Mortgage Force Service Pty Ltd & Anor and Commissioner of State Revenue - [2007] WASAT 53

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: COMMERCIAL & CIVIL

ACT: TAXATION ADMINISTRATION ACT 2003 (WA)

CITATION: MORTGAGE FORCE SERVICE PTY LTD & ANOR and COMMISSIONER OF STATE REVENUE [2007] WASAT 53

MEMBER: JUSTICE M L BARKER (PRESIDENT)

HEARD: 3 AUGUST 2006

DELIVERED : 23 FEBRUARY 2007

FILE NO/S: CC 2618 of 2005
CC 2619 of 2005

BETWEEN: MORTGAGE FORCE SERVICE PTY LTD
MORTGAGE FORCE AUSTRALIA PTY LTD
Applicants
AND
COMMISSIONER OF STATE REVENUE
Respondent

Catchwords:

Revenue - Pay-roll tax - "Wages" - "Employee" - Whether commissions paid to consultants of applicants were wages - Whether consultants were "employees" - Consultants found to be independent contractors

Legislation:

A New Tax System (Goods and Services Tax) Act 1999 (Cth), s 29.70(1)
Bankruptcy Act 1966 (Cth)
Business Names Act 1962 (WA)
Corporations Law (Cth)
Finance Brokers Control (General) Regulations 2005 (WA), reg 16
Finance Brokers Control Act 1975 (WA), s 4, s 26(1), s 30(2), s 31(1), s 43, s 84, s 92
Pay-roll Tax Assessment Act 1971 (WA), s 3(1), s 6(1)
Pay-roll Tax Assessment Act 2002 (WA), s 4, s 5, Glossary
Privacy Act 1988 (Cth)
Real Estate and Business Agents Act 1978 (WA)
Stamp Act 1921 (WA), s 27, 27(1), s 27(3)
Taxation Administration Act 2003 (WA), cl 2(1)(a)

Result:

Review application allowed
Decision of Commissioner of State Revenue to refuse applicants' objection set aside

Category: A

Representation:

Counsel:

Applicants: Mr MJ McCusker QC and Ms MH Meegahage
Respondent: Ms R Panetta and Ms J Jones

Solicitors:

Applicants: Munro Doig Lawyers
Respondent: State Solicitor's Office

Case(s) referred to in decision(s):

Australian Air Express Pty Ltd v Langford [2005] NSWCA 96; (2005) 146 IR 240
Australian Mutual Provident Society v Chaplin (1978) 18 ALR 385
Bridges Financial Services Pty Ltd v Chief Commissioner of State Revenue [2005] NSWSC 788; (2006) 222 ALR 599
City Motors (1981) Pty Ltd v Commissioner of State Taxation (WA) (1993) 26 ATR 291
Commissioner of Payroll Tax v Mary Kay Cosmetics Pty Ltd [1982] VR 871
D & D Tolhurst Pty Ltd v Commissioner of State Revenue (1997) 138 ATR 1001
Federal Commissioner of Taxation v Barrett (1973) 129 CLR 395
GH Teede Pty Ltd v Commissioner of State Taxation (WA) (1985) 16 ATR 647
Hall (Inspector of Taxes) v Lorimer [1992] 1 WLR 939
Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21
Humberstone v Northern Timber Mills (1949) 79 CLR 389
JA & BM Bowden & Sons Pty Ltd v Chief Commissioner of State Revenue (2001) 47 ATR 94
Narich Pty Ltd v Commissioner of Pay‑roll Tax (NSW) (1982) 12 ATR 478
Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497
Roy Morgan Research Pty Ltd v Commissioner of State Revenue [2006] VCAT 1204; (2006) 63 ATR 168
Stevens v Brodribb Sawmilling Co Pty Ltd (1985‑1986) 160 CLR 16
Sweeney v Boylan Nominees Pty Ltd [2006] HCA 19; (2006) 227 ALR 46
TNT Worldwide Express (NZ) Ltd v Cunningham [1993] 3 NZLR 681
Vabu Pty Ltd v Federal Commissioner of Taxation (1996) 33 ATR 537
Zuijs v Wirth Brothers Pty Ltd (1955) 93 CLR 561

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

Mortgage Force Australia Pty Ltd as Trustee for the MFA Unit Trust during the period 1 July 1999 to 21 November 2002 paid commissions to certain consultants, who acted as mortgage originators.
Mortgage Force Service Pty Ltd as trustee for the MF (WA) Service Trust during the period 22 November 2002 to 30 April 2003 paid commissions to certain consultants, who acted as mortgage originators.
During the entire relevant period, the MFA Unit Trust held mortgage origination agreements with financial institutions and the consultants were accredited representative of Mortgage Force to deal with these financial institutions.
The issue before the Tribunal was whether the payments commission made by the applicants to the consultants during the period 1 July 1999 to 30 April 2003, constituted "wages" for the purposes of pay-roll tax under the Pay‑roll Tax Assessment Act 1971 (WA).
The resolution of the issue depended on whether the consultants should be considered "employees", under the general law understanding of what an employee is, or independent contractors.
The Tribunal determined that the consultants were not employees and so the applicants were not liable to pay pay‑roll tax in relation to the commissions paid.
In deciding that the consultants were not employees, the Tribunal regarded a number of factors traditionally considered in deciding this question, including the degree of control that the applicants exercised over the consultants, the question of whose business the consultants carried out, the mode of remuneration of the consultants, the provision and maintenance of equipment, the obligation to work, the hours of work and provisions for holidays, the deduction of income tax, the delegation of work, and the extent to which the consultants could create a saleable asset through their work.
Notwithstanding that the applicants exercised a degree of control over the consultants and that the work of the consultants was obviously important to the applicants' own businesses, the Tribunal, having regard to the totality of the relationship between those parties, decided that the applicants did not run their businesses through the consultants, but that the consultants carried on their own businesses.
The Tribunal found that the proper characterisation of the relationship between the applicants and the consultants was, as contended for by the applicants, that:
•the consultants were the proprietors of their businesses, operated on their own accounts as mortgage originators and in respect of which the applicants provided support services;
•MFA was the proprietor of its own business as a mortgage aggregator and supplied "aggregation services" and support services to the consultants;
•MFS was the proprietor of its own business and liaised with MFA to supply aggregation services and support services to the consultants.
As a result of the Tribunal's decision, the Tribunal allowed the review application of the applicants and set aside the decision of the Commissioner for State Revenue by which he had disallowed the objection of the applicants to his assessment that the applicants were liable to pay pay‑roll tax in respect of the commissions paid to the consultants during the relevant period.
The Tribunal indicated it would make final orders after it heard further submissions from representatives for the parties as to the terms, including with respect to the question of costs upon which both the parties had indicated they wished to be heard.

Issues

The issues raised by these proceedings for determination by the Tribunal are:
(1)Whether payments made by the applicant, Mortgage Force Australia Pty Ltd (MFA) as Trustee for the MFA Unit Trust during the period 1 July 1999 to 21 November 2002 to certain "consultants" were taxable wages for the purposes of pay‑roll tax.
(2)Whether payments made by the applicant, Mortgage Force Service Pty Ltd (MFS) as Trustee of the MF (WA) Service Trust, during the period 22 November 2002 to 30 April 2003 to certain "consultants" were taxable wages for the purposes of pay‑roll tax.

Facts

These proceedings were keenly contested by the parties. By reason of the nature of the contest, while the parties were unable to agree all facts, they were able to agree many facts. The facts that are agreed were settled in a two stage process after much encouragement from the Tribunal.
In some cases, the two applicants are referred to as: "the applicants"; in other cases simply as "MFA" or "MFS" individually; in other cases, collectively as "Mortgage Force".
For ease of reference without intending to ascribe them any particular legal status, the parties agree that for the purposes of these proceedings the various entities and individuals who maintained relevant contractual relations with MFA or MFS during the relevant period should be referred to as "consultants".
Background: The following facts are agreed by the parties as a matter of background.
All of these agreed facts relate to the period 1 July 1999 to 30 April 2003, the agreed relevant period.
The name "Mortgage Force" was a registered business name of MFA.
MFA had origination agreements with 14 financial institutes (origination agreements).
MFA held a finance broker's licence.
Various individuals and entities, referred to neutrally by the parties as "the Consultants", were engaged by MFA pursuant to Deeds of Appointment.
The following consultants, being lawfully constituted entities or individuals, executed a Deed of Appointment:

Consultant Associated individual

(a)     Kalanni Pty Ltd  Bevan O'Farrell
(b)     D & S Holt Family Trust                   David Holt
(c)     The Allsop Family Trust                   Kim Allsop
(d)     Wisebank Nominees Pty Ltd             Mark Roberts
(e)     DNC & ML Holmes as trustee for
the Holmes Trust  Merilyn Holmes

(f) Paul Otway & Lisa Otway trading
as Otway & Otway Consulting
Services Paul Otway

(g)     Nicebridge Pty Ltd  Peter Haffner
(h)     Naturaliste Business Services
Pty Ltd  Stephen Dean

(i) Steve Snook & Pamela Snook
as trustee for the Snook Family
Trust Steve Snook

(j) Todd Haffner & Denise Haffner
trading as T & D Mortgage
Services Todd Haffner

(k)             Craig Sherry
(l)               Ian Bennetts
(m)             Jason Harris
(n)              John Kukura
(o)              John Smith
(p)              Mark Liddelow
(q)              Martin Lovegrove
(r)              Matthew Brennan
(s)              Michael Rushack
(t)               Eileen O'Neill
(u)              Catherine Katseli

However, some consultants did not execute a Deed of Appointment and so were engaged under oral contracts.
The following consultants being lawfully constituted entities or individuals, did not execute a Deed of Appointment but were engaged by MFA as if they had executed a Deed of Appointment:

Consultant Associated individual

(a)     The Campbell Family Trust              Jeff Campbell
(b)     Aaron Basten
(c)     Dennis Smallwood

Sarah Logan executed a Deed of Appointment but the parties agreed that Denregis Holdings Pty Ltd, a company of which she was a director, was appointed as the "Agent" under the Deed of Appointment and at all material times that company operated under the Deed.
On 21 November 2002 MFA ceased making payments to these various consultants.
During the period 22 November 2002 to 30 April 2003 MFA continued to hold its finance broker's licence. MFS did not hold a finance broker's licence.
The origination agreements remained in place between the financial institutions and MFA for the period of 22 November 2002 to 30 April 2003.
MFS engaged a number of individuals and entities as consultants pursuant to one of four versions of the Western Australia Consultancy Agreement (Consultancy Agreement) ("In office", "Home office", "Country office" and "Remote office").
The following consultants, being lawfully constituted entities or individuals, executed the version of the Consultancy Agreement indicated below:

Consultant Associated individual Version

(a)     Kalanni Pty Ltd  Bevan O'Farrell     In office
(b)     Wisebank Nominees Pty Ltd    Mark Roberts       In office
(c)     Craig Sherry  In office
(d)     Dennis Smallwood  In office
(e)     Ian Bennetts  In office
(f)     Matthew Brennan  In office
(g)     Michael Rushack  In office
(h)     Eileen O'Neill  In office
(i) DNC & ML Holmes as trustee
for the Holmes Trust               Merilyn Holmes    Home office

(j) Todd Haffner & Denise Haffner
trading as T & D Mortgage
Services Todd Haffner Home office

(k) Paul Otway & Lisa Otway
trading as Otway & Otway
Consulting Services Paul Otway Home office

(xii)   Sarah Logan  Home office
(xiii) Catherine Katseli  Home office
(xiv)The Allsop Family Trust         Kim Allsop          Country
(xv)Nicebridge Pty Ltd as trustee for
the Nicebridge Trust                Peter Haffner       Country

(xvi) Naturaliste Business Services
Pty Ltd  Stephen Dean      Country
(xvii) John Smith  Country
(xviii) Chris Iannello  Country

No consultant executed a Remote office version of the Consultancy Agreement.
Some consultants did not execute a Consultancy Agreement and so performed their services under oral contracts as if they had executed a Consultancy Agreement:

Consultant Associated individual

(i)     D & S Holt Family Trust  David Holt
(ii)Steve Snook & Pamela Snook as trustee      Steve Snook
for the Snook Family Trust

(iiii)   Keyhole Pty Ltd   David McManus
(iv)    Aaron Basten
(v)     Mark Liddelow

The parties to these proceedings also agree that the following consultants were not engaged as consultants for these purposes:
•The Campbell Family Trust;
•John Harris;
•John Kukura; and
•Martin Lovegrove.
Engagement of consultants: As to the engagement of the consultants by MFA or MFS, the parties to these proceedings also agree a number of facts.
Some of the persons who are appointed or whose entities were appointed as consultants were personally known to either Neil Pinner and/or Michael Brennan, directors of the applicants, in which case Neil Pinner or Michael Brennan recommended to the other that the person or the entity be appointed as a consultant and no further enquiry was made as to that person's experience, skills, qualifications or contacts.
The manner in which clients applied for loans and the loan products were broadly similar to the lending process and the loan products used by consultants when doing lending work in their previous job(s), as lending work is largely standard across the industry.
However, when dealing with clients, consultants could meet with the clients at any time and at any location of their choosing.
Unlike the lending work they did in their previous job(s), consultants needed to become familiar with loan products from a variety of financial institutions (not just one financial institution) and be in a position to evaluate and recommend loan products across different financial institutions.
Both Neil Pinner and Michael Brennan possessed the requisite skills, knowledge and qualifications to control, if necessary, the manner in which the consultants performed the services under the Deed of Appointment and the Consultancy Agreement.
Introductory discussions/orientation: The parties to these proceedings also agree certain facts in relation to the introductory discussions/orientation with consultants.
An employee of one of the applicants explained to the consultant that they were to run their own business, have their own Australian Business Number (ABN) and pay their own taxes.
A copy of each financial institution's procedure manual was provided to the consultant by each financial institution during that financial institution's accreditation training and may also have been downloaded from the relevant financial institution's website.
Nature of services performed: The parties to these proceedings also agree facts as to the nature of services performed by consultants.
The consultants were engaged under contract to find clients, identify suitable loan products for clients, organise the restructuring or refinancing of existing loans for clients, and assist with related enquiries.
Accreditation: The parties to these proceedings also agree facts as to accreditation.
Prior to submitting any loan applications to a financial institution, the consultants were required, by the financial institution, to become personally accredited with that financial institution.
The consultants could choose to become accredited with any financial institution with which MFA had entered into origination agreements.
Consultants could only offer loan products from, and submit applications to, financial institutions with which MFA had origination agreements.
A consultant needed to become accredited with the financial institution, as otherwise the financial institution would not permit the consultant to include its loan products among products which the consultant could recommend to clients.
A consultant could not submit an application form for lodging with a financial institution that he or she was not accredited with.
On occasion, the applicants facilitated the accreditation process by arranging suitable meeting times and places for the financial institutions and consultant.
The consultants became accredited with the financial institutions that they thought they were going to use in providing their services under their contracts with the applicants.
The accreditation process either occurred at the premises of the financial institutions, at the Mortgage Force Nedlands office, or at the consultant's home office.
When the accreditation process occurred at the premises of the financial institutions, consultants not associated in any way with the applicants also attended.
Consultants became accredited with financial institutions by completing the relevant accreditation programme with the financial institution. This programme typically involved the financial institution informing the consultant about its products on offer, the manner in which the loan application forms were to be completed and any procedures the financial institution required the consultant to abide by.
When the consultant had obtained accreditation with the financial institutions, he/she was provided with an "introducer id" from each financial institution.
The introducer id had to be used by the consultant when he/she completed a loan application form for submission to the financial institution.
The consultant could not submit an application form for lodging under his or her introducer id for a competitor of the applicants.
The introducer id identified the consultant to the financial institution.
Based on the introducer id the relevant financial institution knew that MFA was to receive all commissions in respect of clients that the consultant referred to the financial institution.
The consultants were not entitled to and never received a direct payment from the financial institution as they had not entered into origination agreements.
Consultants could not have contracted directly with the financial institutions as the value of loans written by each consultant would have been considered insufficient for the financial institution to contract directly with the consultant.
Membership of professional bodies: The parties to these proceedings also agree facts concerning membership of professional bodies.
All the consultants were or became accredited with the Mortgage Industry Association of Australia (MIAA) as mortgage consultants.
In order to become an "accredited mortgage consultant" member of the MIAA, a consultant was required to:
(1)complete minimum education requirements relative to his/her level of experience;
(2)satisfy a 100 points identification check;
(3)take out an appropriate level of professional indemnity insurance;
(4)not be bankrupt or subject to control under the Bankruptcy Act 1966 (Cth); and
(5)be sponsored by a MIAA Full Member to whom the consultant was exclusively contracted with or otherwise exclusively attached.
MFA was a MIAA Full Member; a member of the "Full Member‑Company or Partnership" category.
Other categories of membership include "Full Member Independent Operator" and "Individual Membership Accredited Mortgage consultant".
A search of the MIAA membership database lists the consultant's business name as "Mortgage Force/[his/her personal name]" and in some cases "Mortgage Force Australia Pty Ltd/[his/her personal name]".
Bank agreements: The parties to these proceedings also agree facts in relation to bank agreements.
MFA entered into all agreements with financial institutions regarding mortgage origination and the payment of commissions for those services.
No consultant entered into any origination agreement.

Pursuant to the origination agreements, MFA was the only party contracted to provide services to the financial institutions in return for which MFA was entitled to receive commissions.
The consultants located clients, identified and recommended suitable loan products for clients, completed or assisted clients to complete loan applications and submitted these loan applications directly to the relevant financial institution.
Financial institutions were also aware of the identity of the consultant who submitted the loan application to the financial institution due to the introducer id each consultant was provided with and required to include on all loan applications.
The only arrangement which dealt with the payment of commission to the consultant was between the relevant applicant and the consultant. The provision was contained in the consultant's Consultancy Agreement or Deed of Appointment, or where the consultant had not executed a Consultancy Agreement or Deed of Appointment, in an oral contract.
Remuneration: The parties to these proceedings also agree facts concerning remuneration.
MFA was paid an upfront commission by the relevant financial institution for each loan product of the financial institution written by a consultant, and a trailing commission for each loan that continued in place with the financial institution.
The relevant applicant remunerated the consultants by payments of commission.
There were two components to the commission paid by the relevant applicant to the consultant: commission paid on the settlement of the loan (upfront commission) and the trailing commission.
To those consultants engaged under a Deed of Appointment, MFA paid a percentage set out in the Schedule to the Deed of Appointment of each of the two types of commission it received from the financial institution for the loan referred by the consultant.
To those consultants engaged under the Consultancy Agreement, MFS paid a percentage set out in Sch D to the Consultancy Agreement of each of the two types of commission MFS had received, through MFA from the financial institution, for the loan referred by the consultant.
MFA was paid the upfront commission by the relevant financial institution at different times.
Prior to payment being made to the consultants, the applicants would issue to the consultants each month notification of the commissions they were to receive.
The consultant could then check the notification to ensure that it corresponded with the consultant's records of what commission the consultant considered they were due to be paid by the relevant applicant.
Where the commissions referred to in the notification differed from what the consultant's records indicated ought to be paid to the consultant, the consultant would:
(1)either contact the relevant financial institution to determine:
(a)why a commission in respect of a particular loan was excluded from the notification; or
(b)why the amount of commission to be paid in respect of a particular loan differed from what the consultant had expected the financial institution to pay; or
(2)contact the applicants to determine why the notification differed from the consultant's record of what commission the consultant ought to be paid by the applicants.
The commission paid by the relevant applicant to the consultant was paid once a month by way of a direct credit to the consultant's bank account. This payment was always made after MFA received its commission from the financial institutions.
The consultants did not render invoices to the relevant applicant for payment of commission to which they had become entitled.
MFA recorded the total amount of commission received from the financial institutions as "gross income" in its financial statements.
MFA did receive or was entitled to receive the total amount of commission from the financial institutions.
Each of the applicants' financial statements recorded the commission paid by the relevant applicant to the consultant as an expense.
The consultants' financial statements reported the commission paid by the relevant applicant to the consultant as "gross income".
Right to dictate place and hours of work: The parties to these proceedings also agree facts as to the applicants' right to dictate a consultant's place of work and hours of work.
The consultants were free to choose where to work and their hours of work.
The applicants never compelled the consultants to work from a particular place or within a particular area.
The consultants were free to choose whether to work within the metropolitan area or outside the metropolitan area.
The consultants were free to choose whether to work from their home office or from the Mortgage Force Nedlands office.
Some clients required appointments to be made with a consultant during business hours. Other clients required appointments to be made with a consultant after business hours.
Consultants were free to make appointments to see clients at a time and place which was mutually acceptable to them.
The hours required to be worked by the consultants on any given day varied because of the varied nature of mortgage origination work.
The applicants did not keep records of where consultants worked from other than to note whether they were "home office", "in office" or "country office".
The consultants were free to choose when to take holidays.
When taking holidays within Australia some consultants ordinarily took equipment such as their mobile phones and their laptops to maintain contact with their clients and to attend to any urgent matters.
Obligation to work: The parties also agree facts as to the consultants' obligation to work.
The consultants were not required to:
(1)work a specified number of hours; or
(2)work any particular hours.
The applicants did not require a consultant to reach a certain target or write a particular number of loans in a given period of time.
However, the contracts between the consultants and the relevant applicant provided for varying rates of commission to be paid based on the gross fees derived in the year (in the case of the Consultancy Agreement) or the number of loans approvals obtained per calendar month (in the case of the Deed of Appointment).
Mortgage origination process: The parties to these proceedings also agree facts concerning the mortgage origination process.
During the relevant period the applicants made available for the use by consultants a Prospect Sheet.
The Prospect Sheet was originally created by Peter Haffner, one of the consultants.
Some consultants, but not all, did use the version of the Prospect Sheet provided to them by the applicants with amendments made by the relevant consultant to suit their own purposes. Any such amendments were made at the consultant's discretion and were not checked or approved, or required to be checked or approved, by the applicants.
None of:
(1)the Prospect Sheet as originally created by Peter Haffner;
(2)the version of the Prospect Sheet made available by the applicants for use by all consultants; or
(3)the version of the Prospect Sheet made available by the applicants then subsequently amended by some consultants to suit their own purposes
contained any reference to Mortgage Force or its logo.
Some consultants met with the clients on multiple occasions prior to lodging the loan applications whilst others did not.
Some consultants used a Prospect Sheet whilst others did not.
On some occasions consultants received notification from the financial institution that the clients' loan applications had been approved and on other occasions notification was provided to the applicants. Once the loan documentation had been received by the clients, some consultants met with the clients to discuss the loan documents and others did not.
Some consultants witnessed the signing of the loan documentation by the clients whilst others did not.
The first step ordinarily taken by a consultant, after a prospective client made contact with the consultant was to ask questions of the prospective client to determine whether he/she could assist the client to obtain a loan product from the financial institution. This step is commonly known as "prequalifying".
Once it was determined that the consultant could assist the prospective client, the next step taken by the consultant was the discussion with the prospective client of what loan products were available from financial institutions, and those loan products the consultant considered appropriate to the client. The consultant would then recommend the loan products he/she considered most appropriate and describe to the client the process involved in obtaining a loan and the paperwork required to be completed.
Some consultants discussed these issues with the clients by telephone. Other consultants made arrangements to meet with the clients to discuss these issues.
The consultant was required to disclose certain information relating to the receipt of commission, pursuant to:
(1)requirements set by the financial institutions, details of which were provided during the accreditation sessions with the relevant financial institution;
(2)Finance Brokers Code of Conduct which came into effect on 4 December 2001; and
(3)the origination agreements between MFA and the relevant financial institution.
For consultants to be in a position to recommend the appropriate loan products for each of the clients, the consultant needed to be fully informed about all loan products available from the financial institutions with which they were accredited.
Loan product information was available on the financial institutions' websites.
The consultant determined which loan products were suitable and presented the client with suitable loan products and information regarding which financial institution offered those products.
The applicants had no input or any involvement determining which loan products were suitable for clients. The "loan worksheet" was a form created and provided to the consultant by the applicants and it referred to Mortgage Force.
Since about early 2002, the reverse side of the loan worksheet has contained the applicants' privacy policy. Prior to 2002 the applicants did not have a privacy policy.
The applicants' privacy policy does not refer to the consultant's name.
The applicants' privacy policy is written from the perspective of the applicants.
The applicants' privacy policy refers to the client as "our customer". The Data Input Sheet was a document created by MFA requiring information concerning the client, details of the consultant dealing with the client, which consultant was to be paid commission and in what share, and the future address of the client for marketing and other purposes.
The loan application form for each loan was completed by the consultant. Loan application forms were made available by the applicants at the Mortgage Force Nedlands office.
Once a loan application form was completed the consultant was required by the applicants to forward a copy of the relevant pages of the completed loan application form and the Data Input Sheet to the Mortgage Force Nedlands office.
The loan application form was forwarded to the relevant financial institution by the consultant or, on some rare occasions, by the client.
MFA received notification of loan approvals at its [email protected] email address.
On some occasions, the consultant received notification of loan approvals directly from the financial institution concerned.
Once loans were approved consultants telephoned the clients to advise the clients of the approval and to congratulate them.
After a loan was approved, an employee of one of the applicants drafted a letter to be sent to the client advising him or her of the approval. The letter was forwarded to the consultant dealing with the client for signing and addition of any personal comments prior to its postage to the client.
An employee of one of the applicants was available to assist in following up with the financial institutions and the clients to ensure that the loan documentation was sent to the client.
The consultant or the client forwarded the signed loan documentation to the financial institution.
After a loan settled, the financial institution emailed the applicants at [email protected] to advise settlement.
An employee of one of the applicants then advised the consultant of settlement of the loan. Consultants ordinarily telephoned the clients to confirm settlement and also to congratulate the clients.
After a loan settled, an employee of one of the applicants drafted the letter to be sent to the client advising him or her of the settlement of the loan. The letter was forwarded to the consultant dealing with the client for signing and addition of any personal comments prior to its posting to the client.
An employee of one of the applicants also prepared another two letters to be sent to the client in the first 12 months after settlement.
The letters were prepared on Mortgage Force letterhead and were sent to the consultant dealing with the client for signing and addition of any personal comments prior to their postage.
Exclusivity of services: The parties to these proceedings also agree facts as to the exclusivity of services.
In addition to being a consultant, Aaron Basten had a contract with the Westland Building Society to procure clients for them. Neither of the applicants had any relationship with Westland Building Society.
Product update and information sessions: The parties to these proceedings also agree facts as to product update and information sessions.
Every two to three weeks, the applicants held product update and information sessions.
The product update and information sessions were generally held at the Mortgage Force Nedlands office. However, on occasion, the sessions were held at the premises of a financial institution.
The product update and information sessions were organised by the applicants and occasionally by a financial institution. An employee engaged by one of the applicants would send out a roster to each consultant at the start of each year outlining the dates of the sessions for the year.
An employee of one of the applicants would send an email to each consultant approximately one week prior to each product update and information session to remind the consultant of the upcoming session.
Attendance at the product update and information sessions was not compulsory. No fee was charged to attend the product update and information sessions.
If a consultant did not attend a product update and information session, an employee of one of the applicants would email or send information discussed at the session to the consultant.
If a consultant attended the product update and information session, the consultant earned CPD (professional development) points required to be accumulated by the MIAA in order for the consultant to maintain the consultant's membership with that body.
Consultants could also earn CPD points in other ways. For example, CPD points were earned from attending bank accreditations and doing relevant TAFE courses.
At the product update and information sessions the directors of the applicants or persons engaged by one of the applicants would outline any changes to the loan products that were offered by the financial institutions, as well as reinforce any applicable industry wide standards and policies.
At the product update and information sessions the consultants discussed problems they had experienced with the financial institutions or clients in order to inform the other consultants.
Every couple of years the applicants organised a conference for the consultants to attend. The conference spanned a couple of days.
Conferences were often held interstate.
At the conference new loan products and procedures were discussed.
Attendance at the conferences was not compulsory.
Own business: The parties to these proceedings also agree facts as to what they term "own business".
Consultants determined whether to contract with the applicants individually or through their companies, partnerships or trusts.
The applicants did not require that the consultants to contract with them through any particular structure.
Consultants were responsible for locating clients and generating their own work.
Consultants chose the hours that they worked.
The applicants had no input into which hours consultants chose to work.
Consultants chose where to work. The applicants had no input into where the consultants worked.
Where consultants were or expected to be "uncontactable", consultants arranged for someone, ordinarily another consultant, to attend to the client's needs whilst they were absent.
The applicants did not grant consultants any entitlements to take sick leave, annual leave, long service leave, maternity or paternity leave or personal leave.
The applicants did not make any superannuation contributions on behalf of the consultants.
Consultants chose their own professional indemnity insurer.
All consultants obtained an ABN and registered for GST (Goods and Services Tax).
The commission that the applicants paid the consultants was inclusive of GST.
According to the terms of the Deed of Appointment, Consultancy Agreement or oral contract no consultant was entitled to receive annual leave, long service leave, sick leave, maternity or paternity leave or personal leave.
All:
(1)business cards provided to consultants by the applicants as part of the support services;
(2)stationery;
(3)newspaper, radio and television advertisements, including the Yellow Pages advertisements;
(4)notepads sent to clients, potential clients and real estate agents;
(5)flyers and other marketing material;
(6)polo shirts provided by the applicants to consultants; and
(7)thank you cards
contained the Mortgage Force name, and except for radio advertisements, logo, and did not contain the consultant's business name or ABN, other than the consultant's personal name.
As part of the support services, consultants were provided with a Mortgage Force email address. The email address was the consultant's first name plus the last initial followed by "@mortgageforce.com.au".
The Mortgage Force email address was the email address that appeared on any advertising material or correspondence.
Most communication between consultants and clients occurred by telephone.
Clients and advertising: The parties to these proceedings also agree facts as to clients and advertising.
The consultants could and did source clients personally by word of mouth and from personal business relationships.
The applicants advertised both in the city and country region publications of Yellow Pages.
As part of the support services provided by the applicants, the applicants organised and paid for the Yellow Pages advertisements.
The applicants' website was created by MFA.
The applicants' website can be found at the address: "
During the relevant period, the applicants advertised the consultants under the link entitled "Our Team" on the website.
On the webpage entitled "Our Team" there was a profile of each consultant, including a photograph of the consultant. Below the consultant's profile the consultant's Mortgage Force email address was listed. A person viewing the "Our Team" webpage could click on the consultant's Mortgage Force email address and email a consultant directly.
The 13 14 97 number was available in 1999.
Prospective clients could dial this number to reach the applicants.
Consultants who agreed to take general enquiries were required to be available to take calls every six weeks for about a week at a time.
Prospective country based clients with general enquiries who rang on the 13 14 97 number would be directed to the consultant located in the relevant country region.
The consultants decided:
(1)whether to give any clients or referrers gifts; and
(2)which gifts to give to clients or referrers.

Usually the gifts were given to the clients or referrers accompanied with a Thank You card and the consultant's business card.
The Thank You cards were blank to allow for a personal message to be written by the consultant.
The applicants sent out marketing material to some clients.
The applicants obtained these clients' addresses from the Data Input Sheet which the consultants were required to forward to the applicants.
The applicants kept the pages of the completed loan application form and the completed Data Input Sheet which the consultant forwarded to the applicants. These documents comprised the client file.
The applicants maintained an electronic client database.
Consultants did not have access to the electronic client database.
The applicants used documents in the client file to update the electronic client database.
Power to delegate: The parties to these proceedings also agree facts as to consultants' power to delegate.
A consultant may have arranged to split the commissions with the relief person who was a consultant.
The commission split was recorded on the Data Input Sheet lodged in respect of any loan applications made whilst the consultant was absent.
The applicants did not seek to influence the amount or basis of the commission split as it was a matter entirely for the consultants.
Duration: Parties to these proceedings also agree facts concerning duration.
The Deed of Appointments had a standard term of five years.
The Consultancy Agreements had a standard term of one year.
On each anniversary of a Deed of Appointment or Consultancy Agreement, whichever was relevant, the applicants reviewed their agreements with the relevant consultants.
Licences: The parties to these proceedings also agree facts concerning licences.
Pursuant to the Finance Brokers Control Act 1975 (WA) in force during the relevant period, anyone who arranged or negotiated loans in the course of their business was required to have a finance broker's licence.
This included anyone engaged as a bona fide contractor by a licensed finance broker. However, anyone engaged as a bona fide employee by a person holding a finance broker's licence was not required to hold a finance broker's licence.
During the relevant period, pursuant to the Finance Brokers Control (General) Regulations 1977 (WA) the fee for a finance broker's licence or renewal of that licence was $324.
To carry on the business of a finance broker, in addition to holding a licence, a licensee was also required to hold a current business certificate.
The mortgage origination industry generally and the applicants only became aware of the necessity for independent contractors to be separately licensed in about late 2001.
On 21 November 2001 the Finance Brokers Supervisory Board issued Statement of Policy 4/2001:
(1)confirming that contractors were required to be licensed; and
(2)stating that holding a restricted finance broking licence would be sufficient.
In the December 2001 newsletter the Finance Brokers Supervisory Board acknowledged that:
"there are a considerable number of finance intermediaries operating in the market place who may not realise that they are required to be licensed. As such, the Board now urges them to obtain a licence as required under the Finance Brokers Control Act 1975."
If a person carried on a business of finance broking without a current licence and business certificate the person may have been subject to disciplinary action and was not eligible to receive payment for negotiating and arranging loans.
On 27 November 2001 the Registrar of the Finance Brokers Supervisory Board wrote to Neil Pinner advising that the consultant Stephen Dean needed to obtain an appropriate licence.
In December 2001, in recognition of the considerable number of finance intermediaries operating without a licence, the Finance Brokers Supervisory Board issued Statement of Policy 5/2001 in which it:
(1)specified the education requirements for the grant of a restricted licence; and
(2)published its interim policy under which restricted licences would be granted prior to the applicants completing the education requirements if certain conditions were met.
The Finance Brokers Supervisory Board maintained a register of licensees and holders of business certificates.
As at 11 December 2002 MFA was recorded on the register maintained by the Finance Brokers Supervisory Board as being registered (Licence FB 760) as a body corporate under the bona fide control of Neil James Pinner holding a current financial brokers licence and business certificate.
Pursuant to the Finance Brokers Control Act 1975, enforced during the relevant period, the Finance Brokers Supervisory Board approved a Code of Conduct which was published in the Government Gazette on 4 December 2001.
Pursuant to the Code of Conduct a finance broker was obliged to keep and maintain copies of all records or negotiations and the forms and documents required by the Code in relation to a loan for a period of six years after the date on which the loan was repaid. This provision continued to apply to a person even when that person ceased to carry on business as a finance broker.
During the relevant period the applicants kept and maintained records of negotiations and forms and documents required by the Code of Conduct.
Support for consultants: The parties to these proceedings also agree facts as to the support provided to the consultants by the applicants.
In relation to those consultants who executed a Consultancy Agreement, MFS agreed to provide those consultants with the support specified in Sch E of the Consultancy Agreement.
In relation to those consultants who executed a Deed of Appointment or were on an oral contract, the applicants agreed to provide those consultants with similar support to that contained in Sch E of the Consultancy Agreement.
The support provided by the applicants to the consultants included:
(1)organising and running product update and information sessions every two to three weeks;
(2)access to a client liaison officer who could follow up on the issue of loan documentation to clients at the consultant's request;
(3)preparing letters to be sent to clients for signing and addition of any personal comments by consultants prior to postage;
(4)checking for compliance and legal issues relating to the advertisements since about February 2003;
(5)resolving and assisting to resolve difficult or protracted issues between the consultants and the financial institutions at the request of a consultant;
(6)sending a weekly rates facsimile, a facsimile from the applicants containing the home loan rates for each of the financial institutions;
(7)emailing consultants updates on the various products and other information available from the financial institutions;
(8)IT (information technology) support;
(9)preparing mail for postage and opening and distributing mail for in office consultants;
(10)general typing for the in office consultants;
(11)liaising with financial institutions to arrange product update sessions which consultants could elect to attend;
(12)liaising with financial institutions to arrange accreditation for some of the consultants;
(13)providing some consultants with a list of financial institutions with which MFA had agreements and appropriate contact details for the consultants to arrange their own accreditation; and
(14)assisting with client files where loans had received approval, when requested by the consultant.
Provision of equipment: The parties to these proceedings also agree facts as to the provision of equipment.
All consultants supplied their own equipment (other than the equipment required to be supplied to them by the applicants under the Deed of Appointment or the Consultancy Agreement). For example, car, mobile phone, computer, facsimile machine, home office equipment and software.
Other supplementary agreed facts: The majority of consultants who were engaged as consultants under contract to one of the applicants had previous lending experience.
The consultants' previous lending experience, if any, equipped them well for their role as mortgage consultants under contract to one of the applicants.
The consultants did not all lodge copies of the relevant pages of each completed loan application form and the completed Data Input Sheets at the same stage of the loan writing process. For example, Aaron Basten only lodged the Data Input Sheet once the relevant loan had been approved. Most consultants lodged the Data Input Sheet at the same time as they submitted the loan application to the relevant financial institution.
Most consultants were aware of the existence of the Mortgage Force Service Statement but could not and did not recall what it said.
Most consultants did not become accredited with all financial institutions with which MFA had origination agreements.
Some consultants, but not all, used the blue folder supplied by the relevant applicant for a client's loan documentation.
Some consultants, including Aaron Basten, Michael Rushack, Peter Haffner and Stephen Dean, did not give the white folders supplied by the relevant applicant to any of their clients.
Where consultants gave white folders to their clients, the consultants were invoiced by the relevant applicant for the cost of the folders and the material included inside the folders.
Loan application forms were also available on the financial institutions' websites or from the financial institutions.
Some consultants, particularly the country office or home office consultants such as Todd Haffner did not use the loan application forms made available by the applicants as they either downloaded loan application forms from the financial institutions' websites or contacted the financial institutions directly and asked for loan application forms to be sent out to them.
In addition to being a consultant, Stephen Dean was a lecturer at TAFE and ran his own accountancy practice.
In addition to being a consultant, Craig Sherry worked on a family farm approximately 15 to 20 days per year.
The directors of the applicants or persons engaged by one of the applicants would, if requested by a consultant to do so, make representations to the financial institutions on behalf of the consultant to resolve any systemic problems.
The relevant applicant set the registration fee payable by consultants attending the conference.
If a consultant did not attend the conference but requested copies of written information distributed at the conference, an administrative person engaged by one of the applicants would email or send information this information to the consultant.
Some consultants registered their own business name where required by the Business Names Act 1962 (WA).
Consultants who employed persons to assist them to provide the services to the applicants deducted amounts for income tax from payments made to these assistants.
Consultants who employed persons to assist them to provide the services to the applicants made superannuation contributions on behalf of these assistants.
Some business cards referred only to the consultant's mobile phone number or home office phone number and not to Mortgage Force's 13 14 97 number.
Some business cards referred to Mortgage Force's 13 14 97 number.
Some business cards referred only to the consultant's home office or country office address and not the Mortgage Force Nedlands office address.
Some business cards referred to the consultant's home office or country office facsimile number and not the Mortgage Force Nedlands office facsimile number.
As part of the support services the applicants supplied consultants with notepads to provide to clients, potential clients or real estate agents at the consultant's discretion.
Some notepads had the 13 14 97 number written on them and others had only the consultant's mobile number written on them.
When some consultants answered external telephone calls, they answered the call with reference to Mortgage Force and their personal name.
When some consultants answered external telephone calls, they did not answer the calls with reference to their business name.
Some consultants had answering services on their mobile telephones that identified them as being associated with Mortgage Force. For example, there were messages such as "you have reached X, from Mortgage Force".
Some consultants had answering services on their mobile telephones that referred only to their own personal names.
46.46% of all loan applications submitted by consultants to the relevant financial institutions during the relevant period originated from referrals to consultants from referrers and existing clients.
90.51% of all loan applications submitted by consultants to the relevant financial institutions during the relevant period originated from referrals from consultants' referrers, referrals from existing clients, repeat business from existing clients and personal business.
Only 2.73% of all loans applications submitted by consultants to the relevant financial institutions during the relevant period originated from advertising outside the Yellow Pages.
Only 5.85% of all loan applications submitted by consultants to the relevant financial institutions during the relevant period were sourced from the Yellow Pages advertisements.
Only 0.37% of all loan applications submitted by consultants to the relevant financial institutions during the relevant period were sourced from the applicants' website.
Some consultants were charged a fee for their Mortgage Force polo shirts.
As part of the support services provided by the applicants, the applicants assisted some consultants with the drafting and printing of consultant profile and history flyers that could be handed out to real estate agents.
Some flyers referred only to the consultant's mobile phone number or home office phone number and not to Mortgage Force's 13 14 97 number.
The applicants required country consultants to contribute to the cost of the country Yellow Pages advertisements.
Consultants chose where to run their advertisements and whether they would be in print, radio or television advertisements.
For example:
•Mark Roberts advertised in "Q Pages" of the Western Australian Gay and Lesbian Business Directory;
•Bevan O'Farrell advertised in the Western Australian Triathlon newsletters;
•Todd Haffner sponsored a competitor in the Avon Descent.
Prospective city based clients who rang on the 13 14 97 number would have their general enquiries addressed by the consultant who was taking general enquiries that day and that consultant would either assist the client with their loan requirements or forward the client details to another consultant.
Only 0.01% of all loan applications submitted by consultants to the relevant financial institutions during the relevant period originated from a general enquiry.
The applicants would arrange for the venue, catering and invitations for client functions at the consultant's cost.
The relevant applicant may have contributed towards the consultant's costs at their discretion.
Some consultants gave gifts to clients or referrers that were not organised by the applicants. These gifts were organised and paid for by the consultant.
The relevant applicant may have contributed towards the consultant's costs at their discretion.
Neil Pinner was first granted a finance broker's licence on 12 August 1992.
Aaron Basten was first granted a finance broker's licence in about 2000.
Consultants were required to contribute 50% towards the cost of some stationery.
Consultants paid wages and salaries to persons they engaged to assist them in performing tasks the services the consultant was required to perform under their contract.

Why the issues arise

The issues arise because the Commissioner has assessed as liable to pay‑roll tax the commissions filed by the applicants to the consultants during the relevant period and has refused to uphold the applicants' objection to that decision. The applicants seek review of the Commissioner's decision not to uphold the objection, under the Taxation Administration Act 2003 (WA).
Under s 6(1) of the Pay-roll Tax Assessment Act 1971 (WA) generally speaking pay‑roll tax is payable in relation to wages paid or payable "by an employer" for services performed or rendered.
By s 3(1) of the 1971 Act, "wages" was relevantly defined to mean:
"… any wages, salary, commission, bonuses or allowances paid or payable (whether at piece work rates or otherwise and whether paid or payable in cash or in kind) to, on in relation to, an employee as an employee …"
Section 5 of the Pay-roll Tax Assessment Act 2002 (WA), the successor Act to the 1971 Act, also imposes pay-roll tax on wages paid.
Section 4 of the 2002 Act, and the Glossary at the end of the 2002 Act, and the Taxation Administration Act 2003 give the expression "wages" a number of meanings including that in cl 2(1)(a) of the Glossary, as follows:
"wages, salary, commission, bonuses or allowances paid or payable to or in relation to an employee as an employee, whether paid or payable at piece work rates or otherwise, and whether paid or payable in cash or in kind."
The definition of "wages" in both the 1971 Act and the 2002 Act focuses on wages paid or payable "to an employee as an employee".
While the applicants have raised the issue whether pay‑roll tax is payable under the 1971 Act and the 2002 Act, the Commissioner correctly states that provisions of the 2002 Act are not applicable in this case as the 2002 Act did not commence until 1 July 2003. In the relevant period - from 1 July 1999 to 30 April 2003 - only the terms of the 1971 Act applied and are here relevant.
In any event, as noted, both under the 1971 Act and the 2002 Act, the definition of "wages" depends on there being wages paid or payable to "an employee as an employee".
Under neither the 1971 Act nor the 2002 Act is the expression "employee" defined. Thus, the term "employee" must be given the meaning ascribed to it by the general law.
The particular legal and factual task to be resolved in this case is whether each of the various persons called consultants for the purpose of the facts in this case was, at material times, "an employee" of MFA or MFS.

Factors relevant to whether person is an employee or independent contractor

Generally speaking a distinction is usually drawn by the general law between an "employee" and an "independent contractor".
The parties in their submissions to the Tribunal in this case accept that there is no single determining factor for deciding whether a person is an employee or an independent contractor in any given relationship. Rather, it is usually accepted that a number of factors should be considered in determining whether, in a particular relationship, a person is an employee.
The decision of the High Court of Australia in Stevens v Brodribb Sawmilling Co Pty Ltd (1985‑1986) 160 CLR 16 (Stevens) is often cited as the modern starting point in identifying the various factors or test for deciding whether or not a person is an employee. That case had to do with the nature of the duty of care, for the purposes of the law of negligence, that a sawmiller owed to persons engaged in its business. The sawmiller engaged "sniggers" to move felled trees to a loading zone and "truckers" to carry the trees to the mill. On the basis that the duty of care owed by the sawmiller might differ depending on whether the sniggers and truckers were employees or independent contractors, it became important to decide whether, on the facts of the case, a person engaged as a snigger or a trucker was an employee of the sawmiller.
Sniggers and truckers used their own vehicles, set their own hours of work, and were paid according to the volume of timber delivered to the mill. The sawmiller did not deduct income tax instalments from the payments. Sniggers and truckers were not guaranteed work and were free to seek other work if weather or other circumstances prevented them from working for the sawmiller. An (acknowledged) employee of the sawmiller had general supervision over operations, but exercised no control over the manner in which sniggers and truckers carried out their tasks.

The parties and their representatives always need to bear in mind what the object of the exercise is and not to make technical responses as to whether or not the Tribunal "ordered" or "directed" or "suggested" or "requested" or whatever in relation to what needed to be done.
As I said, it was a matter of great regret when the hearing started that it seemed, as I said to Mr Mitchell during the course of his submissions on behalf of the Commissioner, that the hearing might be a very long one. There was no good reason to think, following the cross-examination of Mr Iannello by counsel for the Commissioner on the first day, that we were not going to run for many, many, many days. Again, I can see very little reason why any proceedings in this Tribunal need to go that long in prospect. If anyone ever tells me that this is a 10 day or a two week or a three week case, I am absolutely aghast because there is usually no proper justification for such an instruction, if the matter is properly managed; not that I have seen yet.
The only justification can be that parties might see the proceeding as something of an open-ended inquiry where witnesses can be paraded before the Tribunal and examined and cross-examined and re-examined at length without consideration to time constraints and costs. Well, obviously that sort of procedure will not be allowed; it will not happen. There was a fear that it might have happened in this case, especially after the first day of the hearing. In the event, we had an adjournment, much more work was done; not all the facts were agreed, but I think the parties did reasonably well, and we proceeded to a shorter hearing than was otherwise in store.
In the end, I put down the failure of the parties to be able to agree more facts sooner than they did, and well before the hearing commenced, to the fact that review proceedings like this in the Tribunal are relatively new, that perhaps there was a carry‑over from the way proceedings were previously conducted in the Supreme Court, and to the fact that the way the Tribunal wants these matters to be dealt with began to be appreciated only slowly. Additionally, as I said in the main reasons for decision, the case obviously involved a lot of money and the proceedings were keenly contested. No doubt all sorts of things, and not the least of which might be instructions from one's client when one is a professional advisor, can make agreeing facts a difficult thing. But parties have to be told of the Tribunal's expectations.
The result is I really do not see any need to try to reconstruct all of the getting up process. I am not going to attempt to apportion blame to anybody as to why more was not done to agree facts before the hearing started. It has perhaps been something of a learning exercise all round as to how complex matters like this ought to be organised. As I said at the outset, I have no doubt that if it becomes necessary in the future, the Tribunal will exert a more rigorous case management oversight of the proceedings than was finally achieved in this case, and usually may be expected to do so.
When it comes to what else the Commissioner might have done in the course of the earlier objection proceedings, with hindsight I think a lot might have been done. It is true ‑ I remember the cross-examination by Mr McCusker of the auditor when she gave her evidence - that the auditor seemed to accept that the question of employment indeed could be an important matter. Obviously, it is. The point has been made that there are standard instructions and guidelines from the Commissioner for how these audits ought to be conducted, and in effect, this one was conducted in the usual way. There is also no doubt that, in some circumstances, not just in the area of State revenue, but in all areas of official decision-making, important issues come up that can affect a whole industry and that some decisions and proceedings tend to take on the character of a test case.
I do not think in State revenue matters any case is ever quite a definitive test case because every case has to be considered on its own facts, but in this case obviously the issue was important and may be expected to have had wider industry ramifications. There is also no doubt the whole question of State revenue is an important one, and perhaps by reason of the fact that it does involve money, parties tend to fight over it more keenly than other matters. But I do not think on all the materials before me that it can be said, as has been argued on behalf of the applicants, that the failure of the Commissioner in the objection process to have gone to the lengths suggested is so egregious that it ought to be visited with an order for costs in these proceedings.
The suggestion is that in this case, if not as a general matter of policy, a preparedness of the Tribunal to award costs in favour of the successful taxpayer applicant taxpayer in a State revenue matter would send a message to the Commissioner that he needs to pull his socks up in relation to the conduct of objection proceedings. I am not sure that it would necessarily do that. To my observation, indeed in other proceedings that come before the Tribunal, the Commissioner is well aware of the importance of the objection proceedings. I recently had before me ‑ I appreciate it was not the applicant party, or counsel here who were representing the party concerned ‑ an application under s 38 of the Taxation Administration Act2003 (WA) to give directions to complete objection proceedings so that decision could be made without further delay. Those proceedings indicated to me that the objection proceedings were in fact being given very close consideration in an independent review process by a senior officer of the Office of State Revenue. That leads me to think that while we are still working out what this new day means under the new administrative review system in this State, perhaps some errors will be made, but we are, I think, all learning fast. The objection process is terribly important. I am sure the Commissioner appreciates that if there is a possibility of parties coming to the Tribunal afterwards, then it is important for him to do the hard yards during the objection process.
It also means I think, that applicants need to put up as much information as they can to the Commissioner during that objection process. In the Taxation Administration Act 2003, the onus is for that to happen in the objection process and the Commissioner really does not have to look beyond what he is given, even though he has the power to investigate further. Applicants should make frank disclosure to the Commissioner and not try to keep their powder dry until they reach the Tribunal.
So I do not think a failure to make a costs order in a case like this will, by any stretch of the imagination, result in the Commissioner treating objections in a cursory manner. A ruling in a case like this of course does not mean that successful applicants in other cases involving the Commissioner in the future might not make applications for costs and point, in the particular circumstances of the case, to reasons why they should have costs by reason of the conduct of the Commissioner. And so might the Commissioner seek costs in an appropriate case in the future. But, as I say, I am not at all satisfied in this case that a costs order ought to be made here.
Just to make some points clear that perhaps I have not finally clarified, I do not think the reference by the applicant to earlier appeal proceedings in the Supreme Court following the objections process is particularly relevant. As I have suggested, they highlight the fact that we do have a new day when it comes to administrative review of State revenue decisions in this Tribunal. They also highlight the fact that the Tribunal does not expect there to be any delay. There are not any valid reasons, when one has regard to the Act, why, when an application is made by a taxpayer to the Tribunal for review of a State revenue decision, it cannot proceed expeditiously.
When matters come here to the Tribunal, it is going to be important to carefully manage them. I think in the short and medium term, it is going to be important, given the Commissioner is a regular party in these sorts of proceedings in the Tribunal, that the Commissioner's representatives, and professional representatives of applicants who often appear in such matters, have the opportunity to discuss with the Tribunal how matters can be most expeditiously advanced. There still seems to be a tendency for these various representatives to make their own rules up as they go along and tell the Tribunal what the practice and procedure is going to be and when things are going to happen.
I think we generally need to become more mindful of the obligations the Tribunal has to meet the objectives given to it by Parliament to deal with matters expeditiously. At the same time, the Tribunal recognises that sometimes extra time and extra care can be to everyone's benefit, including the Tribunal's, in making a final decision, and that there are resource implications for everybody in handling these matters.
Mr Mitchell, for the Commissioner, suggested that there was a countering policy point, if there was a point in Mr McCusker's argument that costs can send messages. I agree that by applicants not having an expectation that, if they are successful in a complex matter having been professionally represented they are likely to get an award for costs, it is on balance more likely to emphasise that the objection proceeding is important, because the parties typically will continue to bear their own costs in the Tribunal.
The Tribunal was set up with the very clear legislative policy in mind, as reflected in s 87 of the Act, that it is a costs‑free jurisdiction. There have been some variations, I suppose, on that theme, as Mr McCusker mentioned in relation to vocational regulation proceedings in the Tribunal. The Tribunal has expressed its reasons why there ought to be costs when a professional regulatory body succeeds in an action, but otherwise I think the primary position of the Tribunal should be maintained. It would in fact be difficult to distinguish in principle a State revenue review proceeding from other review proceedings, if a special costs rule applied for successful applicants in State revenue matters. If successful taxpayer applicants could get costs orders, why should not every successful applicant in a complex matter. Mr McCusker suggested some reasons why not, but I must say for my part I think the Tribunal would be under great pressure in making the distinction generally.
The result is that the State, through the Act and related legislation, provides taxpayers with the opportunity to have administrative review of State revenue decisions in the Tribunal. The Act contemplates that these proceedings will be without costs orders. We have the power in appropriate cases, in effect, to make costs orders. I do not see any particular reason to adopt the view, for example, that costs orders will ordinarily be made when the issues are complex or parties are professionally represented. That would not be in accordance with the objectives of the Act. I do not think that ordinarily the mere complexity of the matter should result in a costs order being made either. In any event, that was not the submission that was put to me in this case by the applicants.
Finally, then, dealing with the case on the basis it was put forward, I am not satisfied either by reference to the genuineness of the decision‑making processes of the Commissioner, or the manner in which the case was got up or conducted, that the discretion that the Tribunal has to award costs has been enlivened. At the same time, I hope it is clear from what I have said today that I was far from satisfied with the manner in which the case was got up or the direction in which it was heading when it commenced, and I think I made my views in this regard very clear at the time.
There are times, I suppose, when a judge sitting in the position that I am sitting in, can be so disgruntled about something that if you were to ask for a costs order at the time, you might just get it; but on reflection, I do not think the costs basis is made out. But having ruled that way, as I have suggested, it is not to say that either the Commissioner or applicants should expect in the future to make their own arrangements about the way in which proceedings are to be conducted in the Tribunal. They are not to be conducted at their own leisure, according to their own rules. It is going to be important for the Tribunal to closely manage some of these cases so that we can develop an agreed process in the future.
I thank the parties, and particularly their instructing solicitors and counsel, for their written and oral submissions. The applicants' application for costs will be dismissed and just in case anyone is thinking about it, any application for costs in respect of the costs application will not be entertained.

Order

1.No order as to costs.

I certify that this and the preceding [38] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUSTICE M L BARKER, PRESIDENT