This appeal concerns the liability of the appellant, an operator of medical centres, to payroll tax in respect of payments to doctors who treat patients at the centres.
The appellant sought review in the Tribunal of a decision by the respondent ("the Chief Commissioner") to disallow an objection against assessments of payroll tax for the period 1 July 2013 to 31 March 2018, assessed and payable under the Payroll Tax Act 2007 (NSW) ("PTA"). The application to the Tribunal was unsuccessful and now the appellant appeals against the decision of the Tribunal.
For the reasons set out below we have dismissed the appeal.
[2]
Background
The appellant operates a business comprising three medical centres from which various doctors operate. The appellant and the doctors entered into a written agreement. The terms of this agreement were set out in the agreed representative sample agreement before the Tribunal ("Agreement") and there was no dispute before the Tribunal below or on this appeal about the terms of this Agreement.
In the introduction to the Agreement it is noted:
"The Doctor has requested to use The Clinic(s) to provide The Services in these facilities as a private practitioner, subject to the terms of this Agreement. The Doctor agrees to provide the services on a five day per week basis, including weekend rotation."
Clause 1 of the Agreement provides:
"This Agreement is in respect of the provision of The Services by The Doctor, at times agreed by the parties, in The Clinic operated by The Venture."
Services are defined in clause 2 as follows:
"The Services shall mean medical services normally provided in most general practices and shall not include services of a special nature provided by some GPs, such as, acupuncture, cosmetic services etc."
Under the Agreement, the appellant agreed to provide rooms at the clinic as well as shared administrative and medical support services to the doctors.
Various provisions in clause 4 of the Agreement in relation to payment are relevant:
"4.1 In respect of services provided in The Clinic, The Doctor shall 'bulk bill' the patients and will pay the venture 30% plus GST of the total billings…
4.3 The Doctor shall be responsible for and document MBS item numbers to be claimed…
4.5 Payment is made fortnightly two weeks in arrears, for example - if pay is calculated on the 30th of the month, the Doctor would be paid for batches settled between the 1st and 14th of the same month and so on. This rule will apply during leave periods. This is to protect the Venture from any disciplinary action against the Doctor or his Provider No eligibility."
The doctors would bulk-bill their patients and the patients would assign their Medicare benefits to the doctors by completing a "Bulk Bill Assignment Benefit" form.
Outside the terms of the Agreement, there was an arrangement by which the doctors had the option of having the appellant deal directly with Medicare to obtain the benefits assigned to them by the patients. Other than three doctors, all doctors chose to have the appellant deal with Medicare.
To enable this process, the doctors that so opted, directed Medicare to pay all benefits assigned to them by their patients, into a bank account held in the name of the appellant. Administrative staff employed by the appellant would record and reconcile the Medicare benefits received for the doctor. At the end of the first four weeks of the Agreement and every fortnight thereafter, amounts equal to 70% of the claims paid by Medicare for a particular doctor were paid from the appellant's bank account to that doctor. The remaining 30% was retained by the appellant representing the payment in accordance with cl 4.1 of the Agreement.
Payroll tax has been levied by the respondent only in respect of the payments made by the appellant to doctors from the Medicare benefits it collected in its bank account on the doctors' behalf (i.e. the amounts equal to 70% of the claims paid by Medicare). No payroll tax has been levied in respect of the payments made directly by Medicare to the three doctors.
[3]
Payroll tax regime
Section 6 of the PTA imposes payroll tax on "taxable wages" which is defined in s 10(1) as wages that are taxable in NSW. This definition is then picked up by s 11(1)(a) PTA which provides that wages which are taxable in NSW are those that are paid or payable by an employer for or in relation to services performed by an employee wholly in NSW.
Section 7 provides that the "employer" (as defined in s 3(1) to include a person taken to be an employer by or under the PTA) who pays or is liable to pay the "taxable wages" is liable to pay payroll tax on the wages.
Division 7 of the PTA extends the concept of wages to payments made to persons under what are defined in s 32 as "relevant contracts". The relevant parts of s 32 provide:
32 What is a relevant contract?
(1) In this Division, a relevant contract in relation to a financial year is a contract under which a person (the designated person) during that financial year, in the course of a business carried on by the designated person -
(a) …
(b) has supplied to the designated person the services of persons for or in relation to the performance of work, …
(2) However, a relevant contract does not include a contract of service or a contract under which a person (the designated person) during a financial year in the course of a business carried on by the designated person -
(a) ..
(b) is supplied with services for or in relation to the performance of work where -
(i) those services are of a kind not ordinarily required by the designated person and are performed by a person who ordinarily performs services of that kind to the public generally, or
(ii) those services are of a kind ordinarily required by the designated person for less than 180 days in a financial year, or
(iii) those services are provided for a period that does not exceed 90 days or for periods that, in the aggregate, do not exceed 90 days in that financial year and are not services -
(A) provided by a person by whom similar services are provided to the designated person, or
(B) for or in relation to the performance of work where any of the persons who perform the work also perform similar work for the designated person,
for periods that, in the aggregate, exceed 90 days in that financial year, or
(iv) those services are supplied under a contract to which subparagraphs (i)-(iii) do not apply and the Chief Commissioner is satisfied that those services are performed by a person who ordinarily performs services of that kind to the public generally in that financial year…
Where there is a relevant contract, the person to whom services are supplied under the relevant contract is taken to be the employer (PTA, s 33) and the person who supples the services is taken to be the employee (PTA, s 34).
Pursuant to s 35(1), certain amounts under relevant contracts are deemed to be wages. Section 35 provides:
35 Amounts under relevant contracts taken to be wages
(1) For the purposes of this Act, amounts paid or payable by an employer during a financial year for or in relation to the performance of work relating to a relevant contract or the re-supply of goods by an employee under a relevant contract are taken to be wages paid or payable during that financial year.
(2) If an amount referred to in subsection (1) is included in a larger amount paid or payable by an employer under a relevant contract during a financial year, that part of the larger amount which is not attributable to the performance of work relating to the relevant contract or the re-supply of goods by an employee under the relevant contract is as determined by the Chief Commissioner.
(3) An amount paid or payable for or in relation to the performance of work under a relevant contract is taken to include -
(a) any payment made by a person who is taken to be an employer under a relevant contract in relation to a person who is taken to be an employee under the relevant contract that would be a superannuation contribution if made in relation to a person in the capacity of an employee, and
(b) the value of any share or option (not otherwise included as wages under this Act) provided or liable to be provided by a person who is taken to be an employer under a relevant contract in relation to a person who is taken to be an employee under the relevant contract that would be included as wages under Division 4 if provided to a person in the capacity of an employee.
[4]
Tribunal decision
The Tribunal was first required to determine whether the "contract" (as defined in PTA, s 31 to include an agreement, arrangement or undertaking, whether formal or informal and whether express or implied) was a "relevant contract" under PTA, s 32.
There was no dispute before the Tribunal below about what the contract comprised: it was both the Agreement as well as the arrangement by which the appellant dealt with Medicare, received the assigned benefits and then paid the amounts to the doctors after deduction of the 30% fee for the use of the consulting rooms and administrative and medical support services.
The Tribunal first had regard to the relevant authorities for the proposition that a person supplies services to another, whether by servicing the needs of the clients or by providing services in the business of the other. Those cases included Smith's Snackfood Co Ltd v Chief Commissioner of State Revenue (2013) 97 ATR 904; [2013] NSWCA 470 ("Smiths"); D & D Tolhurst Pty Ltd v Commissioner of State Revenue (Vic) (1997) ATC 2179; Levitch Design Associates Pty Ltd as Trustee for the Levco Unit Trust v Chief Commissioner of State Revenue [2014] NSWCATAD 215; Bridges Financial Services Pty Ltd v Chief Commissioner of State Revenue 60 ATR 237; [2005] NSWSC 788.
The Tribunal then considered the specific terms of the Agreement:
"[38] The terms of the Agreement indicate that the Doctors agreed to:
(1) provide the Services on a five day per week basis, including weekend rotation (cl 2) and in this regard agreed to meet roster commitments (cl 3.8) and to provide advance notice of planned vacations (which were limited to four weeks in a 12 month period and which had to be approved by the applicant (cl 6);
(2) promote the interests of the applicant (cl 3.4) including not channelling patients away from the applicant (cl 3.8);
(3) abide by the applicant's operating protocols and to complete all necessary documentation for that purpose (cl 3); and
(4) a restrictive covenant, which would become operational upon the Doctor leaving the particular medical centre owned by the applicant, with such covenant to have an "exclusive zone" of 5 kilometres from the medical centre and to be in place for two years after the Doctor's departure (cl 7)."
In evaluating those terms, the Tribunal found the Agreement secured the provision of services of the doctors to the patients. The Tribunal also made the following factual finding at [39]:
"In circumstances where such services were a necessary part of the applicant's medical centre business, the Doctors provided them not only to the patients but also the applicant."
Given those findings and that there was no dispute between the parties that the services provided were "work-related", the Tribunal ultimately concluded the contract was a "relevant contract": [41].
Having reached that conclusion, the Tribunal was then required to consider whether or not any of the exemptions in s 32(2) applied. It is notable that the appellant only pressed in the Tribunal below that s 32(2)(b)(iv) applied. This required the appellant to satisfy the Tribunal that the services provided by the doctors were services:
1. supplied under a contract to which s 32(2)(b)(i)-(iii) did not apply; and
2. performed by a person who ordinarily performed services of that kind to the public generally in that financial year.
The Tribunal noted that neither party addressed the first of those tests. This was despite satisfaction of both tests being necessary to qualify for the exemption in s 32(2)(b)(iv).
In any event, the Tribunal considered all of the evidence and determined that the appellant had a medical centre business and the doctors' services are of a kind ordinarily required by the appellant. These were findings of fact. Based on these facts, the Tribunal concluded that s 32(2)(b)(i) did not apply.
Similarly in respect of s 32(2)(b)(i) the Tribunal made factual findings that the appellant had a medical centre business, and the terms of the Agreement secured the provision of services by the doctors which are of a kind ordinarily required by the appellant for more than 180 days. Based on these facts, the Tribunal concluded that s 32(2)(b)(ii) did not apply.
However, the Tribunal could not be satisfied as to whether s 32(2)(b)(iii) did or did not apply. Consequently, the appellant failed to discharge its onus of proving that the "services are supplied under a contract to which subparagraphs (i)-(iii) do not apply". That is, the Tribunal had only reached a state of satisfaction about subparagraphs (i) and (ii).
Further, the Tribunal was not satisfied on the evidence that the appellant had discharged its onus of proving that the doctors provided their services to the public generally in each of the financial years in question at [58]. In particular, the Tribunal did not accept the evidence of Dr Thomas, which was found to be a combination of a bald assertion as to what the doctors did and a statement of his belief with no foundation for such assertion and belief. Nor was the Tribunal prepared to infer that the doctors' other income was from providing medical services to the public generally, as opposed to being derived from other sources.
On these bases, the Tribunal determined the exemption in s 32(2)(b)(iv) was not available.
Having determined there was a relevant contract and no exemption applied, the Tribunal then turned to the question under PTA, s 35: were the payments "for or in relation to the performance of work relating to a relevant contract".
The Tribunal approached PTA, s 35 in a three-step manner. First, identifying the "performance of work"; second, determining whether that "performance of work" was said to be "relating to" the relevant contract; and finally determining whether the payments were "for or in relation to" that performance of work.
The Tribunal construed the terms of the Agreement and found that "services," as defined in the Agreement, means the performance of work and that work is the very subject of the Agreement.
In approaching the third step of s 35, PTA, the Tribunal construed the words "relating to" consistently with the Court of Appeal; requiring nothing more than a relationship, whether direct or indirect, between two subject matters (Smiths at [59]). The Tribunal then identified the relationship between the performance of work and the payments in the present case at [67] and concluded at [68]:
"While the relationship between the provision of the services and the Payments was not direct, there was a clear indirect relationship sufficient to satisfy the terms of the section. There is nothing in the context of the section nor its legislative history to suggest that such a relationship is insufficient."
The appellant had submitted that the Tribunal should follow Homefront Nursing Pty Ltd v Chief Commissioner of State Revenue [2019] NSWCATAD 145 ("Homefront Nursing"), however the Tribunal had regard to that decision and considered that it was not determinative. This was for the reason that, in Homefront Nursing, weight had been placed on the fact that the funds received by the practitioners belonged to them rather than the business (to the effect that they were not paid or payable for or in relation to the performance of work). However, that this had subsequently been determined in Commissioner of State Revenue v The Optical Superstore [2019] VSCA 197; 110 ATR 551 ("Optical Superstore") as not a relevant consideration.
Consequently, the Tribunal was satisfied that PTA, s 35 applied to deem the payments to be wages.
[5]
The appeal
An internal appeal lay to the Tribunal constituted by the Appeal Panel on a question of law: Civil and Administrative Tribunal Act 2003 (NSW), s 80(2)(b) (NCAT Act). If no question of law arises, the appellant may seek leave to appeal on any other grounds.
Distinguishing between a question of law and question of fact can often be difficult.
The Full Federal Court in Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 287 ("Pozzolanic") identified five general propositions in relation to the distinction between questions of law and fact (subsequently extracted by the High Court in Collector of Customs v Agfa-Gevaert (1996) 186 CLR 389 at 395):
"1. The question whether a word or phrase in a statute is to be given its ordinary meaning or some technical or other meaning is a question of law: Jedko Game Co Pty Ltd v Collector of Customs (NSW) (1987) 12 ALD 491; Brutus v Cozens [1973) AC 854.
2. The ordinary meaning of a word or its non-legal technical meaning is a question of fact: Jedko Game Co Pty Ltd v Collector of Customs (NSW) (supra); New South Wales Associated Blue-Metal Quarries Ltd v Commissioner of Taxation (Cth) (1956) 94 CLR 509 at 512; Life Insurance Co of Australia Ltd v Phillips (1925) 36 CLR 60 at 78; Neal v Department of Transport (1980) 3 ALD 97 at 107-108.
3. The meaning of a technical legal term is a question of law: Australian Gas Light Co v Valuer-General (1940) 40 SR (NSW) 126 at 137-138; Lombardo v Commissioner of Taxation (Cth) (1979) 40 FLR 208 at 215.
4. The effect or construction of a term whose meaning or interpretation is established is a question of law: Life Insurance Co of Australia v Phillips (supra) at 79:
5. The question whether facts fully found fall within the provision of a statutory enactment properly construed is generally a question of law: Hope v Bathurst City Council (1980) 144 CLR 1 at 7 per Mason J with whom Gibbs, Stephen, Murphy and Aickin JJ agreed; Australian National Railways Commission v Collector of Customs (SA) at 379 (Sheppard and Burchett JJ)."
The Full Court in Pozzolanic, qualified the fifth proposition stating that when a statute uses words according to their ordinary meaning and it is reasonably open to hold that the facts of the case fall within those words, the question as to whether they do or not is one of fact.
In Sharp Corporation of Australia Pty Ltd v Collector of Customs (1995) 59 FCR 6 at 16 Hill J stated that the fifth proposition in Pozzolanic is in truth two separate and related propositions as follows:
"The rule that a question of fact is involved in determining whether facts fall within the meaning of a word once that meaning is ascertained, may cause confusion. The confusion comes about because there are actually two related rules, the distinction between which is not always readily apparent. The first of these rules is generally expressed as being that where the facts have been fully found or there is no dispute as to the facts and the question is whether those facts necessarily fall within the description of a word or phrase in a statute, that will be a question of law. This is the sixth proposition enunciated by [Jordan] CJ in the Australian Gas Light Co case. The rationale for this principle is clear enough. If only one meaning is open but a tribunal arrives at a different meaning, underlying the Tribunal's conclusion must be an error of principle, that is to say, an error of law.
The second related principle is that where the facts found are capable of falling within or without the description used in the statute, the decision which side of the line they fall on will be a decision of fact and not law. Such a decision will generally involve weight being given to one or other element of the facts and so involve matters of degree."
Applying the above principles here, while the meaning and proper construction of the defined words in s 32 and s 35 of the PTA is a question of law, whether or not the facts found fall within the properly construed definitions is a question of fact from which there is no appeal as of right to the Appeal Panel.
[6]
Grounds of appeal
The appellant's Notice of Appeal dated 30 September 2021 listed three broadly drafted grounds of appeal.
In its written submissions, the appellant further articulated those grounds of appeal. The respondent addressed in his written submissions, each of the arguments raised by the appellant.
At the hearing, without objection from the Chief Commissioner, the Appeal Panel gave leave to the appellant to amend the Notice of Appeal to conform with the arguments relied on in written submissions.
The Amended Notice of Appeal filed at the conclusion of the hearing was as follows:
"(1) The Tribunal below erred in construing and applying Section 35(1) of the Payroll Tax Act 2007 ('the PTA') to payments by the Appellant to doctors who practised medicine at its medical centres of amounts equal to 70 per cent of Medicare benefits assigned by patients to those doctors and collected by the Appellant on their behalf.
(2) The Tribunal below erred in law in finding at [39] that, for the purpose of construing and applying Section 35(1) of the PTA, under written agreements between those doctors and the Appellant, the doctors provided their medical servicers as GP's not only to their patients, but to the Appellant;
(3) The Tribunal below erred in law in finding at [41] that the agreement between the Appellant and each doctor was 'a relevant contract' within the meaning of Section 32(1)(b) of the PTA;
(4) (With the leave of the Appeal Panel) the Tribunal below erred in law in finding at [52] that each such agreement is not exempt from being 'a relevant contract' pursuant to section 32(2)(b)(i) of the PTA;
(5) The Tribunal below erred in law in finding at [68] that the 70 per cent payments were 'for or in relation to the performance of work relating to a relevant contact' within the meaning of section 35(1) of the PTA.
(6) The Tribunal below erred in law by finding that under section 35(1) of the PTA such payments are deemed to be wages paid by the Appellant to the doctors.
(7) The Tribunal below erred in law in not following and applying the Tribunal's decision in Homefront Nursing Pty Ltd v Chief Commissioner of State Revenue [2019] NSWCATAD 145, the facts of which were relevantly indistinguishable from the facts which were before the Tribunal below."
Grounds 1, 6 and 7 of the Amended Notice of Appeal comprised the three grounds relied on in the original Notice of Appeal. These were unchanged in the Amended Notice.
In its Notice of Appeal, the appellant contended there were errors of law and so did not seek leave to appeal on any other basis. However, during the course of the hearing, the appellant raised an argument that had not been raised before the Tribunal at first instance. In the Amended Notice of Appeal the appellant included Ground 4 which was (as we understand it) an application for leave to run the new argument on appeal.
In substance, Ground 1 flows from Grounds 2 and 3 in respect of s 32 and Grounds 5 and 6 in respect of s 35.
Essentially, the appellant contends that the Tribunal erred in construing and applying s 32 and s 35 of the PTA in determining whether the amounts paid to the doctors were deemed "wages".
In challenging the conclusion that there was a relevant contract, the appellant contended that the Tribunal erred in finding that services were provided to the doctors. Rather, it was contended, the doctors only provided services to their patients and the appellant that provided services under the relevant contract to the doctors, being the administrative and medical support services together with consulting rooms. This was a challenge to a factual finding of the Tribunal.
This was relied on again by the appellant in challenging the Tribunal's conclusion that the amounts paid were deemed wages under s 35. The argument was that as the doctors did not provide services to the appellant, it was said that they could not be providing services for or in relation to the performance of work relating to the contract.
The appellant acknowledged that there was no dispute in this appeal that amounts were "paid" by the appellant to the doctors for the purpose of s 35. The issue was whether they were paid for or in relation to the performance of work relating to the contract.
The respondent's Reply took issue with the basis of the appeal, particularly that the appeal did not raise questions of law as required under s 80 of the NCAT Act. The respondent supported the conclusions reached by the Tribunal and the orders made.
[7]
Materials before the Appeal Panel
In deciding the appeal, we have had regard to the following:
1. Amended Notice of Appeal;
2. Reply to Appeal;
3. Written submissions for the appellant dated 21 January 2022 and reply submissions dated 20 March 2022;
4. Bundle of documents from the Tribunal below including affidavits and written submissions.
5. Written submissions for the respondent dated 28 February 2022;
6. Oral submissions made on behalf of the parties at the hearing;
7. As requested by the Appeal Panel, further submissions of the appellant 27 March 2022 and in reply on 19 April 2022; and further submissions of the respondent of 11 April 2022.
[8]
Consideration of appeal grounds
Before turning to each of the grounds of appeal identified in the Amended Notice of Appeal, something needs to be said about the Notice of Appeal relied on by the appellant.
A Notice of Appeal is required to properly identify the questions of law which are the subject matter of the appeal. As the Court of Appeal stated in Ferella v Chief Commissioner of State Revenue (2014) 96 ATR 875; [2014] NSWCA 378 ("Ferella") at [22] in respect of an appeal from the Administrative Decisions Tribunal to the Appeal Panel (per White J, Barrett JA and Leeming JA agreeing):
"As the notice of appeal to the Appeal Panel purported to bе ап appeal оп questions of law, it was necessary for the notice of appeal to identify precisely the particular question or questions of law. It was those questions, if there were any, that should have formed the subject matter of the appeal to the Appeal Panel unless leave were sought and obtained for a merits review (TNT Skypak International (Aust) Pty Ltd v Federal Commissioner of Taxation (1988) 82 ALR 175 at 178; 19 ATR 1067 at 1070; В & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187; (2008) 74 NSWLR 481; Соlbу Corporation Pty Ltd v Commissioner of Taxation [2008] FCAFC 10; (2008) 165 FCR 133 at [13]; Osland v Secretary to the Department of Justice (No. 2) [2010] НСА 24; (2010) 241 CLR 320 at 333, [21]; Ное v Manningham City Council [2011] VSC 37 at [4]-[5]; Smalley v Secretary, Department of Health and Ageing [2011] FCA 302 at [10] ff)."
It is not enough to simply assert (as the appellant did), that the Tribunal erred in its construction and application of certain provisions of the PTA without also identifying how that purportedly occurred. Further, as Leeming JA stated in Ferella at [6], "it is not possible, merely by the device of asking whether the Tribunal erred in law in doing something or failing to do something, to circumvent the statutory limitation on the scope of the appeal". What is required is that a particular question of law be identified for determination on the appeal.
In its written submissions, the appellant developed the three grounds relied upon in its original Notice of Appeal and the respondent replied to what he understood to be the grounds (based on those submissions). At the hearing, we directed the appellant to file an Amended Notice of Appeal to put its grounds beyond doubt in this appeal.
While the appellant retained its original three grounds in its Amended Notice of Appeal (which appear as Grounds 1, 6 and 7), it added Grounds 2, 3 and 5 to further articulate those primary grounds. The appellant also added a new ground (Ground 4) seeking leave to raise a new argument on appeal which had been addressed in written submissions and orally at the hearing.
We now address the grounds relied on by the appellant.
[9]
Ground 1
Ground 1 does not of itself identify with any level of precision a question of law. However, as the appeal was argued, Grounds 2 and 3 sought to particularise Ground 1, as did Grounds 5 and 6.
As we apprehend Ground 1 read with Grounds 2 and 3, the appellant contends the Tribunal erred in construing and applying s 35(1), by making the finding at [39] and concluding at [41] that there was a relevant contract.
As noted above, the Tribunal found at [39] that under the terms of the Agreement, the doctors provided services to the appellant. This was a finding of fact.
The appellant argued that:
1. the doctors provided their medical services to their bulk-billed patients, not to the appellant for which they were remunerated by Medicare, not the appellant;
2. the appellant is a company and therefore incapable of receiving, directly or indirectly, any medical services normally provided in most general practices;
3. the Tribunal erroneously held that the authorities do not prevent a conclusion that the doctors provided services to the appellant.
Consequently, it was argued, the conclusion that there was relevant contract for the purposes of s 32 was an error.
However, these submissions amount to nothing more than an attack on the Tribunal's findings of fact and are directed to the conclusion that the contract was a relevant contract, which is a conclusion of fact.
In any event, the Tribunal's approach was entirely orthodox and in accordance with binding authority. As no question of law has been raised, we reject the appellant's appeal on these grounds.
[10]
Ground 4
The appellant sought leave to rely on a new argument on appeal, that is that the exception in s 32(2)(b)(i) applies.
The appellant did not rely on the exception in s 32(2)(b)(i) before the Tribunal at first instance, instead the exception relied upon was that in s 32(2)(b)(iv). One of the necessary integers for satisfaction of the exception in s 32(2)(b)(iv) is that s 32(2)(b)(i) does not apply.
The appellant argued that under s 80(3), NCAT Act, we could decide to deal with the appeal by way of a new hearing and that included allowing a new argument to be raised on appeal. It was further contended that in the wide exercise of our discretion under s 81(2), NCAT Act, we might exercise all the functions that were conferred on the Tribunal at first instance including on grounds other than those relied upon at first instance. When Mr Glissan, counsel for the appellant, was questioned about the nature of what was being sought by the appellant, he confirmed that the appellant was not seeking a rehearing but to have a new hearing on this point only.
In the Amended Notice of Appeal filed after the hearing, for the first time, permission was sought to rely on this argument. No submissions were made as to the basis upon which leave to appeal should be granted or what factors we should take into consideration in the exercise of our discretion to grant leave to raise a new argument.
We do not grant leave to the appellant to rely on the exception in s 32(2)(b)(i) on this appeal.
The appellant had the opportunity to run this argument in the Tribunal below and chose not to do so. As the High Court stated in University of Wollongong v Metwally (No 2) (1984) 158 CLR 447 at 483; [1985] HCA 28:
"It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so."
In any event, the Tribunal found that s 32(2)(b)(i) did not apply and no challenge is brought on this appeal against that conclusion of fact.
Further, the appellant made no submissions about the basis upon which it contends we should exercise our discretion to allow this argument to be raised on appeal. Reliance on s 81(2), NCAT Act is misplaced. That sub-section does not provide a basis for an applicant, having deliberately made forensic decisions about how to run a case at first instance, to change course on appeal by raising arguments not raised below.
[11]
Grounds 5-6
Grounds 5 and 6 also purport to particularise Ground 1.
The appellant contends the Tribunal erred in law in finding that there was a clear relationship between the provision of services and the payments made by the appellant which although indirect, fell within the terms of s 35(1), PTA at [68]. The appellant also challenges the Tribunal ultimate conclusion at [72] that the payments are deemed to be wages.
Central to appellant's challenge as presented at the appeal was reliance on a mistaken proposition that the Tribunal's finding at [39] was erroneous. It was argued that as the doctors did not provide medical services nor could provide medical services to the appellant, there was no "performance of work" relating to the relevant contract within the meaning of s 35. Rather, the medical services were provided to the patients. Consequently, it was argued, there was no relationship to any contract between the doctor and the appellant relating to those services.
This argument was different from the one which had been expressed in written submissions to the effect that the Tribunal should have reached the conclusion that there was no relationship between the payment and contract for the same reasons that this conclusion was reached in Homefront Nursing.
In Homefront Nursing, the arrangement was the same as in this case: doctors bulk-billed patients; the assigned amounts were paid by Medicare into the bank account of the medical centre and subsequently paid to the doctors less a fee for the use of the medical rooms and administration services.
The Tribunal there identified the "arrangement" as "a collecting mechanism for the GPs' Medicare and DVA entitlements; a provision of services and facilities to GPS in which the GP services are supplied; with payment to the Company for the use of its facilities by a share of fees they receive for providing services to patients": [84].
The Tribunal considered the breadth of the words "in relation to" and "relating to", in the context of the expression in s 35(1) "for or in relation to the performance of work relating to a relevant contract". Relying on O'Grady v Northern Queensland Company Ltd (1990) 169 CLR 356, which emphasised that the words "in relation to" must be read in the context of and having regard to the scope of the relevant Act, the Tribunal considered the payments must be directly or indirectly in return for the services or performance of work. The Tribunal found that it was Medicare/DVA that provided the return for the medical services to the doctor where the patient had assigned his or her Medicare benefits, not the Company at [63]. This was apposite to the conclusions of the Victorian Civil and Administrative Tribunal (VCAT) in The Optical Superstore Pty Ltd v Commissioner of State Revenue [2018] VCAT 169 at [108], to the effect that the consultation fees which had been billed to Medicare and subsequently released to the optometrists were a return of amounts to which they were entitled for the services they provided to the patients and not to the trustee/company.
The Tribunal in Homefront Nursing ultimately found that the payments did not have a relevant relationship with the relevant contract because the arrangement was a collection mechanism at [84]. It was held that the payment by the company to the doctors sourced from Medicare was too remote from the work performed by the doctors for the purposes of PTA, s 35 at [88].
The decision in Homefront Nursing was delivered on the same day as the decision of the Victorian Court of Appeal in Optical Superstore, which was an appeal from the decision of Croft J in Commissioner of State Revenue v Optical Superstore Pty Ltd [2018] VSC 524 ("CCSR v Optical"), itself an appeal from VCAT's decision in The Optical Superstore Pty Ltd v Commissioner of State Revenue [2018] VCAT 169.
The Court of Appeal held that the payments made to the optometrists were deemed to be "wages" for the purposes of the Victorian Payroll Tax Act (which is in identical terms to the PTA) even though the monies were at all times beneficially owned by those optometrists. The crux of the appeal was the construction of the words "paid or payable," in particular they extended to a return of money by one person to another in circumstances where the second person earned money providing services to a third party and directed the money be deposited into a bank account of the first person and held in trust. As noted in Optical Superstore, the source of the payment is relevant and may potentially be a significant factor among many "in determining whether an amount is paid or payable … for or in relation to the performance of work": [82].
We note that Croft J in CCSR v Optical held that there was no basis under the PTA to conclude that the words "in relation to" in their context required a direct and immediate relationship between payment and the services and that the provisions were intended to capture a wide range of potential contracting arrangements. This was a matter not ultimately dealt with by the Court of Appeal given the findings made by VCAT at first instance at [88].
In the appeal before us however, there was no dispute about whether the amounts received by the doctors were "paid or payable". The appellant accepted the amounts were payments within s 35(1). Rather the issue was whether they were payments for or in relation to the performance of work relating to a relevant contract.
The appellant argued that similarly to Homefront Nursing, the Tribunal should have determined that the relationship (being an indirect relationship) was too remote to fall within s 35(1). This is despite also arguing that there was no relationship and that the finding at [39] was erroneous.
For the reasons already expressed above, the finding at [39] is a finding of fact. We have already concluded that no question of law arises in respect of this finding. Our conclusion is fatal to the appellant's argument.
Further, the finding at [68] was conclusion of fact and not appealable as of right on this appeal. It was different from the conclusions of fact reached by the Tribunal in Homefront Nursing.
We also note that the appellant did not articulate a question of law as to the proper construction of s 35, such that there is no occasion on this appeal to consider the breadth of relationship by the use of the words "in relation to" or "relating to".
We dismiss these grounds of appeal.
[12]
Ground 7 - failure to follow Homefront Nursing
The appellant submitted that the Tribunal made a legal error by failing to follow or, as a matter of comity, apply Homefront Nursing.
We reject this ground of appeal for the following reasons.
It is well settled that the Tribunal is not bound by the doctrine of precedent: Independent Liquor and Gaming Authority v D & D Natural Health Pty Ltd [2021] NSWCATAP 170 ("ILGA").
As the Appeal Panel in ILGA stated:
"[51] The Tribunal is not bound by the doctrine of precedent to follow earlier decisions. However, in the context of the legislation governing one of the predecessor Tribunal's to NCAT - the Administrative Decisions Tribunal - it was said that the Tribunal should ordinarily follow decisions of the Appeal Panel and decisions of the Tribunal as constituted by the President or a Deputy President, unless they are clearly wrong: Rittau v Commissioner of Police [2000] NSWADT 186 at [60]. We agree, however no such qualification has been expressed in relation to first instance decisions by the Tribunal Members other than the President or. Deputy President. It follows that the Tribunal did not make a legal error by failing to following the decision in MJ Trading v Independent Liquor and Gaming Authority [2018] NSWCATD 260."
Homefront Nursing was not a decision of the Appeal Panel, the President or the Deputy President. The Tribunal was not under any obligation to follow it as law or as a matter of comity.
In any event, the appellant's contention that the doctors did not provide services or perform work for the appellant meant that it was not entirely on all fours with Homefront Nursing where the parties agreed that there was a relevant contract (and consequently, that the company had supplied to it services of the doctors for or in relation to the performance of work). Further, as noted above, the Tribunal in the present case made a conclusion of fact that there was a clear indirect relationship between the provision of services and the payments made by the appellant at [68]. Whereas, in Homefront Nursing at [84], the Tribunal made a finding that there was no relationship to the contract, a conclusion reached without the benefit of Optical Superstore.
[13]
Orders
We make the following orders:
1. Leave to raise new argument on appeal refused.
2. Appeal dismissed.
[14]
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
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Decision last updated: 06 July 2022