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[2011] HCA 41
appellant. Appeal allowed. Orders of the Court of Appeal dated 4 January 2011 set aside. Matter remitted to the Court of Appeal for further hearing in accordance with the reasons. Costs to date in the Court...
9 cited instruments linked from this judgment.
When a taxpayer asks the Supreme Court of New South Wales under s 97 of the Taxation Administration Act 1996 (NSW) to review the Chief Commissioner's decision on a tax objection, the Court does not simply check whether the Commissioner made a legal mistake on the papers that were before him. Instead the Court carries out a full merits review, can consider new arguments, and can make its own decision in place of the Commissioner's, including deciding whether companies should be grouped or de-grouped for payroll tax. The High Court held that the trial judge was entitled to re-exercise the de-grouping discretion afresh and that the Court of Appeal had wrongly limited itself to the narrower Avon Downs approach. The matter was sent back to the Court of Appeal to be decided again on this broader basis.
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2,588 words · generated 24/04/2026
The underlying dispute concerned payroll tax assessments issued to a group of related entities and individuals operating a chicken meat processing business in New South Wales. The fourth and fifth appellants, Mr and Mrs Souris, conducted the processing business in partnership (the Firm). The third appellant, Souris Holdings Pty Ltd, owned premises that were let in part to the Firm, the first appellant Tasty Chicks Pty Limited and the second appellant Angelo Transport Pty Limited. The Chief Commissioner of State Revenue grouped all of these entities under Pt 4A of the Pay-roll Tax Act 1971 (NSW) for the years ending 30 June 2002 to 30 June 2007. While the grouping of the Firm and Souris Holdings was not challenged, the appellants objected to the inclusion of Tasty Chicks and Angelo Transport in the group and sought de-grouping on the basis that it would be unreasonable to treat them as grouped.
The Chief Commissioner disallowed the objections. The appellants then applied to the Supreme Court under s 97 of the Taxation Administration Act 1996 (NSW) for review of that disallowance. At first instance Gzell J treated the proceeding as a merits review. For the first year he found the grouping provisions had been wrongly applied. For the later years he found that the de-grouping discretion should have been exercised in favour of Tasty Chicks and Angelo Transport. He set aside the disallowance of the objections, revoked the assessments and ordered reassessments.
The Chief Commissioner appealed to the Court of Appeal. Handley AJA (with whom Giles and Macfarlan JJA agreed) characterised the s 97 proceeding as an appeal in which the taxpayers had to demonstrate error by the Chief Commissioner on the materials that had been before him, applying the principles stated by Dixon J in Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353 at 360. On that basis the Court of Appeal allowed the appeal and restored the Chief Commissioner's decisions.
The appellants obtained special leave to appeal to the High Court. The High Court (French CJ, Gummow, Crennan, Kiefel and Bell JJ jointly) held that the Court of Appeal had misunderstood the nature of a s 97 review. The proceeding is a merits review in which the Supreme Court is empowered by ss 100(2) and 101(1) of the Administration Act, supplemented by s 75A of the Supreme Court Act 1970 (NSW), to reach its own conclusion on the evidence before it and to substitute its own decision for that of the Chief Commissioner. The appeal was allowed, the Court of Appeal's orders were set aside, and the matter was remitted to the Court of Appeal to be reheard on the correct principles. Costs orders followed the event in this Court, with costs in the Court of Appeal reserved for later determination.
The High Court began from the proposition that both the terms "appeal" and "review" take their meaning from the statute in which they appear. The Court cited Osland v Secretary to Department of Justice [No 2] (2010) 241 CLR 320 at 331-332 [18] and Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390 at 399-400 [27] for the need to identify the precise nature of the jurisdiction and the duties and powers of the court when a statute confers jurisdiction described as an appeal or review from an administrative decision. In the present statutory scheme, Pt 10 Div 2 of the Administration Act uses the single term "review" for applications both to the Administrative Decisions Tribunal (under s 96) and to the Supreme Court (under s 97). Section 103A(1) emphasises the exclusivity of that review mechanism.
The Court placed decisive weight on the text of ss 100(2) and 101(1). Section 100(2) expressly provides that the cases of the applicant and respondent "are not limited to the grounds of the objections" before the Chief Commissioner. Section 101(1) then lists expansive powers: the court may confirm or revoke the assessment or decision, make an assessment or other decision in place of the one under review, order payment of tax, remit the matter to the Chief Commissioner, or make any further order it thinks fit. The definition of "assessment" in s 3(1) includes an assessment made by the Supreme Court on review. These provisions, read with s 75A of the Supreme Court Act (which applies to appeals from administrative bodies and permits the receipt of further evidence and the making of any assessment that ought to have been made), demonstrate that the Supreme Court is to conduct a merits review and reach the correct or preferable decision.
The Court contrasted this scheme with the quite different "appeal" mechanism considered in Avon Downs. There the taxpayer was limited to the grounds stated in the objection, the Commissioner was not required to give reasons, and the court could interfere only if the Commissioner had failed to address the statutory question, taken extraneous matters into account, or reached a conclusion that was explicable only on the basis of legal error. Under the post-2000 New South Wales regime the Chief Commissioner must give reasons for disallowing an objection (s 93), the review is not confined to those reasons, and the court is expressly authorised to substitute its own decision. The Court of Appeal's reliance on Avon Downs was therefore misplaced.
The High Court also drew support from the legislative history. The Administrative Decisions Tribunal Legislation Amendment (Revenue) Act 2000 (NSW) introduced the concurrent jurisdiction regime. The Treasurer's second reading speech explained that the ADT would offer a cheap and flexible alternative while the Supreme Court remained available for technically difficult or high-value matters. This policy choice would be undermined if the Supreme Court were confined to a narrow judicial-review function. Gzell J had correctly understood these provisions; the Court of Appeal had not. The appeal therefore had to be allowed and the matter remitted so that the Court of Appeal could reconsider the substantive payroll-tax issues on the footing that the primary judge had been entitled to re-exercise the de-grouping discretion.
Before the 2000 amendments the objection and review regime for New South Wales taxation statutes was less clearly differentiated. Taxpayers dissatisfied with objection decisions could proceed either by way of Supreme Court appeal (often limited to the grounds in the objection) or, in some contexts, to a Board of Review that exercised the Commissioner's powers afresh. The Avon Downs standard applied to the former route because the statute did not confer power to substitute a fresh decision on the merits.
The Administrative Decisions Tribunal Legislation Amendment (Revenue) Act 2000 (NSW) and subsequent minor amendments (including the addition of s 97(4) by the State Revenue Legislation Amendment Act 2001 (NSW)) created the dual-track system now found in Pt 10 of the Administration Act. Division 1 deals with objections; Div 2 provides for review by either the ADT or the Supreme Court, but not both. Section 97(4) deems a Supreme Court review to be an appeal for the purposes of the Supreme Court Act, thereby picking up s 75A. The ADT's powers are supplemented by s 63 of the Administrative Decisions Tribunal Act 1997 (NSW), which requires it to make the correct and preferable decision on the material before it. The High Court held that, once the interaction between these provisions is recognised, the Supreme Court exercises materially the same merits-review function, subject only to the additional procedural powers conferred by s 75A.
After the High Court's decision the law is settled that a s 97 review is not a judicial review for error in the Avon Downs sense. The Supreme Court must address the substantive statutory questions (grouping, de-grouping, liability) for itself. It may receive further evidence, is not confined to the objection grounds, and may make any order authorised by s 101(1), including a fresh assessment. The decision restores the practical utility of the Supreme Court track for taxpayers who prefer judicial determination of complex factual or legal issues. The remand to the Court of Appeal illustrates that the High Court did not itself resolve the payroll-tax grouping dispute; that remains for the Court of Appeal to decide on the merits-review basis.
Paragraph 5 states: "An 'appeal' from an administrative decision to a court is the creature of statute and it confers original, not appellate, jurisdiction. Further, where a jurisdiction called an 'appeal' is enlivened, it is essential to identify its nature and the duties and power of the court in the exercise of that jurisdiction. The term 'review' presents similar considerations. It takes its meaning from the context in which it appears."
Plain-English translation: Parliament decides what an "appeal" or "review" actually means in each Act. The court must read the specific sections to discover whether it is limited to checking for legal mistakes or can decide the whole case again from scratch.
Paragraph 12 (corresponding to the discussion of ss 100 and 101) provides: "Upon an application for review under Pt 10 Div 2 of the Administration Act, the cases of the applicant and respondent 'are not limited to the grounds of the objections' before the Chief Commissioner (s 100(2)). The powers of the Supreme Court and the ADT are spelled out in s 101(1)."
Plain-English translation: Once the case reaches the Supreme Court the taxpayer can raise new arguments that were not in the original objection. The Court can confirm the Commissioner's decision, cancel it, make a completely new decision, send the matter back, or do whatever else is appropriate.
Paragraph 13 records Gzell J's observation (approved by the High Court): "The powers in the [Administration Act], s 101 are quite different from the powers of a court on appeal under the [Income Tax 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 [ADT] has been abrogated."
Plain-English translation: The New South Wales Act gives the judge a broader toolkit than the old federal income-tax appeal system. The Supreme Court and the Tribunal now have essentially the same job: decide what the correct tax outcome should be.
Paragraph 15 concludes: "The Court of Appeal should not have allowed the Chief Commissioner's appeal by proceeding on the basis that the jurisdiction and powers conferred upon the Supreme Court were such that before Gzell J it had been for the taxpayers to show that the Chief Commissioner had erred on the materials before the Chief Commissioner and to show that the exercise of discretion by the Chief Commissioner was vitiated by error of a kind referred to in Avon Downs."
Plain-English translation: The Court of Appeal used the wrong legal test. It thought the taxpayers had to prove the Commissioner had made a mistake on his own files. That is not what s 97 requires. The case must go back to be decided again under the correct, broader test.
This precedent is triggered whenever a taxpayer dissatisfied with the Chief Commissioner's determination of an objection to a state taxation assessment elects to apply to the Supreme Court under s 97 of the Taxation Administration Act 1996 (NSW) rather than to the Administrative Decisions Tribunal under s 96. It applies to payroll tax, land tax, stamp duty and other taxes administered under the Administration Act. The decision is especially relevant where the statute confers a discretion on the Chief Commissioner (for example, the de-grouping discretion in former Pt 4A of the Pay-roll Tax Act or its successor provisions) and the taxpayer contends that the discretion should be exercised differently. It also applies where the taxpayer wishes to adduce fresh evidence or raise arguments not contained in the original objection.
The precedent governs any case in which the Court of Appeal or a trial judge must characterise the nature of the s 97 jurisdiction. It requires the court to apply the full suite of powers in s 101(1), read with s 100(2) and s 75A of the Supreme Court Act, rather than to limit itself to error-based review. Fact patterns that do not trigger the precedent include applications to the ADT (which are governed by s 63 of the ADT Act but are subject to the same substantive merits-review philosophy) and proceedings under Commonwealth taxation statutes that retain the Avon Downs-style appeal mechanism.
Although the present judgment is the authoritative statement of the High Court, the reasons themselves explain how earlier authority should be treated. The Court distinguished Avon Downs on the ground that the federal income-tax appeal there considered limited the taxpayer to the objection grounds and did not confer power to substitute a fresh decision. The High Court cited with approval its own recent decisions in Osland (No 2) and Kostas for the proposition that the nature of any statutory appeal or review must be ascertained from the particular Act. It also referred to the legislative history of the 2000 amendments and the Treasurer's second reading speech to show that the dual-track system was intended to offer genuine choice between merits review in the ADT and merits review in the Supreme Court.
The judgment makes clear that s 97(4) of the Administration Act picks up s 75A of the Supreme Court Act only so far as that section is consistent with the specific powers and limitations in ss 100 and 101 of the Administration Act. Subsequent courts are therefore directed to read the provisions together rather than to treat s 75A as importing a general appellate limitation. The remand itself illustrates the proper disposition: where a lower court has applied the wrong standard, the appellate court should correct the legal characterisation and return the substantive issues for rehearing on the merits. The decision has reinforced the practical equivalence of the Supreme Court and ADT review functions, subject only to procedural differences arising from the Supreme Court's additional powers under s 75A(7) and (10).
The High Court expressly left the substantive payroll-tax grouping and de-grouping issues for the Court of Appeal to determine on remand. Accordingly, the correct application of the de-grouping criteria in Pt 4A to the particular business relationships between the processing partnership, the transport company and the property owner remains undecided. The Court did not explore the interaction between s 101(1)(b) (power to make a fresh assessment) and the Commissioner's separate power to issue reassessments under other provisions of the Administration Act.
Another open question is the precise scope of "further evidence" that may be received under s 75A(7) when the review concerns a discretionary state of satisfaction. While the Court made clear that the review is not confined to the materials before the Chief Commissioner, it did not articulate any outer limit on that evidence. The relationship between the Supreme Court's powers on review and the exclusivity provision in s 103A(1) was assumed rather than analysed in depth; future cases may test whether collateral challenges or declarations outside Pt 10 remain available in exceptional circumstances. Finally, the judgment does not address how a s 97 review should proceed when the objection determination involves questions of mixed fact and law that might attract different standards of appellate review on any subsequent appeal from the Supreme Court under Pt 7 of the Supreme Court Act. These issues await further litigation.
Tasty Chicks Pty Limited v Chief Commissioner of State Revenue
On appeal from the Supreme Court of New South Wales
C J Bevan with A Tsekouras for the appellants (instructed by Legal Ease Lawyers)
G C Lindsay SC with I C Latham for the respondent (instructed by Crown Solicitor (NSW))
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
Tasty Chicks Pty Limited v Chief Commissioner of State Revenue
State taxation - Pay-roll tax - Taxpayer dissatisfied with Chief Commissioner's determination of objection to assessments may apply to Supreme Court for "review" pursuant to Taxation Administration Act 1996 (NSW), s 97.
Administrative law - Courts - Original jurisdiction upon statutory "appeal" and "review" in respect of administrative decision - Nature, power and duties of court in exercise of that jurisdiction.
Taxation Administration Act 1996 (NSW), ss 97, 101.
"On such an appeal [under s 97] the [Supreme] Court must consider whether the appellant has established that the Commissioner erred on the materials that were before him. Where, as in this case, the [Pay-roll Tax Act] makes the taxpayer's liability depend on the Commissioner being 'satisfied' that a fact exists, the question for the Court on appeal is whether the Commissioner's decision to the contrary was vitiated by error of the kinds referred to by Dixon J."
"[The decision of the Federal Commissioner of Taxation], it is true, is not unexaminable. If he does not address himself to the question which the sub‑section formulates, if his conclusion is affected by some mistake of law, if he takes some extraneous reason into consideration or excludes from consideration some factor which should affect his determination, on any of these grounds his conclusion is liable to review. Moreover, the fact that he has not made known the reasons why he was not satisfied will not prevent the review of his decision. The conclusion he has reached may, on a full consideration of the material that was before him, be found to be capable of explanation only on the ground of some such misconception. If the result appears to be unreasonable on the supposition that he addressed himself to the right question, correctly applied the rules of law and took into account all the relevant considerations and no irrelevant considerations, then it may be a proper inference that it is a false supposition. It is not necessary that you should be sure of the precise particular in which he has gone wrong. It is enough that you can see that in some way he must have failed in the discharge of his exact function according to law."
"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."
The importance of par (b) of s 101(1) is emphasised by the definition of "assessment" in s 3(1). This includes not only an assessment of tax liability by the Chief Commissioner, but also an assessment by the Supreme Court or ADT on an application for review.
"A review by the Supreme Court is taken to be an appeal for the purposes of [the Supreme Court Act] and the regulations and rules made under that Act, except as otherwise provided by that Act or those regulations or rules."
"The powers in the [Administration Act], s 101 are quite different from the powers of a court on appeal under the [Income Tax 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 [ADT] has been abrogated."
His Honour added that the powers on review are the same for the Supreme Court and the ADT. That requires qualification to allow for the supplementation of the Supreme Court's powers by s 75A of the Supreme Court Act, but otherwise is correct.
"It is anticipated that, by conferring concurrent jurisdiction on the [ADT] and the Supreme Court, taxpayers who are presently deterred from pursuing a review of the Chief Commissioner's decision past the objection stage because of the complexity, expense and delay associated with Supreme Court proceedings will take advantage of access to the cheap and flexible review mechanisms offered by the [ADT]. Conversely, those taxpayers who wish to access the judicial expertise of the Supreme Court because their particular matter involves highly technical and difficult legal issues or because the amount of tax in issue is substantial can do so."
Chief Commissioner of State Revenue v Tasty Chicks Pty Ltd [2010] NSWCA 326. ↑
Osland v Secretary to Department of Justice [No 2] (2010) 241 CLR 320 at 331‑332 [18]; [2010] HCA 24. ↑
Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390 at 399‑400 [27]; [2010] HCA 32. ↑
Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245 at 261; [1995] HCA 10. ↑
See Pasini v United Mexican States (2002) 209 CLR 246 at 253‑254 [11]‑[13]; [2002] HCA 3. ↑
Since repealed with effect 1 July 2007 by s 104 of the Payroll Tax Act 2007 (NSW). ↑
Tasty Chicks Pty Ltd v Chief Commissioner of State Revenue (2009) 77 ATR 394. ↑
Tasty Chicks Pty Limited
Chief Commissioner of State Revenue
[1995] HCA 10
(2010) 241 CLR 320
(2010) 241 CLR 390
(1995) 183 CLR 245
(2002) 209 CLR 246
(1949) 78 CLR 353
(2010) 240 CLR 611
Appeal allowed. Orders of the Court of Appeal dated 4 January 2011 set aside. Matter remitted to the Court of Appeal for further hearing in accordance with the reasons. Costs to date in the Court of Appeal to be determined by that Court on final disposition. Respondent to pay appellants' costs in this Court.