that those criteria accurately reflect the true circumstances. By their very nature, estimates are approximations based upon judgment and that necessarily poses some difficulties in demonstrating the unreasonableness of an estimation. 125 There was an apparent disconnect between the foundation of the applicants' allegation in the 2FAOA that the estimate was not reasonable and those raised in submissions. To some extent the submissions appeared to suggest that a trial should occur so that the applicants may cross-examine the decision-maker, but that desire alone is no reason to have a trial. The originating process ought clearly identify the grounds on which the alleged administrative error rests. If those identified grounds are not viable there is no purpose in a trial merely to allow the applicants the opportunity to search for other grounds in the course of the hearing. The identified grounds, which are articulated in ground 2 of the 2FAOA, have been shown to be without substance. They were generally based on the proposition that CLK Kitchens had no obligation to withhold because it was only paying the money on behalf of CLK Services. That was founded on a misunderstanding of the operation of the statute. 126 The applicants' submitted they wanted to cross-examine Mr Condon, although the basis of that desire was not made clear. It seemed to relate to the fact that the estimate was subsequently reduced by the sending of the "Notice of Reduction of Estimate of Liability Payable to the Commissioner of Taxation" but the actual import of the submission in that respect was opaque at best. It was submitted in this respect : MR MARKS: But my learned friend can't get away from that because his entire case is that there's no second estimate. He's tied head and foot to the first estimate and if it falls then there's no saving it by this alleged amended or varied estimate. He can't have it both ways. Again, we have this cluster of administrative law problems. Now, there does not - I will leave you to puzzle over what Mr Condon might say under cross-examination because we want him. And that's why I handed up dictionary definitions of estimate which require judgment. 127 However, Div 268 specifically provides for the making of reductions in the estimate initially given. That obviously arises because, as in this case, when the estimate is made the Commissioner is likely to be acting on limited information. In addition, the express object of Div 268 is "to enable the Commissioner to take prompt and effective action to recover" unpaid PAYGW amounts. It is necessarily implicit that the taking of prompt and effective action will often occur on limited information where the actual liability of the payer is not fully ascertainable. Requiring the Commissioner to delay to acquire more fulsome information and to more fully assess the actual liability would undermine Parliament's express intention. When a recipient of an Estimate Notice responds by way of affidavit or statutory declaration or otherwise, they may provide information which demonstrates why the estimate overstates the amount of PAYGW amounts actually payable. If so, the liability is automatically reduced by reason of the operation of s 268-40(2). Alternatively, the Commissioner may receive additional information as to why the estimate is higher than the actual liability and, under s 268-35, reduce the estimate, as occurred here. 128 Mr Marks QC also referred to paragraphs 8 to 10 of the applicants' written submissions in relation to this topic. First, it was said that the estimate included amounts which CLK Kitchens was obliged to withhold in relation to contractor expenses where that obligation does not exist under s 12-35. Although this ground of alleged unreasonableness does not appear in the 2FAOA, it is still appropriate to consider it. In any event the submission misunderstands the manner in which the estimate was made. As Mr Condon said in his affidavit, he expected that the contractor expenses reported by CLK Kitchens were for work which was really performed by employees as was expected in the industry. Indeed, the whole basis of the Commissioner's estimate is that the amounts paid were actually wages to the employees even if they were accounted for by the company as contractor expenses to labour hire companies. As a result the identified contractor expenses for those years in which CLK Kitchens had been using labour hire companies were seen as reflective of the amount which had been or would have been paid as wages. To a large extent that was the effect of the analysis in the column headed "Total wages & Cont Exp as % wages Benchmark" in the spreadsheet attached to Mr Condon's email of 28 June 2018. In brief, in the making of the estimation the Commissioner used the actual amount of the contractor expenses as a proxy for undisclosed wages in respect of which PAYGW amounts were required to be retained. That was added to an amount which reflected the application of the lower end of the industry benchmark rates for wages. It follows that the submission in relation to the estimate in this respect is misguided. 129 It was next said that the estimate is based upon the assumption that the amounts to be withheld were at a rate of 49.5% and that CLK Kitchens was not a relevant entity which needed to hold TFN declarations and it assumed that all putative employees would have withholdings deducted at that rate. Again, this submission has no foundation in a claimed ground of review and it is also misconceived. First, the application of the highest tax rate did not flow from a determination that the individual workers would actually be liable to pay tax at that rate. It was applied because the payment of the wages was done without CLK Kitchens having the relevant TFNs of the workers: s 15-10 (the amount of PAYG to be withheld is specified in the withholding schedules) and s 15-25 of TAA (which permits the Commissioner to make the withholding schedules). Withholding schedules in some relevant years provided that the withholding rates where a TFN was not provided was 49%: see eg Taxation Administration Act Withholding Schedules Correction October 2016 issued on 23 September 2016, Legislative Instrument F2016L01506. Second, s 12-35 and the withholding schedules apply regardless of whether the payer to the employee is the employer or not. The section and schedules apply where the TFN has not been supplied. It may be that the applicants' suggestion that they were unaware of why the top tax rate was used lacked some credibility. As identified above (at [119]), the issues paper had informed them that, in the absence of TFN declarations, CLK Kitchens was required to withhold "at the top tax rate plus Medicare". Again, there is no substance in this "unpleaded" ground of unreasonableness. Although it may be that 49.5% is higher than 49%, that does not demonstrate that the application of the former rate took the calculation out of the concept of "estimating" or "estimation" or "estimate". 130 Again, it is appropriate to re-iterate that the making of the estimate involves making approximations and, necessarily, they may be broad. That was especially so where CLK Kitchens had neither reported having any employees and nor did it identify the amount which it paid in wages. Further, as the estimate may only be reduced and not increased, it is not inappropriate for the Commissioner to adopt a broad-brush liberal approach. After all, the recipient of the estimate who has all the information and knows the true facts can immediately cause the estimate to be reduced by the giving of a statutory declaration. 131 The applicants further submitted that the estimates were made that CLK Kitchens was required to withhold at the highest marginal tax rate when the ATO officers had the records of employees of the labour hire companies and ought to have known the actual rate of tax they paid. However, again, that misunderstands the operation of the TAA. Given that CLK Kitchens did not have TFN declarations made by the employees, the obligation was to withhold at the highest rate, so it was not irrational to proceed on the basis that the company complied with its obligations. The position paper had indicated that to be the case and the applicants did neither submitted to the contrary nor did they adduce any evidence to suggest that the Commissioner had any reason to believe that the workers had provided TFNs to CLK Kitchens. 132 The applicants' written submissions contain the assertion that the workers had provided their TFNs to CLK Services, however, that is irrelevant to the obligation of the payer required to withhold under s 12-35. It is that entity which is required to obtain the workers' TFNs. There was no argument advanced by the applicants to the contrary. 133 It follows that there is no reasonable prospect of the applicants establishing that any of the alleged bases for the claim that the estimate lacked any intelligible justification or was "unreasonable" could be sustained. To a not insignificant degree the submissions made by the applicants on the application appeared to transcend the boundaries of the pleaded particulars of lack of reasonableness, but even those additional grounds had no merit to them. 134 Finally, it should be noted that none of the foregoing discussion should be taken to mean that s 268-10(2) demands a "reasonable" decision simpliciter. The standard set out there is of course merely that the Commissioner "thinks" the amount of the estimate "is reasonable". However, any extra scope that might be taken to provide the Commissioner in making the decision under s 268-10(1) is unnecessary to consider in disposing of the present applications.

Has the Commissioner made a binding election to pursue CLK Services for some underlying liability such that he is not entitled to estimate CLK Kitchens' liability for PAYGW amounts? 135 In the originating applications the applicants assert facts (unusually, in the prayers for relief) which they say prevent the Commissioner from issuing the estimates to CLK Kitchens. It is said that the Commissioner successfully proved in the administration of CLK Services for a running balance account deficit debt in respect of BAS amounts as at 15 March 2017 and voted at a meeting of creditors on 28 April 2017 against the company entering into a DOCA. Those BAS amounts were said to include CLK Services' PAYGW amount obligations in relation to the period covered by the amount now in dispute between CLK Kitchens and the Commissioner. It is also asserted that the DOCA was approved by the members and its terms were carried into effect by the paying of a dividend to the Commissioner. On those facts it is said that the Commissioner was precluded from making relevant decisions under ss 8AAZ, 268-10, 268-15 and 269-25. 136 The applicants relied upon the affidavit of Mr Bettles of 23 October 2018 as supporting the above statements of fact. Mr Bettles was appointed as one of the liquidators of CLK Services. He said the Commissioner submitted a proof of debt in CLK Services' administration in the sum of $969,954.35 which included sums in relation to the PAYGW and superannuation obligations of the company. The proofs were admitted for voting purposes. At paragraph 80 of the applicants' submissions it is said that the DOCA: was finalised and under the terms of the DOCA "all debts or claims, present or future, actual or contingent, due or which may become due by the company as a result of anything done or omitted or on behalf of the company before the day when the administration began and each claim against the company as a result of anything done or omitted by or on behalf of the company before the day when the administration began are extinguished": clause 7.1. 137 It is further submitted the Commissioner made an election as between mutually inconsistent rights, was paid on his proof and that he cannot now be said to say that someone else is liable for the tax on the same basis on the same employee entitlements. 138 The applicants referred to Seventeenth Canute Pty Ltd v Bradley Air-Conditioning Pty Ltd [1987] 1 Qd R 111, 128 in support of the above proposition and, in particular the passage: As the cases referred to, and in particular the passage in the judgment of Sir George Jessel, indicate, the respondent as at June 1, 1981 had the right to elect between two funds - the "security fund" represented by the charge under the Subcontractors' Charges Act, and the "Scheme Fund" pursuant to the Scheme. By intentionally proving pursuant to the Scheme for the whole debt, by satisfying the queries of the Scheme Trustees as to the quantum thereof, and by accepting the dividend paid thereunder, the respondent elected to be treated as a "Scheme Creditor" and waived any right to rely on its charge. I can find nothing in Sargent v. A.S.L. Developments Limited (1974) 131 C.L.R. 634, or the subsequent decisions of the High Court in which that case has been considered, which would lead to a contrary conclusion. In my view the English cases to which I have referred establish that this was indeed a decision by the respondent as between two alternative rights. 139 That case was one where a creditor had elected to prove in a scheme of arrangement which the debtor company had entered into with its creditors and where the creditor subsequently asserted a right to enforce a subcontractor's lien in respect of the same debt. The Court held that the effect of entering into the scheme was the assignment of the creditor's rights and lien. It was also regarded as an election as between mutually inconsistent rights as the above passage indicates. However, that does not impact upon the present situation. That was a case where the same party had truly inconsistent rights to pursue as against the same party and one course rather than another was chosen. To choose one set of rights against the company by participating in the scheme had the effect that inconsistent rights based on the same alleged entitlement could not be pursued against that same company. 140 More recently the principles relating to the doctrine of election were recently stated in Bibby Financial Services Australia Pty Ltd v Sharma [2014] NSWCA 37 at [115]: An election occurs where a person has two truly alternative rights or sets of rights and with knowledge of the facts giving rise to the inconsistent rights acts in a manner consistent only with the exercise of one of those rights and inconsistent with the exercise of the other: Sargent v ASL Developments Ltd at 641, 645-6 (Stephen J) and 655-6 and 658 (Mason J); Commonwealth v Verwayen [1990] HCA 39; 170 CLR 394 at 407-8 (Mason CJ) and 421 (Brennan J); Khoury v Government Insurance Office (NSW) [1984] HCA 55; 165 CLR 622 at 633-4 (Mason, Brennan, Deane and Dawson JJ). 141 As Brennan J said in Commonwealth of Australia v Verwayen (1990) 170 CLR 394 (Verwayen) at 421, "[e]lection consists in a choice between rights which the person making the election knows he possesses and which are alternative and inconsistent rights". That is reflective of the observations of Stephen J in Sargent v ASL Developments Ltd (1974) 131 CLR 634 (Sargent v ASL), 641, 645-6 to the following effect: The doctrine of election as between two inconsistent legal rights is well established but certain of its features are not without their obscurities. The doctrine only applies if the rights are inconsistent the one with the other and it is this concurrent existence of inconsistent sets of rights which explains the doctrine; because they are inconsistent neither one may be enjoyed without the extinction of the other and that extinction confers upon the elector the benefit of enjoying the other, a benefit denied to him so long as both remained in existence. 142 The essence of the doctrine is probably accurately identified by K Handley in Estoppel by Conduct and Election, Sweet & Maxwell (2nd ed) 2016, p 255 where he opined: It will be seen that the so-called right of election is not a right in the strict sense with a corresponding duty in another, but a power. An elector has the power to change the legal rights and duties of another vis-à-vis himself or a third person with a corresponding liability of the first to submit to the change. An election does not involve a choice between two sets of rights which presently co-exist but between an existing set of rights and a new set which does not yet exist. See also K Handley, "Exploring New and Old Ideas about Estoppel and Election" (2019) 93 ALJ 594, 601-602. 143 A foundation of the applicants' election defence is that the Commissioner relied upon the PAYGW amounts reported by CLK Services in the sum of $969,954.35 but not paid as supporting his proof of debt. It seemed to be asserted that this was that company's PAYGW liability arising from the payment of the wages to its employees. It was then said that this amount covered the same amounts which the Commissioner asserts CLK Kitchens is liable under s 12-35 in that they relate to the same employees who received payment of wages from CLK Kitchens. Indeed, in the course of submissions Mr Marks QC said that the Commissioner was claiming against each company for the same underlying liability. The submission as made was: This is a very unusual sort of set of facts where the Commissioner has inserted himself in the affairs of two companies claiming the same thing, essentially. The same underlying obligation, the PAYGW and the two companies. And despite the fact that he was in the midst of proving in one's administration raised estimates against another. 144 The Commissioner first says that there is no evidence to suggest that the amount claimed in the proof was the same as the underlying amount owed by CLK Kitchens. In support of that he relied upon the evidence of Mr Moreland in an affidavit filed on 13 November 2018 who compared the PAYGW amounts reported by CLK Services but not paid with the amounts estimated by the Commissioner against CLK Kitchens. The amounts are substantially different. There is, therefore, some substance in the Commissioner's submission that the amounts underpinning the proof lodged in the administration of CLK Services has not been shown to include the amounts which form the basis of the Estimate Notice. That said, on an application of this nature it is appropriate to assume in the applicants' favour that the amount for which the Commissioner proved in the administration of CLK Services did include a liability for PAYGW amounts arising from the payment of wages by CLK Kitchens to employees but which were reported by CLK Services and the reporting of the payments gave rise to a liability for the PAYGW amounts. 145 Mr Moreland also gave evidence that the Commissioner received no payment at all from the DOCA entered into by CLK Services in respect of the PAYGW amounts owing by CLK Kitchens. Although the Commissioner's proof of debt was for PAYGW amounts and the superannuation guarantee charge the payment received was only applied in relation to the charge which was claimed in an amount of $95,738.98. 146 One difficulty with the "election" defence raised by the applicants is that the liability for which the Commissioner is assumed to have proved against CLK Services was that company's purported liability based on it reporting PAYGW amounts whereas the liability arising against CLK Kitchens is that which arises as a result of s 268-20 and the giving of the Estimate Notice by the Commissioner to the company. These are two separate liabilities. It was not suggested and there was no evidence that a similar Estimate Notice was given to CLK Services. That company was thought to be liable for the PAYGW amount because it reported that it was responsible for that amount. It can be presumed that it made those reports on the basis that it claimed to have paid wages to the workers as employees, whereas it was CLK Kitchens which made the payments. On the other hand, the liability of CLK Kitchens arose by reason of the giving of the estimate. 147 Division 268 specifically provides that the underlying liability created by Part 2-5, and in particular s 16-70 on the one hand, and the estimated liability on the other, are separate and distinct obligations. The actual liability arising by reason of the obligation to withhold the relevant PAYGW amounts under s 12-35 and remit them to the Commissioner under s 16-70 is referred to as the "underlying liability". The liability which arises because the Commissioner gives an entity an Estimate Notice under s 268-10 and s 268-15 is referred to as the "estimate". The Commissioner submitted that no election can arise where the liability arising as a result of the service by the Commissioner of an Estimate Notice is a different liability to that of the underlying liability arising as a result of s 16-70. That is made clear by s 268-20(1) and (2) which provides: 268-20 Nature of liability to pay estimate Liability to pay amount of estimate (1) You must pay to the Commissioner the amount of the estimate if the Commissioner gives you notice of the estimate in accordance with section 268-15. The amount is due and payable when the Commissioner gives you the notice. Note: The amount of the estimate may be reduced, or the estimate revoked, under Subdivision 268-D. Liability to pay amount of estimate is distinct from underlying liability (2) Your liability to pay the amount of the estimate is separate and distinct from the underlying liability. It is separate and distinct for all purposes. Example: The Commissioner may take: (a) proceedings to recover the unpaid amount of the estimate; or (b) proceedings to recover the unpaid amount of the underlying liability; or (c) proceedings of both kinds. 148 The effect of s 268-20(2) is that the two liabilities are not the same and that is emphasised by the legislature in the statement that the estimate liability is "separate and distinct for all purposes". It follows that even where the Commissioner undertakes an act of enforcement with respect to the underlying liability, that will not affect or diminish his entitlement to pursue the estimate liability. This position is made even clearer by the examples given for s 268-20(2). There it is identified that the Commissioner is entitled to take proceedings against the one entity to recover the underlying liability and separate proceedings to recover the estimated liability. This necessarily assumes that action taken to enforce one right does not negate, impede or impair the other. If taking proceedings to enforce one right is not an election, neither would proving in a liquidation. 149 The above is fortified by s 268-20(3), which provides for the pro tanto discharging of one liability when the other is discharged by payment. The legislative requirement that one liability can only be reduced as a result of the other being reduced "by payment" is significant. It necessarily means that the discharge of the underlying liability by a means other than payment will not have the effect of diminishing the estimate liability of another entity. The provisions identified might generally be applied against the same entity which has both an underlying liability and an estimate liability. They must, necessarily, apply with greater force where, as here, the underlying liability is said by the applicants to be with CLK Services and the estimate liability is owed by CLK Kitchens. The existence of s 268-20 is sufficient to reject the claim that the Commissioner has somehow elected to pursue one alternative and inconsistent claim rather than another. The proof in the administration of CLK Services was not in relation to the estimate for which CLK Kitchens is said to be liable. 150 Mr Marks QC for the applicants submitted that there was a disputed question of fact as to whether the amounts in respect of which the Commissioner proved related to the amounts of PAYGW in respect of which the estimate was issued to CLK Kitchens. However, that was a false issue. Even if it is assumed in favour of the applicants that the liability for which the Commissioner proved arose from the payment of wages to employees which underpinned the estimate liability of CLK Kitchens, it would still not follow that an election arose. The Commissioner is entitled to pursue each liability separately regardless of the existence of the other. Only the actual payment of one liability will discharge or reduce the other. 151 Here the liability alleged against CLK Services was obviously not the underlying liability relating to the estimated liability for which CLK Kitchens is responsible. The underlying liability of CLK Kitchens is the liability for the amount for which it is actually liable because it paid the net wages to the employees. The estimate liability is that of which notice was given to that company by the Commissioner in respect of the payments it made. The liability asserted against CLK Services was not the same as either liability asserted against CLK Kitchens. On the assumption made in favour of the applicants, the claim against CLK Services was its presumed underlying liability which was perceived to exist because it reported its liability for PAYGW amounts in respect of its employees who were paid net wages by CLK Kitchens. On the other hand, the liability alleged against CLK Kitchens is the estimate liability arising from the giving of an Estimate Notice to it in respect of the CLK Services' employees whom were paid wages by CLK Kitchens. Whilst it may be the case that the underlying factual foundation in respect of the Commissioner's claims was the payment of wages to the employees that is where the overlap ceases. 152 In a sense, by proving in the administration, the Commissioner was asserting, albeit not in curial proceedings, that one or other of the companies was liable. Nevertheless, a separate liability was asserted against each. The fact that by proving in the administration and the subsequent entry by the company and creditors into the DOCA brought the Commissioner's rights against CLK Services to an end did not affect his rights against CLK Kitchens. 153 The argument sought to be advanced by the applicants appears to have some similarities with the old common law rule that judgment obtained against one tortfeasor was a bar to an action against the others on the same cause even if judgment remained unsatisfied: Brinsmead v Harrison (1871) LR 7 CP 547. The immediate difficulty with such an argument in the present case is that the sources of liability of CLK Services and CLK Kitchens were separate and distinct. 154 The Commissioner submitted in relation to the "election" defence that the only manner in which the liability to pay the estimate can be reduced or revoked are those methods provided for in Div 268. There, the legislation makes provision for the recipient of a notice of estimate to take steps which may reduce the liability to pay as well as provisions by which the Commissioner may reduce or revoke that liability. Reduction may also occur by the actual payment of the estimate liability or the underlying liability. Given what is said above, there is no need to reach any final conclusion with respect to this submission. However, there does not appear to be anything in Div 268 which suggests that the statutory liability of the recipient of an Estimate Notice is any less or more vulnerable than any other statutory obligation.

Knowledge 155 It is to be kept in mind that the proof of debt in the administration of CLK Services was lodged on 24 March 2017, being shortly after the issuing of the Estimate Notice to CLK Kitchens. The meeting of creditors of CLK Services took place on 28 April 2017. It is apparent that at that time it was by no means clear that the Commissioner was aware of the actual intercompany arrangements between CLK Services and CLK Kitchens. In circumstances where a party must have actual knowledge of the facts giving rise to the legal rights as between which an election must be made: Sargent v ASL; it is far from clear that at any relevant time the Commissioner or his officers had that knowledge. In any event, it is not necessary to determine this point as there were no inconsistent rights requiring an election in this case. That said, it must be doubtful that where the parties with all the knowledge, Mr Karananos, CLK Kitchens and CLK Services, misled (whether deliberately or innocently) the Commissioner into believing the "straw" company, CLK Services, owed the PAYGW amount, any election can arise where the Commissioner acts on the misrepresentation.

Conclusion on the "election" defence 156 It follows that, for several reasons, the applicants' claim that the Commissioner has elected to pursue inconsistent rights cannot be sustained. The essential facts are not in controversy and nor were they said to be. The question is merely one of law and, despite the lengthy reasons, it is not difficult given the operation of Div 268. The applicants have no reasonable prospects of successfully establishing this ground of review or challenge to the estimates and DPNs.

No prospects of success on the grounds of unreasonableness 157 The consequence of the above is that there are no reasonable prospects of the applicants obtaining relief on the ground that the decision to make an estimate of the unpaid PAYGW amount liabilities of CLK Kitchens was not reasonable or was not able to be made because of an election.

Application to review decision to issue notice 158 In paragraph 3 of the relief sought in the 2FAOA the applicants seek: Review the decision of the Respondent made 11 July 2017 and purportedly pursuant to Section 268-15 of Schedule 1 to issue an Estimate Notice to the First Applicant for each withholding period from 1 July 2011 to 31 May 2017. 159 The Commissioner submitted that the applicants' attempt to seek review of the Commissioner's alleged decision to issue the PAYGW Estimate Notice on the making of the PAYGW estimates is doomed to fail. He said that once he makes an estimate of the unpaid and overdue amount of PAYGW liability under s 268-10 he is obliged to issue a notice. He relies upon s 268-15(1) which provides, "The Commissioner must give you written notice of the estimate", being the estimate referred to in s 268-10. It is submitted that the issuing of the notices is a statutory obligation of the Commissioner and does not arise from a decision made by him. 160 The applicants provided no written submissions in relation to this topic. No oral submissions were made on their behalf in relation to it either. The grounds specified in the 2FAOA on which it is said that the alleged decision should be set aside are that the Commissioner did not make the estimate in accordance with s 268-10 prior to issuing the notice on 11 July 2017 and the "election" defence, each of which has been identified above as being of no substance. 161 There is force in the Commissioner's submission that the issuing of the estimate notices was the performance of a statutory obligation and not a decision of the Commissioner. There was no power not to issue a notice if the estimate had been made. In any event, the applicants seek review of the making of the estimate itself and assert that it was not a valid estimate under Div 268. The grounds on which it relies for that assertion are the same as the grounds relied upon to set aside the alleged decision to give of the notice of the estimate. Those grounds have failed and there are no additional grounds on which the applicants rely for the purposes of setting aside the latter. 162 It follows that the Commissioner should have judgment in relation to the claim to review the decision to issue the Estimate Notice, there being no reasonable prospects of success in relation to this decision.

Issue 2: Was the Commissioner compelled to revoke the PAYGW estimates on receipt of the statutory declaration? 163 The issue which arises here is whether the applicants have any reasonable prospect of prosecuting their application on the ground that the Commissioner was compelled by s 268-40 to revoke the estimates on the receipt by him of Mr Karananos' statutory declaration. The Commissioner's submission was that the statutory declaration so clearly did not meet the statutory criteria that this ground of review cannot possibly succeed. But there is a more straightforward reason that the applicants have no reasonable prospects of succeeding on this point: there is no decision or conduct of the Commissioner to review.

Did the statutory declaration reduce or revoke the estimated liability? 164 Section 268-40 provides that a person who receives a notice of an estimate may provide a statutory declaration relating to the estimate. An affidavit may also be given in other circumstances. Giving the declaration may have the effect of reducing or revoking the amount of the liability arising from the estimate. The relevant sub-sections of s 268-40 are set out above. 165 The applicants did not contest the Commissioner's submission that, as a matter of law, the material in a statutory declaration delivered under s 268-40 can be the subject of evaluation or testing by the Commissioner who is not required to blindly accept assertions in it and ignore inherent or latent flaws, but that was not correct. As mentioned above, the operation of s 268-40 depends upon whether the statutory declaration is "to the effect … that a specified lesser amount is the unpaid amount of the underlying liability". If the statutory declaration contains assertions of fact which do not establish that the underlying liability to pay PAYGW amounts never existed or were of a lesser amount, the effect of the estimate is unaltered: see Re Plutus Payroll Pty Ltd [2017] NSWSC 1360, [27]-[29] per Brereton J. 166 Section 268-40 does not provide for any decision to be made by the Commissioner. Indeed, its very purpose is to allow the recipient of an Estimate Notice to reduce or revoke their liability without relying on any action or decision of the Commissioner. Such a regime is necessary because of the extraordinary powers of the Commissioner to create an enforceable and immediately due liability at any time. The purpose of s 268-40 is to give a means of unilaterally reducing or revoking that liability. 167 So the applicants' written submission at paragraph [31] that "[t]he Commissioner failed to consider the Statutory Declaration as required by sections 268-40(2) and (4)" cannot be correct. Nothing was so required. Indeed, the applicants in the next paragraph contradict themselves: "Once the Statutory Declaration satisfies the threshold of 'being to the effect of' no liability is owing, the estimate is revoked." That submission of the applicants should be accepted. The Commissioner has no power to exercise, and it follows that he cannot have failed to exercise it. 168 If in fact the statutory declaration(s) given here are sufficient to reduce or revoke the liability of the applicants, the applicants do not need judicial review. Their liability is already reduced or revoked. If the statutory declaration(s) given here are insufficient, there is no decision to review, and even if there were, as the declarations are insufficient, there is no realistic probability of a different decision. 169 The applicants also apply for declarations to the effect that the statutory declaration has reduced the estimate liability to nil or revoked it. Although, where there is no reviewable decision, those might be declarations not apt to be sought on a judicial review application, the question will nevertheless be considered. 170 The real question is whether the statutory declaration is to the requisite effect.

Transtar Linehaul 171 In Transtar Linehaul Pty Ltd v Deputy Commissioner of Taxation (2011) 196 FCR 271 (Transtar Linehaul) at [78]-[79], Robertson J considered the degree of specificity required of the contents of an efficacious statutory declaration or affidavit under s 268-40: [78] In the present case, in my opinion, to enliven s 268-40(4) it was necessary to do more than assert in affidavits, without reference to primary facts or to primary documents which must have existed, that during the period 1 January 2010 to 31 March 2011, no amounts on account of PAYG withholding were withheld from payments made to any person or that Transtar Linehaul had no employees receiving salary or wages, and paid no amount as salary or wages or at all to any person as an employee, from which it might have withheld an amount on account of PAYG or that during that period Transtar Linehaul withheld no amount on account of a PAYG obligation of any description or that Transtar Linehaul had no liability to withhold amounts on account of PAYG withholding obligations and the business of Transtar Linehaul was arranged to that end. [79] Put differently, this material dealt in a summary way with matters which were by no means pure questions of fact. In addition it dealt with those matters in such a rolled up and conclusory way that it did not in my view verify facts sufficient to prove that the underlying liability, to pay to the Commissioner the amount that Transtar Linehaul withheld, never existed. 172 Those observations, although dealing with affidavits made under s 268-40, reveal the correct approach to considering the content of a statutory declaration in that they identify that the effectiveness of a declaration depends upon its contents. The ascertainment of whether the declaration is of the requisite effect involves an evaluative consideration. At paragraphs [85]-[88], his Honour observed that: [85] In my view there is an equivalence to the requirement that the affidavit "verifies facts sufficient to prove" in that, in the case also of a statutory declaration, a merely formal statement without substantiation would not always answer that requirement and would not do so in a matter of any complexity. In my view the expression "to the effect that" directs attention to the substance of the statutory declaration rather than to its form. In my opinion, as with the affidavit, the statutory declaration need not in every case contain the entirety of the relevant material. [86] Further, in my view, the recipient of the statutory declaration may evaluate it in order to assess its substance or effect, although in the case of dispute it would ultimately be for a court to decide whether the statutory declaration was to the effect required by the statute. [87] Thus there is a broad similarity in the present context between what is required of a statutory declaration and what is required of an affidavit. [88] This construction is confirmed by s 268-90 which applies in the same terms to a statutory declaration given or an affidavit filed for the purposes of s 268-40. 173 The applicants did not suggest that his Honour's observations should not be followed, probably because his Honour's views on the interpretation of statutes are invariably accepted as being authoritative. In this respect the observations of his Honour in paragraph [86] are carefully made. There his Honour identifies that the essential question is the substance or effect of the statutory declaration. Ultimately, that is a question to be answered by a court. The effect of a declaration is not conditioned on whether the Commissioner accepts that it has the required effect, but whether it is of the required effect. That is because the operation of s 268-40(2) is triggered by the giving of a statutory declaration that has the prescribed effect. If so, the estimate is reduced or revoked accordingly. If not, it remains unaltered.

Armstrong Scalisi Holdings 174 The above observations of Robertson J were adopted by Ward CJ in Eq in Armstrong Scalisi Holdings at [219]. There the defendant, ASH, carried on an accounting practice under the name CAP Accounting. The Deputy Commissioner brought proceedings seeking to recover an RBA deficit debt of approximately $4 million plus interest. The proceedings followed service by the Deputy Commissioner of a Notice of Estimate of Liability estimating ASH's liability for PAYGW amounts in the period from 1 July 2009 to 31 October 2013. ASH denied liability and asserted that it had only one employee, Mr Cassaniti, and that it had complied with all of its obligations. It said it otherwise procured its labour requirements through the use of a labour hire company and that the relevant labour hires were the employees of that company. ASH did accept that it made payments for the remuneration of the staff, but said that it did so on behalf of the labour hire company. On that basis, Mr Cassaniti claimed that ASH had never been under any obligation to withhold PAYGW amounts in respect of those employees. Although ASH paid money to the employees as wages, it claimed it was really paying money to the labour hire companies in return for the provision of services. It said that, in order for a withholding obligation to arise under s 12-35, the amount paid to an individual as an employee must be characterised as salary or wages and paid in the course of an employer-employee relationship. The expression, "in the course of" an employer-employee relationship was said to mean that the wages had to be paid to the employee by an employer. ASH claimed that any alleged debt arising as a result of the Estimate Notice served on it by the Deputy Commissioner had been negated because it had provided the Deputy Commissioner with a statutory declaration to the effect of "verifying facts in the circumstances sufficient to prove that any alleged underlying liability never existed". In general terms, the contents of the statutory declaration identified its above claim that it was not the employer of the workers. The parties agreed upon separate questions for determination and four such questions were posed to the Court which went to the effectiveness of the statutory declaration to revoke or to reduce the Estimate Notice. It was not in doubt as between the parties that, if the statutory declaration complied with the requirements of ss 268-40 and 268-90, then the estimate would be revoked pursuant to s 268-40(4). 175 The major question identified to the Court was: 1. Is the statutory declaration … a statutory declaration that answers the description in, and satisfies the requirements of, ss 268-40 and 268-90 of Schedule 1 to the Taxation Administration Act 1953 (Cth)? 176 Unfortunately, an issue arose as to the authority of the delegate to issue the Estimate Notice and that caused the separate question process to derail slightly. Although Ward CJ accepted that that issue made the question set out unnecessary to decide, her Honour indicated that the statutory declaration did not meet the statutory requirements of s 268-40(4) as it was not "to the effect" that the underlying liability never existed or that a specified lesser amount is the unpaid amount of the underlying liability. 177 Her Honour considered the predecessor to the existing estimate regime and the introduction of Div 268 in July 2010 as well as the purposes which it was intended to achieve. Her Honour carefully analysed the legislative provisions in the Division (at [59]-[73]) and there is no need to address those matters here. 178 In considering the issues surrounding the identified separate question, Ward CJ referred to Robertson J's statement in Transtar Linehaul as to the requirements of ss 268-40 and 268-90. Her Honour accepted that an affidavit or statutory declaration was insufficient if it merely did no more than assert that no amounts on account of PAYG withholding were withheld from payments made to any person or that the recipient of the notice had no employees receiving salary or wages and no amount was paid to them from which it might have withheld the relevant amount. Her Honour also accepted there was an equivalence to the requirements of the affidavit referred to in s 268-40 (which "verifies facts sufficient to prove") and those applicable to a statutory declaration. After considering the submissions advanced by the respective parties her Honour concluded: (a) The relevant issue of construction was as to the meaning of the phrase "to the effect" in the context of s 268-40 that the requisite statutory declaration must be to the effect either "'that a specified lesser amount is the unpaid amount of the underlying liability' … or 'that the underlying liability never existed'" (at [261]). (b) In the matter before her Honour, the provider of the statutory declaration asserted that no amount of PAYG relating to the relevant period ought to have been or was withheld by the defendant and has not been remitted to the Deputy Commissioner (at [262]). (c) The requirements of a statutory declaration were akin to an affidavit "verifying certain facts" in that the person making it must attest to the truth of the facts stated in the declaration. Her Honour accepted the "equivalence" identified by Robertson J in Transtar Linehaul between the affidavit and statutory declaration. In particular, the requirements in relation to the statutory declaration directs attention to the substance of the statutory declaration rather than its form (at [264]-[265]). (d) The expression "to the effect" of something else is, in substance, the same as (albeit not necessarily identical to) that other thing. It is commonly understood as being a paraphrase or summary of the content of something else and not a verbatim account (at [266]). (e) At [267], her Honour said: A declaration "to the effect" that a state of affairs never existed (i.e., the underlying liability) or that a "specified" lesser sum was unpaid requires the maker of the declaration to attest to facts which would be sufficient, if accepted in a contested dispute, to establish that state of affairs or that specified lesser sum. By "sufficient", I mean that, accepting the substance of the declared fact is true, the conclusion which would, on balance, follow is that some specified lesser sum is unpaid or that underlying liability never existed. The defendant's position seems to be that, while acknowledging that a mere statement (or conclusion) without reference to the underlying facts would be insufficient, it is required to do no more than provide a declaration setting out facts showing what has been withheld and (by the omission of facts as to any other withholding) that no other sums have been withheld. (f) The statutory declaration before her Honour declared that there was no liability to withhold any other PAYG amounts and that no amount of PAYG relating to the notice period that "ought to have been withheld by the defendant". That, however, was not "to the effect" that that underlying liability "never existed". On the face of the declaration it was identified that amounts, described as "wages", were paid to certain members of CAP Accounting staff but that ASH withheld no amounts in relation to them. Therefore, the statutory declaration did not disclose facts upon which it could be concluded, as a matter of substance, that the underlying PAYGW liability never existed (at [269]-[270]). (g) The legislation does not impose a positive obligation on the recipient to disclose why any amount identified as not having been withheld was not, however, at a practical level, that may be required, especially if a recipient is attesting to facts to the effect that an underlying liability never existed or that a specified lesser amount of the liability is unpaid. It may be necessary for the recipient to verify facts to dispel what would otherwise be an available inference that amounts ought to have been but were not withheld (at [271]). (h) Despite the denials of liability, sufficient facts were not verified in the statutory declaration to show that the liability never existed (at [272]). (i) The bank accounts indicating payments by the defendant to the employees of the labour hire companies identified the payments as "wages" and that gave rise to an inference that they were paid in that character. There was no evidence which indicated to the contrary. (j) Consequently, Ward CJ determined that the statutory declaration was insufficient to verify facts that no or a lesser specified amount was owing. 179 It is necessary to set out paragraphs [269] to [272] of her Honour's reasons: 269 I am not satisfied that the 2017 Statutory Declaration is "to the effect" that the underlying liability "never existed". On the face of the Table in Sch 1 to the 2017 Statutory Declaration, payments were made, described as wages, to identified members of CAP Accounting staff (other than Mr Cassaniti) and the declaration makes clear the defendant's position that no amounts were withheld by the defendant in relation to those payments. 270 Therefore, whatever may be the case as to the extent to which the plaintiff could properly test the 2017 Statutory Declaration by reference to other material (such as the Account B statements), and whatever might be said as to whether the defendant has properly complied with its obligations to remit amounts to the plaintiff under Div 16 or whether the maker of the 2017 Statutory Declaration was ultimately proven correct as to the facts so verified (see s 268-90(2)(b)), I consider that the plaintiff has established that the 2017 Statutory Declaration does not disclose facts upon which it can be concluded (and is as a matter of substance not to the effect) that the underlying (PAYGW) liability never existed. 271 I accept that the legislation does not impose a positive obligation on the taxpayer to disclose why it was that any particular amount disclosed (implicitly or otherwise) by the statutory declaration (or affidavit) not to have been withheld was not withheld. However, at a practical level, if a taxpayer is attesting to facts to the effect (or sufficient to prove, in the case of an affidavit) that the underlying liability never existed or that a specified lesser amount of the liability is unpaid (in this case said to be nil) and, on the material provided by the taxpayer, there is some doubt arising as to the characterisation of particular payments, then it may well be that there is a need for the taxpayer to verify facts to dispel what would otherwise be an available inference that amounts ought to have been but were not withheld. In the present case, that issue potentially arises in relation to amounts disclosed in the 2017 Statutory Declaration as paid out of the defendant's Account A to the various third party entities (from which there was no PAYGW) but in respect of which the bank statements record descriptions such as "wages", "Pay" and "Payroll" (see [23] of Mr Zafariou's 10 May 2018 affidavit and Ex AZ-5 thereto; bank statements in Volume 1 of the volumes exhibited to the 2017 Statutory Declaration). 272 The verified facts in the present case disclose at the very least that amounts (described as wages) were paid by the defendant to individuals out of Account A, from which payments no amounts for PAYG tax were withheld. The defendant effectively conceded that this was the case in relation to the so-called "isolated transactions". Thus, the 2017 Statutory Declaration does not verify facts to the effect that the underlying liability "never existed". Nor am I persuaded that the 2017 Statutory Declaration discloses facts upon which it can be concluded (and thus I consider that as a matter of substance it is not to the effect) that the "specified" lesser amount unpaid of the underlying liability is nil. Since the only specified lesser amount in the 2017 Statutory Declaration is "nil", it is apparent from the information in Table A on its face demonstrates that this is incorrect. Therefore, I cannot accept that the 2017 Statutory Declaration is to the effect that the amount unpaid of the underlying liability is nil (that being the position for which the defendant, at least in the declaration and in its pleading in these proceedings, though not perhaps in its final submissions, has contended). (emphasis in bold added) 180 Whilst her Honour's conclusion on that issue may well be entirely correct, on one reading it may be that the nomenclatures used in the reasons were not entirely consistent with the earlier parts of the reasons. At paragraph [60] it is correctly recognised that the "underlying liability" is not the obligation to withhold amounts but the obligation under s 16-70 to remit amounts to the Commissioner. See also paragraphs [164] and [239]. However, in the passage set out above a distinction appears to be drawn between the obligation to remit and the underlying liability: [270]. The expressions used might suggest that the underlying liability is the failure to withhold. Moreover, in paragraphs [269], [271] and [272], it seems to have been accepted that the recipient of the notice had verified that no amounts for PAYG tax been withheld, but that was not sufficient. Therefore, on one reading it may be that her Honour was ascertaining whether there had been compliance with the obligation to withhold rather than the obligation to remit.

Conclusion on the requisite content of a statutory declaration 181 The "underlying liability" is the obligation to remit the PAYGW amounts which have actually been withheld: s 268-10(1). The failure to comply with the antecedent obligation to withhold the amounts is dealt with in other ways. Indeed, if, in fact, there has been no withholding, within the meaning of the TAA, there can be no underlying liability. The question is, therefore, whether the statutory declaration verifies facts sufficient to prove: (a) that a specified lesser sum is the unpaid amount of the underlying liability, in that the amount of withheld PAYGW amounts which have not been remitted is less than that estimated by the Commissioner; or (b) that the underlying liability never existed, which might be established by disclosing that nothing which ought to have been withheld had been withheld albeit in contravention of s 12-35. 182 As mentioned, it may be that Ward CJ's conclusion was correct despite the matters referred to above. There, the Commissioner submitted the statutory declaration contained admissions that "the payments were made from ASH's bank account to the employees of the CAP accounting business in respect of which no amounts were withheld by the defendants in respect of those payments": [234]. He said that it showed that ASH paid the employees their net wages and did not withhold amounts paid to the accounting staff identified, This, it was submitted, was similar to the circumstances in Plutus where Brereton J rejected the estimate recipient's claim on the basis that it was the entity which was obliged to withhold the PAYGW amounts: [236]. It may be that in Armstrong Scalisi Holdings the indication that the maker of the statutory declaration deposed that the recipient did not withhold any PAYGW amounts was a short-hand way of saying that "the estimate recipient did not hold on to any PAYGW amounts to remit to the Commissioner". It seems the estimate recipient paid the "net wages" of the labour hire company's employees; that it did not pay to them the PAYGW amounts; and that it did not remit the PAYGW amounts to the Commissioner. The maker of the statutory declaration made statements to the effect that the estimate recipient did not "withhold" any PAYGW amounts. If that conclusion could be taken as sufficient verification it would establish that no underlying liability, being the obligation under s 16-70, existed. 183 However, the question is whether the assertion that no PAYGW amounts were withheld is a sufficient verification of the facts to prove that the underlying liability never existed. Adopting the observations of Robertson J and Ward CJ above, it would be necessary for the maker of the statement to attest to facts which, if accepted on a contested dispute, would be sufficient to establish that the estimate recipient did not retain, hold back or keep any portion of the employee's wages which might be the PAYGW amount. Where the correct characterisation of the facts is in doubt the maker of the statement would usually have to dispel the facts which support the conclusion that the liability exists. The statutory declaration is ineffective unless it meets the identified standard that is it verifies facts sufficient to prove, in this case, that the underlying liability never existed. If the facts are equivocal and are equally consistent with the existence or non-existence of liability, the affidavit will not satisfy s 268-40(2) or (4). 184 Some reference must also be given to the scope of s 268-90 which relevantly provides: 268-90 Requirements for statutory declaration or affidavit Scope (1) This section applies to a statutory declaration given, or an affidavit filed, for the purposes of section 268-40 or 268-45 in relation to the estimate. Content (2) In a case covered by paragraph 268-10(1)(a) (estimate of liability under requirement to pay to the Commissioner amounts you have withheld under the Pay as you go withholding rules), the statutory declaration or affidavit must verify the following facts: (a) whichever of the following are applicable: (i) the sum of all amounts you withheld under Division 12 during the relevant period, or the fact that you did not withhold any such amounts during the period; … (b) what has been done to comply with Division 16 (Payer's obligations and rights) in relation to the amounts referred to in paragraph (a). 185 The reference to verifying facts in sub-paragraph (2)(a)(i) has some difficulty associated with it given that the facts to be verified are quite likely to actually be mixed questions of law and fact. It involves a determination as to whether the relevant entity is obliged to withhold PAYGW amounts under s 12-35 and what is meant by "withholding" in the context of schedule 1 of the TAA as informed by the definitions in ITAA97. It is not sufficient to simply swear to the issue that no PAYGW amount was withheld or that the total amount withheld is nil as that will not "verify" the fact in question. It is necessary to verify the facts which show that no amount was, in fact, retained. With reference to the observations of Edmonds J in Cassaniti, it would be necessary to verify facts to show that no amounts of something due to the employee were held back or, put differently, that no amounts were held back in reduction of gross wages to a net amount which is paid to the employee. As Edmonds J, said that may be evidenced by the accounting records of the entity paying the employee, although that would not be the only method. 186 It must be mentioned that neither party addressed the Court on whether the declaration verified facts supporting the conclusion that CLK Kitchens did not retain any amounts which it was obliged to withhold in respect of the wages paid to employees. This was not the basis of any claimed jurisdictional error.

Verifying on oath 187 It is also relevant that the making of the affidavit or the statutory declaration is no mere formal task. It requires the person who has received the estimate (or a person on its behalf) to go on oath as to the veracity of the facts which are asserted. Were the recipient of a notice to deliberately misstate facts in an affidavit or statutory declaration they would be exposed to prosecution in the ordinary course. As the above authorities show, the person making the declaration or affidavit must descend into the facts which will negate or reduce the liability arising from the Estimate Notice. The making of broad general assertions or conclusory statements about the absence of liability for the PAYGW amounts is insufficient. Were it otherwise, the requirement that the statement be on affidavit or in a statutory declaration would be rendered almost meaningless. If a mere statement that no PAYGW amounts were withheld or were not payable was sufficient, the requirement to depose or declare would be irrelevant as such statements would be mere conclusory opinions on matters of mixed law and fact in respect of which any prosecution for perjury would be practically otiose. This supports the preposition from the authorities referred to that the recipient of an Estimate Notice must confront and deal with the facts in respect of which the estimate arises. In the present case those facts concern the payment of the wages to the labour hires as employees and the non-payment to the Commissioner of retained amounts.

Whether Mr Karananos' statutory declaration was effective to revoke the notice 188 The Commissioner submitted that, far from being "to the effect" that a specified lesser sum is the unpaid amount of the underlying liability, Mr Karananos' statutory declaration actually verifies the foundation of the Estimate Notice given by the Commissioner. It is said the declaration affirms or does not disaffirm the essential facts on which the Estimate Notice was based, being that CLK Kitchens paid its money to the labour hire workers which performed services for it and the money so paid was in discharge of their net wages. On any view, the statements in the statutory declaration are vague and probably deliberately so. They do not descend into the detail of the transactions by which the employees of CLK Services were paid using the funds of CLK Kitchens and, to the contrary, they tend to obfuscate that issue. That does not, of itself, render the statutory declaration ineffective and there is no obligation on the estimate recipient to be fulsome or open with the Commissioner. Nevertheless, the more general the terms of a statutory declaration are the less likely it is that it will meet the statutory requirements. 189 Mr Karananos' statutory declaration of 18 July 2018 makes a number of assertions but they do not, either alone or collectively, verify facts to the effect that no underlying liability existed or that a specified lesser amount is unpaid. The reasons for that are as follows: (a) At paragraph 5 it is said that CLK Kitchens had always complied with lodging its BAS and paying its associated taxation obligations. However, that conclusory opinion that no amount is owing or that CLK Kitchens has complied with its taxation obligations is insufficient compliance with s 268-40(2) as no relevant facts are identified. (b) At paragraph 8, it is said that CLK Kitchens ceased carrying on business on 30 January 2017, such that it was not making payments to anyone which required withholding from that date. See also paragraph 21. That, however, is irrelevant if CLK Kitchens did make payments to employees as wages. The payer being required to withhold under s 12-35 is not conditioned upon the payer being the employer of the employees or carrying on a business. In any event this point has lost its relevance given that the Commissioner no longer pursues amounts arising after 31 January 2017. (c) At paragraphs 12 and 13 it is said that no PAYGW amounts were withheld and that the total amount withheld was nil. It is noted that these paragraphs appear under the heading of "(a)(i) Amounts withheld under Division 12 during the relevant period" which is an apparent reference to s 268-90(1)(a)(i). These paragraphs are discussed below. (d) At paragraph 14 it is said that CLK Kitchens did not have any employees in the relevant period and, therefore, made no payments to individuals as its employees. Whilst that may be correct, it does not absolve the entity which paid the wages to the workers as employees from liability under s 12-35 to withhold amounts and then under s 16-70 to remit them to the Commissioner. (e) At paragraph 15 it is said that CLK Kitchens only made advances referred to in paragraphs 44 to 54 of the declaration and did not make payments which required compliance with s 12-35. Again, that conclusory statement does not deal with the payments which were actually made. (f) The matters in paragraphs 44 to 54 in the statutory declaration are set out above. Their substance and effect is that CLK Kitchens paid money to the employees of CLK Services and the amount so paid was treated, as between CLK Kitchens and CLK Services, as an advance to be reimbursed. Although it is not expressly admitted by Mr Karananos that the money paid to the employees by CLK Kitchens was paid "as wages", that is not unequivocally denied either. It is said that CLK Kitchens was not liable to pay wages, but that is not to the point if it did pay them. The statutory declaration is carefully crafted and an opinion is expressed at paragraph 53 that, "The Taxpayer was no more paying an individual salary or wages than NAB who provided the batching facility". Again, that is a conclusory opinion as to the legal effect of the payments made by CLK Kitchens. But more importantly, the statutory declaration does not deny that it paid money to CLK Services employees on a weekly or monthly basis in discharge of the wages debt owing to them. 190 The difficulty with the statutory declaration for CLK Kitchens is that the statements in it are consistent with it paying amounts to the employees of CLK Services which were the equivalent to their net wages and salaries. It has the appearance of being prepared on the basis that if it indicated that if CLK Kitchens did not employ any employees it would not be liable. But even in that respect the language is vague and the plain suggestion is that CLK Kitchens paid money to CLK Services employees using its "batch entry" facility and the amount so paid was treated as a loan to CLK Services. It follows that the statutory declaration does not verify facts which establish that CLK Kitchens was not obliged to withhold PAYGW amounts pursuant to s 12-35. Therefore, to the extent that CLK Kitchens sought to argue that the declaration was revoked because it disclosed that it was not liable to retain PAYGW amounts pursuant to s 12-35, the argument fails. 191 It was submitted that because the declaration had attached to it a large number of pages of exhibits, it is a declaration that went beyond a mere assertion that no amount of PAYGW was owing. Whilst it is true that the declarations annexed voluminous amounts of material, that supporting material did not alter the nature of the text of the statutory declaration which, as the Commissioner submitted, did not meet the statutory requirement. 192 The above is sufficient to dispose of the application in relation to the efficacy of the statutory declaration. The applicants' arguments were only directed to whether it verified facts to the effect that CLK Kitchens was not obliged to withhold PAYGW amounts under Div 12. Although no argument was advanced by either party in relation to whether the declaration verified facts to show that it did not retain any PAYGW amounts, given the possible confusion in some authorities as has been referred to above, it is not inappropriate to consider that issue in the present context. 193 On that basis the next question is whether the declaration verified facts to show that CLK Kitchens did not withhold such amounts or did not fail to remit the amount withheld to the Commissioner. The latter point was patent and the only real issue is whether the former was dispelled. In respect of this the following paragraphs of the declaration are relevant: 11. I will now deal with each type of payment mentioned in Division 12, since the Estimate Notice does not state what kind of payment the Commissioner considers was being made by the Taxpayer. 12. The Taxpayer did not withhold any amounts during the Relevant Periods. 13. The total amount withheld for each Relevant Period is nil. … (b) Compliance with Division 16 41. The Taxpayer did not have any employees during the Relevant Periods. 42. For that and the other reasons given at length above, there was no amount for the Taxpayer to pay to the Commissioner under section 16-70 in any Relevant Period. 43. The Taxpayer has complied with Division 16 of Schedule 1 of the Act. It paid the correct amount, being nil, to the Commissioner under s 16-70 in each Relevant Period. 194 It is obvious that the statements in paragraphs 41, 42 and 43 are mere conclusory statements involving matters of mixed law and fact. On no view do they verify the facts in the manner identified in Transtar Linehaul or Armstrong Scalisi Holdings. It follows that the essential question is whether paragraphs 12 and 13 satisfy s 268-40(4) by verifying sufficient facts to prove that the underlying liability never existed. The statement that CLK Kitchens did not withhold any amounts is necessarily conclusory given what was said by Edmonds J in Cassaniti as to the variety of meanings of the word "withheld" as used in the taxation legislation. The expression as used in the declaration may merely mean that CLK Kitchens did not set aside any amounts of money in respect of the wages of the employees equal to the amount which would be sufficient to satisfy the obligation under s 16-70. But that is only one meaning of the word withhold. The declaration may not mean that CLK Kitchens did not, in the words of Thawley J in Price, hold back something due to the employee, resulting in the reduction of a gross amount to a net amount which is paid to the employee. In his affidavit of 15 June 2018, Mr Karananos deposed that CLK Kitchens only paid to the employees their net wages and not their full entitlement. That suggests that the PAYGW amounts were, in fact, withheld in the manner referred to by Thawley J. But it is not necessary to consider that additional evidence of Mr Karananos. The only question is whether the words used in the declaration met the statutory criteria. 195 Here, adopting the approach and using the words of Robertson J in Transtar Linehaul (at [78]- [79]), to enliven s 268-40(4) it was necessary to do more than assert in the statutory declaration, without reference to primary facts or to primary documents which must have existed that during the relevant periods, CLK Kitchens withheld no amount of a PAYGW obligation or had no obligations to that end. The matters in paragraphs 11 and 12 were not mere questions of fact and dealt with the matters in a rolled up and conclusory manner such that they did not verify facts sufficient to prove that the underlying liability to pay the Commissioner never existed. The words used were not sufficient to establish that the estimate recipient did not retain, hold back or keep any portion of the employee's wages which might be the PAYGW amount. As Robertson J said, where the correct characterisation of the facts are in doubt the maker of the statement would have to go further so as to dispel the facts which support the conclusion that the liability exists. Here that was not done. 196 Once the effect of the words used in the statutory declaration are ascertained (for which no trial was needed) it is apparent that the question in issue can only permit of one answer. 197 The above, without more, establishes that the terms of the statutory declaration were not sufficient to effect a reduction or revocation of the Estimate Notice. That conclusion has been reached by considering the terms of the declaration itself, rather than by assessing it against other information.

Non-compliance with s 268-90(2)(a)(i) 198 Although s 268-90 mostly concerned with the formal content of the statutory declaration, s 268-90(2)(a)(i) may be seen as reflective of s 268-40(2) and (4). If so, it is apparent that the factors identified above as to why the statutory declaration did not satisfy s 268-40 also support the conclusion that s 268-90(2)(a)(i) was not satisfied. The mere conclusory statement that no sums were withheld is insufficient. The requirement is to verify that no sums were withheld under Div 12 during the relevant period. That would require verifying the absence of that type of withholding referred to by Thawley J in Price: "deprivation, holding back of something due to the employee, resulting in the reduction of a gross amount to a net amount which is paid to the employee". No attempt to do that occurred here.

Non-compliance with s 268-40(2) and (4) 199 The failure of the statutory declaration to comply with the requirements of s 268-40(2) or (4) has the consequence that the Estimate Notice was left unaltered and the liability of CLK Kitchens to pay the amount of the estimate remained unabated. Once the effect of the statutory declaration is ascertained, there can be no reasonable argument to the contrary and there is no evidence filed or identified by the applicants which could possibly alter the outcome. 200 The necessary conclusion is that the Estimate Notice was not revoked or reduced on the giving of the statutory declaration. Had it been of the prescribed effect it would automatically reduce or revoke the estimate. There was also no obligation on the Commissioner to consider reducing or revoking the estimate under s 268-35, as considered below. The claim by the applicants to the contrary has no reasonable prospects of success.

The consideration of extraneous material 201 For reasons which were not particularly clear, the parties filed and relied upon additional affidavit information surrounding the making of the payments by CLK Kitchens. No objection was taken to the Court considering that material for the purposes of the applications although, as mentioned, it was not necessary in relation to the above issue. 202 Had it been appropriate to consider the material extraneous to the statutory declaration, the issue of the liability of CLK Kitchens would have been made even more certain. That which was left vague in the declaration was made clear in the affidavits filed by both parties, but, in particular, by the applicants. The contents of those affidavits are referred to above and established that CLK Kitchens paid money to the employees of CLK Services as their wages or salaries. The identification of those payments in the bank accounts of CLK Kitchens as "wages" was a strong indicator of that. Indeed, this was acknowledged by Mr Karananos in his affidavits of 29 July 2017 and is supported by the evidence in the affidavit of Mr Logan, the solicitor for the applicants. That left no doubt that the process which had been put in place was that CLK Kitchens paid the wages (net of PAYGW amounts) of the labour hires on behalf of CLK Services and, as between the companies, that payment would generate a loan obligation by CLK Services in the same amount. The only conclusion was that the money received into the account of the employees as their wages was paid by CLK Kitchens with the authority of CLK Services to discharge its liability to them. Nothing other than that which appeared in the statutory declaration, in relation to whether PAYGW amounts were payable or withheld, appeared in the affidavit. Had that material been relevant it would not have altered the outcome of this issue.

Issue 3: Should the Estimate Notices be reduced or revoked? 203 The applicants submitted that the Commissioner was obliged to reduce or revoke the Estimate Notice which he had given them. 204 First it was submitted that he ought to have done so under s 268-35(1) and, indeed, was obliged to consider whether he ought to exercise the power under that section, but it is obvious that is not correct. That section relevantly provides: 268-35 How estimate may be reduced or revoked - Commissioner's powers Reduction (1) The Commissioner may at any time reduce the amount of the estimate, but is not obliged to consider whether or not to do so. 205 In a similar vein the power to revoke an estimate is within the discretion of the Commissioner and there is no obligation to consider exercising the power. s 268-35(3) provides: Revocation (3) The Commissioner may at any time revoke the estimate, but is not obliged to consider whether or not to do so. 206 However, it may be that the applicants' argument was that the Commissioner was bound to reduce or revoke the estimate or consider doing so because Mr Karananos had made a statutory declaration within seven days of receiving the Estimate Notice. In that respect s 268-40 permits the recipient of a notice to reduce or revoke it by, inter alia, giving the Commissioner a statutory declaration which is to the requisite effect. It was submitted that the statutory declaration was given within the seven day period and the Commissioner was bound to consider reducing or revoking the estimate after taking into account the statutory declaration. It was said that this obligation is different to that which arises under s 268-35. 207 One difficulty with this argument is that the statutory declaration was not effective to cause a reduction or revocation of the estimate under s 268-40 as has been identified above. It follows that the applicants' argument must necessarily be that even though the statutory declaration was not effective to cause any reduction or revocation under s 268-40, the Commissioner was obliged to consider exercising a power, other than that in s 268-35 (albeit so far unidentified), and consider reducing or revoking the estimate. This argument seems to stem from the observations of Robertson J in Transtar Linehaul, who, when considering the alternative methods of reducing the estimate which a recipient of an estimate might take, observed at 285 [86]: Further, in my view, the recipient of the statutory declaration may evaluate it in order to assess its substance or effect, although in the case of dispute it would ultimately be for a court to decide whether the statutory declaration was to the effect required by the statute. 208 His Honour's comment did not suggest that the immediate effect of the giving a statutory declaration or affidavit which complied with s 268-40 was not, of itself, to reduce the estimate. His Honour makes it pellucid that the view adopted by the recipient of the statutory declaration or affidavit is irrelevant to its actual effect. Given that an efficacious statutory declaration will have the effect accorded to it by the statute, the imposition on the Commissioner to consider reducing or revoking the estimate would be somewhat otiose. Indeed, if it is the case that the statutory declaration or affidavit does not contain material which has the required effect, it is not likely that it will alter the Commissioner's opinion of the estimate. 209 The applicants submitted that the passage from the reasons of Robertson J in Transtar Linehaul quoted above did not appreciate the difference between the curial and non-curial paths to the assessment of the effectiveness of the statutory declaration. It was said that the administrative path was merely to ascertain whether the declaration was to the effect referred to in s 268-40 whereas the issue before a Court was whether there was an underlying liability. That argument is misconceived. The only relevant question before the Court where the efficacy of the statutory declaration is in issue is whether it is to the effect required by s 268-40(2) or (4). The question of the underlying liability is not in issue at that point in time. 210 There is nothing in the provisions of Div 268 which suggests the existence of any super-added duty to consider reducing or revoking is imposed upon the Commissioner and none was identified by the applicants. The power of the Commissioner to consider is conferred by s 268-35 as are the conditions and obligations of its exercise. If material comes to light, by whatever means, which impacts upon the Commissioner's estimate, he may, in the exercise of his discretion, consider exercising the power to reduce it and, if he chooses to exercise it he may reduce it or revoke it. It is relevant that, in this matter, after the application in QUD 369 of 2017 was filed, the applicants provided a PAYGW calculation report and supported the same with bank statements. Consequent upon the receipt of that and pursuant to s 368-35(5), the Commissioner, on 14 March 2018, reduced the amount of the estimate and a notice of reduction was issued and the reduced amount recorded in CLK Kitchen's RBA. Certain estimates which were outside of the relevant period were also revoked. There was not any dispute that the effect of s 268-55 is that "the estimate has effect, and is taken to always have had effect, as if the original amount of the estimate had been the reduced amount" with result that the original Estimate Notice is efficacious to the extent of the reduced amount. It was submitted by Mr Marks QC that a trial was required for the purposes of ascertaining the scope of the operation of s 268-55(1) (Transcript p 46 L23-25), but there is no relevant difficulty in ascertaining its scope and both parties were able to make submissions about it in the context of the summary judgment application. 211 In any event, the foundation of the applicants' argument in this respect was that the statutory declaration was effective to cause a revocation of the estimate. However, as identified above, the declarations did not have the effect for which the applicants contend. Further, there was no obligation on the Commissioner to further consider reducing or revoking the estimate. 212 This ground of opposition to the summary judgment application must also be rejected. It has no reasonable prospects of success.

Issue 4: Should the Director Penalty Notices be quashed, amended or withdrawn 213 Mr Karananos complains about the issuing to him of two DPNs. The first related to a withholding period from 1 July 2011 to 28 February 2017 and the second from 1 March 2017 to 31 May 2017. He also complains that the DPNs were not withdrawn on the giving of the statutory declarations. 214 He submitted that the DPNs issued by the Commissioner consequent upon the giving of the Estimate Notice should be quashed, amended or withdrawn. The primary argument underlying this is that the statutory declaration of Mr Karananos was effective to reduce or revoke the estimates given by the Commissioner and, as a result, the Commissioner ought to have withdrawn the notices. As identified above, there are no reasonable prospects of those arguments succeeding and it follows that the argument that the DPNs should be withdrawn on that basis would also fail. 215 At paragraph 29 of their written submissions, the applicants said: Further, the Director Penalty liability was raised, and the DPNs issued, before consideration of the Statutory Declaration. The Taxpayer was entitled to give the statutory declaration, and the Commissioner obliged to consider the declaration. To issue the DPN, before that necessarily brief process is complete, subverts the legislative scheme. 216 The submissions did not go on to explain how the giving of the DPNs at the time identified subverted the legislative scheme. The recipient of the Estimate Notices were entitled to give a statutory declaration in relation to the estimate which supported the DPNs and, if the declarations complied with the requirements of s 268-40, the DPNs would necessarily fall with the estimates. Nothing in that process subverts any part of the scheme or gives rise to any statutory non-compliance or jurisdictional error in the decisions of the Commissioner.

Reductions in the estimate did not invalidate the DPNs 217 The Commissioner did, in fact, subsequently reduce the amount of the estimates in relation to both periods to which the DPNs respectively relate. The effect of the reductions which arose from the Commissioner's consideration of the further material provided by the applicants was to revoke the DPN relating to the period from 1 March 2017 to 31 May 2017 (the non-lockdown period) because the estimate for that period was revoked. Otherwise the liability under the other DPN for the lockdown period was automatically reduced by force of the reduction in the estimate pursuant to which it was given. The applicants seemed to suggest that the effect of reducing the estimate was that the DPNs issued in respect of the higher original estimate was invalidated. 218 In response, the Commissioner submitted that it is well-established that the reduction in a PAYGW estimate does not affect the validity of a DPN issued for a higher original amount. That was effect of the decision of Cavanough J in Commissioner of Taxation v Craddock (2006) 204 FLR 274 (Craddock), being a decision in relation to the original estimate and director penalty notice regime, which was affirmed by the Western Australian Court of Appeal in Roche v Deputy Commissioner of Taxation (2014) 290 FLR 268 (Roche) at 281 [77] where Newness JA (with whom McLure P and Murphy JA agreed) said: So far as it relates to div 269, s 268-55(2) is directed to the effect of the reduced estimate on the amount the director is liable to pay to the Commissioner by way of a penalty. What is made retrospective is the effect of the reduced estimate on the amount for which the director is liable as a penalty, not the Commissioner's state of mind under s 269-25(2)(a). Section 268-55(2) is not directed to the content of the notice before action required under s 269-25. The content of a valid and effective notice is specified in s 295-25. Relevantly, the Commissioner must set out in the notice the amount he thinks is the unpaid amount of the company's liability at the time the notice is issued. There is nothing in the statutory scheme to suggest that a notice which is valid and effective when given, ceases to be valid and effective if the Commissioner's estimate of the unpaid amount is subsequently reduced. It is not necessary for the purposes of div 269 that a fresh notice should be given setting out the reduced estimate. 219 Those observations appear to be entirely correct and no argument was advanced that the decision in that Court ought not to be followed. Necessarily, the consequence is that there can be no argument that the DPN was rendered invalid as a result of the reduction in the PAYGW estimates. That being so, the applicants' underlying legal complaint in relation to the DPNs is difficult to discern.

Relevance of timing for compliance with DPNs 220 The applicants further submitted that it was "unsatisfactory" for the Commissioner to argue that the liability under a DPN is reduced commensurately with a reduction in the estimate. It was submitted that it was somehow unfair that the directors were obliged to comply with the requirements of a DPN within 21 days in respect of a liability for $19,475,997 when a later reduction of the primary liability, by way of an estimate, was to an amount of only $4,485,450. 221 However, by reason of ss 269-10(1) item 4, 269-15 and 269-20, the director penalty liability arises automatically at the end of the day that the Estimate Notice is given. There was no suggestion to the contrary. Here, the Estimate Notice was given to the first applicant on 11 July 2017 and the DPNs were issued to the second applicant, Mr Karananos, on 12 July 2017. Again, there is no suggestion to the contrary or that the DPNs were other than in accordance with the requirements of s 269-25. 222 After the statutory declaration was received by the Commissioner, Mr Karananos, on 20 July 2017, asked that the DPNs be withdrawn, however, the Commissioner determined not to revoke the estimate and refused the request to withdraw the DPNs. Subsequently, on 14 March 2018, after the Commissioner received further information about the wages paid to the employees, he reduced the estimates and issued notices of reduction. That had the effect of automatically reducing the DPN liability: ss 268-55 and 269-20(5). In the case of the estimates for the periods from 1 March 2017 to 31 May 2017, the estimates were revoked with the consequence that the DPN covering that period was of no effect. 223 The applicants' arguments to the effect that the DPNs ought to have been withdrawn seemed to rise no higher than the assertion that the operation of the TAA was "unsatisfactory" because the director would be liable to pay an amount which was higher than the company's liability. They did not, however, seek to cavil with the proposition that, by reason of Div 268, a reduction in an estimate automatically reduced the director's liability under an earlier issued DPN and subss 268-55(1)(d), (2) and (3) operate to deem the DPN to have always been for the reduced amount. In Roche at [69]-[70], the Court of Appeal said of the observations of Cavanough J in Craddock: His Honour considered that the purpose of s 222AKA was to ensure the estimate system did not unreasonably cause the company or its directors to be liable for a greater amount than the underlying liability [36]. Where an estimate was reduced, the result of s 222AKA was that the liability provision - s 222APC - had effect and was taken always to have had effect as if the original amount was the reduced amount; that is, the company and the directors were liable, and were taken always to have been liable, for the reduced amount. That, however, did not require any alteration in the notice served under s 222APE. In his Honour's view, where an estimate was reduced, s 222AKA did not deem a notice previously sent under s 222APE to have referred to the reduced estimate. The references to "estimate" in s 222APE were to the original estimate and a notice setting out the original estimate was valid and effective notwithstanding that the estimate may have subsequently been reduced. Cavanough J considered that the construction contended for by the Craddocks was also unlikely because it would open up the recovery process to abuse. It would enable a company to release information to the Commissioner in dribs and drabs, with the result that estimates were being continuously revised and new notices had to be served, each giving a further 14 days before recovery action could be taken [44]. 224 The observations of Cavanough J are applicable to the Div 268 and 269 regimes and there were no submissions from the applicants to the contrary. It follows that the reduction in the amount of the estimates gave rise to no occurrence which had the consequence that the Commissioner ought to have withdrawn or revoked the DPNs. They are deemed to have always been for the reduced amount of the estimate.

The DPN for 1 March 2017 to 31 May 2017 225 Given that the effect of the revocation of the estimates in relation to the period 1 March 2017 to 31 May 2017 was the removal of any obligation under the associated DPN, it is now inutile and of no effect. It is relevant that the applicants omitted to identify any provision by which the Commissioner might withdraw the DPN. No order of the Court is required to set aside the decision to issue it or the alleged decision not to revoke it. Indeed, no grounds have been shown to exist which would warrant the making of such orders. The applicants have no reasonable prospect of establishing any error in the decisions or the conduct of the Commissioner in this regard.

Whether a director is prejudiced by the DPN issued in respect of the higher original amount 226 The applicants' real concern appears to be that the operation of Div 268 and Div 269 may make it difficult for a director who is issued with a DPN based on an estimate which is subsequently reduced. That being because the estimate may well be in excess of the actual PAYGW liability. However, such a concern is overstated. The issuing of the DPN does not impose liability on the director. It is a pre-condition to the commencement of proceedings for the recovery of the penalty. Of itself, it does not affect the legal rights and obligations of the director receiving it. Its delivery merely removes a procedural bar to the commencement of recovery action: Guss v Commissioner of Taxation (2006) 152 FCR 88, 100-101 [38]-[43], 113-114 [102]. It must also be kept steadily in mind that Div 268 is intended to operate to facilitate prompt and effective recovery of PAYGW amounts and unpaid superannuation guarantee charge. Necessarily, that requires action which will effectuate recovery in a timely manner before large amounts of unpaid liabilities are accumulated by a company which is then placed into external administration and the ability to recover the liabilities is lost. The estimate regime enables that to occur by imposing a liability even though the actual unpaid amount is not known. That is ameliorated by the ability of the recipient of an Estimate Notice, who can be expected to have substantially greater knowledge of the actual circumstances, to give a statutory declaration or affidavit verifying the true position. It is, therefore, always within the province of the recipient to cause the estimate to be immediately reduced by providing facts which demonstrate the actual amount outstanding. By that action a director of a defaulting estimate recipient will reduce the amount of penalty under a DPN. 227 It is apparent that the applicants have no reasonable prospect of establishing any error, jurisdictional or otherwise, in relation to the issuing of or refusal to withdraw the DPNs.

Issue 5: Allocating the liability to the RBA 228 Again, the foundation of the applicants' argument in this respect was that the statutory declaration was to the effect that no liability arose as a result of the issuing of the Estimate Notice or it was extinguished by the giving of the statutory declaration. On that basis it alleged that no amount should have been allocated to the applicants' RBA. Given the conclusions reached above this argument fails in limine. 229 In his submissions, the Commissioner set out the provisions on which his legal entitlement to allocate amounts to an RBA exist, although it is apparent that the applicants' concerns were not directed to the legality of allocating amounts in general. As the Commissioner submitted, they are directed to the allocation of the amounts accruing consequent upon the giving of the estimates and the DPNs and the applicants' complaint in that respect rests on the submissions considered above. That being so it is not necessary to consider the manner in which the Commissioner might allocate the amounts in question. In any event, the RBA is part of an administrative process which provides a system of accounting of existing liability. It does not, of itself, create a liability and the setting aside of any allocation would not have any effect on the primary liability of the applicants to the Commissioner or their substantive rights and duties otherwise. Neither in the applicants' written or oral submissions was any attempt made to contradict the Commissioner's submissions in this respect and there is no obvious answer to them. 230 It follows that any order by the Court to alter or set aside the allocation of amounts, assuming that can be done, would be inutile. If the applicants were successful in setting aside the estimates or DPNs the RBA debt would be reduced to the same extent: ss 8AAZLA-8AAZLC of the TAA. However, as has been identified above, there are no reasonable prospects of that occurring with the result that the applicants have no reasonable prospects of the orders sought in this regard being made. 231 It follows that none of the grounds advanced by the applicants in relation to this issue have any merit and they have no reasonable prospects of successfully challenging the actions of the Commissioner to cause the entries to be made to the RBA.

Other issues 232 The applicants also raised a number of other issues which did not fit within the scope of the Commissioner's five main points.

Second statutory declaration 233 On 21 March 2018, Mr Karananos gave a further statutory declaration to the Commissioner in relation to the estimates which had been issued on 11 July 2017 and reduced by a notice given on 14 March 2018. The applicants' position appears to be that if the Commissioner reduces a previously given estimate, the time for giving a statutory declaration is restarted. No statutory provision was referred to which might support that contention. As the operation of Div 268 discussed above shows, the effect of a reduction is that the original estimate is taken to always have been the reduced amount: s 268-55. The estimate remains intact even if its amount is reduced. The scheme of Div 268, like its progenitor, provides for only one estimate: Craddock at 285-286 [38]-[39]. 234 There is nothing in the provisions to suggest that the effect of a reduction is to issue a new notice of estimate under s 268-15. Indeed, the opposite is true. The right to give a statutory declaration under s 268-40 is upon the receipt of a notice of the estimate, being that estimate made under s 268-10 of which notice is provided for in s 268-15, not upon the receipt of a written notice of the reduced amount of the estimate. The scheme of Div 268 reveals the establishment of an estimate which may vary in amount but, by the deeming provisions, is taken to always have been the varied amount. That being so, the second statutory declaration was not provided within the time permitted by s 268-40(1), being within seven days from the date of the giving of the Estimate Notice. No extension of time was given by the Commissioner to provide a second statutory declaration such that it could not have been of any effect. 235 The consequence is that the applicants have no reasonable prospects of seeking review of the alleged failure to consider the second statutory declaration. 236 In any event, it is apparent that Mr Morelande of the ATO did consider the second statutory declaration when it was received. In his affidavit he noted that it contained only minor differences to the first statutory declaration and did not make any substantial difference in relation to the issues to be considered. He said there was therefore no utility in allowing any extension of time for the giving of a statutory declaration. 237 Although the Commissioner submitted that the affidavit of Mr Morelande forecloses the issue about whether the affidavit was considered, it is not necessary to determine the issue on that basis. In different circumstances, had that been a pivotal issue, the applicants may have been entitled to cross-examine on the document. The essential difficulty is that the second statutory declaration was, in fact, substantially the same as the first. Any additions or variations did not go to the substance of whether it met the requirements of s 268-40(2) or (4). For the reasons identified previously in these reasons, it too was not to the requisite effect, with the consequence that it could not and did not cause a reduction in the amount of the estimate. Moreover, again for the previously expressed reasons, the Commissioner had no obligation to consider it. 238 The applicants drew attention to the notice of reduction in the estimate which was sent to CLK Kitchens on 14 March 2018. It was attached to the affidavit of Ms Felu and dated 14 March 2018. The title of the document was, "Notice of Reduction of Estimate of Liability Payable to the Commissioner of Taxation". After referring to the original "Notice of Estimate of Liability", the letter contained the following statement: This notice is to advise that in exercise of the powers and functions conferred on me as a Deputy Commissioner of Taxation by delegation from the Commissioner of Taxation under the provisions of the TAA, I give notice that I have reduced the amount of the estimates shown in column 2 of the table below, in accordance with section 268-35 in Schedule 1 to the TAA, to the amount shown in column 3 of the table below... 239 Thereafter, the letter set out the numerous periods to which the reduction of estimate related and identified the original estimate and the "Reduced amount of estimate". At the end of the letter there appeared the statement, "The reduction in the amount of the estimates takes effect when this notice is sent to you." 240 The applicants submitted that the letter represented a new Estimate Notice which gave rise to a new entitlement in CLK Kitchens to give a new statutory declaration. However, the document which referred to itself as a "Notice of Reduction" and which identified that it was a purported exercise of power under s 268-35 to reduce the estimate, was self-evidently a reduction of the estimate and not a new estimate. The reasons the applicants claimed that it was a new estimate and not a notice of reduction were somewhat obscure. 241 It may be that the argument being advanced was that any reduction in the original estimate must necessarily be a new estimate and that will activate the right of the recipient of the estimate to give a statutory declaration under s 268-40. However, that argument has been dealt with above and the short answer to that pure question of construction is that section is triggered by the giving of a notice of estimate and not a notice of reduction. 242 It also seemed to be argued that the statement in the Notice of Reduction that the reduction took effect when the notice is sent, was a statement which could only mean that it was a new estimate because, if it was a notice of reduction the estimate would always have been that amount. That submission is also obviously in error. The statement in the letter was to the effect that the "reduction" took effect from the date. That is an accurate statement of the effect of the notice of reduction. Prior to that point in time CLK Kitchens was bound by and was required to comply with the terms of the Estimate Notice. It was only released from that obligation once a reduction was made. Whilst it may have been that the effect of the reduction was that the estimate in the Estimate Notice was to be taken to always be in the reduced amount, it had nothing to say about when the reduction effected by the notice took effect. 243 The Notice of Reduction was what it unquestionably purported to be. On no view of the facts could it be said that it was a new estimate under s 268-10 or notice under s 268-15. The applicants have no reasonable prospects of succeeding in the contrary argument.

Material for the reduction of estimate 244 The applicants also assert that, at the time of the making of the original estimate, the Commissioner had before him all of the material on which the external accountant, Worrells, had when it subsequently analysed the actual amount of PAYGW payable in respect of labour hires. It is said that the Commissioner subsequently relied upon the analysis in the Worrells report for the purposes of reducing the amount of the estimate and that, in those circumstances, the original estimate could not have been reasonable. Again, the applicants assert that they should be entitled to cross-examine the ATO officers on the manner in which the estimate was made. Mr Logan, the solicitor for CLK Kitchens, deposes that he obtained a letter from a Ms Anita Owens of Worrells Solvency and Forensic Accountants calculating the PAYGW amounts which CLK Services might owe to the Commissioner. The letter was provided to the Commissioner on 1 February 2018. In it, Ms Owens made a calculation on the PAYGW amounts based on the actual rates of tax which the workers would pay. The amount identified is $4,407,851.70. So the argument went, it is said that the Commissioner had the same information on which these calculations were made and, for that reason, the estimate of $19,475,997.00 was necessarily unreasonable. 245 Apart from the fact this ground of unreasonableness is not raised in the originating application, the immediately obvious difficulty with it is that Ms Owens made her calculations on the basis of five identified assumptions, one of which was that each of the employees had provided their tax file number to CLK Kitchens. That latter assumption is, of course, the converse of the assumption in the estimate made by the Commissioner's officers, in particular, Mr Condon who identified that the TFNs had not been provided. Similarly, Ms Owens assumed that each of the employees were entitled to the tax free threshold, but given the effect of scale 4 of the Withholding Schedules, that was not applicable in assessing the PAYGW liability where the TFN has not been provided by an employee. In other words, Ms Owens did not purport to calculate the PAYGW amount CLK Kitchens ought to have remitted in accordance with the taxation legislation on the facts as they existed. Her calculations are based on assumptions which did not exist but which were subsequently assumed in favour of CLK Kitchens. For this reason this ground of alleged lack of reasonableness has no reasonable prospects of success. It is based upon a misapprehension of the manner in which Ms Owens made her calculations; that is, other than in accordance with the relevant obligations of CLK Kitchens to withhold and remit PAYGW amounts at the highest tax rate. 246 The applicants made no submissions as to why it was that the Withholding Schedules did not apply in the circumstances. There was not the slightest suggestion that the employees had provided their tax file numbers to CLK Kitchens. On the applicants case there was no reason why that would have occurred. They regarded the workers as being employees of the now insolvent CLK Services and, consequently, CLK Kitchens had no reason to receive their tax file numbers. Whilst it may be that the Commissioner was subsequently prepared to reduce the PAYGW liability on the assumed basis that the workers had provided their tax file numbers, such that the withholdings by CLK Kitchens would have been referable to the actual amount of tax payable by the workers, the applicants did not and cannot identify any error in the making of the estimate by application of the rate in the Withholding Schedule applicable to the circumstances. Again, the applicants have no reasonable prospects of successfully challenging the estimate on this basis.

An order compelling the making of a further estimate or reduced estimate 247 In paragraph 5 of the orders sought in the originating application the applicants seek an order that the Commissioner make an estimate as against the first applicant. The applicants now accept that the reduction previously made by the Commissioner satisfies the relief sought here. That being so, it is no longer in issue.

Entries made in the RBA which were reversed. 248 The applicants also seek review of the alleged allocation of amounts to the RBA on 7 July 2017, but which was reversed on 10 July 2017, being prior to the commencement of proceedings. In his affidavit, Mr Mason, an employee of the ATO in Significant Debt Management, identified that part of his duties is to key estimates of liability for unreported PAYGW amounts onto the liable entity's Running Balance Account (RBA) and issue notices of estimates. He explained that if the ATO's Employment Obligation audit team identified evidence of a failure to remit withheld PAYGW amounts it can refer the estimated liabilities to Mr Mason's team, who key in those liabilities onto the entity's RBA and issue the estimate notice. After the issuing of the estimate notice the Significant Debt Management team will follow up with issuing DPNs or taking debt recovery action, if required. 249 On 28 June 2017, Mr Mason attended a meeting in relation to CLK Kitchens where he was informed and he believed that CLK Kitchens were liable for certain PAYGW amounts. Mr Condon of the Employment Obligation audit team asked the Significant Debt Management team to key into the RBA of CLK Kitchens the relevant PAYGW amounts to issue estimates notices and DPNs. Mr Mason was sent a spreadsheet on Friday 7 July 2017 and he commenced keying in the amounts. However, due to the large amount of PAYGW estimate periods he ran out of time on that day and had not completed the task. He was instructed to delete the amounts which had been keyed in and to then insert all of the amounts on a day when he had the ability to key in amounts in respect of all the periods and issue the notices. He deleted the amounts already keyed in on Monday 10 July 2017, and on 11 July 2017 he keyed in all of the PAYGW amounts for each of the relevant periods. On that same day he issued the relevant Estimate Notice. On the following day he issued the DPNs to Mr Karananos. 250 The only submission made by the applicants in relation to this matter was: whether the operative RBA entry was 7 or 10 July, both precede the alleged "estimate" (11 July). The precise order of events must be explored by cross-examination. 251 No elucidation for this proposition was advanced and it is not possible to identify any jurisdictional error in the process of the ATO to which the argument might support. No ground of review can be detected in the originating application which might support review of the act of keying in information into a computer. The applicants did assert that the estimates were not made in accordance with the law but why there needed to be cross-examination on this point was not explained. 252 As the Commissioner submitted, the allocation of amounts to the RBA on 7 July 2017 were of no effect or significance to the applicants. They were a mere internal procedure involving preliminary work in relation to the issuing of estimates. The entry of the information into a computer had no impact upon the rights, entitlements or obligations of the applicants and was not, in any way, a substantive determination or decision which might be subject to review under the Administrative Decisions (Judicial Review) Act 1977 (Cth): Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321, 337. Similarly, the Commissioner is correct in his submission that, as the alleged conduct had no substantive effect and the entries were reversed prior to the commencement of the proceedings, there is nothing in respect of which a Constitutional writ under s 39B(1A) of the Judiciary Act 1903 (Cth) might be directed. 253 There is no reasonable prospect of the applicants succeeding in relation to the claimed review of the conduct of entering the data concerning the PAYGW amount into the computers at the ATO.

Conclusion with respect to the "other grounds" 254 It follows that the applicants have no reasonable prospects of succeeding in challenging the decisions or conduct of the Commissioner on the basis of the grounds referred to under the heading of "other grounds".

CONCLUSION IN PROCEEDING QUD 369 OF 2017 255 Despite the myriad issues and arguments raised by the applicants, none of them have any substance. None of them support a conclusion that the applicants have any reasonable prospects of successfully challenging the impugned decisions or conduct of the Commissioner. The application for summary judgment should be allowed and the 2FAOA should be dismissed. Necessarily, the applicants must pay the Commissioner's costs of the proceedings. 256 The applicants claimed that they were entitled to their costs relating to the relief they sought that the Commissioner make a new estimate. They submitted that the relief was no longer required because a reduction in the estimate was subsequently made. However, the relief sought was not available and the reduction by the Commissioner occurred as the result of receiving additional information. There is no basis for suggesting that the applicants succeeded on this issue.

THE SECOND PROCEEDING: QUD 241 OF 2018 257 The FAOA in the second proceeding is partially repetitious of and partially founded upon the claims in the first proceeding, QUD 369 of 2017. At its centre is the proposition that the reduction of the estimate by the Commissioner on about 14 March 2018 had the consequence that a new estimate was made and that entitled the applicants to give to the Commissioner a further statutory declaration. That argument has been rejected above as having no reasonable prospects of success. It follows that the Commissioner's claim for summary judgment and the applicants' arguments in opposition to it can be quickly considered.

Alleged decision on 14 March 2018 to allocate a new amount to the RBA of CLK Kitchens 258 The applicant's complaint in this respect is that the Commissioner allocated a reduced amount to the RBA on 14 March 2018 prior to giving CLK Kitchens time to respond. Underlying this complaint is the assertion that the notice of reduction constituted a further estimate and, on that basis, the applicants were entitled to deliver a further statutory declaration pursuant to s 268-40. It is said that a further declaration was, in fact, delivered but, by that time, the reduced amount had been allocated. 259 There are a number of answers to this proposition. First, as is identified above, no new estimate was made. The original estimate remained efficacious albeit at a reduced amount. Therefore no further right to give a statutory declaration arose. Secondly, it is doubtful that the alleged "decision" constitutes a relevant decision in respect of which relief can be obtained. Of itself, the allocation to the RBA does nothing, and it is the primary liability arising under Div 268 which generates the applicants' obligations. Thirdly, as is identified above, the Commissioner was not required to elect between inconsistent rights when proving for a debt in the administration of CLK Services.

Alleged new estimate decision 260 The applicants complain that the decision by the Commissioner on 14 March 2018 to make a new estimate ought be quashed. It is first submitted that no liability arose because CLK Kitchens was not obliged to withhold any PAYGW amounts. That submission seems to be founded upon the assertion that CLK Kitchens was not the employer liable to withhold under s 12-35. Any argument to that effect has been dealt with above. Secondly, it was asserted that the decision was unreasonable. However, there was no new estimate decision but merely a reduction in the estimate. In any event the grounds of unreasonableness are those which are relied upon in relation to the original estimate decision and they have no substance either as has been indicated above. Again they proceed under the mistaken view that CLK Kitchens was not liable to withhold PAYGW amounts. Thirdly, the applicants submitted that CLK Kitchens was not liable in circumstances where the labour hire companies had issued withholding summaries. Again, as has been considered above, that argument is misconceived. Fourthly, the argument that the Commissioner elected between inconsistent rights when proving in the administration of CLK Services is an argument which cannot be sustained.

Alleged decision to issue new estimate notice 261 Again, this argument is founded on the false premise that a new estimate decision was made, when that did not occur.

Alleged failure to consider the second statutory declaration 262 This argument has been dealt with in the reasons in relation to the first proceeding. The applicants had no right to deliver a further statutory declaration and no extension of time was granted to allow that to occur.

Alleged failure to revoke the new estimate decision 263 As there was no new estimate decision, there can have been no failure to revoke it. Further, it was submitted that the revocation should occur because the applicants had given to the Commissioner a statutory declaration which complied with s 268-40(2). As has been explained above, the applicants had no entitlement to deliver any such further statutory declaration. In any event, it was not to the effect of s 268-40(2) or (4) and, therefore, did not cause a reduction or revocation of the estimate. 264 One issue which does arise in relation to this question concerns the scope of the material on which the Commissioner may rely when considering his position on receipt of a statutory declaration or affidavit. The applicants' originating application alleges that the Commissioner, by his officers, wrongly took into account material other than that which appeared in the statutory declaration given by Mr Karananos on 21 March 2018. To some extent that ground is inconsistent with their submissions made in the course of argument to the effect that if a statutory declaration is delivered in accordance with s 268-40(2) or (4), the Commissioner is obliged to consider it. As has been indicated above, a complying statutory declaration has the effect, itself, reducing or revoking the estimate. The conclusion by the Commissioner that a statutory declaration has that effect or otherwise does not alter the consequences of its delivery. However, pursuant to s 268-35 the Commissioner may, at any time, reduce the amount of the estimate. Even if it is the case that a statutory declaration does not, of itself, have the effect required by s 268-40, the information in it, along with other information acquired by the Commissioner, may cause the Commissioner to reassess his estimate. That is a perfectly proper approach to take. Even though the Commissioner is not obliged to exercise the power under s 268-35(1), it is apparent from the facts of this case that the ATO officers prudently assessed the state of known circumstances as further information came to hand. There was no error in them doing so. 265 It follows that the applicants' complaint that the Commissioner failed to exercise some, as yet unidentified, power under s 268-40(2) or s 268-40(4) has no reasonable prospects of success. It follows that there was no failure by the Commissioner to revoke the estimate notice as claimed. There are no reasonable prospects of the applicants establishing otherwise.

Alleged failure to withdraw the director penalty notices 266 This ground is based upon the claimed efficacy of the second statutory declaration. As identified above, the purported statutory declaration was inutile and of no effect. Necessarily, there was no obligation on the Commissioner to withdraw the DPNs even if he had a power to do that. The applicants have no reasonable prospects of succeeding on this ground.

Alleged conduct concerning the above decisions 267 In the second proceeding, as in QUD 369 of 2017, the applicants also seek to review various "conduct" of the Commissioner relating to the alleged decisions referred to above including allocating amounts to the RBA, issuing the alleged new estimate notice, failing to revoke the new estimate notice and failing to withdraw the DPNs. Necessarily any review of that conduct is doomed to fail because the decisions (where there was in fact a decision as alleged), were valid and there is no reasonable prospect of the applicants establishing otherwise. In the result, the applicants have no reasonable prospects of successfully challenging the purported conduct.

Conclusion in the second proceeding QUD 241 of 2018 268 Again, it follows that despite the plethora of issues and arguments agitated by the applicants, none of them have any reasonable prospects of success. They were all without substance. The Commissioner's application for summary judgment should be allowed and the FAOA in QUD 241 of 2018 should be dismissed. Again, the applicants must pay the Commissioner's costs of these proceedings. I certify that the preceding two hundred and sixty-eight (268) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Derrington.