SKG Cleaning Services Pty Ltd v Chief Commissioner of State Revenue; Ezko Property Services (Aust) Pty Ltd atf the Ezko Unit Trust v Chief Commissioner of State Revenue

[2025] NSWSC 1219

Supreme Court

New South Wales

Medium Neutral Citation:

SKG Cleaning Services Pty Ltd v Chief Commissioner of State Revenue; Ezko Property Services (Aust) Pty Ltd atf The Ezko Unit Trust v Chief Commissioner of State Revenue [2025] NSWSC 1219

Hearing dates:

18, 19, 20 and 21 August 2025

Date of orders:

17 October 2025

Decision date:

17 October 2025

Jurisdiction:

Equity - Revenue List

Before:

Hmelnitsky J

Decision:

Dismiss proceedings 2023/273808 and 2023/463408 with costs

Catchwords:

TAXES AND DUTIES — Payroll tax — Liability — Employment agents — Where each plaintiff operates a commercial cleaning business — Where there are contracts between plaintiffs and their clients for provision of cleaning services — Where cleaning services under contracts are carried out by subcontractors and employees of the plaintiffs — Whether contracts are ‘employment agency contracts’ under s 37 of the Payroll Tax Act 2007 (NSW) — Whether ‘indicia’ relevant to determining when subcontractor and employee works ‘in and for’ the client’s business — Whether plaintiffs discharged onus of showing that assessments were excessive

Legislation Cited:

Payroll Tax Act 2007 (NSW), ss 26, 27, 37, 38, 39 and 40

Taxation Administration Act 1996 (NSW), ss 97 and 100(3)

Cases Cited:

Bayton Cleaning Company Pty Ltd v Chief Commissioner of State Revenue (NSW) [2019] NSWSC 657; (2019) 109 ATR 879

Chief Commissioner of State Revenue (NSW) v E Group Security Pty Ltd (2022) 109 NSWLR 123; [2022] NSWCA 115

Chief Commissioner of State Revenue (NSW) v Integrated Trolley Management [2023] NSWCA 302

Godolphin Australia Pty Ltd v Chief Commissioner of State Revenue [2022] NSWSC 430; (2022) 114 ATR 597

UNSW Global Pty Ltd v Chief Commissioner of State Revenue (NSW) [2016] NSWSC 1852; (2016) 104 ATR 577

Texts Cited:

Nil

Category:

Principal judgment

Parties:

SKG Cleaning Services Pty Ltd (First Plaintiff in 2023/273808)
SKG Pty Limited (Second Plaintiff in 2023/273808)
Sydney Express Cleaning Pty Ltd (Third Plaintiff in 2023/273808)

Ezko Property Services (Aust) Pty Ltd atf The Ezko Unit Trust (First Plaintiff in 2023/463408)
Ezko Property Services (Aust) Retail Pty Ltd (Second Plaintiff in 2023/463408)

Chief Commissioner of State Revenue (Defendant in 2023/273808 and 2023/463408)

Representation:

Counsel:
M Hodge KC/D Stretton/H Lenigas (Plaintiffs)
A Gerard/R Raffell (Defendant)

Solicitors:
Marque Lawyers (Plaintiffs)
Crown Solicitor for New South Wales (Defendant)

File Number(s):

2023/273808
2023/463408

Publication restriction:

Nil

JUDGMENT

1. These two proceedings were heard together. I will refer to proceedings 2023/273808 as the ‘SKG proceedings’ and proceedings 2023/463408 as the ‘Ezko proceedings’. Where necessary, I will distinguish between the plaintiffs in each proceeding by describing them as the SKG plaintiffs and the Ezko plaintiffs, respectively.

2. Each plaintiff conducts a commercial cleaning enterprise. During the periods relevant to this dispute, each plaintiff entered into contracts with a range of clients to supply cleaning services. To perform those contracts, each plaintiff used subcontractors, or a combination of its own employees and subcontractors.

3. By assessments issued on 20 October 2022, the defendant (the Chief Commissioner) assessed the SKG plaintiffs to payroll tax in respect of payments made to subcontractors for the provision of cleaning services to their (ie, the SKG plaintiffs’) clients for the 12-month periods ending 30 June 2017 to 30 June 2021. By assessments issued on 10 July 2023, the Chief Commissioner assessed Ezko Property Services (Aust) Pty Ltd as trustee of The Ezko Unit Trust as the designated group employer for itself and Ezko Property Services (Aust) Retail Pty Ltd in respect of payments made by each of those entities to subcontractors for the provision of cleaning services to their clients for the 12-month periods ending 30 June 2019 to 30 June 2023.

4. The assessments were raised on the basis that the cleaning contracts between the plaintiffs and their clients were ‘employment agency contracts’ within the meaning of s 37 of the Payroll Tax Act 2007 (NSW) and that amounts paid by the plaintiffs to the subcontractors were therefore ‘taken to be wages’ by reason of s 40(1)(a). The assessments included penalty tax equal to 25% of unpaid amounts pursuant to ss 26 and 27(1)(a) of the Payroll Tax Act.

5. Following unsuccessful objections, each plaintiff commenced proceedings by way of review under s 97 of the Taxation Administration Act 1996 (NSW).

6. Although other issues were identified in the parties’ appeal statements and addressed in the evidence, the only substantive issue in dispute by the end of the hearing was the correctness of the Chief Commissioner’s primary conclusion concerning each plaintiff’s payroll tax liability. As such, the issue for determination is whether any of the assessments include tax on amounts that are not ‘taken to be wages’ under s 40(1)(a) of the Payroll Tax Act.

7. There was no question that the plaintiffs bore the onus of proof on this issue. However, there was a subtle but important difference in what the parties said was necessary to discharge this onus. The plaintiffs submitted that because the assessments were raised on the basis that all payments to subcontractors were taken to be wages, it was sufficient to demonstrate that even one client contract was not an ‘employment agency contract’ within the meaning of s 37 in order to show that the relevant assessment was excessive. They accepted that if I were to find that a particular client contract was not an ‘employment agency contract’ it was not possible on the evidence to calculate the extent to which the relevant assessment was excessive. However, they submitted that the appropriate order would in that event be for the matter to be remitted to the Chief Commissioner to reassess by excising from the relevant assessment any amounts paid to subcontractors in respect of such client contracts.

8. The Chief Commissioner submitted that, where the issue was whether the assessments are excessive because they include tax on amounts that are not ‘taken to be wages’ by reason of s 40(1)(a), it was not enough for the plaintiffs to show that a client contract was not an ‘employment agency contract’. Rather, it was necessary to demonstrate that a particular assessment included tax on amounts paid to subcontractors in respect of such a contract. He pointed out that the plaintiffs generally fulfilled their contracts through a combination of their own employees and subcontracted labour and that any given assessment would only be excessive if and to the extent that it imposed tax on amounts paid to subcontractors in fulfillment of a contract that was not an ‘employment agency contract’.

9. For the reasons which follow, I find that the plaintiffs have not discharged their onus because I am not persuaded that any client contract was not an ‘employment agency contract’ within the meaning of s 37. It is therefore strictly unnecessary to resolve the issue described in the previous two paragraphs. I will however indicate my conclusions in relation to that matter at paragraph [111] below.

The facts in more detail

Some preliminary observations about the evidence

10. Insofar as the evidence consisted of written cleaning contracts between the plaintiffs and their clients, it was not in dispute. I will describe it below.

11. However, the evidence did not include all contracts in respect of which the plaintiffs were assessed. Although the plaintiffs tendered further contracts during the hearing to address some of the gaps in the evidence, the position by the conclusion of the hearing was that many of the contracts relevant to the dispute were unable to be found by the plaintiffs and were therefore not in evidence. The omissions were significant. In the case of SKG, for example, documents tendered by the Chief Commissioner show that in the 2017 year it recorded revenue of $1,499,669.41 from City FM. However, the evidence did not include a contract between SKG and City FM for the relevant period.

12. Insofar as the evidence consisted of statements by witnesses about how the plaintiffs performed the cleaning contracts, it is appropriate to record that three of the plaintiffs’ four witnesses did not perform at all well under cross-examination. As senior counsel for the plaintiffs acknowledged in his final submissions:

“…we recognise that of the four witnesses who were cross‑examined, two of them performed poorly and one of them performed quite poorly, and ultimately, their evidence is, depending upon how one views it, either not of assistance or of limited assistance.”

13. The three witnesses to whom senior counsel was here referring were Messrs Conomos, Vasilas and Shresta. Of these, the witness whom he described as having performed ‘quite poorly’, was Mr Vasilas, who was the Executive Director of the Ezko plaintiffs. In fairness to all of these witnesses, the issue had nothing to do with their general character but about the accuracy of the statements in their affidavits as to how, precisely, the plaintiffs conducted their business. The cross-examination demonstrated that the descriptions of the plaintiffs’ business which each of these witnesses set out in their affidavits were often no more than unsubstantiated assertion.

14. Two examples will serve to illustrate the difficulty. Mr Vasilas, who gave evidence in relation to the Ezko proceedings, said that only about 2% of services to Ezko Property clients and Ezko ‘facilities management clients’ (commercial property managers or facilities managers who managed properties or facilities for the relevant landlord) were provided by subcontractors. However, it became clear that Mr Vasilas had not derived this figure from a review of any financial records at all. Mr Vasilas also made statements about ‘specialty’ cleaning services that, he said, were outside the scope of client contracts. However, there was no sound basis for this assertion. This issue has particular relevance for one of the issues to be determined and I will return to it below.

15. In no case did the witnesses explain the relationship between particular client contracts and particular payments to subcontractors. Nor was this relationship apparent from the substantial volume of accounting records tendered by the Chief Commissioner. The description of their evidence as being of either no assistance or, at best, of limited assistance, was a fair one.

The SKG proceedings

16. The SKG plaintiffs are as follows:

1. SKG Cleaning Services Pty Ltd (SKGC) – the first plaintiff.

2. SKG Pty Limited (SKG) – the second plaintiff.

3. Sydney Express Cleaning Pty Ltd (SEC) – the third plaintiff.

17. SEC was deregistered in November 2024.

18. SKG and SKGC operate commercial cleaning businesses that provide cleaning services to their respective clients at their business premises, which include shopping centres, retail outlets, government facilities and office buildings. SEC also operated a commercial cleaning business and acted as a subcontractor for SKGC and SKG.

19. In the period relevant to the SKG proceedings, SKG had 43 business clients across various industries for whom it provided regular cleaning of commercial offices, broadly speaking. SKGC had 104 business clients across various industries including large retail premises and government and institutional premises. In addition to these business clients, SKGC also supplied cleaning services to 12 ‘facilities management clients’ (defined above in paragraph [14] in the context of Ezko).

20. The SKG plaintiffs initially sought to distinguish the facilities management clients from the other business clients on the basis that payroll tax should not be payable on payments in respect of contracts with the facilities management clients even if it is otherwise payable in respect of the payments from the business clients. They submitted that it is because payroll tax should only be borne by the relevant employment agent that is closest to the end client. However, this submission was not pressed at the final hearing.

21. SKG and SKGC held written cleaning contracts with their respective clients. None of these clients had employed cleaners or internal cleaning departments, meaning that all of the cleaning services that these clients received were supplied exclusively under the contracts with SKG and SKGC.

22. To perform the client contracts, SKGC and SKG had contracts with various subcontractors who performed, or whose workers performed, cleaning services. The subcontractors performed those services through their employees or contractors. As mentioned, SEC was also subcontracted by SKGC and SKG to perform cleaning services, however I was informed that none of the assessments in dispute include tax on amounts paid by SKGC or SKG to SEC.

23. SKGC had a significant number of its own employees. It provided cleaning services under the cleaning contracts through a mixture of those employees and other subcontractors. SKG however provided cleaning services only through subcontractors. In the period relevant to this dispute, it did not have employees of its own.

The SKG/SKGC contracts

24. SKGC and SKG’s client contracts may be split into two broad classes. The first consisted of standard short-form contracts. The second consisted of long-form contracts containing detailed terms that were unique to the particular contract.

SKG contracts

25. Fifty-nine SKG cleaning contracts which used the standard form were in evidence. One further contract (being the contract with Sarina Russo) used the standard form with the addition of some further terms suggested by the client. These contracts were, in all material respects, identical, save for the nature and frequency of the services to be performed. The specifications particular to each contract that varied between clients were contained in clause 1 of the contract, set out under the headings ‘Cleaning Days’, ‘Cost Per Annum’, ‘Site Name’, ‘Site Address’ and ‘Cleaning Specifications’. The ‘Cleaning Specifications’ were expressed in relatively close detail. For example, in the atWork Australia contract, the Cleaning Specifications set out the areas to be cleaned and the individual tasks to be carried out. In some standard form contracts, such as the contract with Dominelli Kirrawee Ford, the frequency at which each task was to be performed was also provided for in this section.

26. The SKG standard form contracts also recorded the broad terms of the engagement and the duties of SKG under the contract.

27. There were seven longer, non-standard form SKG client contracts in evidence. Broadly speaking, these contracts imposed more stringent obligations upon SKG than the standard form contracts. The contract with Endeavour Foundation provides an example. Clause 4 of that contract set out the primary obligations of SKG other than the cleaning services which SKG was contracted to provide (which services were set out in detailed schedules attached to the contract). They included the following:

1. SKG must engage personnel with appropriate qualifications to perform the cleaning services.

2. Endeavour Foundation may make any of SKG’s subcontractors stop work if SKG or any of its sub-contractors commit a material breach of the contract or do not comply with certain of the sub-clauses in clause 4.

3. SKG must ensure that its personnel perform the cleaning services ‘in accordance with all reasonable directions given by [Endeavour Foundation]’ from time to time.

28. Clause 5 included the following:

“5.1 If the Supplier engages a sub-contractor, the Supplier:

(1) must ensure the work performed by the sub-contractor meets the requirements of this agreement, including without limitation, clause 4;

(2) is liable to [Endeavour Foundation] for the acts and defaults of that sub-contractor as if they were the acts and defaults of [SKG]; and

(3) must ensure that the sub-contract is immediately terminable, and that sub-contractor vacates [Endeavour Foundation’s] property immediately, if this agreement is terminated.”

29. Further terms followed, including a right for Endeavour Foundation to terminate the agreement upon certain conditions and an obligation on SKG to supply the necessary equipment for the performance of the cleaning services.

30. In total, there were seven of these longer, non-standard form SKG client contracts in evidence. They each contained different terms apportioning varying degrees of responsibility for, and control over, the employees and subcontractors between SKG and the client.

SKGC contracts

31. There were 94 standard form SKGC client contracts in evidence. One further contract modelled on the standard form was the Sarina Russo contract, which contained some additional terms. The terms of the standard form SKGC client contracts were very similar but not identical to the standard form SKG client contracts. For example, although SKG and SKGC both had client contracts with Sarina Russo, the standard forms upon which these contracts were based were different.

32. The contracts with Best & Less Pty Limited and Pepkor South East Asia Limited are examples of the longer-form, non-standard SKGC client contracts. These were SKGC’s highest value clients during the relevant periods. As with the longer-form SKG contracts, the longer-form SKGC contracts provided for more stringent and specific obligations on SKGC when compared with the standard form contracts. There were 25 longer-form SKGC contracts.

The performance and conduct of the SKG cleaning contracts

33. Generally, the cleaning services offered by the SKG plaintiffs under the cleaning contracts included: dusting and wiping down surfaces; vacuuming, sweeping and mopping floors; spot cleaning walls and windows; polishing glass and mirrored surfaces; and emptying and re-lining rubbish bins. The precise services that were to be provided depended on the specifications in each cleaning contract.

34. At the time that SKG and SKGC submitted tenders or provided their quotes for the cleaning contracts, their clients would indicate to the SKG operations team their preferred hours for the cleaning services to be conducted. The times for the cleaning services to be conducted and their frequency varied from client to client and were included in the respective cleaning contract between SKG or SKGC and the client. For example, retail businesses would usually prefer for services to be provided during their operating hours.

35. Subcontractors and, in the case of SKGC, subcontractors and employees would be allocated to provide the cleaning services under the cleaning contracts by SKG and SKGC. Allocation was conducted in meetings with Mr Conomos and members of SKG and SKGC’s human resources and customer services staff. In these meetings, the subcontractors and employees were assessed in respect of their work history, skill levels and the human resources departments’ assessment of each individual. Rosters were prepared in accordance with this allocation and were provided to the relevant client. Usually, each site would have either only subcontractors or SKGC employees allocated to provide cleaning services; there would rarely be a mixture of subcontractors and employees allocated to the same site, although the evidence does not allow me to conclude that this never occurred.

36. SKG and SKGC provided the rostered subcontractors and employees, as the case may be, with certain cleaning equipment. Usually, this was limited to the supply of large, specialised items such as equipment trolleys, gas buffing tools, electric burnisher machines, industrial scrubbing and buffing machines.

37. The subcontractors and employees would store cleaning equipment provided to them by SKG and SKGC in storage rooms located on-site. Access to the premises was provided by the clients. Upon entering the premises, the subcontractors and employees would sign into and register their attendance using SKG or SKGC internal systems, and in some circumstances would register their attendance in a sign-in book of the relevant client. The subcontractors and employees would then undertake the services provided for in the cleaning contracts using the equipment stored on the relevant premises.

33. SKG and SKGC would regularly review the provision of services under the client contracts by undertaking regular site visits.

34. The clients sometimes requested additional and specialised cleaning services, such as deep cleaning, carpet steam cleaning and external window cleaning. If the clients required additional services to be completed, those requests were raised directly to Mr Conomos or another member of the operations team.

35. During the relevant period, Mr Shreshtha as the accounts executive was responsible for supervising and providing support to employees, subcontractors and personnel of the SKG plaintiffs. He attended periodic meetings with clients, during which meetings he would liaise with clients whenever there were concerns or complaints with respect to the quality of services being provided.

The Ezko proceedings

41. The Ezko plaintiffs are:

1. Ezko Property Services (Aust) Pty Ltd atf The Ezko Unit Trust (Ezko Property) – the first plaintiff

2. Ezko Property Services (Aust) Retail Pty Ltd (Ezko Retail) – the second plaintiff.

42. During the relevant period, Ezko Property principally provided cleaning services to government, institutional, residential and retail premises. Ezko Retail provided cleaning services to shopping centres and large retail complexes managed by facilities management clients.

43. The Ezko plaintiffs held written cleaning contracts with each of their respective clients. None of these clients had their own internal cleaning departments. As with the SKG plaintiffs, the Ezko plaintiffs also initially sought to distinguish between the Ezko plaintiffs’ business clients and facilities management clients. However, as with the SKG proceedings, this distinction was not pressed at the final hearing.

44. To perform the client contracts, Ezko Property and Ezko Retail used a combination of subcontractors and their own employees. They had written cleaning contracts with subcontractors and made payments to them.

The Ezko contracts

45. The Ezko cleaning contracts are longer-form, non-standard contracts. The Ezko plaintiffs did not use standard form contracts.

46. The evidence included 18 contracts between Ezko Property and its clients, and seven contracts between Ezko Retail and its clients.

47. As with the SKG client contracts, the Ezko client contracts required Ezko Retail and Ezko Property to supply regular cleaning services at the clients’ premises. The scope, tasks, frequency and times at which those cleaning services were performed varied between clients and were set out in the detailed cleaning specifications contained in the client contracts.

48. The terms of the client contracts varied widely from client to client. Generally, however, they at least included terms dealing with the following matters:

1. Ezko Property or Ezko Retail, as the case may be, agreed to provide regular cleaning services at the relevant client’s premises or at locations specified by the client.

2. Ezko Property or Ezko Retail agreed to provide the labour required for the cleaning services to be performed.

3. The times of day when cleaning services were to be available and the number of hours to be worked each day.

4. Requirements for inspection and reporting.

5. Employees or subcontractors were required to comply with internal guidelines, policies and procedures of the clients.

6. Ezko Property or Ezko Retail agreed to supply to the employees or subcontractors the equipment required to provide the cleaning services.

49. For example, the contract between Ezko Property and Law Courts Limited contained all of the terms described above. So too did the contract with DEXUS CPA Pty Ltd, Leader AutaInvest II Pty Ltd and Commonwealth Superannuation Corporation for the cleaning of Grosvenor Place.

50. Some contracts consisted of nothing more than a schedule of services. For example, the contract for Ezko Property’s cleaning of 121 Henry Street, Penrith was simply a one-page document containing details of the service times and a list of the cleaning services to be provided.

The performance and conduct of the Ezko cleaning contracts

51. As noted above, Ezko Property serviced ‘commercial’ clients, working on government, institutional, residential and retail premises. Generally, its cleaning services consisted of the following: cleaning and polishing surfaces, equipment and fixtures; vacuuming, machine scrubbing and mopping floors; wiping down walls and windows; and emptying and re-lining rubbish bins.

52. Ezko Retail serviced ‘retail’ clients, primarily in large retail complexes. Generally, its cleaning services consisted of the following: so-called ‘ready to trade’ cleaning such as dusting, removal of litter, odour minimisation, waste removal and removal of spills and leakages; vacuuming, sweeping, mopping and polishing floors; shampooing carpets, mats, rugs and runners; and cleaning of bathroom and common dining areas. These services were provided across the consumer-facing areas of these retail premises.

53. When the Ezko plaintiffs submitted tender proposals, their clients would either indicate their preferred hours for the services to be provided or they would invite staff from the Ezko management team to inspect their premises to calculate the hours required for the cleaning services to be performed. Ezko Property would provide services for their clients at varying times and at varying intervals (daily, weekly, monthly, bi-monthly, six-monthly, or annually), depending on the client’s needs. Ezko Retail mainly provided services on a daily basis, but also at varying times.

54. During the tender process, the Ezko plaintiffs’ management team would determine the number of Ezko employees or subcontractors to provide services under the cleaning contracts. They would review and calculate the aggregate costs of the employees or subcontractors as well as the costs of any materials and equipment to be allocated to each cleaning contract; the total amount would form the budget or ‘contract price’ that was submitted to the client for approval.

55. Clients of Ezko Property and Ezko Retail sometimes requested particular cleaning services, such as high-pressure cleaning and stripping of tiled or terrazzo flooring, high-rise window cleaning and maintenance services. These so-called ‘specialised’ services were requested directly with the Ezko plaintiffs’ management team, who would in turn engage subcontractors to perform them. Mr Vasilas gave evidence that these services fell beyond the scope of the cleaning contracts. This evidence was admitted to the extent that it reflected Mr Vasilas’ belief. However, the evidence did not support a conclusion that this belief was justified.

56. The Ezko plaintiffs’ clients usually conducted an initial training session for Ezko employees in line with their own general training procedures and employee induction policies. This included operational and safety training. Continuous training was also provided during the course of their performance of the cleaning services under the contracts.

57. Under the Ezko contracts, the Ezko plaintiffs provided to their employees and subcontractors the equipment required to perform the cleaning services under the cleaning contracts. The employees and subcontractors would attend the clients’ premises and store cleaning equipment provided to them in storage rooms located on-site, or, where no storage space was available on the client’s premises, in a third-party storage facility rented by the client.

58. Access to premises was provided by the clients. Upon entry to the client’s premises, the rostered employees typically registered their attendance using Ezko’s internal management software and, where required, the relevant client’s systems. The subcontractors would do the same. They also typically attended a meeting with the clients to receive the scope of the services to be performed. They would then undertake the services provided for in the cleaning contracts using the equipment stored on the relevant premises.

59. Mr Vasilas and other members of the Ezko management team were responsible for conducting periodic on-site inspections of client premises, during which they would inspect the quality of the cleaning services being performed and attend meetings (both in-person and online) with client representatives where feedback would be discussed in respect of the cleaning services.

The statutory scheme

60. The provisions by which payments to subcontractors may be treated as ‘taxable wages’ for the purposes of the Payroll Tax Act are contained in Part 3, Division 8 of that Act. They were described by Basten AJA in Chief Commissioner of State Revenue (NSW) v Integrated Trolley Management [2023] NSWCA 302 (‘Integrated Trolley Management’) at [23] to [26]. As a succinct statement of the statutory scheme, those paragraphs cannot be improved upon.

61. As in Integrated Trolley Management, it is here especially relevant to note the definitions in s 37:

(1)  For the purposes of this Act, an employment agency contract is a contract, whether formal or informal and whether express or implied, under which a person (an employment agent) procures the services of another person (a service provider) for a client of the employment agent.

(2)  However, a contract is not an employment agency contract for the purposes of this Act if it is, or results in the creation of, a contract of employment between the service provider and the client.

(3)  In this section—

contract includes agreement, arrangement and undertaking.

62. Sections 39 and 40 then provide:

39   Persons taken to be employees

For the purposes of this Act, the person who performs work for or in relation to which services are supplied to the client under an employment agency contract is taken to be an employee of the employment agent.

40   Amounts taken to be wages

(1)  For the purposes of this Act, the following are taken to be wages paid or payable by the employment agent under an employment agency contract—

(a)  any amount paid or payable to or in relation to the service provider in respect of the provision of services in connection with the employment agency contract,

(b)  the value of any benefit provided for or in relation to the provision of services in connection with the employment agency contract that would be a fringe benefit if provided to a person in the capacity of an employee,

(c)  any payment made in relation to the service provider that would be a superannuation contribution if made in relation to a person in the capacity of an employee.

(2) Subsection (1) does not apply to an employment agency contract to the extent that an amount, benefit or payment referred to in that subsection would be exempt from payroll tax under Part 4 (other than under section 50 or Division 4 or 5 of that Part), or Part 3 of Schedule 2 (other than clause 5 or 13A), had the service provider performed the services as an employee of the client, if the client has given a declaration to that effect, in the form approved by the Chief Commissioner, to the employment agent.

63. The principal issue for determination is therefore whether the plaintiffs’ contracts with their clients were ‘employment agency contracts’ within the meaning of s 37. It is only if they were that the Chief Commissioner was correct to treat the plaintiffs’ payments to subcontractors as being taken to be wages under s 40.

Applicable principles

64. In UNSW Global Pty Ltd v Chief Commissioner of State Revenue (NSW) [2016] NSWSC 1852; (2016) 104 ATR 577 (‘UNSW Global’), White J held at [62] that the expression ‘employment agency contract’ should be construed in the following way:

“Applying a purposive construction, as mandated by s 33 of the Interpretation Act, I think that the definition of an employment agency contract as being a contract under which a person (the employment agent) ‘… procures the services of another … for a client of the employment agent’ can be read as meaning a contract under which a person procures the services of another person in and for the conduct of the business of the employment agent's client. That was the intended scope of the provisions. It does not do too much violence to the text (Taylor v The Owners – Strata Plan 11564 at [40]) to confine the operation of the phrase ‘for a client’ in that way, rather than as meaning for the client’s benefit.” (emphasis in original)

65. A challenge to the correctness of this statement was rejected in Chief Commissioner of State Revenue (NSW) v E Group Security Pty Ltd (2022) 109 NSWLR 123; [2022] NSWCA 115 (‘E Group’): see especially [42] and [46].

66. In Integrated Trolley Management, Basten AJA (with whom both Ward P and Payne JA agreed) explained at [49] that the ‘test’ identified in UNSW Global and in [42] and [46] of E Group is to be approached as follows:

“That language requires the identification of (i) the work to be done by persons who provide the services to a client and (ii) the nature and ordinary conduct of the client’s business. It is the relationship between the two which determines the application of s 37(1) in a particular case.”

67. To like effect, see comments by Payne JA at [7].

68. Some sense of the kind of relationship to which their Honours were referring is to be gleaned from what Basten AJA said at [86]. His Honour said:

“In addressing the application of the statutory test, as explained in UNSW Global and accepted by this Court in E Group Security, the Chief Commissioner emphasised that the individuals who worked for the client should do so in much the same way as would an employee of the client. That meant that the business would involve work having a degree of regularity and continuity, and where the nature of the work was to a significant degree under the control and direction of the client. So long as the qualifiers are maintained, this approach should be accepted.”

69. There are strong indications in the reasons of Basten AJA in Integrated Trolley Management that it is only where the relevant relationship can be identified in the terms of the contract itself that the contract will be within the statutory definition. At [97], his Honour said that it was ‘arguably misconceived’ to rely on matters of actual practice extraneous to the contract in determining whether a contract was an employment agency contract. See also his Honour’s observations about the centrality of the terms of the contract at [99]. At [111] his Honour said:

“For the reasons given above, the appeal must be upheld and the assessments of the Chief Commissioner reinstated. The following points may be made in summary form in support of that conclusion. First, the application of s 37 must be assessed by reference to the terms of the employment agency contract relied upon by the Chief Commissioner as the basis of the assessment under challenge. In principle, that will be the agreement between the employment agent and its client. Generally, the actual operation of the agreement, including arrangements between the employment agent and its service providers and between the service providers and the persons performing the work will not form a necessary part of the analysis, and will provide little guidance as to the characterisation of the employment agency contract. The primary judge was correct to focus upon an objective analysis of the contract, although he looked to the wrong contractual relationship.”

70. I do not understand what Basten AJA said in these paragraphs to stand for the proposition that the Court may only have regard to the terms of the contract or arrangement between the putative employment agent and its client in determining the s 37 question. Apart from anything else, his Honour accepted at [112] that a consideration of context and the nature of the client’s business may play a role in the analysis. However, I note the general caution expressed by all members of the Court in Integrated Trolley Management about attempting to apply the statute by reference to indicia derived from other cases: [2], [3] (Ward P), [8] (Payne JA), [40]-[54], [113] (Basten AJA).

The plaintiffs’ submissions

71. The plaintiffs’ case rested heavily on the proposition that their client contracts did not contain features that engaged s 37 of the Payroll Tax Act because they did not give rise to a relationship akin to an employment relationship between the client, on the one hand, and the subcontracted service providers, on the other. Their case was largely framed by reference to what was said in Integrated Trolley Management about the need to identify such a relationship from the terms of the contract itself. Their global submission in relation to the client contracts was that they contained the following features:

1. The clients were not themselves commercial cleaners and the cleaning contracts did not provide for them to carry out any cleaning tasks.

2. There was no requirement for the plaintiffs to ensure, or attempt to ensure, continuity of cleaning staff.

3. The clients did not provide cleaners or supervisors; the plaintiffs did so (including via their subcontractors).

4. The clients did not provide cleaning tools, material and equipment; the plaintiffs did so.

5. There were no clauses permitting the clients to issue instructions, directions or complaints to individual cleaners, whether they were the plaintiffs’ employees or subcontractors.

6. The clients did not decide the hours of work (other than giving a range of permissible times in some cases, with limited variation rights); the plaintiffs did so.

7. The clients generally did not specify the tools, techniques or products to be used for the cleaning services; those matters were left to the plaintiffs to decide.

8. The cleaners did not use the clients’ email, internet, telephone, computer or radio systems or equipment.

72. The plaintiffs accepted that it was nevertheless not possible to determine the whole of the proceedings at such a high level of generality. They submitted that the contracts in each case could be divided into several classes, ranging from those in respect of which there were ‘no indicia’ that the contract would fall within s 37, to those in which there were ‘relatively more indicia’ that the contract would fall within the section. In the Ezko proceedings, the plaintiffs submitted that there were certain contracts in relation to which the evidence demonstrated that the services were only provided by employee labour. I will deal with this last category of contracts separately in relation to the issue of the plaintiffs’ onus.

73. The indicia to which the plaintiffs were referring were those drawn from the authorities, especially Integrated Trolley Management. The plaintiffs did not fall into the trap of treating the presence or absence of indicia as being conclusive of the statutory question. They took care to submit that it was necessary to hew closely to the language of the section. Their submission was that the test posed by the language of the section, as explained in UNSW Global and E Group, was not satisfied on the terms of the contracts.

74. The aspects of the client contracts upon which the plaintiffs’ case focused were as follows:

1. The regularity of the cleaning services.

2. The location at which the services were provided.

3. Those clauses which required the plaintiffs to provide labour, materials and equipment in order for the services to be performed.

4. Those clauses specifying the times of day at which services would be provided and the number of hours to be worked each day.

5. Clauses containing detailed specifications of the work to be done.

6. Clauses involving inspection and reporting requirements.

7. Clauses requiring the plaintiffs to comply with the client’s reasonable directions.

8. Clauses requiring the plaintiffs to comply with the clients’ policies and procedures.

9. Clauses allowing clients to specify or require that particular cleaners not be used.

75. Examples of contracts which the plaintiffs submitted contained ‘no indicia’ apt to attract the operation of s 37 included:

1. The contract dated 4 March 2016 between SKG and AtWork Australia. This was a ‘standard form’ SKG contract.

1. The contract commencing with effect from 6 August 2021 between SKGC and Hales Douglass. This was a ‘standard form’ SKGC contract.

2. The undated contract between Ezko Property and HINO Motor Sales Australia Pty Ltd.

76. For each of these examples, the salient terms of the contract are set out below.

AtWork Australia

77. This is one of the many standard form contracts employed by SKG. Clauses 1, 2 and 3 contained the main terms and scope of the contract, and provided as follows:

“1. Agreement

Cleaning days: Tuesdays & Fridays

Cost Per Annum: $16,640.00 + GST

Site Name: asWork [sic] Australia

Site Address: Shop C3004, Top Ryde City Shopping Centre, Corner of Blaxland & Devlin St, Ryde NSW 2112

Cleaning Specifications

Office area including boardroom:

Clean and wipe down furniture, equipment and table tops.

Clean and wipe down desks (where surfaces have no papers)

Vacuum all floor areas.

Dusting with microfibre rags or static cloths

Remove scuff marks from walls.

Empty waste bins.

Spray and wipe fixtures, ledges and window sills

Wipe down phones

Removal of cobwebs

Spot clean internal and external glass

This Deed of Agreement and all schedules (together the Agreement) is made by the following parties:

a) atWork Australia (the ‘Principal’)

ABN 29 009 452 153

b) SKG PTY LTD (the ‘Contractor’)

ABN 52 076 694 061

2 TERMS OF THIS AGREEMENT

2.1 The contractor is engaged to perform the Services as per specification (if supplied).

2.2 The effective date of this Agreement shall be the date shown on the Section 5 of this Agreement

2.3 The Contractor will perform the Services at the premises set out in Section One.

2.4 The principal will pay to the Contractor the fees set out in the Section One.

2.5 The Principal may engage the Contractor to carry out certain work outside the Services provided in the specification in section one. The parties agree to negotiate in good faith for any such request by the Principal

2.6 The contract applies for a period of twenty four months (24) from date of commencement and with a fixed price for twelve months (12). After this period, the price may be subject to CPI increases.

2.7 The Contractor reserves the right to employee staff or contract labour as it see[s] fit.

2.8 The Contract Price is as established is detailed on page 1 of this agreement.

2.9 The Client must pay that part of the Contract Price as specified in each invoice issued within 30 days of the date of invoice.

3. DUTIES OF THE CONTRACTOR

3.1 The Contractor must:

a) Perform the Services in a conscientious expeditious and professional manner and to a standard reasonably requested by the Principal;

b) Advise the Principal of the names of its employees if requested, and ensure it only employs persons of proper character, in compliance with all laws.

c) Follow all security procedures required by the Principal in relation to its access to the Premises.

3.2 The Principal may with due cause at any time object to an employee. If this occurs, the Contractor must cease to provide the Services of that employee with reasonable notice and an alternate person must be provided. That alternate person must be acceptable to the Principal.

3.3 The Principal acknowledges that the Contractor does not provide services exclusively for the Principal.”

78. The reference to ‘employees’ must, in context, be understood to include subcontractors.

79. Clause 5 contained various ‘promises by the contractor’, including covenants to abide by applicable legislative and other requirements, to provide insurance and so on. Clause 5.4 contained a promise that the contractor’s ‘employees or contractors are competent to perform the services’. Clauses 5.7 and 5.8 were as follows:

“5.7. The contractor will supply all equipment and chemicals required to complete the scope of works.

5.8. The Contractor agrees to employ the employees of the Principal on award conditions.”

80. The work to be done by clause 5.8 was not explained.

Hales Douglass

81. This is one of the many standard form contracts employed by SKGC. Clauses 1, 2 and 3 of this contract provided as follows:

“1 AGREEMENT

Cleaning Days: One (1) Service per week (Friday evening or over the weekend)

Fixed Cost Per Annum (cleaning services): $4680.00 + GST

Fixed Cost Per Month (cleaning services): $390.00 + GST

This Price is a total annual amount that will be paid over 12 equal monthly payments

Site Name: Hales Douglass

Site Address: Level 1, 30C Orient St, Batemans Bay NSW 2536

Cleaning Specifications:

Front Reception / Office Areas / Meeting Rooms

Clean and wipe down furniture, equipment, table tops, desk/ counter.

Dusting with microfibre rags or static cloths

Sweep, vacuum and mop floors.

Remove scuff marks from walls.

Empty waste bins.

Vacuum air vents

Spray and wipe fixtures, ledges and window sills

Removal of cobwebs

Dusting above 2.1metres

Kitchenette

Clean and wipe down equipment and furniture

Vacuum/ sweep/ mop floors.

Clean and wipe down sinks, splash backs and counters.

Empty waste bins.

Spot clean walls.

Clean external surfaces

Bathrooms, Amenities and Showers

Clean and disinfect pans, seats, lids, urinals, hand basins, sinks, fittings, shower heads, taps and stainless steel areas.

Clean and wipe down all wall tiles.

Sweep and mop (with disinfectant) all floor surfaces.

Refill toilet paper, hand soap dispensers & paper towel.

Clean glass and mirrors.

Clean door handles.

Floor areas

Vacuum and mop all floor areas.

Stairs

Remove all cobwebs

Sweep & Mop

Dust stairwell walls

This Deed of Agreement and all schedules (together the Agreement) is made by the following parties:

a) Hales Douglass (the ‘Principal’)

ABN 59 003 694 424

b) SKG CLEANING SERVICES PTY LTD (the ‘Contractor’)

ABN 45 162 372 125

2 TERMS OF THIS AGREEMENT

2.1 The contractor is engaged to perform the Services as per specification (if supplied).

2.2 The effective date of this Agreement shall be the date shown on the Section 5 of this Agreement

2.3 The Contractor will perform the Services at the premises set out in Section One.

2.4 The principal will pay to the Contractor the fees set out in the Section One.

2.5 The principal must pay SKG Cleaning Services the full amount within 30 days from the date of the relevant invoice

2.6 The Principal may engage the Contractor to carry out certain work outside the Services provided in the specification in section one. The parties agree to negotiate in good faith for any such request by the Principal

2.7 This contract is valid for a period of 3 years from date of commencement with a 3-year extension option. This option will automatically commence if the Principal has not formally requested their intention to not exercise this extension. This price is fixed for the first twelve (12) months and every following 12 months will incur a CPI increase at the anniversary of this contract.

If by 14 days prior to the expiry of this contract the principal has not indicated in writing, that they do not wish to continue the services of the contractor, this contract will automatically rollover for another twelve (12) months and will do so at each anniversary of this contract.

2.8 The Contractor reserves the right to employee staff or contract labour as it sees fit.

2.9 The Client has the option to add sites as they become online or remove sites from the current contract if they are no longer in use.

2.10 With any new sites or section in current buildings that are added, specifications, service schedules and costing will need to be signed off by Principals procurement department. (Pricings [sic], specifications and service schedules will firstly be negotiated by both Principal and Contractor).

2.10.1 For any sites under this contract which no longer require commercial cleaning services or any sites that the Principal vacates and no longer require cleaning services, the invoice amount will be varied to reflect this change. Payment will not be required for sites removed for the above reasons. Thirty days’ notice is required for any changes to occur from the original contract.

2.10.2 Principal must firstly offer the Contractor the opportunity to continue works at the Principals new premises.

3 DUTIES OF THE CONTRACTOR

3.1 The Contractor must:

a) Perform the Services in a conscientious expeditious and professional manner and to a standard reasonably requested by the Principal;

b) Advise the Principal of the names of its employees if requested, and ensure it only employs persons of proper character, in compliance with all laws.

c) Follow all security procedures required by the Principal in relation to its access to the Premises.

3.2 The Principal may with due cause at any time object to an employee. If this occurs, the Contractor must cease to provide the Services of that employee with reasonable notice and an alternate person must be provided. That alternate person must be acceptable to the Principal.

3.3 The Principal acknowledges that the Contractor does not provide services exclusively for the Principal.”

82. Clause 5 contained ‘promises by the contractor’ in very similar terms to the covenants contained in clause 5 of the AtWork Australia contract described above. This contract also contained a clause providing that the contractor ‘agrees to employ the employees of the Principal on award conditions’.

HINO Motor Sales

83. The HINO contract consisted of a document entitled ‘Cleaning Specification and Pricing’. It was in the form of a proposal that was executed as an agreement by the parties. The ‘proposed cleaning specification’ is reproduced below.

Office Area
Vacuum all carpets.	Daily
Tidy and dust down office furniture and polish as required.	Daily
High dust and clean.	Weekly
Dust and clean other areas.	Daily
Dust signs and paintings.	Daily
Damp clean desktops and disinfect and wipe telephones.	Weekly
Dust all office equipment/computers.	Weekly
Carry out complete kitchen cleaning.	Daily
Empty and clean rubbish bins.	Daily
Spot clean and polish glass	Daily
Recreational Amenities Toilets Shower/Locker rooms
Sweep and wash all floors using a germicidal type detergent. Particular attention to be paid to corner areas and behind pans.	Daily
Vacuum all exhaust air vents.	Monthly
Clean and disinfect urinals, pans, seats and lids (both sides) paying particular attention to difficult and unexposed areas.	Daily
Clean and polish urinals, wash basins, taps, pipes and miscellaneous fittings with a disinfectant cleaner.	Daily
Clean and polish mirrors.	Daily
Empty and clean rubbish bins.	Daily
Clean all bench tops/basins	Daily
Remove splash marks and stains from walls, partitions and doors.	Daily
Replenish supplies of toilet paper and soap	Daily
Dust sills, doors and door frames	Daily
Deodorise toilet areas to ensure pleasant surroundings.	Daily
Remove graffiti	Daily
Report defects	Daily
Spot clean all glass partitions	Daily
Deep Clean and wash down disinfectant all surfaces of walls, partitions, mirrors, doors, floors	Daily
Complete machine sweep/scrub of warehouse space. Particular attention to be paid to edges and corners.	Weekly
Pick up all visible rubbish	Daily
Empty and clean all rubbish bins.	Daily
Dust and clean shelving	Weekly
External Tiled areas, entrances
Pre-Sweep all areas with dust control mop	Daily
Clean intercom	Daily
All floor surfaces to be cleaned	Daily
All corners, edges hand scrubbed or mopped	Daily
Dust free all edges	Daily
All accessible ledges, columns, posts and protection rails to be dusted and polished	As Required
All surfaces are to be wiped clean of graffiti	Daily
Keep clean, free of litter, cigarette butts, etc, all pot plants and planter boxes	Daily
Dust and clean all air conditioning registers	Weekly
Dust and clean all light fittings	Weekly
Entry doors (glass) to be cleaned and polished and presented mark free	Daily
All areas, features, artwork, edges etc. to be kept cobweb free	Daily
Pressure wash of tiled floor surfaces	Quarterly
Cleaners Room
To be kept clean, tidy and rubbish free at all times	Daily

84. The document then set out the number of cleaners that would be provided to perform the services and the number of hours per day in which the services would be provided. This was broken down across the office and the warehouse. The breakdown showed total hours per year to perform the services in the office areas (2,388 hours) and the total hours per year for the warehouse (1,115 hours). The document then contained a pricing summary (exclusive of GST), which was as follows:

Area	Price per calendar month	Price per annum
Office Cleaning	$12,488.00	$149,856.00
Warehouse Cleaning	$5,810.00	$69,720.00
Total	$18,298.00	$219,576.00

85. Schedule 1 then contained ‘key details’, as follows:

“1. Site: HINO Motor Sales Australia – 6-10 Parraweena Rd, Caringbah NSW 2229

2. Service: Provision of cleaning services

3. Term: 3 years + optional 2 year extension

4. Commencement Date: 1st of June 2020

Notes:

a) Quotation based on current requirements. Any changes to the requirements will be reviewed, including relocation to new warehouse facility.”

86. As to all of the contracts in this category (being those in respect of which there were said to be no indicia tending to invite the application of the employment agency provisions of the Payroll Tax Act) the plaintiffs submitted that the regularity at which work was to be performed was a neutral factor. The plaintiffs also submitted that the fact that services were always required to be performed at the client’s premises was a neutral factor. In relation to both of these matters, they submitted that cleaning services must by nature be delivered regularly and at the site to be cleaned.

87. Central to the plaintiff’s case concerning this category of contracts was the submission that the contracts do not ‘create a mechanism of client control over individual workers or, relevantly, over the services’.

88. Insofar as these contracts specified the detail of the services to be provided and the times at which services were to be provided, the plaintiffs submitted that the contracts did no more than reflect the commercial realities of cleaning services. The plaintiffs submitted that detailed specifications such as these were to be expected in any arms-length commercial cleaning contract.

Conclusions in relation to the contracts said to contain no indicia to support the assessments

89. The contracts to which I have just referred represent the high point of the plaintiffs’ case. They are the contracts said to contain no indicia capable of supporting a conclusion that they are employment agency contracts within the meaning of s 37.

90. I am unable to accept that that is so. Each of these contracts contained detailed specifications governing the nature of the services to be delivered, where and when they were to be delivered and how much time was to be spent delivering them. In this way, each contract reveals a close and relevant connection between the services to be performed (being the work described in the specification) and the ordinary conduct of the business of the client (which necessarily governed the content of the specification). Although the services were provided to a wide range of clients across a wide range of industries and government sectors, each client sought essentially the same thing: a cleaning service appropriate to the routine requirements of its particular business.

91. It is not to the point that none of the clients was itself a commercial cleaning business. A service may be provided ‘in and for’ a client’s business even if the service is not of the kind that the client offers as part of its revenue earning or ‘core’ services: Bayton Cleaning Company Pty Ltd v Chief Commissioner of State Revenue (NSW) [2019] NSWSC 657; (2019) 109 ATR 879 at [104] (Ward CJ in Eq).

92. I do not accept that the fact that the services were all required to be delivered on-site is a neutral factor. Nor can I accept that the regularity and continuity with which the work was to be performed is a neutral factor. It is true that it is in the very nature of cleaning services that they must be delivered regularly and at the premises to be cleaned. But these are circumstances that cannot be ignored just because they are in the very nature of cleaning services. To the contrary, these are circumstances that tend to demonstrate the closeness of the relationship between cleaning services, on the one hand, and the ordinary conduct of the business that requires them, on the other. It would be more appropriate to say that it is in the very nature of cleaning services that they have a strong tendency to reflect the day-to-day needs of the business to which they are provided.

93. In Integrated Trolley Management, Basten AJA said that ‘the characterisation of cleaning and security services as otherwise than services provided in and for the conduct of the client’s business is suggestive of error’: [54]. Although I do not understand his Honour to have been saying categorically that contracts to provide cleaning and security services will always be employment agency contracts, his Honour’s comment does in my respectful opinion at least reflect that it is usually very easy to discern the relevant relationship between the ordinary conduct of a client’s business, on the one hand, and the everyday cleaning services which that business has contracted to acquire, on the other.

94. Basten AJA did not foreclose the possibility that a business may contract to acquire cleaning services in such a way as to avoid the operation of Part 3 Division 8 of the Payroll Tax Act. Specifically, his Honour found it unnecessary to determine whether the clause imposing responsibility on the contractor ‘for the management of the cleaners prevented the agreement being an employment agency agreement’: [109]. As his Honour pointed out, that matter had not been argued.

95. That matter has been argued in this case. The plaintiffs’ submission is that the responsibility for management of the cleaners themselves is, as a matter of the terms of the cleaning contracts, reposed in them, not the clients. The contractor and not the client has control over the workers.

96. Although that may be true, it is not a complete answer to the question, which concerns whether a person procures the ‘services of another person’ for a client (s 37). The focus here is relevantly on the procurement of services. In the case of the cleaning services supplied by the plaintiffs in these proceedings, the clients may not have control over the workers in the sense of having a contractual right to control or direct them as employees, but they remain entirely in command of the services to be provided by those workers. In every case, it is the clients who decide what services are provided and when they are provided. These are matters that are inevitably governed by the exigencies of the client’s business, not by the plaintiffs. They are matters that find expression in even the simplest contract specifications.

97. At paragraph [68] above, I referred to what Basten AJA said in Integrated Trolley Management about the approach to be adopted in applying s 37. That approach involves an assessment of matters such as the regularity and continuity of the work and the degree to which the ‘nature of the work’ is under the ‘control and direction of the client’. In the present case, the contracts do have these features. They are for the provision of regular and continuous services, the nature of which is to a significant degree under the control and direction of the client.

98. It follows that even those contracts said to contain no indicia capable of bringing the contract within the scope of s 37 are employment agency contracts within the meaning of that section.

Other contracts

99. The conclusions I have reached in relation to the so-called ‘no indicia’ contracts mean that I reach the same conclusions in relation to the other contracts all the more readily. In the case of all other contracts in evidence, there are provisions of the kind to which I have just referred, as well as provisions that provide the client with additional elements of control over the services and the workers, be they employees or subcontractors, who were to provide them.

99. For example, the evidence includes a contract between SKG and George Weston Foods dated 19 January 2016. Clause 4.1 contained in Annexure C to the contract (‘Terms and Conditions’) included the following ‘general obligations of supplier’:

“The supplier must:

(a) perform the Services with all due care and skill and in a professional, punctual and diligent manner;

(b) perform any ancillary service that may be required in order to ensure that the Services are delivered with all due care and skill and in a professional, punctual and diligent manner;

(c) not allow any other work of the Supplier, or of its officers, agents, employees or subcontractors, to interfere with the performance of the Services;

(d) provide the Services to GWF in the manner GWF reasonably requires and in accordance with the KPIs;

(e) in performing the Services, comply with GWF’s reasonable directions and, if required, cooperate with any third party suppliers providing services to GWF;

(f) obtain, keep current and produce to GWF on request evidence of any relevant authorisation, permit or licence, required by law in order for the Services to be provided;

(g) cooperate fully with GWF and act reasonably and in good faith towards it;

(h) comply with all applicable laws;

(i) comply with all GWF policies and attend any training provided by GWF in respect of those policies; and

(j) not endanger the health or safety of any person in GWF’s workplace.” (emphasis added)

101. The detailed and highly prescriptive specifications included the following notes:

Evening Routine (5PM to 8.45PM) (Note: Cleaners must be out by 10PM)

Note: Cleaners to arrive in clean and company labelled Uniform

Kitchens

(Check Communication Book and act on all requests).

…

102. Clause 12 was headed ‘Required Personnel’. It provided as follows:

“12.1 Specified personnel

If GWF specifically requests for any particular Supplier personnel to perform the Services, the Supplier must use those personnel to perform the Services, and may only use other personnel with GWF's prior written consent.

12.2 Removal of personnel

At GWF's request, the Supplier will cease using any particular Supplier personnel in performance of the Services. The Supplier will provide replacement personnel that are acceptable to GWF for any personnel removed in accordance with this clause.”

103. These are all matters that indicate a close connection between the business of the client, on the one hand, and the work to be done under the cleaning contract, on the other.

104. To like effect is the contract between Ezko Retail and Scentre Shopping Centre Management Pty Ltd in respect of Westfield Burwood, dated 7 November 2018. That contract reserved a role to the client in the cleaning operations. The client had a right to appoint a Scentre Group-employed ‘Cleaning Manager’ to oversee all cleaning operations. Clause 4.4 of Schedule 1 to the agreement required the contractor to manage requests from the client and to make sure they were carried out in a timely and effective manner. Ezko was required to adhere to various Scentre Group policies, plans and procedures and to comply with its induction and sign-in requirements. Schedule 1 also provided:

“2.1 The Contractor must adopt and align with Scentre Group’s D&I and Customer centric approach that guarantees utmost value to its customers by creating extraordinary experiences.

2.2 The Contractor is considered a Scentre Group Representative and Westfield Brand Ambassador, being identifiable by uniforms. The Contractor must ensure any employee or contractor providing Services are professional and void of expressing personal opinions when interacting with customers and/or retailers.”

105. For the same reasons as indicated above, this is a contract in which the relevant relationship between the client and the cleaning services is readily apparent.

106. In my view, subject to the question of whether some client contracts were performed solely using employed labour (which I consider next), all of the contracts in evidence are employment agency contracts.

Contracts performed only with employed labour

107. Finally, the plaintiffs in the Ezko proceedings submitted that there were certain contracts that were performed only through the use of employed labour and not through the use of subcontractors. It was common ground that if this was so, then those contracts would not be employment agency agreements. The evidence said to support this conclusion was given by Mr Vasilas in cross-examination, who suggested that the following client contracts had been serviced only by employees:

1. Grosvenor Place;

2. Law Courts;

3. University of Sydney Union; and

4. Parramatta Westfield.

108. However, accounting records tendered by the Chief Commissioner show that in the case of all of these clients, the relevant Ezko entity made payments to subcontractors apparently in relation to cleaning work at these same locations. In the case of all but the University of Sydney Union, these payments were both substantial and regular.

109. Mr Vasilas sought to explain that these payments related only to so-called ‘specialty’ matters extraneous to the client contracts. However, in the complete absence of evidence as to what the subcontractor payments actually related to (save as revealed by the accounts tendered by the Chief Commissioner) and given my concerns about the reliability of Mr Vasilas’s evidence generally, I cannot accept his explanation. It would have been a simple matter to tender invoices for the so-called ‘specialty’ work done at these locations to demonstrate that the services provided did not relate to the client contracts, but this did not happen.

110. I am not in these circumstances prepared to conclude that there were any client contracts in respect of which it can be said that the services were supplied exclusively by employed labour.

The onus of proof

111. The conclusions I have reached mean that it is strictly unnecessary to consider whether the plaintiffs’ submission set out at paragraph [7] above is correct. However, had I concluded that some of the contracts were not employment agency contracts, I would not have accepted that that conclusion alone was sufficient to demonstrate that any particular assessment was excessive.

112. The reason for this is that the payroll tax liability notified in the assessments relevantly reflects the tax payable on amounts that are taken to be taxable wages under Part 3 Division 8 of the Payroll Tax Act. The task of demonstrating that the assessments are excessive involves demonstrating that the Chief Commissioner took into account subcontractor payments that were not taken by the Act to be taxable wages: see Integrated Trolley Management at [9]-[10] (Payne JA). In discharging their onus under s 100(3) of the Taxation Administration Act, the plaintiffs must prove all matters necessary to enable the Court to answer that issue in their favour: Godolphin Australia Pty Ltd v Chief Commissioner of State Revenue [2022] NSWSC 430; (2022) 114 ATR 597 at [44].

113. Of course, a critical step in reaching that conclusion would be to demonstrate that at least some client contracts were not employment agency agreements. But it would only be a step. It would remain necessary to demonstrate that the amounts on which the assessments were based included amounts referable to that contract. In circumstances where there is no clear evidence about the extent to which any particular client contract was performed through the use of subcontracted labour, as opposed to employed labour, I would not have been able to conclude that any particular assessment was excessive and if so by how much. The solution proposed by the plaintiffs was that I would in that event set the assessments aside and remit them to the Chief Commissioner to determine which subcontractor payments should be excised from taxable wages, would only be productive of further dispute.

ORDERS

114. In each matter, the proceedings will be dismissed with costs.

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Decision last updated: 17 October 2025