Southern Cross Group Services Pty Ltd v Chief Commissioner of State Revenue

The decision of the Tribunal

1. The Tribunal's Reasons for refusing to set aside the Summonses were as follows: (a) The applicants seek administrative review of the payroll tax assessments of the respondent for the financial years ended 30 June 2018 to 30 June 2020. (b) Each summons seeks production, from the person to whom the summons is addressed, of the following documents: - any agreement (including subcontracts) in place, with the applicants, during the relevant period for the provision of security services; - invoices (including associated subcontractor statements/declarations) issued to the applicant for the provision of security services and personnel for specified months during the relevant period. Each of the abovementioned summonses have been served and there has been production of documents in response to those summonses other than the summons served on the applicant. (c) In its application for the summonses the respondent indicated that the reason for the request was so as to resolve the issue as to whether there was an employment agency contract between the applicants by reason of their subcontracting arrangements, namely - whether the second applicant procured the services the services of the subcontractors for its client, the first applicant. In this regard, the respondent also noted that this was the case in the decision of the Court of Appeal in Chief Commissioner of State Revenue v E Group Security Pty Ltd (No 2) [2022] NSWCA 259 (E Group). (d) The applicants contend that the respondent is undertaking a fishing expedition in that the respondent is not seeking evidence to support its case, but is instead seeking to discover whether there is a case available to it in line with its 2022 Court of Appeal E Group case. (e) As noted by the respondent, it is well established that on administrative review, the respondent agency, nor the applicant for administrative review, is not bound by the material that was before the agency at the time the decision the subject of review was made. This is also highlighted in s 100(2) in the Taxation Administration Act 1996. Furthermore, the role of the Tribunal on administrative review is to determine the correct and preferable decision having regard to the material before it and the relevant law: s 63 Administrative Decisions Review Act 1997. In this regard, it is noted that, subject to the rules of natural justice, the Tribunal is to ensure that all relevant material is disclosed to the Tribunal so as to enable it to determine all the relevant facts in issue in the proceedings: Civil and Administrative Tribunal Act 2013 (NSW) s 38(2) and (6)(a). (f) As identified by the Court of Appeal in the E Group case, a matter relevant to a person's liability for pay roll tax is whether the related entities are a party to 'employment agency contracts' within the meaning of s 37 of the Payroll Tax Act 2007 (NSW). While this may not have been identified as an issue by the respondent during the objection process, this does not prevent the respondent from relying on this ground in these proceeding, based on the material that has been provided by the applicants. (g) At the same time, I agree that this is an issue the respondent could and should have raised earlier in these proceedings. While the onus is on the applicant to establish that the assessment decision of the respondent is incorrect, in my opinion, where the respondent foreshadows that it may rely on grounds other than those identified during the objection processes, this should be disclosed as soon as possible and not left until the applicant has provided its evidence, based on what it understood the respondent's case to be. For example, in this case, at the time of the objection determination (11 October 2022), the decision in E Group had not been handed down. That decision was handed down on 13 December 2022, which was five days after the applicant's lodged their administrative review applications, but also a month before the first directions date in these proceeding. Yet it was not until July 2023 that the respondent identified this as an issue in these proceedings. (h) While I am critical of the respondent's delay, in my view this is a matter that can be appropriately addressed through an appropriate cost order. At the same time, the matter should proceed to a hearing on the dates previously set and I have made orders accordingly.

The Notice of Appeal

1. It is accepted that the decision in question here is an interlocutory decision and leave to appeal is required.
2. The principles for the grant of leave to appeal an interlocutory decision were considered by the Appeal Panel in Champion Homes Pty Ltd v Guirgis [2018] NSWCATAP 54 at [35]: As stated in various decisions of the Tribunal and its predecessor, the Administrative Decisions Tribunal, the principles to be applied are to be derived from the principles applicable to leave applications in courts: see for instance, Johnston v Department of Education and Training (GD) [2007] NSWADTAP 6 and BHM v BHN & Ors [2014] NSWCATAP 26. These principles include the following: (1) It is unnecessary and unwise to lay down rigid rules of practice or exhaustive criteria governing the grant of leave to appeal: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 175; [1981] HCA 39; (2) However, the requirement for leave is a filter restricting access to the appeal process: Coulter v R (1988) 164 CLR 350; [1988] HCA 3 at 359 per Deane and Gaudron JJ; (3) Leave should only be granted where there are substantial reasons to allow an appellate review: Johnson Tiles Pty Ltd v Esso Australia Ltd [2000] 104 FCR 564; (4) Circumstances justifying leave may be an error of principle resulting in substantial injustice: Minogue v Williams [2000] FCA 125. However, these concepts may not be cumulative; (5) There is a difference between the exercise of a discretion concerning a matter of practice and procedure and an exercise of a discretion that determines substantive rights: Adam P Brown per Aickin, Wilson and Brennan JJ at 177 citing with approval Jordan CJ in In re Will of FB Gilbert (dec) (1946) 46 SR (NSW) 318 at 323; (6) Where an interlocutory decision effectively determines the substantive rights of the parties, that may be a significant factor in favour of granting leave to appeal: Eltran Pty Ltd v Westpac Banking Corporation (1991) 32 FCR 195 per Spender J at [14]-[15], referring to Ex parte Bucknell (1936) 56 CLR 221 at 225-6; (7) In connection with a matter of practice and procedure, restraint should be applied in reviewing such decisions, especially if an application for leave is made during the course of a hearing: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [21], referring to Adam P Brown and in In re Will of FB Gilbert (dec); (8) Leave should not be granted unless a substantial injustice would result and the decision is attended with sufficient doubt to warrant it being reconsidered by the appeal body. What is sufficient is dependent on the particular case: Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-9; (9) Lastly, subject to the above, the matters set out in Collins at [84 (1)-(2)] are also relevant to the exercise of a discretion to grant leave.

The Appellants' submissions

1. The Appellants contend that the Tribunal asked the wrong question and applied the wrong principle of law in determining the Appellants' objections, whereby: 1. the Tribunal determined whether the materials sought by the Respondent could pertain to a 'matter relevant to a person's liability to payroll tax' which is not the applicable common law for determining whether a valid objection is raised to the issuance of a summons; 2. the Tribunal's Reasons for its decision, incorrectly applied s 100(2) of the TAA and s 38(2) and s 38(6)(a) of the NCAT Act rather than enquiring whether the Respondent had a legitimate forensic purpose for accessing the documents; and 3. by refusing the Appellants' objection, the Tribunal allowed the Respondent to access documents pursuant to a 'fishing expedition' - namely, in order to consider whether it had an additional ground for levying payroll tax.
2. The Appellants' case on appeal is that whilst s 100(2) of the TAA allows the Respondent to expand the case from the grounds raised in the objection, that provision does not supersede or supplant the common law requirement which prohibits the issuance of a summons for the purpose of determining whether a case exists or in other words for the purpose of 'fishing'.
3. The Appellants submit that the Tribunal in determining the objection to the Summonses failed to consider the proper test of 'legitimate forensic purpose'. Rather, the Tribunal had asked itself whether the 'client issue' was a relevant issue on the question of the Appellants' liability for payroll tax and not whether the Summonses were issued for a legitimate forensic purpose. That approach is said to be apparent from the Tribunal's reference to s 100(2) of the TAA and s 38(2) and s38(6)(a) of the NCAT Act.
4. The Appellants contend that the Tribunal thereby erred in failing to ask the further question whether or not the Summonses were issued for the purposes of 'fishing'.
5. The Appellants submit that mere relevance is not enough and if the Tribunal had considered whether or not there was a legitimate forensic purpose to the Summonses it ought to have concluded that the Summonses were not properly issued as they were issued for the purpose of seeing whether or not a case existed as opposed to seeking to obtain evidence to support the new case.
6. In support of the above principles, the Appellants relied upon the following authorities: Attorney General for New South Wales v Dylan Chidgey [2008] NSWCCA 65 at [58]; Fawaz v Commissioner of Police NSW, Police Force [2022] NSWCATAD 296 at [23]; Commissioner of Railways v Small (1938) 38 SR (NSW) 564 at 575; icare NSW v Webb [2023] NSWCATAP 192 at [34]; Re Don [2006] NSWSC 1125 at [26] (3); Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145 at [73].
7. In support of the proposition that the Summonses were issued for the purpose of fishing the Appellants referred to the following: 1. the client issue was not a matter that was raised by the Respondent as an issue in the section 58 documents, in the Respondent's communications with the Appellants during the payroll tax objection process or in the Respondent's reasons for the payroll tax decision; 2. the applications for the Summonses accepted that the 'client issue' was not raised as an issue in the section 58 documents or previously; 3. the Respondent cited Chief Commissioner of State Revenue v E Group Security Pty Ltd (No 2) [2022] NSWCA 259 in support of the issuance of the Summonses, which demonstrates that the Respondent was not seeking evidence to support its case but was seeking to discover whether it had a case based on this authority; and 4. the Respondent's counsel informed the Tribunal that the Respondent's evidence could not be prepared before it had an opportunity to review the material sought in the Summonses.
8. We note the transcript of the hearing before the Tribunal was put before us on appeal.

Respondent's submissions

1. In response, the Respondent essentially put forward two propositions: 1. the Tribunal was mindful that the Summonses had to be for a legitimate forensic purpose and not be issued for the purpose of 'fishing'; and 2. the Tribunal correctly determined that there was a legitimate forensic purpose for issuing the Summonses and that they were not issued for the purpose of 'fishing'.
2. The Appellants referred to paragraph (d) of the Reasons where the Tribunal stated: The applicants contend that the Respondent is undertaking a fishing expedition in that the Respondent is not seeking evidence to support its case, but is instead seeking to discover whether there is a case available to it in line with its 2022 Court of Appeal E group case.
3. The Respondent then referred to the oral submissions made by Counsel for the Respondent to the Tribunal relevantly as follows: [T]his is absolutely not a case of fishing because these very applicants were involved in proceedings, payroll tax review proceedings, with the Chief Commissioner, and the Chief Commissioner succeeded on this very issue [the "client" issue] that I 'm now seeking to raise [Southern Cross Group Services Pty Ltd v Chief Commissioner of State Revenue [2019] NSWSC 666, [43] & [61].]. There's no evidence that their business relevantly changed between those earlier proceedings, and the current period under review, and, indeed, there is evidence in [the] section 58 documents that it did not relevantly change, at least for most of the period under review[;] that's because the second applicant, by which I mean Southern Cross Security, AU, continued to make payments to subcontractors which indicates that it was continuing to procure the services of subcontractors for the first applicant as its client. So it's the very opposite of a fishing expedition. It's an exercise that has a sound basis in previous proceedings between the parties, and in the section 58 documents.
4. The Respondent then referred to paragraph (f) of the Reasons whereby the Tribunal after setting out the relevant statutory context stated: While this [the client issue] might not have been identified as an issue by the Respondent during the objection process, this does not prevent the Respondent from relying on this ground in these proceedings, based on the material that has been provided by the applicants.
5. The Respondent emphasised the words, 'based upon the material that has been provided by the applicants.' The Respondent submitted that these words must be a reference back to the evidence in the section 58 documents referred to by counsel for the Respondent - namely, that the second Appellant continued to make payment to subcontractors which indicated that it was continuing to procure the services of subcontractors for the first Appellant as its client.
6. Therefore, the Tribunal was referring to this material and accepting that this material, included in the section 58 documents, demonstrated that the Summonses had a legitimate forensic purpose and could not be regarded as a fishing expedition.
7. The Respondent also submitted that in the event that the Appeal Panel upheld the appeal and set aside the decision below, the Appeal Panel should redetermine the issue.
8. The Respondent submitted that the existing material demonstrated the legitimate forensic purpose and, in the alternative, also sought to provide new evidence for the Appeal Panel to consider on any redetermination and rehearing of the issue.
9. In light of our conclusion to dismiss the appeal, we do not need to consider the question of this new evidence.

The Appellants' submissions in reply

1. In response to the proposition that paragraph (f) of the Reasons amounts to a finding, including on the basis of the section 58 documents currently filed, that the Summonses were not a fishing expedition, the Appellants made the following submissions.
2. The Appellants contended that the documents and evidence referred to by counsel for the Respondent was not tendered before the Tribunal below and therefore amounted to nothing but a submission from the bar table. The Appellants submitted that the Tribunal below should not have relied upon such alleged material when it was not tendered.
3. Counsel for the Appellants, who was counsel appearing for the Appellants at the Tribunal below, accepted that she did not object to or cavil with the description of the documents made by counsel for the Respondent at the time. In addition, counsel for the Appellants herself referred to page 20 of the section 58 documents in submissions made to the Tribunal. When this was canvased, counsel for the Appellant accepted that at the time the assumption was made that the section 58 documents were tendered and before the Tribunal.

Consideration

1. We agree with and adopt the submissions of the Respondent.
2. The principles of law put forward by the Appellants are not in dispute. We accept that mere relevance is not a sufficient justification for the issuing of a summons for production. The common law principle which prohibits the issuing of a subpoena for the purpose of 'fishing' is a well-known proposition ever since it was formulated by Jordan CJ in Commissioner of Railways v Small (1938) 38 SR (NSW) 564 at 575: … A party is no more entitled to use a subpoena … than he is the summons of interrogatories, for the purpose of 'fishing', i.e., endeavouring not to obtain evidence to support its case, but to discover whether he has a case at all….
3. The written submissions and oral submissions before the Tribunal below, which we have carefully considered, make it plain that the principal issue for consideration was whether or not the Summonses could be said to be issued for the purposes of 'fishing'. In particular, no submission was made by the Respondent that the prohibition against issuing a summons for the purposes of fishing had been supplanted by s 100(2) of the TAA or any of the provisions of the NCAT Act.
4. The principal submission of the Respondent was that there was sufficient material already known to the Respondent to put forward a case based on the 'client issue' but that the Summonses were being sought in order to obtain evidence to support this case, being a case not previously raised.
5. As these proceedings are administrative review proceedings, no pleadings or points of claim/defence are filed by the parties. There was no other formal statement made by either of the parties as to the essential facts, matters or contentions being pursued or relied upon in the proceedings.
6. Given the terms of s 100(2) of the TAA, the fact that documents were sought in respect of an issue not canvased previously by the Respondent in correspondence or the objection process does not necessarily mean that the Summonses were issued for the purposes of 'fishing'.
7. On the basis of the submissions of the parties, the Tribunal must have been aware that the principal issue before it was whether or not the Summonses were issued for a legitimate forensic purpose and not for the purpose of 'fishing'. In our view, while the Tribunal did not expressly find that the Summonses had a legitimate forensic purpose, such a finding can be implied by the words ". . . based on the material that has been provided by the applicants" in paragraph (f) of the Reasons. Counsel for Respondent had referred to that material in oral submissions. The implication that can be drawn from paragraph (f) of the Reasons was not only that the Summonses were relevant but that they had a legitimate forensic purpose based on that material.
8. It follows that we are not satisfied that the Tribunal asked itself the wrong question and failed to consider whether or not the Summonses were issued for the purposes of 'fishing' as contended for by the Appellants.
9. We also reject the Appellants' submission that the Tribunal should not have relied on the facts and documents summarised by counsel for the Respondent. Even if the documents were not formally tendered the Tribunal is not bound by the rules of evidence and there was no prejudice to the Appellants. These matters were within the knowledge of the Appellants and were not disputed either at the time or before us.
10. Whether the Summonses were issued in order to obtain evidence to support an existing case or whether the purpose was to discover whether there is a case involves an evaluative determination of the Tribunal. The principles governing appeals from such a determination have been considered by courts in a number of decisions and were summarised in ZZI v Holdsworth & University of Newcastle [2023] NSWCATAP 78 at [175]-[182].
11. In particular, the High Court stated in Hinch & Macquarie Broadcasting Holdings Pty Limited v Attorney General (Victoria) [1987] HCA 56; (1987) 164 CLR 15 at [28], that unless appellate courts show "restraint in disturbing the evaluative determinations of primary decision makers they will inevitably invite appeals to a different evaluation which, objectively speaking, may be no better than the first. Second opinions in such cases would be brought at the cost of diminishing the finality of litigation in a troublesome area and, sometimes at least, with a burden of costs upon the estate which should not be encouraged".
12. In our view, it was open to the Tribunal below to take the view that the Summonses were not issued for the purpose of 'fishing' but were issued to obtain evidence to support the new case or ground being sought to be raised by the Respondent. We are also mindful that in a matter of practice or procedure, such as this, restraint should be applied in reviewing the relevant interlocutory decision.
13. Accordingly, we are not satisfied that a substantial injustice would result if leave to appeal from the Tribunal's interlocutory decision is refused. Further, the Tribunal's decision is not, in our view, attendant with sufficient doubt to warrant it being reconsidered by us.

Disposition

1. The orders of the Appeal Panel are: 1. Leave to appeal refused. 2. Appeal dismissed.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 17 November 2023