Roden Security Services Pty Ltd v Chief Commissioner of State Revenue

The Tribunal (at [3]-[4]) set out the position as to the oral evidence of the contractors. Oral evidence was given by Mr Hodge, a director of the appellant (although he had not previously given a witness statement). He gave evidence - identified at [14] by the learned Tribunal member as being mainly hearsay - as to the independent contractor status of Messrs Strachan and Armstrong, and as to work undertaken by those persons.

The learned Tribunal Member set out some of the cross-examination of Mr Hodge (at [16]) which demonstrated that the invoices upon which Mr Hodge gave evidence were not the totality of the invoices rendered by the contractors. However, none of the invoices related to services provided by the contractors to any member of the public apart from the appellant. The finding made by the learned Tribunal member was that "there was ... no probative evidence of any kind that either contractor provided services to anyone other than the [appellant] during the relevant period". (see [17])

The parties were each given the opportunity to make oral and written submissions, both at the hearing and after its close. In the submissions furnished after the close of the hearing, the appellant asked the Tribunal to draw inferences from the finding that the contractors were independent contractors that their services were "generally available to the public" and replied in this context on Ruling PTA021 (a payroll tax ruling issued by the respondent) (see [19]). The entire ruling was set out in paragraph [20].

The learned Tribunal member then proceeded to analyse the effect of the legislation, and noted that the payments made to the contractors would be exempt from payroll tax "if, put in general terms, the contractors provided services of the kind to the public generally. The [appellant] was not able to demonstrate that this was so" (at [22]). The reasons went on to note (at [23]) that "the remedy lay in the [appellant's] own hands; it had only to demonstrate compliance with sub-section (v) and if it had done so it would have succeeded".

The learned Tribunal member then spent some time explaining why, in the circumstances, the evidence was insufficient to enable the Tribunal to draw an inference from various parts of it (see [24] - [25]).

In paragraphs [26]-[39] of the reasons for decision, the learned Tribunal member dealt with what was called the "discretion issue" - that is, the proof of the issue "to the satisfaction of the Commissioner" as used in the relevant sub-section and the test to be applied in an application for review of a discretion. The learned Tribunal member examined various authorities which included Kolotex Hosiery v. FCT 132 CLR 535, in which the High Court said that "the conditions stated ... are not fulfilled unless the Commissioner is actually satisfied" (per Gibbs J at 566-567). The reasons then went on to consider the High Court's view of reviewable error in cases of a decision-maker's satisfaction in Avon Downs Pty LTd v. Federal Commissioner of Taxation (1949) 78 CLR 353 at 360, and cases following.

The learned Tribunal member held that a matter involving the Commissioner's actual satisfaction may be overturned on appeal, in a threefold test: firstly, it is necessary to determine whether the Commissioner was satisfied as to the state of affairs alleged, secondly, to determine whether the Tribunal is entitled to review that conclusion on the basis of error, and thirdly, if so, whether on a proper view of the facts and the law, the Commissioner should have been satisfied (see par [37]). Applying this test, the learned Tribunal member found that the Commissioner was not so satisfied, and on the state of the evidence, it was "not possible to hold that he should have been so satisfied". (see par [38]).

The next question was referred to as the "two or more persons issue" (see pars [40] and [41]). The learned Tribunal member referred to some evidence of a person named Jack who, Mr Hodge said, assisted Mr Armstrong from time to time. The learned Tribunal member regarded this as a "de minimis" and held that "de minimis work does not fall within the sub-section" (see par [41]). This finding was not part of the appeal.

The Conclusion section of the reasons (pars [42] ff) repeated the findings that the evidence did not, directly or by way of reasonable inferences to be drawn from it, lead the Tribunal to a state of satisfaction as to the evidence of whether the payments to the contractors were exempt pursuant to s 3A(1)(e) of the Pay-roll Tax Act, nor was there any significant evidence in support of a finding under the "two or more persons issue". At par [44] the learned Tribunal member said:- "It follows that in respect of the discretion issue the Respondent's inability to be satisfied in accordance with the relevant statutory provisions was correct".

Accordingly, the learned Tribunal member affirmed the decision under review (see par [46]).

The appellant's submissions 16. The appellant, which was represented by a legal practitioner at the hearing of the appeal, made oral submissions, and was granted leave to file additional written submissions. The following summary is of both the oral and written submissions.

17. First ground of appeal - s 31A(1)(e)(v). The appellant stressed that the statutory test was whether the services rendered to the appellant by the contractors are "rendered by a person who ordinarily renders services of that kind to the public generally". It was submitted that the learned Tribunal member erred not only as to the application of the provision, but also as to the requisite level of satisfaction required.

18. The appellant pointed to the paragraphs in which the reasons for decision, in effect, paraphrased the test; for example, paragraph [22] (where the learned Tribunal member referred, as quoted above, to contractors "providing" services). It was submitted that the Tribunal, in so glossing the meaning of "render", was in error in requiring actual provision or actual performance of services to particular members of the public. It was submitted that the verb "render" is not synonymous with "provide", and the appellant cited the Shorter Oxford Dictionary definition of "render" as including:- "3. The action of performing a service ... 5 represent or describe as being of a certain character; make (a person) out to be. 6. Hand over, deliver to a person. 8. Give out, emit, discharge. 9. Submit to a person for consideration".
19. It was submitted that the word "render" had a number of meanings, which meaning depended on context.

It was submitted that the terms of the relevant sub-section did not require an "activity test"; rather, it merely required the Commissioner to ascertain whether an independent contractor was a business independent of the taxpayer and that process should not stand or fall on whether services were actually performed during the relevant period, although that of course would be a relevant matter. Actual provision of services to the public is only one indicia of independence.

The incorrect formulation of the test set out in sub-s 3A(a)(i)(v) was submitted to be an error of law. There were extensive written submissions on where a "question of law" has sufficient materiality to allow an appeal. These need not be dealt with here but they have been read and considered.

The appellant submitted that the proper test was that in Behmer v. Commissioner of State Revenue (1994) 28 ATR 1082. That test was set out as being:- "The requirement that the services to the public be "ordinarily rendered" does no more than require the Commissioner or Tribunal to look at the contractor's business and to be satisfied that the ordinary course of business is to render services to whoever will contract on like terms. The composite phrase conditioning the exercise of the power in para (v) thus requires the Commissioner or Tribunal to be satisfied that the contractor is engaged in an independent business and that in that business the contractor will, as an ordinary incident, deal with persons other than the one whose liability will otherwise be increased".

The submissions for the appellant indicated an acceptance of this proposition in other cases, including Drake Personnel Ltd v. Commissioner of State Revenue (1988) 40 ATR 304, Drake Personnel Ltd v. Commissioner of State Revenue [2000] VSCA 122, and DSG Pty Ltd v. Victorian Workcover Authority [2008] VSCA 42. The Behmer test, while accepted in Victoria, should also be applied here due to the necessity of interpreting uniform legislation across the States in a uniform way (and here reliance was had with a statement to this effect by Gzell J in Bridges Financial Services Pty Ltd v. Chief Commissioner of State Revenue [2005] NSWSC 788 at 218).

The submissions pointed to the difficulties in proving that an independent contractor was indeed independent, and what was termed the "perverse" outcome that the more independent a contractor may be, the harder it would be to prove the extent of its operations.

It was submitted that because of the incorrect formulation of the test (the "activity test"), the learned Tribunal member failed to take account of evidence in support of the "ordinary incident" aspect of the independence test, including business cards and an entry in the White Pages which formed part of the documents produced to the Tribunal pursuant to s 58 of the Administrative Decisions Tribunal Act 1997 ("the ADT Act").

The appellant submitted that the consequence of the learned Tribunal member's approach was that his Honour failed to take into account rational, persuasive evidence that the contractors were offering, rather than actually providing, their services to the public. Accordingly, the error was a material error and the appeal should be allowed.

As for the level of satisfaction which is required under the statute to be reached by the Commissioner, the appellant submitted that there is no basis, either in precedent or in the statute, for the "three stage test" set out by the learned Tribunal member. In support of this submission the appellant called in aid the process of determination of a review of a decision set out in s 63 of the ADT Act, which provides:- "63 Determination of review by Tribunal (1) In determining an application for a review of a reviewable decision, the Tribunal is to decide what the correct and preferable decision is having regard to the material then before it, including the following: (a) any relevant factual material, (b) any applicable written or unwritten law. (2) For this purpose, the Tribunal may exercise all of the functions that are conferred or imposed by any relevant enactment on the administrator who made the decision. (3) In determining an application for the review of a reviewable decision, the Tribunal may decide: (a) to affirm the reviewable decision, or (b) to vary the reviewable decision, or (c) to set aside the reviewable decision and make a decision in substitution for the reviewable decision it set aside, or (d) to set aside the reviewable decision and remit the matter for reconsideration by the administrator in accordance with any directions or recommendations of the Tribunal."

The appellant submitted that the "three-stage" approach as set out by the learned Tribunal member had no legislative authority, and the Tribunal, at first instance, should effectively sit in the chair of the decision maker and exercise the same level of requirement of satisfaction without needing to look for errors of law or of fact. The appellant submitted that the approach in Kolotex Hosiery and the other cited cases applied only to federal tax cases before the Federal Court, and that no such process need be undergone by a member of the Administrative Decisions Tribunal, who, in effect, is deciding the case at first instance.

Second Ground - incorrect admission of evidence. It is fair to say that the submissions on this topic were comparatively faintly advanced in oral argument, and were eventually (along with the application to extend to the merits) not pressed.

Third ground - failure to grant procedural fairness. The submission on this point is summarised in the written submissions as "many aspects of the proceedings at first instance were deeply unsatisfactory, and in their totality this amounted to a failure to give the Appellant natural justice". The appellant raised at the outset the case of Damjanovic v. Sharpe Hume & Co [2001] NSWCA 407, in which the Court of Appeal said that "The only conclusion to which one can come ... is that [the appellant] did not have a "fair go"". It was submitted that the same conclusion can be reached in the current case.

It was submitted that the learned Tribunal member's criticism of the non-legally qualified representative who appeared before him (but who did not appear before the Appeal Panel), for example, at transcript p 86, "The evidence before me so far is not very satisfactory" is akin to the comments of the trial judge in Damjanovic. Quotes from Damjanovic such as "going to hell on your own bicycle" and "providing sufficient rope to hang himself".

The submissions set out a number of comments which indicate that the learned Tribunal member was "abrupt and rude", including transcript page 71, line 44 "where the Member changes the topic of discussion for the sole purpose, it seems, of picking a fight with (the appellant's representative)" and page 86, line 29 "where the Member explodes at (the appellant's representative) with no obvious provocation". A number of instances where the learned Tribunal member comments on the non-legally qualified representative's lack of expertise or lack of understanding are noted.

It was also submitted that the matter had been "prejudged". The appellant relied on Livesey v. New South Wales Bar Association (1983) 151 CLR 288 where the High Court said:- "What is in issue in the present case is the appearance and not the actuality of bias by reason of prejudgment. The reasonable observer is to be presumed to approach the matter on the basis that ordinarily a Judge will so act as to ensure both the appearance and the substance of fairness and impartiality. But the reasonable observer is not presumed to reject the possibility of prejudgment or bias; nor is the reasonable observer presumed to have any personal knowledge of the character or ability of the members of the relevant Court".

The appellant pointed to the repetition of the learned Tribunal member's view of the unsatisfactory nature of the evidence and submitted that where that view is (as is the contention of the appellant) incorrect, then there is a reasonable apprehension of bias raised. A similar submission was made in relation to the expressions from the Bench that "a statement which is tendered where the witness is not available for cross-examination is of very limited value indeed".

Further, the appellant drew on the lack of legal experience of the representative for the appellant at first instance, and that the "Member failed to discharge his duty to the unrepresented litigant" as set out in Johnson v. Johnson (1997) 139 FLR 384 (see also s 73 of the ADT Act).

The written submissions on this point closed with the statement "This was not a level playing field".

It should be noted that the offer of the learned Tribunal member to adjourn the proceedings to allow the applicant to procure the attendance of the two contractors, as well as the respondent's offer (albeit a conditional one) to pay expenses, was noted as being proper.

The appellant's submissions, finally, were that the reasons for decision were less than adequate, given that the reasons "failed to mention Drake Personnel" and, by relying heavily on the respondent's submissions in the wording of the reasons, failed the "sense of grievance" standard set by Beale v. Government Insurance Office of NSW (1997) 48 NSWLR 430.

Respondent's Submissions 39. The respondent's submissions were relatively brief. They can be summarised as follows:- a)the statutory construction point raised by the appellant - that "render" does not mean "provide", is not necessarily correct. The Shorter Oxford Dictionary and the Macquarie Dictionary each include "to perform a service" in their definition of "render". b)the Behmer test is not that which is appropriate in the way in which it is stated by the appellant. That test - which the respondent says is not consistent with the statutory provision as stated by the appellant - would have been failed by the appellant for the same reason, a lack of evidence. c)as to the level of satisfaction required, the Tribunal is required by s 63 of the Act to determine for itself whether it is "satisfied"; the respondent submits that it is for the Tribunal to determine the basis upon which it may reach that satisfaction. The respondent further noted that the submission that High Court decisions (such as Kolotex Hosiery and Avon Downs (1949) 78 CLR 353) should not bind the Tribunal is "an ambitious one". It is fair to say that these submissions were made faintly in the light of the decision in Tasty Chicks Pty Ltd v. Chief Commissioner of State Revenue [2009] NSWSC 1007, and it was noted that the appellant should be given an opportunity reply to the citing of that authority, it being a case decided on 25 September 2009. d)the appellant's natural justice submission is, it was submitted, negatived by a reading of the transcript. The respondent submitted that a description of the proceedings as hostility, obstruction and rudeness should indeed be the very opposite; the transcript shows the learned Tribunal member trying to point out to the appellant's representative the difficulties of trying to prove a case without direct evidence. It is submitted that the parallels drawn between the conduct of this hearing and that in Damjanovic are "frankly offensive and wrong". The comments extracted in the appellant's submissions do not, it is submitted, how what they are extracted to show. e)likewise, it was submitted for the respondent, there is no evidence of prejudgment, merely an awareness and a communication to the appellant of the need for evidence to prove the appellant's case. f)further as to the natural justice point, the respondent relied on the provisions of s 73(4) of the ADT Act and the explanations given to the appellant as to the dangers if it did not seek to produce probative evidence of the nature of the businesses of the contractors. g)while a failure to provide adequate reasons was conceded to be an error of law, it was submitted that "a Tribunal is not required to tediously examine detailed evidence or a minute explanation of every step in the reasoning process" ( Soulemezis v. Dudley (1987) 10 NSWLR 247 at 259C-D). It is suggested that Drake Personnel was not referred to by the appellant in argument.

Appellant's Submissions in Reply 40. In reply, the appellant made a number of points which mostly restated the original submissions, rather than answering the specific arguments of the respondent. The further points which were raised were:- a)the meaning of "rendering of services" is a broader concept than mere "performance of services". In support of this submission, the appellant pointed to various sections of the Pay-roll Tax Act which used the phrase "performed or rendered" (for example, ss 3AA, 3AD, 3AE, 3B and 6); b)Drake Personnel did in fact adopt the Behmer test, and found that a person who was registered with personnel agencies did in fact "render services to the public". c)the decision of Gzell J, in Tasty Chicks Pty Ltd v. CCSR [2009] NSWSC 1007 was relevant in assessing whether the Tribunal had properly exercised its functions under s 63 of the ADT Act , and the import of that decision was that there was no requirement for a finding of error before the Tribunal was able to examine the quality of the Commissioner's satisfaction; d)the requirements under the payroll legislation are administrative requirements; it should not be the case that a person seeking an exemption should have to adduce "detailed historical evidence" about the contractors they have used. Accordingly, the appellant's interpretation of the relevant sub-section, and reliance on Behmer , are correct. e)as to the natural justice point, the appellant dealt with each of the respondent's arguments and pointed out that the respondent did not deal with each of the appellant's instances in detail, nor did it deal with all the authorities raised by the respondent. It was submitted that the learned Tribunal member's comments were to similar effect to those of the Judge in Damjanovic , rather than their being similar in tone. In a section entitled "Stifling effect on development of Appellant's case" the appellant listed again the references in the transcript to particular issues and noted that the respondent did not deal with all of them. "This alone should raise a real question of whether the appellant was denied natural justice". Mainly the submissions on this point were re-statements of the original arguments.

Consideration - statutory test 41. The first issue to consider is the meaning of the relevant sub-section. Stripped of matters which are irrelevant to the consideration of the text, the sub-section reads (somewhat ungrammatically):- (1) A reference in this section to a relevant contract in relation to a financial year is a reference to a contract under which a person (in this subsection referred to as the designated person ), during that financial year, in the course of a business carried on by the person: .... (v) those services are supplied under a contract to which subparagraphs (i)-(iv) do not apply and the Chief Commissioner is satisfied that those services are rendered by a person who ordinarily renders services of that kind to the public generally ..." 42. The question then is, what is the meaning of the term "who ordinarily renders services of that kind to the public generally?".

Each side has provided dictionary definitions of the word "render". There is no doubt that it includes the meaning "perform". The learned Tribunal member appeared to equate it with both "provided" (par [17]) and "performed (par [18]). The appellant, in effect, says that in the context of the legislation and the requirement that a contractor be independent in order for payroll tax not to apply, the interpretation of the section should tend toward "render" having a meaning closer to "offer".

When properly understood, the decision in Behmer does not particularly assist the appellant. Behmer was a decision of the Victorian Administrative Appeals Tribunal. The decision of Member Pagone (as he then was) was cited with approval in Drake Personnel v. Commissioner of State Revenue (1998) 40 ATR 304 by Balmford J, the relevant passage being:- "Para (v) seems to be concerned to exempt from the net of liability services provided by a contractor who is genuinely independent from the person whose liability would be affected by the broadening of the ambit of the Act. The test the legislature has chosen to determine that independence is one which requires a factual inquiry into the rendering of services by the contractor to others. That the rendering be "to the public generally" means no more than that the Commissioner (and on review the Tribunal) is able to exercise the power if the contractor renders services to other members of the public apart from the person otherwise liable to tax. The words do not confine the exercise of the power to those cases where there is a large class of the public to whom the services are either provided or offered. The requirement that the services to the public generally be "ordinarily rendered" does no more than require the Commissioner or Tribunal to look at the contractor's business and to be satisfied that the ordinary course of that business is to render services to whoever will contract on like terms. The composite phrase conditioning the exercise of the power in para(v) thus requires the Commissioner or Tribunal to be satisfied that the contractor is engaged in an independent business and that in that business the contractor will as an ordinary incident, deal with persons other than the one whose liability will otherwise be increased.

In the end I am satisfied on the limited facts available in this case that the proper conclusion is that Stubbs do ordinarily render their services to the public generally. They are not tied to the Applicant but seek its work when invited to tender. The Applicant is not the sole consumer of the Stubbs' services and they have at least one other significant client."

The interpretation of the sub-section and of Behmer by Balmford J would seem to require that the Commissioner - and the Tribunal, standing in its place on an application for review - actively review the business of the alleged independent contractor to ensure that the services provided by the contractor are available and used by other persons. It would not be sufficient to, say, have a listing on a website or in some other directory for services if any enquiries for those services were regularly refused on the basis that the contractor was fully engaged with the business generally using its services.

This interpretation fits with this Appeal Panel's interpretation of the word "render". The word cannot be looked at in isolation - and it does have many different meanings, as noted by the appellant. It must be construed in the context of the entirety of the legislative section and of the remaining words of the section, "who ordinarily renders services of that kind to the public generally".

There is nothing in the words of the section, or, in our view, the legislative purpose which would restrict or narrow the words to include a mere offering of services, if those services were not actively used. In Drake Personnel the factual investigation revealed that there was "at least one other significant client", and given the purpose of the sub-section to exclude persons who work as contractors but are as a matter of fact "tied" to the taxpayer, that factual inquiry is necessary. There is nothing in the appellant's submissions that the more independent the contractor, the harder that independence is to prove.

Accordingly, it appears to us that the learned Tribunal member, in finding that there was a need to show that the contractors had in fact provided services to someone other than the appellant during the relevant period, was not in error.

The submissions of the appellant as to the reception of Behmer being required as part of the uniform revenue legislation across the States may have more impact were Behmer a decision of a higher court; as it is, it is no more binding upon this Appeal Panel than any other single-member Tribunal decision. In any event, it does not, as we have said, assist the appellant in the way contented for, and so that issue may rest there.

It is clear that there was no evidence that the contractors actually did render services to others; there was some evidence that they may have been prepared to do so had they been asked (see s 58 documents; the Yellow Pages entry in particular). The statements made by the contractors did not deal with this issue, and in any event they were not cross-examined, despite the appellant being given opportunities to call them for that purpose. Accordingly, in the absence of any evidence showing that they did, in fact, render services to the public, in contrast to their being merely listed as available to do so, the learned Tribunal member was correct to find that they did not fall within the section.

Consideration - discretion point 51. That leads us to the second point, as to whether the learned Tribunal member erred in his reasoning as to the finding of the level of satisfaction, and as to the ability of the Tribunal to re-examine the discretion of the Commissioner in reaching that level of satisfaction.

It is common ground that both the Commissioner and the learned Tribunal member had to be satisfied of the existence of the particular facts for the appellant to succeed. The onus lies, of course, on the appellant to prove those facts. The learned Tribunal member found that it did not so prove those facts. On one view of it, having construed the legislative test properly, the learned Tribunal member did not need to review whether the Commissioner should have been so satisfied, as there was no evidence before him which would indicate that there was a basis to be satisfied.

However, the appellant has raised the issue and we should indicate our views. The provisions in s 63 of the ADT Act apply to revenue cases as they do to other applications for review. In addition, the Tribunal is given powers under the Taxation Administration Act 1996. Sub-section 63(2) of the ADT Act provides to the Tribunal the power to "exercise all of the functions that are conferred or imposed by any relevant enactment on the administrator who made the decision."

One of the matters required by the legislation is for the Commissioner, in effect, to form a view as to whether the contractors ordinarily rendered services to the public generally. In order to reach that view, the Commissioner must reach a particular state of satisfaction as to the evidence.

The Tribunal is empowered, by s 63, to undertake the same process as the Commissioner undertook; that is, to examine the evidence and to see whether it conforms to the statutory test.

In para [33] of his reasons for decision, the learned Tribunal Member cites Gzell J in Affinity Health Ltd v. Chief Commissioner of State Revenue [2005] NSWSC 663 at [58]. Just prior to the portion cited, Gzell J said:- [56] The Chief Commissioner submitted that while it was open to the Tribunal to make an assessment or decision in the place of those of the Chief Commissioner, I should construe the Taxation Administration Act 1996, s 101(1)(b) as limited to the powers of the Tribunal and as inapplicable to the powers of the Court. It was submitted that the Tribunal was established as a body competent to engage in merit review. It is not bound by the rules of evidence and may inquire into any matter in such manner as it thinks fit, subject to the rules of natural justice ( Administrative Decisions Tribunal Act 1997, s 73). It is required to deal with matters according to considerations of efficacy, effectiveness, accessibility and fairness ( Administrative Decisions Tribunal Act 1997, s 3). Since it is required to decide the correct and preferable decision ( Administrative Decisions Tribunal Act 1997, s 63), the Tribunal stands in the shoes of the administrative decision maker. [57] But against those considerations, is the clear language of the Taxation Administration Act 1996, s 101(1). It provides that the Court or the Tribunal may do any one or more the specified actions. And that clear language is not to be cut down, in my view, by any of the considerations of the functions and purpose of the Tribunal." ( emphasis added) .

Section 101 of the Taxation Administration Act provides:- "101 Powers of court or tribunal on review (1) The court or tribunal dealing with the application for review may do any one or more of the following: (a) confirm or revoke the assessment or other decision to which the application relates, (b) make an assessment or other decision in place of the assessment or other decision to which the application relates, (c) make an order for payment to the Chief Commissioner of any amount of tax that is assessed as being payable but has not been paid, (d) remit the matter to the Chief Commissioner for determination in accordance with its finding or decision, (e) make any further order as to costs or otherwise as it thinks fit. (2) Nothing in this section limits the application of the following provisions of the Administrative Decisions Tribunal Act 1997 in respect of an application for review before the Administrative Decisions Tribunal: (a) Division 3 of Part 3 of Chapter 5, (b) section 88."

Accordingly, the effect of the various legislative provisions as explained by Gzell J in Affinity Health is that the Tribunal, or the Supreme Court, on an application for review must stand in the shoes of the decision maker and accordingly must exercise the discretions in the same way. There is no need for the kind of considerations which apply to reviews of discretionary matters such as in Avon Downs, Kolotex Hosiery and House v. R (1936) 55 CLR 499 in an application for review.

This conclusion is strengthened by Gzell J's decision in Tasty Chicks Pty Ltd v. Chief Commissioner of State Revenue [2009] NSWSC 1007, a decision handed down after the delivery of reasons in the Tribunal below. In that decision, Gzell J reviewed the High Court cases dealt with by the learned Tribunal member in paragraphs [26] to [39] of the decision, as well as decisions from other jurisdictions, and concluded in paragraph [165] that:- "[165] The powers in the Taxation Administration Act , s 101 are quite different from the powers of a court on appeal under the Income Tax Assessment Act . They are specific and include the power to make an assessment or other decision in place of the assessment or decision the subject of the review. And any dichotomy between the powers of the Supreme Court and the powers of the Administrative Decisions Tribunal has been abrogated. The powers on review are the same for court and Tribunal ." ( emphasis added) . 60. It appears, therefore, that the learned Tribunal member erred in requiring an error to be demonstrated as the second stage of the "three-fold test" in order for the Tribunal to be "entitled to review" the Commissioner's level of satisfaction (see par [37]). However, we are not persuaded that that error should lead to the decision being set aside.

61. The Commissioner was not satisfied of the factual basis of the nature of the work undertaken by the independent contractors. Nor, on the first stage of his three-stage process, was the learned Tribunal member. While, as we have said, we do not need to consider this issue, nor would the Appeal Panel be satisfied that the contractors fell within the relevant sub-section. In paragraph [38] of the decision, the learned Tribunal member said:- "... in the absence of relevant evidence it is not possible to hold that he should have been so satisfied. In summary then, the complete absence of any real evidence as to what the contractors did (if anything at all) for anyone other than the Applicant during the relevant years has the effect that the respondent could not be satisfied as to the discretion issue".

62. Accordingly, despite the error in the "threefold test", the ultimate analysis of the discretion did not need to, nor did it, use the incorrect test, and so there is no need to set aside the decision of the Tribunal below as a result.

Consideration - Natural Justice 63. This issue can be dealt with shortly. It is clear that the exchanges between the learned Tribunal member and the representative for the appellant in the hearing below was at times robust and direct. However, as will be clear from the summary of arguments above, the exchanges were in the context of the appellant's representative being informed that without evidence which was reliable and direct, his client was likely not to be able to prove its case. The learned Tribunal member, quite properly in our view, offered an adjournment, and the Commissioner, quite properly again, in view of his model litigant requirements, offered to pay for the attendances of the witnesses whom he wished to cross-examine.

64. The ensuing exchanges are not, as it was submitted by the appellant, redolent of the exchanges in Damjanovic which were demeaning and belittling of the non-legally qualified representative, but in our view were robust expressions of the likely outcome of the forensic decisions being taken. The submission from the appellant has always been that it should not have to prove its case affirmatively; or, alternatively, that the case could be proven from inferences drawn from Mr Hodge's evidence (which, of necessity on this point, must be hearsay). While the Tribunal is not bound by the rules of evidence, it is bound by the rules of natural justice and it would have been unfair in the extreme to the respondent to make inferences of actual work done by persons who had given statements which did not deal squarely with that fact, and about which only hearsay evidence and peripheral documents had been tendered.

65. We have read the transcript. The learned Tribunal member, in exchanges with the representative, is firm and at times outspoken. But it would have been unfair for him not to have told the appellant's representative of his views as to the paucity of the evidence. We are of the view that it was proper for him to let the appellant know of those views, and to offer the appellant an adjournment specifically in order to remedy the deficiency.

66. We are accordingly of the view that there was no failure to afford procedural fairness, and even less a prejudgment of the matter by the learned Tribunal member. Such a submission is contrary to the repeated offers of an adjournment.

Conclusion 67. We are of the view that despite the error in reasoning as to the test to be applied to a review of a discretion, the appeal should be dismissed and the original assessments affirmed.

Costs 68. The parties made submissions as to costs orders that should or should not be made on the contingency that the appellant were successful. It has not been successful. The appellant sought a costs order on the basis not only of a successful result, but also in light of the respondent's carriage of the matter. While we do not need to decide this point, it may be that the appellant put its submissions on the basis that a costs order should be made whether it was successful or not. We do not see anything reprehensible about the manner in which the matter has been conducted, which we would need to do in order to make an order for costs against a successful party. Nor is there any matter which otherwise falls within the provisions for costs in the ADT Act.

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