FEDERAL COURT OF AUSTRALIA Trylow v Commissioner of Taxation [2004] FCA 446 INCOME TAX – failure to deduct group tax – penalty imposed under s 221EEA of the Income Tax Assessment Act 1936 - whether persons were sub-contractors or employees of the taxpayer – sham and fraud – "bodgie" companies in the building and construction industry – employees paid via a cheque-cashing company ADMINISTRATIVE LAW – applications under Part IVC of the Taxation Administration Act 1953 –whether Federal Court may consider whether penalty under Income Tax Assessment Act 1936 was correctly imposed – whether the Federal Court is limited to material that was before the Tax Commissioner EVIDENCE – tendency and coincidence – s 97 of the Evidence Act 1995 (Cth) – evidence of dealings by other employers with the "bodgie" companies – evidence was probative of the companies' business practice and not tendency evidence Income Tax Assessment Act 1936 (Cth) ss 221EAA, 221N, 221YHD, 221YHDA, 221C Taxation Administration Act 1953 (Cth) Pt IVC Federal Court RulesO 52B r 5(a)(v) Evidence Act 1995 (Cth) ss 56, 95, 97 Stergis v Commissioner of Taxation (1989) 86 ALR 174 referred to Avon Downs Pty Ltd v Commissioner of Taxation (1949) 78 CLR 353 cited Richardson v Commissioner of Taxation (1932) 48 CLR 192 referred to Temples Wholesale Flower Supplies Pty Ltd v Federal Commissioner of Taxation (1991) 29 FCR 93 referred to Snook v London and West Riding Investments Ltd [1967] 2 QB 786 cited Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) FCR 449 cited Copperart Pty Ltd v Commissioner of Taxation [1993] 93 ATC 4779cited R v Boardman [1975] AC 421 cited Jacara Pty Ltd v Perpetual Trustees WA Ltd (2000) 106 FCR 51 referred to Zaknic Pty Ltd v Svelte Corporation Pty Ltd (1995) 61 FCR 171 referred to Jones v Dunkel (1959) 101 CLR 298 cited Hollis v Vabu Pty Ltd (2001) 207 CLR 21 referred to Briginshaw v Briginshaw (1938) 60 CLR 336 referred to TRYLOW PTY LTD v COMMISSIONER OF TAXATION N 1091-1094/02 TRYLOW PLANT HIRE LTD v COMMISSIONER OF TAXATION N 1095/02 HILL J 16 APRIL 2004 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N1091-1094 OF 2002 BETWEEN: TRYLOW PTY LTD APPLICANT AND: COMMISSIONER OF TAXATION RESPONDENT JUDGE: HILL J DATE OF ORDER: 16 APRIL 2004 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application be dismissed. 2. The matter be remitted to the Commissioner to permit the Commissioner to make such further decisions concerning remissions as the Commissioner may be empowered by law to make. 3. The Applicant pay the Commissioner's costs of the application. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N1095 OF 2002 BETWEEN: TRYLOW PLANT HIRE PTY LTD APPLICANT AND: COMMISSIONER OF TAXATION RESPONDENT JUDGE: HILL J DATE OF ORDER: 16 APRIL 2004 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application be dismissed. 2. The matter be remitted to the Commissioner to permit the Commissioner to make such further decisions concerning remissions as the Commissioner may be empowered by law to make. 3. The Applicant pay the Commissioner's costs of the application. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N1091-1094 OF 2002 N1095 OF 2002 BETWEEN: TRYLOW PTY LTD APPLICANT AND: COMMISSIONER OF TAXATION RESPONDENT BETWEEN: TRYLOW PLANT HIRE PTY LTD APPLICANT AND: COMMISSIONER OF TAXATION RESPONDENT JUDGE: HILL J DATE: 16 APRIL 2004 PLACE: SYDNEY REASONS FOR JUDGMENT INTRODUCTION 1 Before the Court is an appeal against an objection decision of the Respondent Commissioner of Taxation. In that decision the Commissioner disallowed the objection of the Applicants Trylow Pty Ltd and Trylow Plant Hire Pty Ltd against notices issued to them of a failure to make deductions from salary or wages under s 221EAA of the Income Tax Assessment Act 1936 ("the Act"). In these reasons the Applicants will be referred to as "Trylow" unless there is a need to distinguish between them when their corporate names will be used. Trylow objected against the Notices and the objections were disallowed. It is those objection decisions against which Trylow now appeals to the Court. 2 Although designated as an appeal, an application of this kind is brought under Part IVC of the Taxation Administration Act 1953 ("the Administration Act") in the original jurisdiction of the Court. It is necessary at the outset to say something about the Court's jurisdiction and the nature of the proceedings. THE JURISDICTION OF THE COURT 3 Section 221EEA (1) of the Act provides relevantly: "Where an employer … refuses or fails, at the time of paying salary or wages to an employee, to deduct from the salary or wages the amount required to be deducted under this Division, the employer is liable to pay to the Commissioner, by way of penalty…. 4 Section 221EEA forms part of the provisions of the Act concerned with Group Tax, popularly then called "Pay As You Earn tax ("PAYE"). A person ("an employer") who paid salary or wages as defined to an employee was required to deduct a prescribed amount from the salary or wages and pay it to the Commissioner. The legislative scheme is the subject of a fuller discussion in Stergis v Commissioner of Taxation (1989) 86 ALR 174. Failure to deduct the prescribed amount brought with it the consequence that the Act imposed upon the employer a penalty. The penalty was not imposed by the Commissioner. It arose not as a consequence of any process of assessment. It was a consequence of the Act itself. 5 However, the Commissioner was given power by virtue of s 221N(1) to remit the whole or part of the penalty. He was then required by s 221N(2) to notify the employer of the outcome of that decision in the event that he decided to remit part only of the penalty or nothing at all. A person dissatisfied with the Commissioner's remission decision could then object against it in the manner set out in Part IVC of the AdministrationAct. If the objection was disallowed in whole or in part the objector could then elect to have the decision reviewed by the Administrative Appeals Tribunal (see Part IVC Division 4) or appeal to the Court against it (Part IVC Division 5). The decision is a reviewable objection decision (as defined in s 14ZQ of the Administration Act) because it is not an ineligible income tax remission decision (as defined by s 14ZS of the Administration Act). 6 Because the decision objected against is the decision to remit otherwise than the whole the penalty imposed by s 221EEA, it may be thought that the jurisdiction of the Court is limited to investigating whether that decision was exercised in accordance with law. The Court itself is not authorised to exercise the discretion to remit. No doubt the Court could set aside the decision of the Commissioner on what may be referred to as normal administrative law grounds, for example, because the decision took into account an irrelevant consideration, or failed to take into account a relevant consideration, or because the decision involved an error of law, or upon examination it was revealed that the decision was made arbitrarily or capriciously, such that there was no real decision at all: Avon Downs Pty Ltd v Commissioner of Taxation (1949) 78 CLR 353 at 360. The Court clearly has no jurisdiction to enter upon the merits of the decision itself. 7 However, because the decision to remit must commence with the fact that there has been a failure to remit PAYE tax giving rise to the penalty under s 221EEA, review of the penalty involves an examination of whether the terms of s 221EEA gave rise to a penalty in the first place. This was the basis of the decision of the High Court in Richardson v Commissioner of Taxation (1932) 48 CLR 192, where in an analogous case involving remission of a penalty imposed under s 67 of the Act (which section imposed a penalty for failure to include any assessable income in a return), the High Court held that the Board of Review on a review, and the Court in the event of an appeal from the Board, could consider whether the penalty (then called "additional tax") was properly payable at all. The decision in Richardson was applied by a Full Court of this Court in Temples Wholesale Flower Supplies Pty Ltd v Federal Commissioner of Taxation (1991) 29 FCR 93 where it was held that the Administrative Appeals Tribunal on review of a decision not to remit the whole of the penalty under s 221EEA had jurisdiction to consider not merely whether the penalty should be remitted, and the extent of the remission, but whether any penalty was payable at all. 8 Temples Wholesale Flower Supplies was a decision that involved the Administrative Appeals Tribunal engaged in merits review. Since such a review places that the Tribunal in the position of the Commissioner to consider afresh the issue before it, the Tribunal is clearly not limited to considering the material which was before the Commissioner at the time of making the decision. It will consider all relevant evidence that is placed before it. 9 There is however a question whether, when an employer appeals to this Court against the Commissioner's objection decision, this Court is restricted, in considering not only the legality of the decision to remit but also whether a penalty was correctly imposed at all by s 221EEA to the material which was before the Commissioner at the time the remission decision was made. If the Court's jurisdiction is such that it should be referred to as judicial review of the Commissioner's decision, the view that the Court should be limited to the material that was before the Commissioner has considerable force. However, it at least arguably follows from Richardson that this is not so. Not only did the High Court suggest that the Board of Review had jurisdiction to consider whether the additional tax (ie penalty) which in that case was in dispute was properly payable, it held also that the High Court on appeal from the Board had jurisdiction to consider the same issue. It will be recalled that it was the law at that time that the jurisdiction of the Court on appeal from Boards of Review was only invoked once it was shown that the Board's decision involved a matter of law, but once the jurisdiction was invoked, the entire controversy was then before the appeal Court. Once the jurisdictional matter was made out (ie the involvement of a question of law) the jurisdiction of the High Court at that time would seem to equate to the jurisdiction of this Court presently being exercised. Hence, it can be said to follow that this Court would have had jurisdiction to consider for itself whether the penalty was properly imposed and in doing so could consider such admissible evidence as was placed before it rather than being confined to the material which was actually, or perhaps constructively, before the Commissioner at the time the remission decisions were made. On the other hand it can be said that the matter was not really in issue in Richardson even if the context in which Richardson was decided was such that no distinction could be drawn between the present context than that in Richardson. 10 It is not necessary for me to resolve this issue here. The parties were in agreement that the Court hearing an appeal from the objection decision involving the Commissioner's decision not to remit the whole of the penalty did have jurisdiction to determine whether the penalty was in fact payable and could do so on the basis of the evidence which was before it, that evidence being, it may be presumed, more extensive than that which was before the Commissioner although perhaps in some ways more confined since the Court is bound by the rules of evidence, while the Commissioner himself is not. However, since the exercise of the discretion to remit was also the subject of complaint on normal administrative law grounds it necessarily follows that in deciding that aspect of the application to the Court the Court could have regard only to the material before the Commissioner. Neither party suggested in fact that the evidence before me differed in any way from the evidence before the Commissioner at the time he made the remission decisions, although it is obvious that it did. THE POSITIONS OF THE PARTIES. 11 Except for one minor matter which I shall deal with later in these reasons, the real issue between the parties was whether on the facts before me Trylow had in the period between 30 June 1996 and 30 June 1999 ("the relevant period") failed to deduct PAYE tax from the payments it made to persons of whom it was alleged by Trylow that they were employees of one or more of 14 companies and not employees of Trylow. The total amount which the Commissioner claimed that Trylow failed to deduct was $1.219,534.35. The Commissioner remitted the penalty payable to 100% of the tax which he claimed Trylow should have deducted from amounts paid to the 14 companies by Trylow. He was of the view that these amounts were, in truth, salary and wages paid to employees of Trylow and that they were paid to the recipient companies at the direction of the employees. The 14 companies were: A H Plant Hire Banard Civil Engineering Pty Limited Brickeridge Constructions Pty Limited Carig Constructions Pty Limited C & L Constructions Pty Limited Duiske Constructions Pty Limited Eureka Plant Hire Pty Limited International Excavations Pty Limited O'Callaigh Excavations Pro Line Plant Hire Pty Ltd South Falk Services Subcrete Constructions Pty Limited Tomdeeley Constructions Pty Limited Wilsons Work-Hire Constructions Pty Limited 12 It was common ground that each of Trylow Pty Ltd and Trylow Plant Hire carried on the business of providing labour to contractors engaged in projects in the building industry and also hiring plant (with or without operators) to such contractors. In so doing, Trylow employed its own workers and provided the services of those workers on many occasions to the contractors. When it provided labour in the form of its own employees it paid by direct debit to those employees salary and wages, having first deducted the appropriate group tax which it remitted to the Commissioner. However, Trylow also on some occasions contracted with other labour hire companies that these companies would provide their employees to the contractors for a fee which was paid to the labour hire companies. It also contracted with such companies that they would, for a fee, provide plant and operators to the contractors. On such occasions Trylow did not pay workers salary and wages. Rather the workers were paid by the labour hire companies Presumably those labour hire companies deducted group tax and paid the tax so deducted to the Commissioner. Whether they did so was not a matter of relevance to Trylow. The fee paid to such labour hire companies by Trylow for labour was an amount higher than the salary and wage payable by Trylow to its employees since it covered not only the group tax not deducted, but also compulsory payments which Trylow was obliged to make to cover workers compensation insurance, redundancy insurance and compulsory superannuation contributions. In such cases the labour hire companies provided to Trylow certificates obtained from the Commissioner that Trylow was not obliged to deduct prescribed payments tax. Trylow was thus paid by the contractors not only for the provision of its own employees to the contractors but for the provision of labourers who were apparently employed by the labour hire companies under contract with Trylow. Trylow was also paid by the contractors for the provision of plant with or without operators. Trylow also had its own plant which it hired out to the contractors with or without operators who were its employees. There were over 200 labour hire companies with whom Trylow contracted in the relevant period. Among them was, Trylow claimed, each of the 14 companies. 13 It was Trylow's case that the labourers who purported to be employed by one or more of the 14 companies and whose services were made available to contractors were not employees of Trylow. While it was not necessary for Trylow to show that the persons whose services were made available to contractors were employees of the 14 companies, the principal case for Trylow was that they were. The alternative case was that each of the persons was an independent contractor not employed by Trylow. 14 It was common ground that the burden of proof lay upon Trylow to show that none of the persons in respect of whose labour it made payments to one or more of the 14 companies were employees of Trylow: s 14ZZO of the Administration Act. If they were, there was no dispute that Trylow was obliged to deduct from amounts paid to the 14 companies the prescribed amount of groups tax. The presumption would be that the amounts had been paid at the direction of the persons to the relevant recipient company. 15 Although the remission decision was made on the basis that payments made by Trylow to all of the 14 companies were actually payments of salary and wages to employees of Trylow, the Commissioner conceded at the outset of the proceedings that the payments made to one of the 14 companies, namely, A H Plant Hire Pty Ltd, were actually payments for plant hire or labour. The consequence was that, to that extent, the matter should be remitted to the Commissioner so as to reduce the amount of penalty payable. Accordingly I shall refer to the remaining 13 companies compendiously as "the contentious companies". 16 While therefore the onus lay upon Trylow to show that none of the persons in question were employees of Trylow, the Commissioner sought to make out what Senior Counsel for the Commissioner referred to as a "circumstantial case". The circumstantial case was that the real relationship between Trylow, each company and the person claimed to be an employee of it was that the person in question was an employee of Trylow. Further, the person had directed Trylow to pay his salary to the relevant contentious company, which company then returned in cash to the person (or perhaps Trylow for payment to the person) what had been paid to the company less a fee or commission of 7% or 8%. Invoices which had been rendered by the contentious companies to Trylow purporting to be for employees of the contentious company made available by it to Trylow were, it was submitted, a sham in the legal sense of that word: Snook v London and West Riding Investments Ltd [1967] 2 QB 786, Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) FCR 449. They were, it was submitted, a disguise for the real relationship which I have set out above. 17 In the statement of facts, issues and contentions filed by the Commissioner pursuant to Order 52B Rule 5(a)(v) of the Federal Court Rules the Commissioner contended that in the relevant period tax should have been deducted from prescribed payments made to the 14 companies under ss 221YHD and 221YHDA of the Act. Only in the alternative was it contended that there had been a failure to deduct group tax pursuant to the obligations imposed by ss 221C(1) and 221C(1A) of the Act. And this was notwithstanding that the decision to remit made by the Commissioner was, on all the papers before the Court, a decision expressly made with respect to the failure to deduct group tax and not to the failure to deduct tax from prescribed payments. 18 Had the Commissioner maintained a case depending upon failure to deduct tax from prescribed payments and the Court was satisfied that there was such a failure it seems to me that Trylow would have been bound to succeed. A decision to remit penalties imposed by the Act for failure to deduct group tax from salary and wages would clearly be shown to be excessive if it were found that the payments made by Trylow were prescribed payments so that they were not salary and wages. The decision would have been made under an error of law as to the real relationship between Trylow and the payees of the amounts. The problem would not be cured by a submission that similar considerations would necessarily have to be taken into account in deciding whether to remit the penalty imposed in respect of non deduction of tax from prescribed payments. If authority is needed for what would seem to me to be a self evident proposition reference may be made to Copperart Pty Ltd v Commissioner of Taxation [1993] 93 ATC 4779; 26 ATR 327. 19 In his final submissions, the Commissioner made no attempt to support a case based upon failure to deduct tax from prescribed payments. It is difficult to understand why the statement of facts, issues and contentions required by the Rules was drafted the way it was when the remission decision clearly proceeded on a different basis. THE EVIDENCE – FOR TRYLOW 20 The principal witnesses called to give evidence for Trylow were a Mr McGirr, who was a director of each of the Trylow companies and a Mrs Kilfeather who was bookkeeper for each company. In addition Trylow called evidence from a Ms Kenneally, a banking relationship manager with Trylow's bankers St George Bank Limited ("St George"), a Mr Mayo, a foreman employed by Daracon Engineering Pty Limited, one of the contractors, a Mr Romanous and a Mr Thompson also employed by Daracon respectively as project managers, a Mr Palmer, superintendant of construction works for Leighton Contractors Limited, another Contractor and a Mr Cacciopoli a superintendant employed by Baulderstones another contractor. 21 As will be seen there were virtually no documents produced on behalf of Trylow concerning the payments that were made to the contentious companies, or recording the work performed by any person who was said to be an employee of the contentious companies involved in performing services at the direction of Trylow for the contractors. Nor was any evidence given by any such person said not to be an employee of Trylow. I shall return to the significance of the failure to call such witnesses later. 22 Mr McGirr's affidavit evidence and the affidavit evidence of Miss Kilfeather together with their oral evidence in chief dealt largely with what was referred to in the course of the case as the Trylow system. That is to say, the procedure adopted by Trylow in its dealings with labour hire companies with which it contracted for the provision of labour to contractors. The Court was asked to infer that there was no difference between the system applying to labour provided under contract to Tylow by labour hire companies not being the contentious companies and the system applying to labour provided by the contentious companies. If that inference should be made then the conclusion would follow that none of the payments made to the contentious companies were really salary and wages of persons who were employees of Trylow. THE EVIDENCE – FOR THE COMMISSIONER 23 For the Commissioner evidence was sought to be led from directors of two companies which had dealt with one or more of the contentious companies. Evidence was also led from a Mr Dwyer, a solicitor employed by the Australian Tax Office concerning the non lodgement of returns by ten of the contentious companies. 24 The first witness called for the Commissioner was a Mr McAusland, a director of Metropolitan Damp Cure Pty Ltd who had had dealings with Eureka Plant Hire and Proline Plant Hire in the years 1998 and 1999. In each case the company had been involved in what may be referred to as "cheque cashing". In each case, invoices were given to Mr McAusland by the company in question purporting to be for labour provided by that company, but in circumstances where the real relationship was that wages of employees of Metropolitan Damp Cure were paid at their direction to one or other of the companies which then paid in cash a discounted amount which was given to the employee. The second witness was a Mr Linehan who was at the relevant time a director of Linehan Excavations Pty Limited who had also dealt with Eureka Plant Hire Pty Limited in the relevant period. He too recorded an arrangement with Eureka Plant Hire Pty Limited for sham invoices to be delivered when the real arrangement was that cash was to be paid to the employee without deduction of group tax after a commission had been retained by Eureka Plant Hire. 25 The admission of this evidence was strongly opposed by counsel for Trylow on the basis that it was tendency evidence which should not be admitted. The Commissioner did not seek to support the admissibility of the documents on the basis that they had been before the Commissioner at the time of making the remission decision. This would have guaranteed their admissibility, although not as evidence of the truth of what each witness said. I allowed the affidavits to be read noting that the evidence related to dealings with two of the contentious companies where the documentary material in one case at least, was in the same hand writing as the documentation in evidence concerning the dealing between one of the companies and Trylow. I noted also that the evidence may have been admissible as evidence of the business activities of the companies which had dealings with the witnesses, rather than as tendency evidence. However, I indicated that I would give my reasons for admitting the evidence at the same time as I delivered my decision on the merits of the appeal. Those reasons are to be found under the heading "Admissibility of the evidence of Mr McAusland and Mr Linehan" later in these reasons. 26 The Commissioner relied also upon signed statements from Mr McGirr and Mrs Kilfeather given to the National Crime Authority and obtained by the Authority in the course of its investigation into a scheme involving what were referred to as "bodgy companies" that were involved in providing "cheque cashing facilities". Each statement was prepared by an officer of the NCA but adopted by the person giving it as being correct and the evidence that the person in question would give in Court if required so to do. The statements are relied upon by the Commissioner as containing admissions particularly from Mr McGirr. The statements are discussed later under the heading "The NCA statements" THE TRYLOW EVIDENCE 27 I turn now to address the evidence for Trylow. Most of the Trylow evidence in chief, so far as it concerned the Trylow System in general, was not controversial. What was controversial was the inference which Trylow sought to make from it. Unless otherwise indicated I accept the general evidence as to the Trylow system so far as it relates to the dealings which Trylow had with labour hire companies, not being the contentious companies in the relevant period. THE TRYLOW SYSTEM 28 Trylow carried on in the relevant period the business of providing labour and excavation plant and equipment to large commercial and industrial builders. Plant was sometimes provided on what is referred to as a "wet hire" basis. That is to say the plant was made available together with an operator. Sometimes it was provided on what is referred to as a "dry hire" basis. That is to say that it was the plant alone which was provided. Mostly, however, Trylow provided labour only or plant on a wet hire basis. 29 In the period in question the commercial and industrial builders (herein called "the Contractors") included Leighton Contractors Limited ("Leighton") Daracon Engineering Pty Limited ("Daracon"), Baulderstone Hornibrook Pth Limited ("Baulderstones") and John Holland Pty Limited. Each of these companies contracted directly with the companies or institutions responsible for the project. Relevant projects included a section or sections of the M5 Motorway, the Olympic Games Village, Olympic Stadium and other facilities at Homebush Bay, the Showground, Sydney Airport, Optus premises and Fox Studios. 30 Trylow employed some 45 workers in the relevant period who were deployed at the direction of Trylow to the project on which they were instructed to work. At times when demand was high Trylow needed additional workers and plant. In such cases Trylow contracted with other labour hire companies to provide labour and sometimes plant to the project in respect of which it had contracted to provide workers or plant. In the relevant period it contracted with some two hundred companies to provide workers or sometimes plant to the Contractors. 31 Generally a representative of the relevant Contractor would telephone Mr McGirr and request him to provide labour or plant or both to a particular job site. The request was sometimes made on short notice. If Trylow employees were not available, Mr McGirr would then contact a representative of a labour hire company by telephone to enquire whether that company had the requisite number of labourers or the requisite plant which could be made available for the particular job. Sometimes Mr McGirr would contact persons who were on site, and whose services has been made available to a Contractor, to enquire whether they knew of any persons employed by the labour hire company which employed them who would be available to work on building sites. 32 Generally a labourer or plant hire operator was not permitted on site unless he had first completed an induction course that mainly concerned with safety issues with the Contractor. Labourers made available by labour hire companies such as Trylow would be directed by their employer to present themselves to the relevant site. There they were under the supervision of a site foreman, superintendent or other supervisor employed by the Contractor who would direct the men what they were to do. The hours of work and matters such as the time when breaks were to be taken would be matters for the Contractor. Mr McGirr went from site to site to ensure that Contractors were happy with the workers Trylow made available (including workers otherwise employed by other labour hire companies under contract with Trylow) and to sign off the labour dockets which provided evidence that labour or plant had been provided to the Contractor and the hours that had been worked. 33 The labour dockets were referred to by Mr McGirr as the "day dockets". He carried with him books of these dockets. Each book contained fifty dockets stapled together. There were four copies of each docket, although Mr McGirr in his affidavit evidence said that there were "several copies". Each docket was numbered and there were four colours for each set of docket, a white, a yellow, a green and a pink copy. Each day on each job a docket would be filled out recording the number of hours for which labour had been provided to the Contractor and details of equipment made available. The names of labourers were not necessarily recorded. The dockets were completed sometimes by Mr McGirr or sometimes by the labourer working on the site. They were countersigned by an officer of the Contractor on site. One copy of the day dockets (the white copy) was provided to the Contractor's representative on site. The day dockets formed the basis on which Trylow could later invoice the Contractor for the labour or plant made available. 34 The remaining three copy dockets were then returned to the Trylow office for the preparation of invoices to the Contractors usually on a monthly basis. This was part of Mrs Kilfeather's job as bookkeeper. The invoice would be accompanied by copies of the dockets for the month so that the Contractor could compare, if it so desired, the docket attached to the invoice with the copy docket retained by the Contractor. The copy attached to the invoice was the yellow copy. The remaining green copy was attached to the Trylow copy invoice. 35 It is clear from the copies of the day dockets that they provide no way of determining which employees were engaged in which project, let alone whether particular persons were or were not employees of Trylow. Generally speaking, no name appears upon them. They tell nothing more than the number of hours which Trylow personnel (including in that expression persons employed by Trylow as well as person employed by other labour hire companies contracting with Trylow) were engaged on a particular day for a particular project, or the number of hours in which Trylow plant was engaged in the project (including plant provided by other companies at the direction of Trylow). 36 No record was kept by Mrs Kilfeather showing which labourers worked which day on which project or which item of plant was out on hire. However a weekly record was kept which set out the name of each person engaged in a project and the number of hours worked. 37 According to Mr McGirr's affidavit evidence he completed a summary sheet for each working week setting out the name of the person whose services had been provided and listing the hours worked. The hours worked figure was taken from the day docket. Mr McGirr attended the various building sites to check the attendance at those sites of the labour and plant provided by each sub-contractor. He said he noted this information in his own records, meaning, presumably, the summary sheet. Two of such weekly sheets were available for the weeks ending 19 September 1999 and 26 September 1999 and a number of such sheets were available for the period from January 2000 to August 2000. Otherwise no such sheets were available for the relevant period. According to Mr McGirr, he kept these summaries for a few weeks in case any query should arise as to the number of hours worked. After a few weeks these summaries were discarded. 38 There was thus no document which Trylow was able to produce which identified the work done by any person said by Trylow to be employed by the contentious companies, the name of such person, the hours worked or on what project the person worked. 39 According to the affidavit evidence of Mrs Kilfeather, where labour was provided by other labour hire companies, Mr McGirr would contact her and authorise her verbally to make payment of a nominated amount to the representative of the relevant labour hire company. Mr McGirr would telephone, she said, usually from a site, and advise her that a particular person from a particular company would be calling upon her to pick up a cheque. She was to receive from that representative an invoice for the payment and exchange it for a cheque. If Mr McGirr happened to be in the Trylow office he would sometimes see the invoice and tell Mrs Kilfeather that it was approved. Occasionally he would give her handwritten notes with calculations upon it so that Mrs Kilfeather could cross check against the invoice. According to Mr McGirr he did not approve any payment unless he was satisfied that the amount charged was correct. 40 Trylow has, over the years since the relevant period, been the subject of audit including by officers of the National Crime Authority and the Australian Taxation Office. As a result, Mr McGirr said, documents other than those discarded shortly after they were created because they were no longer useful, have been lost. It was for this reason that only a small number of invoices relating to the 13 companies in question had been retained. 41 In his oral evidence Mr McGirr said that he kept a summary for each labour hire company which provided labourers or plant at his direction to work with Contractors setting out the number of men from that company that were made available to Trylow and through that company to the Contractors. The summary contained names and dollar amounts with a total at the bottom of the page. He said he used that summary to calculate the amount owing to the labour hire company. He would have a conversation with a representative of that sub-contractor and agree the amount to be invoiced each week. He kept this summary in his utility, presumably so that it was readily available to him to check calculations. These summaries were discarded when they were no longer required. 42 He also said that in relation to each subcontractor, he kept in a folder which he retained in his utility notes of the contact person for each company and the names of labourers provided by that company. A sheet would be started as soon as Trylow first had dealing with the company and at the time of initial contact. Names would be scratched off when the worker was no longer working for Trylow. Those notes were likewise discarded as and when Trylow finished dealing with the relevant subcontractor. Except as later discussed, Mr McGirr was unable to remember the name of any of the labourers who were associated with the contentious companies. THE INVOICES FROM THE CONTENTIOUS COMPANIES 43 There was nothing in the affidavit evidence suggesting that the invoices from the contentious companies might be in any way unusual or that they might differ from similar invoices which may have been delivered to Trylow from any one of the over 200 such companies with which Trylow dealt in the relevant period. It is true that the invoices played little part in the affidavit evidence. They were generally given, it would seem from the evidence in chief, to Mrs Kilfeather who would be concerned only with the amount shown on them. Upon receipt of an invoice Mrs Kilfeather would pay the person who brought it to her so long as the amount invoiced coincided with the amount which Mr McGirr authorised her to pay. In chief, Mrs Kilfeather said that invoices were often presented to her with a handwritten note from Mr McGirr. Although her affidavit in giving this evidence suggested that this procedure related to the invoices from the contentious companies, in cross-examination it would seem that in saying this she was referring to invoices which were on 30 day terms, that is to say invoices from labour hire suppliers not being the contentious companies. The latter invoices were regarded by her as on 7 day terms. The difference in terms of payment was not explained. 44 That there were some problems with these invoices emerged only in cross-examination. The way the problems emerged is relevant to the credit of Mr McGirr as well as to the suggestion that the invoices far from recording as on the face they do, that Mr McGirr was contracting with each of the contentious companies for the provision of the labour of persons employed by those companies, are but a sham or disguise for some other and real relationship. 45 First there is the problem that Mr McGirr was unable to relate any invoice produced to any particular project or to the services of any particular employee. Mostly he could not recall either the name of the company representative with whom he had contact for the provision of services. These problems, he explained, were a result of the fact that he had destroyed the primary documents he made which would enable him to work these matters out. Although it seemed that invoices from the contentious companies were presented on a weekly, or less regular basis in some cases, to Mrs Kilfeather by representatives of the contentious companies she claimed to be unable now to remember the names of almost any of the persons who came to see her for payment. Since in some cases the transactions appeared to have taken place over longish periods of time I find the inability to remember names rather difficult to believe. 46 Secondly, in his oral evidence Mr McGirr said that he never saw the invoices. Rather he said, invoices were taken by the representative of the company to Mrs Kilfeather who would pay them on his the instructions. His affidavit evidence suggested that he saw some, although by implication, not many, of them. In the course of cross examination, Mr McGirr said that he gave a document to the worker to give to his employer (ie a representative of the labour hire company) recording the agreed figure to be paid in respect of the worker. This document, together with the invoice was later presented to Mrs Kilfeather. Later in cross-examination, Mr McGirr referred to the document given to the worker as a "reconciliation". He said that he kept a copy for himself which was later discarded. Mrs Kilfeather's evidence did not wholly support what Mr McGirr said. While it is not relevant here to determine which version is correct I would accept the evidence of Mrs Kilfeather where it was in conflict with that of Mr McGirr. 47 It was Miss Kilfeather's evidence that companies which provided labour or plant for Trylow projects were generally paid on a 30 day basis, although there were lots of exceptions. Accounts that were paid on a 30 day basis were authorised directly by Mr McGirr who signified his approval on an invoice or extracted those invoices where there was some discrepancy. The invoices from the contentious companies were not within this normal 30 day payment basis. Rather they (and presumably others) were paid on a 7 day basis. Invoices which came from companies which gave no address where payment could be sent to were obviously paid to an individual ,as on the face of it, Mrs Kilfeather would have had no idea where to send a cheque for payment to. 48 A representative of the company seeking payment would bring the invoice to Mrs Kilfeather after having had a conversation with Mr McGirr as to the amount owing. Mr McGirr would tell Mrs Kilfeather, according to her evidence, generally by telephone that someone would come in to pick up a cheque and the amount to be paid. Sometimes Mr McGirr would have attached a piece of paper to the invoice suggesting that Mrs Kilfeather draw a cheque for a particular amount or in accordance with the invoice. On some occasions therefore, it would appear that Mr McGirr had already seen the invoice before. On other occasions it would seem that he had not done so. There is no doubt that in every case Mr McGirr approved payment of the amount owing. There is also no doubt that Mrs Kilfeather was in no way interested in what the invoice said. Her interest was solely in the amount said to be owing, the amount which she required Mr McGirr to approve before payment was made. She made no attempt to reconcile details on the invoice from labour hire companies with any invoice she sent to the head Contractors. So if the labour hire invoice was said to refer to some item supplied at a particular cost she made no attempt to check whether that amount had been charged to the Contractor. 49 One curious matter is that there seemed some difficulty in Mrs Kilfeather distinguishing on the face of the invoice between invoices requiring payment on 30 days and invoices requiring payment on 7 days (unless obviously, the invoice so stipulated). It seems from the cross-examination of Mrs Kilfeather that a different system was in place with respect to the 30 day invoices than applied with respect to the 7 day invoices. This rather contradicted the suggestion that the Trylow system applied in all cases to transactions with labour hire companies which essentially was the Trylow case. More importantly, however, is that Mrs Kilfeather in her oral evidence suggested that Mr McGirr would set aside one day a month to review all the 30 day invoices which he then personally approve for payment. One may wonder if Mr McGirr needed to go through all invoices received in the month to sort out the 7 day invoices from the 30 day invoices whether it was really true that he did not look at, as he said, the invoices paid to the contentious companies. It may be the answer that as these invoices had been paid there was no need to sort them out from the other invoices from labour hire companies that were paid on a 30 day basis. I do not believe Mr McGirr when he says that he really did not look at the invoices received from the contentious companies until required to do so as a result of investigations into these and other companies with the National Crime Authority. It was suggested later by counsel for Trylow that what Mr McGirr meant when he said he did not look at invoices was that he did not look at the invoices before the Court. That would suggest that there was something different between those invoices and other invoices. That hardly assists Mr McGirr's case. 50 It is necessary to say something now of the form and the content of the invoices from the contentious companies to the extent that they still survived and were in evidence. 51 The invoices from Banard Civil Engineering Pty Ltd which were said to be terms nett-14 days (although it would seem that they were treated by Trylow as 7 day invoices) contained no address to which payment might be sent. The work description was hand written. 52 The invoice from Brickridge Construction Services Pty Ltd did show a post office box number as the address of the company but no phone number. The details of what the invoice was for were hand written. 53 The invoice for C & L Constructions Pty Ltd again showed a post office box address, no telephone number and was hand written. 54 The invoice for Duiske Constructions Pty Ltd likewise showed a post office address but no phone number. It was hand written. Invoice numbers did not appear to be sequential in time. 55 The Eureka Plant Hire invoices differ. There is both an address, phone number and fax number for the company and the invoices are either typed or computer generated. One of them was according to Mr McGirr's evidence queried for a dry hire and was reduced as shown on that invoice. 56 The invoices for International Excavations Pty Ltd contained neither address nor phone number. They were hand written. 57 The invoices for O'Ceallaigh Excavations did show an address and mobile phone number. The details of work done were hand written. 58 The invoices for Pro Line Plant Hire Pty Ltd contained a post office box address but no phone number. Details were hand written. 59 The invoices for South Falk Services contained a post office box number and mobile phone number. They were hand written. 60 Invoices for Tomdeeley Construction & Labour Hire Pty Ltd were prepared on a blank pad to which a stamp with the company name had been affixed. There is no address or phone number shown on the invoice. Details on the invoice are otherwise hand written. 61 Invoices from Wilson's Work Hire Constructions Pty Ltd contain neither address nor phone number. Details of the invoice are typed or computer entered. 62 Against this evidence must be noted the evidence of Mrs Kilfeather that invoices received by companies acting as labour hire companies were often scrappy as the entities which invoiced were often small businesses. No invoices from companies which the Commissioner apparently accepted as being genuine employers of labour were tendered by Trylow by way of comparison. 63 More significant is the content of the invoices themselves. Early in the cross-examination, Mr McGirr was taken to an invoice from C & L Construction Services which showed that it was for labour and bob-cat hire. Nothing was volunteered by Mr McGirr to suggest there was anything wrong with the invoice. Indeed there was no suggestion that the invoices were in any way remarkable. 64 Generally where the invoices purported to be solely for labour, nothing on the invoice permitted the reader to know how many employees were made available, or the rate per hour payable, or the number of hours worked. The dates on some of the Tomdeeley invoices bear no relationship to the sequence of invoice numbers. Some of the Tomdeeley invoices purport to be for other than labour. One is supposed to relate to damage to a lock, another to the hire of a back hoe. Mr McGirr in cross-examination agreed that the probability that there was any obligation to pay for a lock was slight. He said that unless the invoice had been agreed with him on site, Mrs Kilfeather would not have paid it. I accept that evidence to the extent that it means that Mrs Kilfeather required Mr McGirr's authorisation before payment of an invoice. However, the fact that Mr McGirr had no recollection about any damage to a lock having been agreed to be paid for was strange, but perhaps, given the time that had passed, possible. Another invoice contained a figure for hire of a truck that was so small as to be "highly unlikely". Ultimately the figure appeared to be $118 which Mr McGirr agreed was unlikely to be the appropriate rate for a day's hire. Other invoices contained amounts for damage to ignition switch, backhoe hire of varied and unlikely amounts. Another invoice referred to an amount for a "float". Mr McGirr agreed that there probably wasn't a float.. He agreed also that there probably wasn't a supply of two bogey tippers as was stated on another invoice. It was put to Mr McGirr that the information on the Tomdeeley invoices was "rubbish". Mr McGirr in response to a question from the bench that the invoice descriptions bore no resemblance to what Mr McGirr said was agreed with the company accepted this to be so. However, he said then, presumably to explain why he had never queried these matters, that until the hearing or in the case of some, the NCA interview, he had never seen the invoices, as the only matter of relevance to him was the bottom line as to what was owing. The suggestion that he had never seen the invoices was perhaps inconsistent with the evidence set out earlier concerning payment of invoices. Mr McGirr was reminded that he had in evidence agreed that he had seen some invoices, although he had said that he had not seen all of them. He replied that he had been giving general evidence concerning all of the more than 200 labour hire companies with which he dealt. With respect to Mr McGirr I think it is likely that Mr McGirr would have seen more than just a few of the invoices from the contentious companies. Indeed, I do not accept his evidence to the extent that he says otherwise. 65 The cross-examination proceeded to consider the Wilson Work Hire invoices. They included reference to removing and tipping spoil and tip fee. Mr McGirr agreed he had no knowledge of this. Another referred to a stop sign bat; others to "Crown Lager" or beer albeit at various prices. Mr McGirr was taken to the invoices from C & L Constructions which referred to hire of a bobcat. He agreed that there had never been any arrangement by which he had agreed to hire a bobcat from that company. The Duiske invoices stated they were 30 day terms but Mr McGirr agreed that he had never arranged to pay that company on a 30 day basis. Payment was made on a 7day basis. In respect of the invoices from International Excavations Mr McGirr agreed with senior counsel for the Commissioner that the detail on an invoice apart from the figure owing was "meaningless or irrelevant". An entry "supply of shovels" was pointed out to him . He agreed that no shovels had been provided. 66 At this point I asked Mr McGirr whether it would be appropriate to call what was on the front page of the invoices (that is to say, the description of the subject matter of the invoice other than the bottom line figure) "a fiction". He agreed. Counsel for the Commissioner then asked him to agree that that was the case with each of the other invoices in evidence. Mr McGirr agreed that this appeared to be the case. He was then taken to other invoices where descriptions such as "sundries", "mini excavator" and "sand" were agreed to be likewise mere inventions. Again, his only explanation was that he had never seen the invoices until interviewed by the NCA. The cross-examination continued with invoices from O'Caellaigh Excavations being agreed to be wrong when there was a reference to "water cart", "headlight fixed" hire of "back hoes". 67 In summary, the cross examination made it clear that except where invoices referred to labour where there was no way of reconciling them with work actually performed, the invoices were "fictitious". The subject matter of the invoice could not be trusted to convey what, if any, work had been performed for Trylow. Yet neither Mr McGirr nor Mrs Kilfeather appear to have noticed this problem at least prior to the NCA investigation, and neither of these were frank enough to have mentioned the problem in their evidence in chief. Mr McGirr could give no explanation why the invoices contained fictitious narratives. Clearly, one inference available is that the contentious companies performed no services at all for Trylow so that what appeared on the invoices was quite immaterial to Trylow. All that mattered was the amount which the contentious company asserted was owing to it. The face of the invoice needed to be completed so that the invoice, if ever scrutinised by the Australian Taxation Office would appear to be genuine. 68 Throughout the cross-examination it was put to Mr McGirr that it was not only the narrative on the invoices that was fictitious, but rather the real relationship that Trylow had with the contentious companies was that they provided a cheque cashing facility for employees. This was denied by Mr McGirr. Ultimately the question is whether I accept that denial. THE INTRODUCTION OF MR MCGIRR TO THE CONTENTIOUS COMPANIES 69 Nothing in the evidence in chief threw light on how Mr McGirr came to contract the contentious companies. As already noted there was no evidence from any representative of those companies or any person who was employed by those companies and performed services at the direction of Trylow for Contractors. Such evidence as there was, was left to emerge in cross-examination. 70 Basically Mr McGirr's evidence was that he had but the scantest recollection of his dealings with the representatives of these companies and generally that he could not now recollect how he came to deal with them. Indeed, he could scarcely remember the names of either those who purported to represent the companies or those who, he said, were employed by them as labourers on projects where their services were made available at the direction of and pursuant to contracts with Trylow. 71 It was clear that Mr McGirr could not remember any telephone conversation with any representative of the contentious companies. When asked if he could, he said that could not remember any specific company that he would have phoned. He gave evidence of a conversation he said he had with Mr Jim Curtin. He could not be specific as to when it took place other than that it was "97, 98". The account he gave of this conversation in which he claimed that he asked Mr Curtin the rates he charged for a backhoe and where he said he told Mr Curtin that the driver of the hoe had to be competent and have necessary qualifications and equipments was very obviously at best a reconstruction of a conversation of which he had no real memory. At worst it was itself a fabrication. 72 There was considerable cross-examination directed at Mr McGirr's recollection of the persons associated with each company. 73 As to Barnard Civil Engineering Pty Ltd, Mr McGirr could recall no person with whom he had had contact, and nor could he remember when or how the original contact originated. 74 As to Brickridge Constructions he again had no recollection of any initial contact. He could not remember the name of any person to whom he spoke on behalf of or employed by that company, although he said that at the time he would have been able to contact someone by reference to the sheet he kept in his utility relating to that company. 75 As to Carig Constructions Mr McGirr said, when asked to recall how he made contact with the company he said only that the name of the company did not come to his head at this stage. C & L Construction Services was in the same situation. 76 As to Duiske Constructions, when asked how he made contact with it he said that the name John Stafford came to mind. He said that as far as he recalled John had phoned him to tell him that "he had blokes for hire and that he also had a backhoe". He gave Mr McGirr his telephone number. There was no indication given as to how Mr Stafford came to telephone Mr McGirr. 77 Mr McGirr was more forthcoming about Eureka. He said that he remembered speaking to a Mr Curtin from this company. He could not be more specific as to when the conversation occurred other than to say that it was sometime in 1997 or 1998. He gave what was obviously a reconstructed version of a conversation in which he said he had called Mr Curtin because he had been led to believe that his company had a backhoe available for hire. He said he asked for rates, and discussed the necessity for drivers to have the appropriate qualifications and equipment. Thereafter he said he called workers of the company to tell them where to report. There was no indication how Mr McGirr came to find out about Eureka or that it had a backhoe for hire. 78 Mr McGirr gave evidence that he had contacted Eureka about a float and told Mr Curtin to send the paperwork to Mrs Kilfeather before invoices could be paid. There had been a dispute about the invoice. 79 International Excavations was a company with which a Mr P J Carr was associated so Mr McGirr said. At some stage Mr Carr had contacted Mr McGirr to tell him that "his boss" was thereafter going to trade under the name Pro Line. The boss was Mr Pat O'Connor. Mr Carr was a general labourer and had worked on projects for Daracon and John Holland. 80 Mr McGirr was not cross-examined concerning O'Ceallaigh Excavation. However it seems that that a Mr Clive Kelly was associated with that company. Mr Kelly had been an employee of Trylow during at least the period 26 April 1998 until May 1998. He was a driver and Mrs Kilfeather deduced from invoices under the name O'Ceallaigh that he had had a mini excavator which was hired out. 81 Proline was, Mr McGirr said, a company for which Mr Carr had worked. He was the point of contact. Mr Carr had been an employee of Trylow and worked for it as a labourer. He had come to Mr McGirr and had said, "I'd like to now be paid via International Excavations". When, ultimately, employment records were produced by Trylow it appeared that Mr Carr had started working for Trylow in around April or May 1988 and that he continued, according to the records, to be employed by Trylow until around June of 1998 82 Southfalk was a company with which Mr McGirr associated a Mr Mark Crowley. Mr McGirr said that he had called Mr Crowley telling him he was looking for a couple of labourers for Fox Studios and asking Mr Crowley if he had any available. He asked for rates and that Mr Crowley send the paperwork, ie prescribed payment declaration, workers compensation certificate and so on. The conversation was said to have taken place in 1997 or 1998. If it took place, the evidence given of the conversation was clearly a reconstruction. I have no doubt that Mr McGirr had no recollection of that conversation. 83 Mr Crowley was a plant operator. It was put to Mr McGirr that Mr Crowley had worked for Trylow before any association with Southfalk. Mr McGirr said that he did not remember whether this had been the case. Later documentary material was tendered which showed that Mr Crowley had been an employee of Trylow and had started work with that company in 1996 or in early 1997. Although Trylow had been requested to produce salary records they had not been located at the time of the cross-examination. If available then the records would have recorded when it was that Mr Crowley had ceased to be an employee of Trylow, at least in accordance with those records. Salary records covering the period October 1997 to January 2000 were produced but did not show Mr Crowley to be an employee in the period the records covered. 84 In the statement which Mr McGirr had given the NCA Mr McGirr had said that Mr Crowley had been an employee of Trylow. However, when shown the statement Mr McGirr suggested that it was not to that extent accurate but that what he had meant was that Mr Crowley had worked for Trylow through a cross-hire arrangement. 85 In that statement Mr McGirr had also said that Mr Crowley had asked Mr McGirr to pay his wages through a labour hire company operated by a friend of him. Further he had said in the statement that over a time associates of Mr Crowley had come to work for Trylow and that they had requested they be paid using a similar arrangement to Mr Crowley. In his evidence now Mr McGirr was unable to give the names of any such person or indeed how many such persons there were. He said that he had never spoken to these persons. When Mr McGirr needed labour he would contact Mr Crowley and ask whether he had labourers available. 86 He had said that each week and on a day or so before pay day he and Mr Crowley would come to an agreement as to how much the Southfalk Services' employees were owed for wages for the preceding week. 87 Mr McGirr said that Tylow had been a regular customer of Tomdeeley. He said that he always spoke to the same person on behalf of that company, that being a Mr Ryan. He had met Mr Ryan at more than one of the sites on which Trylow had worked. He had had a record of Mr Ryan's telephone number but this had been in the document he kept in his utility and the document had been discarded. Mr Ryan in fact had been a truck driver employed by Trylow in 1997. Mr McGirr could not recall when Mr Ryan had ceased to be employed by Trylow. In the course of cross-examination concerning the statement Mr McGirr had given the NCA, Mr McGirr said that Mr Ryan had said that he was going to work for Tomdeeley and that he had explained to Mr McGirr that Tomdeeley was a labour hire company. In the statement Mr McGirr had said that Mr Ryan had told him that he wanted his wages paid through a friend's company by the name of Tomdeeley Constructions Pty Ltd. 88 A building industry superannuation fund membership document signed by Mr Ryan showed him as an employee of Trylow as at 10 September 1997. 89 According to the PPS documents held by Trylow a Mr Sheehy was the contact person for Tomdeeley. His name also appeared on the invoices received by Trylow from Tomdeeley. Mr McGirr had never, so far as he recalled, met Mr Sheehy. 90 Finally there was Wilsons Work Hire. Mr McGirr could not recall who the point of contact was for that company. There was no evidence of the name of any worker who had been according to Mr McGirr provided under contract by that company to Trylow. THE BANK EVIDENCE 91 Ms Angela Kenneally, a Banking Relationship Manager with St George Bank Limited ("St George"), whose evidence I accept without question, gave evidence to the effect that Trylow had maintained cheque cashing facilities for its accounts with the Bank. Ms Kenneally said that Trylow Pty Limited had maintained accounts with St George since 1995 and that Trylow Plant Hire Pty Limited had maintained accounts with St George since 1998. She said that a cheque cashing facility for up to $25,000 per week had been established for the Trylow Pty Limited account on 19 June 2000, and that a similar facility for up to $10,000 per week had been established for the Trylow Plant Hire account on 10 October 2000. Further to this, Ms Kenneally said that it was not the practice of St George to allow cashing of cheques on its customer's accounts unless a special facility had been established. She said that had there been a cheque cashing facility prior to the establishment of these facilities there would have been an application for that facility on the Trylow file. There was no such application. 92 Accordingly, it can be inferred from this evidence that Trylow did not have a cheque cashing facility on any of its St George accounts throughout the relevant period. I do not think, however, that this evidence is of any particular relevance. It might perhaps have been of some relevance to look at the cancelled cheques drawn on the Trylow account in favour of the contentious companies. No attempt was, however, made by either party to have such cancelled cheques in Court. THE EVIDENCE OF THE OTHER TRYLOW WITNESSES 93 The evidence of the remaining witnesses did not assist greatly in the resolution of the question in issue between the parties. I accept, save in the one respect noted, all the evidence given by these witnesses. 94 Mr Mayo confirmed Mr McGirr's evidence about the day docket system. He confirmed also that Trylow had provided equipment and labour at the various sites at which Mr Mayo had worked as a foreman for Daracon in the relevant time these including the Olympic Village and the M5 Motorway sites during the relevant period. He confirmed also that Daracon had conducted induction training for workers who came onto Daracon sites and that Mr McGirr would attend the site at least once a week to discuss and collect the day docket book for the week. He would also attend at a site to drop off equipment for workers (ie vests, hard hats, grease or fuel). He said that while Daracon employees generally wore shirts and hard hats with Daracon insignia on them, this was not a reliable method to distinguish Daracon employees from employees of other companies as not all Daracon employees wore the Daracon uniform. 95 Mr Mayo said that Mr McGirr would only direct workers supplied by Trylow by telling them which supervisor they were to speak to. If a Trylow worker was unsatisfactory, Mr Mayo would mention this to Mr McGirr who would replace the unsatisfactory worker with another labourer. 96 Mr Romanous had worked on the Olympic Stadium and showground projects. He too confirmed that Trylow had provided workers for these sites and that workers on Daracon sites had to complete an induction course. Once this was completed, workers were issued a card which contained the identity of the worker's employer. Perhaps such records might have led to the ability to locate employees who were said to be employed by the contentious companies. No attempt was made to use them. He too conceded that it would be difficult to distinguish Daracon employees from employees of other companies on site. He said that he had a vague recollection of having seen an excavator in Sydney on which the name Proline had appeared. His recollection was not, however, sufficiently precise that I would accept this to be the case. 97 Mr Thompson had been the site engineer at the Olympic Equestrian Centre, the Olympic Village and at Fox Studios in the relevant period. He confirmed that Daracon had obtained both plant and labour from Trylow and that Trylow had used the system of Day Dockets to determine the hours worked by labourers provided by Trylow or for plant hired. 98 Mr Palmer had worked on the Eastern Distributor site for Leightons during the relevant period. He confirmed that Leightons had hired excavators, bobcats and watercarts from Trylow as well as trucks and excavators. He confirmed the system of day dockets used by Trylow. Leightons had, he said, required all new workers on Leighton sites to complete a safety induction course and that he would personally check the certification of any Trylow plant operator. He said that upon completion of an induction course the worker would be issued with a card which would state the name of the employer of the worker. Again no attempt appears to have been made to see whether the card might be used to locate persons who, Trylow claimed, had been employed by the contentious companies. 99 Finally, Mr Cacciopoli gave evidence that he had been employed by Baulderstones in the relevant period on the Sydney Airport Third Runway site. In that period, plant had been hired from Trylow on a wet hire basis for the site. Baulderstones would check workers compensation insurance, superannuation compliance and compliance with union requirements before workers would be allowed to work on the site. Trylow had supplied excavators, trucks, rollers, graders and plant moving equipment to the project. Baulderstones likewise conducted site induction courses and issued cards indicating the induction course had been completed. The name of the worker's employer would appear on the card. THE NCA STATEMENTS. 100 Mr McGirr in his evidence noted that he had given a statement to the NCA on 15 December 1999 for the purposes of the Authority's investigation into the use of "bodgy" companies in the building industry. 101 In that statement Mr McGirr had said that a Mr Crowley had started work for Trylow in 1997 and that Mr Crowley had requested Mr McGirr that Trylow "pay his wages through a labour hire company operated by a friend of his". Mr McGirr said also that "associates" brought along by Mr Crowley to Mr McGirr had also "requested that they be paid using a similar arrangement "with Mr Crowley". Mr McGirr said that Mr Ryan had likewise requested that his wages be paid "through" Tomdeeley. 102 Mr McGirr sought to explain away these references to wages being paid "through" a company as really being the terminology of the officer from the NCA who had prepared the statement. He admitted that he had thought the terminology to be appropriate at the time but now wished to distance himself from it. 103 Mr McGirr accepted that at the time of signing the NCA statement he had understood that the statement was important and that it contained testimony that he had said he would be prepared to give in court. He said, however, that it was not really accurate as far as it related to Mr Crowley and Mr Ryan and that what he had meant was that each would be employed on a cross employment arrangement by which I would assume he meant that each was to be employed by the labour hire company which would, under contract, make his services available to Trylow. 104 I have no doubt that the statement was prepared by the NCA and that it is possible that the terminology used was that of the NCA officer who prepared it. However, not without some hesitation, I would find that in making the statement to the NCA, Mr McGirr was more probably than not using in substance the language which Mr Crowley and Mr Ryan had used in the conversations which the statement records. Indeed, in the course of cross-examination in his evidence in this case, Mr McGirr said that Mr Carr had wanted to be paid "via" International Excavations. 105 I do not think that in giving the statement to the NCA Mr McGirr directed his mind one way or the other to what the words "payment … through" might mean. At the time there was no suggestion that the Commissioner would seek to enforce payment of a penalty under the Act. In other words, it is more probable than not that the statement which Mr McGirr gave at the time was truthful, and, so far as memory permits, accurate. 106 Mrs Kilfeather had also given a statement to the NCA and it was attached to one of her Affidavits read in the present proceedings. In that statement Mrs Kilfeather said that sub-contractors of Trylow were usually paid on a thirty day basis. She said that she would pay invoices which Mr McGirr approved, either verbally of by notation on the invoice with blank cheques which Mr McGirr had signed. In the statement she said, referring to some of the contentious companies, that in accordance with normal Trylow practice she would have written out a cheque for the amount of the invoice which she then would have posted to the company in question or handed to a representative. She said that Mr Sheehy collected cheques payable to Tomdeeley and that in respect of International Excavations, Proline and Eureka cheques were picked up by a Mr Pat O'Connor. 107 The statement was not really different from the evidence she gave before me. However, the suggestion that sub-contractors were usually paid on 30 days whereas the invoices of the contentious companies appear, according to her evidence to have been paid on a 7 day basis perhaps confirms that the contentious companies were treated differently from the labour hire companies with which Trylow dealt in the relevant period. One might expect seven days terms to be required or even immediate payment to be made if the persons on whose behalf payment was made were actually employees who wished to be paid on a weekly basis. THE EVIDENCE OF THE COMMISSIONER – Mr McAusland and Mr Linehan. ADMISSIBILITY OF THE EVIDENCE OF MR MCAUSLAND AND MR LINEHAN 108 As noted earlier, objection was taken to reading the affidavits of each of Mr McAusland and Mr Linehan. Those affidavits annexed statements that each had given to the National Crime Authority relating to dealings which they had had with Eureka Plant Hire and Proline Plant Hire in the case of Mr McAusland and Eureka Plant Hire in the case of Mr Linehan. It was said that each affidavit was in essence similar fact evidence, the only relevance of which would be to say that because each of the witnesses had used the relevant companies as cheque cashing facilities whereby they paid employees in cash without deduction of group tax, similar arrangements must have been entered into by those companies with Trylow. None of the affidavits contained, it was submitted, direct evidence of any fact in issue. 109 I am not convinced that the evidence is necessarily similar fact evidence. An issue in the Commissioner's case is that neither Eureka nor Proline employed labourers who, under contractual relations with Trylow were directed to work at sites where Contractors were engaged in projects. Relevant to that issue is the question whether the two companies in fact did employ labourers. That is to say it is relevant as an issue in the case what the business of each company was in the relevant period. The evidence which I will shortly summarise was that each company provided cheque cashing facilities and neither provided labour or plant hire in their dealings with Mr McAusland and Mr Linehan. If it is accepted that this was the sole business of either company in the relevant period, then the Trylow case must fail. And this is without relying upon the evidence to show that because the deponents dealt with the companies by way of their providing a source of cash to pay employees it followed that Trylow did too. 110 The primary test of admissibility of evidence is to be found in s 56 of the Evidence Act 1995 ("the Evidence Act"). It is the test of relevance. Evidence which is not relevant is not admissible. Evidence will be relevant if, it being accepted it "could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding." 111 Section 97(1) of the Evidence Act provides that "evidence of a tendency that a person has or had, is not admissible to prove that a person has or had a tendency… to act in a particular way … if: (a) the party adducing the evidence has not given reasonable notice in writing to each other party of the party's intention to adduce the evidence; or (b) the Court thinks that the evidence would not, either by itself or having regard to other evidence adduced or to be adduced by the party seeking to adduce the evidence have significant probative value." 112 It is not in dispute that Trylow had been given reasonable notice in writing of the intention of the Commissioner to adduce the evidence that is objected to. 113 Section 95(1) of the Evidence Act is relevant to the operation of section 97(1). It provides: "Evidence that under this Part is not admissible to prove a particular matter must not be used to prove that matter even if it is relevant for another purpose." 114 Tendency evidence must clearly be regarded with some scepticism. It may be in the criminal arena that evidence that an accused has committed a particular crime in a particular manner may be such that it would rationally affect the assessment of the probability of the fact in issue, being whether the accused did in fact commit a later crime in the same way: R v Boardman [1975] AC 421. It may even be the case where relationships are in issue that, as Sophie Tucker the American comedienne once sang: "A man who cheats will always repeat." But evidence, for example in the context of misleading and deceptive conduct that a respondent made representations in the past which were misleading will generally not affect the assessment of the probability that the representation made to an applicant and claimed to have been relied upon by the applicant was in the same and false terms. This will particularly be the case where there are, as in Jacara Pty Ltd v Perpetual Trustees WA Ltd (2000) 106 FCR 51 significant discrepancies in the account of the alleged conversations. 115 As Sackville J pointed out (at 65) in Jacara, that similar fact evidence will ordinarily be relevant to a fact in issue in the proceedings because it tends to establish a propensity in the relevant person, and that propensity is "a link in the process of tending to show that the person did in fact behave in the particular way alleged in the case." Evidence may be relevant both because it tends to establish a propensity and because it may tend independently to prove a fact in issue. That is the circumstance to which s 95(1) is concerned. 116 Similar fact evidence is, as his Honour also observed by reference to the previous case law, not merely rejected on the grounds of relevance. Particularly in the area of criminal law it will be rejected because its prejudicial effect may transcend the probative force of that evidence. Whatever the situation in the criminal law may have been, it is clear from s 97(1) of the Evidence Act that relevance will not of itself be the test of admissibility of tendency evidence. It will not be admissible where the Court is of the view that the evidence would not have "significant probative value", even if forensically it may be said to be relevant. Lehane J in Zaknic Pty Ltd v Svelte Corporation Pty Ltd (1995) 61 FCR 171, cited in Jacara,suggested that the tendency evidence would have to be "clearly and strongly probative of the relevant fact in issue" (at 176). However, I would, with respect, agree with Sackville J that it is the statutory language which must be applied and that there is a danger in a reformulation such as that undertaken by Lehane J, which may distract attention from the statutory language. 117 I do not think that merely because Eureka engaged in a series of cheque cashing transactions that evidence is of itself such that, if accepted, it has significant probative value in proving that transactions entered into between the same company and Trylow were of a similar kind. However, as I noted in the course of argument, the transactions which Mr McAusland narrates he had with Pro Line in particular were transactions within the same period that Trylow dealt with that company, and the invoices which Mr McAusland was given were not merely in similar form to those received by Trylow, but are in fact in identical handwriting to those which Trylow received. To that extent therefore, that evidence could have significant probative value and thus be admissible as tendency evidence. However, as will be seen later, I have not found it necessary to decide whether Trylow did in fact enter into contracts with Pro Line or for that matter Eureka which were of a kind similar to those which either Mr McAusland or Mr Linehan entered into with those companies. I have thus not had need to resort to their evidence as tendency evidence in the real sense of that expression. 118 It seems to me, however, that the evidence is strongly probative of another matter, and that is the business activity that Pro Line and Eureka engaged in during the relevant period. The evidence is direct evidence of the activities of those companies. And while it does not follow that this is the only business which either company engaged upon, it is a relevant issue in the present case whether either company employed persons who were its employees. If, despite my view to the contrary, the evidence is to be characterised as tendency evidence when it merely is used for the purpose of determining what the business activity of the two companies was in the relevant period, then I would be of the view that it has, with regard to that issue, significant probative value and should therefore be admitted. 119 I should say that I reject the submission advanced for Trylow that tendency evidence is only admissible where it goes to prove a tendency of a party to the litigation. The acceptance of such a submission would unduly limit the circumstances when tendency evidence could be admitted. While ordinarily it would be tendency of a party to the litigation which would be a relevant matter for decision rather than the tendency of some other person there is nothing in the language of the Evidence Act and there is no authority dealing with the interpretation of that Act which has been cited to me to support the submission. No doubt the question whether the fact in issue involves the tendency of a party to the litigation will be relevant in identifying the issues which arise in a particular case and thus whether the evidence sought to be admitted is strongly probative of an issue in the case. But that does not meant that there is such a limitation upon the operation of s 97(1)(b) of the Evidence Act. 120 The parties accepted that if I admitted the evidence of Mr McAusland then for the same reasons the evidence of Mr Linehan would be admitted. On this basis both statements were admitted into evidence. 121 Little need be said of the evidence itself. It shows as I have already indicated that Eureka and Pro Line in their dealings with Mr McAusland and Mr Linehan did not deal on the basis of providing employees to the respective companies they headed, but rather produced fictitious invoices which gave the appearance of such dealings whereas the actual dealings involved no more than the payment of cheques to the relevant company with the company returning cash less a percentage. Mr McAusland dealt with Mr Patrick O'Connor when he transacted business with Eureka and Pro Line. It will be noted that Mr O'Connor also appears to have dealt with Trylow and as representative of more than one of the contentious companies. However, in the case of the Eureka invoices provided to Mr McAusland they are completely different from the computer created invoices tendered by Trylow. It may well be, therefore, that the Eureka transactions stand in a different light from other transactions which Trylow had with other companies listed as contentious companies. That is not, however, the case with Pro Line. In each case (that is to say Eureka and Pro Line) Mr McAusland was provided with PPS deduction variation certificates, just as Trylow was; the certificates showing no need to withhold tax. Each company took a commission. The motivation of Mr McAusland in entering into the arrangement was twofold. First, the arrangement meant reduced paper work in respect of each of his employees, since he would not have to deduct tax, arrange workers compensation, contributions to the Building Industry Redundancy Fund or perhaps superannuation. Second, it made it easier to get employees to work for him at a time when presumably labour was in short supply. He denied that there was any monetary saving to him. The cheques were cleared through the corporate bank account but the cheques were not cashed at that Bank. The amounts Mr McAusland cashed were never more than $5000. Mr McAusland noted that he had on one occasion seen Patrick O'Connor at a job site where he was standing at his car. He was not aware whether or not Mr O'Connor was working at the site. 122 Mr Linehan headed a company providing gas services to residential properties. It was in that capacity that he had dealt with Eureka and particularly with Mr Curtin. The suggestion that he engaged Eureka to assist in the making of tax free payments to an employee came from the employee. The employee threatened to leave unless such an arrangement was entered into for his benefit. The commission paid to Eureka was 8%. Payment was made to the company and in return, cash of an amount of the cheque less 8% was returned and paid to the employee. The arrangement was used to pay the wages of some casual workers as well as the full time employee who originally suggested it and later his successor. 123 In cross-examination Mr Linehan was asked whether he was aware that Mr Curtan was operating a plant hire business. Mr Curtan originally replied that he was not aware but then said that he understood that Mr Linehan had machines working somewhere in Melbourne. This was, he said, "part of a general bit of chat". It does not appear from this evidence that Mr Linehan had any knowledge of Mr Curtan being in the business of providing labour or of plant hire, at least in the Sydney area. 124 I accept the evidence of both Mr McAusland and Mr Linehan. THE TAX OFFICE EVIDENCE 125 The evidence of Mr Dwyer was directed at the filing or non filing of taxation returns by the contentious companies. Most of the contentious companies had not lodged tax returns for the years of income in which the relevant period occurred and the records so showed. Put positively it would seem that none of the contentious companies that Mr Dwyer was able to identify did lodge a tax return. Mr Dwyer was unable to locate any records at all for South Falk Services Pty Limited, Subcrete Pty Ltd and O'Cealaigh Excavations Pty Ltd. There were records for Carig Constructions Pty Ltd and Carrig Constructions Pty Ltd but Mr Dwyer was unable to determine which of these two companies was the company referred to in the list of contentious companies. Neither had lodged returns. CONCLUSIONS 126 I am of the view that Trylow has not satisfied the onus upon it of showing that the persons who it claimed were employed by the contentious companies were not employed by Trylow. I do so for the following reasons. JONES v DUNKEL 127 First there is the problem that Trylow did not call evidence from any person who it said was an employee of the contentious companies or any person connected with any of those companies. Putting to one side the rule in Jones v Dunkel (1959) 101 CLR 298 the applicant has to establish on the balance of probabilities that each person said not to be an employee of Trylow was in fact not an employee. In one sense it can be said that it was not incumbent on Trylow to establish that each such person was an employee of one or more of the contentious companies. There could be some other possibility, for example, that a labourer was in some contractual and non employment relationship with one or other of those companies However, no such suggestion was made, although there was a faint suggestion that perhaps each of the persons might have been employees of the Contractor. While, perhaps, some of the evidence from employees of the Contractors might have formed the basis for an argument that the Contractors were in a position to direct workers provided by Trylow not only as to what the worker should do, but also how the worker might do that work and so qualify the workers as employees of the Contractor under the traditional tests of what constitutes an employer/employee relationship, the difficulty is that there is no suggestion of any contract between Contractors and labourers provided by Trylow. Whatever test may be employed to distinguish employment from the relationship of independent contractor (see, for example, Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 36-41) there can be no employer/employee relationship or for that matter independent contractor relationship without there being a contract between the persons said to be employees and the person said to be the employer. There can be no contract without there being consideration. There is no suggestion of any consideration passing between the Contractors or any of them and the workers. The only consideration passing between the Contractors and any other person on the evidence is the consideration payable by the Contractor to Trylow. 128 The Commissioner relied upon the rule in Jones v Dunkel. That rule may be stated in two ways, both of which may be said to have relevance here and both of which can be said to be rules of common sense. The first is that an unexplained failure to call a material witness allows one to infer that the evidence of that witness would not be helpful to the party which fails to call him or her. The second is that such failure permits any inference otherwise open to be more comfortably drawn. 129 In written submissions, counsel for Trylow sought to dismiss the failure to call either workers or those associated with the contentious companies by asserting (there was no proof at all to support the assertion) that the workers had all returned to Ireland. Whether they were all Irish or not was not established by any evidence. Indeed there was no evidence which would enable me to know what the names of the workers were, except for the evidence I have already set out. Some, perhaps all, of the persons whose names appeared in the evidence might well have been Irish, or of Irish extraction. Nothing in evidence would permit the inference that any of the workers, if Irish born, returned to Ireland. Not surprisingly, Counsel for Trylow indicated that he wished to withdraw this submission. It did not advance the case of his client. 130 However, after the evidence was concluded and indeed after both counsel for Trylow and Senior Counsel for the Commissioner had addressed the Court, counsel for Trylow applied to the Court for leave to reopen the Applicants' case to recall Mrs Kilfeather. It was indicated that Mrs Kilfeather would give evidence of searches she had undertaken to trace persons Trylow understood to be connected with the contentious companies. Although the application was clearly made too late and to accede to it might be said to have worked unfairness to the Commissioner who may have conducted his case on the basis that there was no evidence of any attempt to contact the individual persons, I formed the view that there was really no prejudice to the Commissioner other than with respect to costs so long as the evidence, such as it was, was taken the next day and Trylow agreed to pay the Commissioner's costs on an indemnity basis of the additional time for the giving of that evidence and the consideration of it by the Commissioner's advisors. 131 The evidence of Mrs Kilfeather was that some considerable time ago (July 2003), she had been requested by Mr McGirr to endeavour to contact the persons named in Trylow's computer records as the persons representing the contentious companies, that is to say, the contact persons for each company. Most, if not all, of these persons were the persons named in the correspondence with the Commissioner of Taxation relating to prescribed payment deductions. Mrs Kilfeather had endeavoured to make contact using the telephone numbers kept in the computer records, but without success. She said that she had contacted Telstra's directory assistance service and two persons in the building industry. She had made no attempt to contact any of the workers provided by any of the contentious companies because she did not have now, and never had had any record of their names, telephone numbers or addresses. 132 I accept Mrs Kilfeather's evidence. While that evidence explains the failure on the part of Trylow to call as witnesses the contact persons named in Trylow's records it does not explain the failure of Trylow to call any person who might have been employed by the companies to work at the direction of Trylow. Nor does it explain how it comes about that no evidence has been given by any company which had ever dealt with the contentious companies as labour hire companies. There is also the question, even in respect of the contact persons, whether there were other reasonable sources of enquiry open to Mrs Kilfeather or Trylow. 133 As I have indicated above it is possible that induction cards from contractors might have revealed addresses or telephone numbers for the persons said to be made available by the contentious companies to Trylow. In saying this, I do not fail to take account of the fact that according to Mr McGirr, Trylow contracted with many labour hire companies other than the contentious companies in the relevant period. I suppose it may have been possible for Mrs Kilfeather to have made searches of electoral rolls for the contact persons, or even to have enquired of the National Crime Authority whether any action had been taken by it as a result of its enquiries and if so whether any of the persons involved were in gaol or otherwise available to give evidence. 134 However, I am prepared to accept that none of the persons contacted by Mrs Kilfeather should be treated as available witnesses such that the rule in Jones v Dunkel should be taken to be applied to them. I am not, however, prepared to accept that Mr McGirr and Mrs Kilfeather were unable to recall the names of persons who, in the relevant period, were said to have performed work at the direction of Trylow and as employees of the contentious companies. We know, at least, of Mr Crowley, Mr Carr, Mr O'Sullivan and Mr Ryan. No explanation is given for any of them not having given evidence. And there must, inevitably, be others. 135 In other words, I would find that the failure to call any one of the persons said to have been employees of the contentious companies has the consequence not only of permitting me to infer that the evidence of those persons would not assist the Trylow case but more importantly that failure, unexplained as it is, permits me more comfortably to draw the inference, clearly available to me on the evidence, that those persons were in fact employees of Trylow. 136 I should say that even if the failure to call these persons to give evidence were wholly explained, I would have concluded that Trylow had not satisfied the burden of proof upon it. It is inconceivable if the contentious companies were, in the relevant period, carrying on the business of supplying labour or supplying plant and labour to persons in the building industry that no person in that industry, other than Mr McGirr could be found to have dealt with the contentious companies. No evidence has been given of any attempt on the part of Trylow to make enquiries generally in the building industry which might at the least prove, on the balance of probabilities that any of the contentious companies provided labour or plant and labour on a contract basis to any company other than Trylow. In these circumstances it is difficult to conclude that Trylow has satisfied the onus upon it. THE CREDIT OF MR McGIRR 137 Given that the only person who might have been party to any contract between Trylow and the workers and the only person who claimed to have contracted with the contentious companies on behalf of Trylow was Mr McGirr it is obvious that his credit was very much in issue in the case. 138 It is clear that Mr McGirr when purporting to give evidence of conversations which he alleged took place with representatives of the contentious companies was, if the conversations took place at all, merely reconstructing what might have taken place in the course of them. I have no doubt that even if a conversation occurred, the conversation in no way followed the course Mr McGirr said it did. 139 Although I accept that Mr McGirr might not have studied invoices received by Trylow from labour hire companies in any depth, and even might not have looked at all at some of them, I think it is highly unlikely that he did not look at any of the invoices from the contentious companies which were in evidence before me. McGirr presented as a careful business man who would take care to ensure that Trylow paid no more for what it contracted that he agreed. To do that, it would be important for him to see invoices from time to time, if only to ensure that the invoices agreed with the amounts he had authorised. 140 The fact that the material on the face of the invoices was a fabrication was telling. What purpose did the fabrication have other than to provide a verisimilitude to the invoices so that they might survive at least superficial scrutiny? Further the fact that Mr McGirr did not in chief disclose the fictitious nature of the invoices and provide an explanation of them, if one was available, obviously affects his credit. While invoices can be accepted as prima facie evidence of contracts arrived at between invoicer and invoicee they cease to provide prima facie evidence of any contract once they are shown to be fictitious. 141 I find, as already noted, that the National Crime Authority Statement of Mr McGirr records substantially what passed between Mr Crowley and Mr McGirr when the arrangements concerning Mr Crowley were entered into and between Mr McGirr and Mr Ryan so far as concerned the arrangement relating to him. 142 The evidence of Mr McAusland establishes that ProLine carried on a business which did not involve the supply of labour and Mr McGirr has not satisfied me on the balance of probabilities that it had any employees. Likewise the evidence of both Mr McAusland and Mr Linehan demonstrates that Eureka carried on a business not being labour hire and there is no evidence otherwise that it carried on any other business or that it had any employees. This matter has to be seen against the evidence from the Commissioner that virtually none of the contentious companies lodged tax returns and no evidence was called from any other company which used labour provided by those companies. It follows that I do not accept Mr McGirr's evidence and that of Mrs Kilfeather that there was a real dispute between Trylow and Eureka covering an item of plant. 143 There are no record of the names, hours of work, places of work or work done by any person said by Mr McGirr to be employed by the contentious companies. I realise that Mr McGirr's evidence was that such records as he kept of such matters were almost immediately destroyed but it does seem remarkable that the only records which Trylow is able to produce indicating any relationship between the contentious companies and Trylow other than the fictitious invoices are the documents given to Trylow at the time arrangements with each company were said to have been initiated showing workers compensation cover and the waiver of the requirement to deduct prescribed payments tax from payments made to them. Despite being asked in cross examination whether any of the persons said to be employed by the contentious companies, other than Mr Crowley, Mr Ryan and Mr Carr were prior to the arrangements alleged to have been entered into with the contentious companies employees of Mr McGirr, no attempt was made to tender the full employment records apparently kept by Trylow to prove the matter one way or the other. Pay records were ultimately tendered for the period October 1997 to January 2000 but no attempt was made to advise the Court what the records demonstrated. 144 What is clear is that at least some of the persons, specifically Mr Carr and Mr Patrick Ryan said to have been employed by one or more of the contentious companies had been employees of Trylow until the point of time that their salary was paid through the relevant contentious company. I think it is more likely than not that these persons became aware, while employees of Trylow, of the possibility that they could avoid the withholding of group tax on the basis of having their salary paid through a company which provided the relevant workers compensation certificate and prescribed payment exemption certificate while nevertheless continuing to be employed by Trylow. It is probably the case that Mr Crowley told some of his friends of this possibility so that they, if not already employees of Trylow, commenced employment with Trylow on the basis that their salaries or wages would be paid through one or other of the contentious companies. Since the names of most of the persons said to be employed by the contentious companies were unknown there is simply no way in which to determine whether such persons had at some stage been employees of Trylow before entering into the arrangement to be paid "through" or "via" a contentious company. THE SERIOUSNESS OF THE ALLEGATION 145 It was submitted by Trylow that while the Applicants bear the onus of poof, that onus should be less than would otherwise be the case having regard to the seriousness of the allegations made against Trylow and Mr McGirr. Reference is made to the well known passages in Briginshaw v Briginshaw (1938) 60 CLR 336 at 362-3. It is said that the corollary of that proposition was that where the Commissioner's case went no further than to raise a prima facie case of fraud or sham, that prima facie case should be taken to be refuted having regard to the standard of proof applicable. 146 I am not sure that I understand what is meant by the corollary. The present is not a case where it is suggested that Mr McGirr is guilty of fraud in the technical sense as some of the submissions advanced on behalf of Trylow said. Clearly it is suggested that Trylow breached its obligations under the Act by entering into what was a disguise for a real employment arrangement and, in consequence, did not withhold tax. It may further be the case that Mr McGirr committed some offence under the Act. But whether or not that is the case I have taken into account the fact that a serious allegation has been made against him which could involve a criminal offence on his part and on the part of others who participated in the arrangement. However, I have no doubt that the evidence which leads me to conclude that Mr McGirr has not satisfied the onus rises above a merely prima facie case of sham made against Trylow 147 As I have already indicated I do not find it necessary to make any finding as to what the contentious companies in fact did in their arrangements with the individual workers. Obviously no group tax was withheld by them and paid to the Commissioner. I do not find it necessary to decide whether the contentious companies were paid any commission and if so by whom. Nor do I need to find whether Mr McGirr or Trylow received any financial benefit from the arrangements that were entered into. That there was a benefit in a commercial sense to Trylow is clear. The evidence suggests that in the relevant period there was a tight labour market for labourers and plant operators in the building industry. Obviously it would have been easier to have attracted workers on the basis that no tax would be deducted from amounts paid to them. I certainly do not make any finding of fraud, whether on the part of Mr McGirr or on the part of Trylow. I do not find that Mr McGirr gave false evidence to the Court. Rather I rest my decision, ultimately, on the fact that Trylow has not satisfied the burden upon it of showing that the workers who were paid through the contentious companies were not employees of Trylow. THE ADMINISTRATIVE LAW ISSUE 148 It was submitted on behalf of Trylow that even if it did not succeed in showing that the payments it made to the contentious companies were in fact payments of salary or wages, the Commissioner's discretion to remit the penalties under s 221N of the Act miscarried. The submission was that the person exercising the discretion failed to have regard to the reliance which Trylow placed upon the prescribed payment documents and tax file documents which had been issued by the Commissioner to the contentious companies and which had been relied upon by Trylow in its dealings with those companies. So far as I understand the submission, it is said that the remission decision was made solely within the confines of Part 3 of Division 2 of the Act without regard to Division 3A. 149 I am unable to see any failure on the part of the decision maker to take into account a relevant matter such as is alleged on behalf of Trylow. If a decision is made that the penalty should not be remitted or not be remitted beyond a particular amount on the basis that the payments made by Trylow were salary and wages, it is hard to see how it could be relevant to that decision that Trylow relied upon documents from the Commissioner waiving prescribed payments tax or that Trylow relied upon other documentation, such as workers compensation insurance certificates. It follows from my finding that Trylow did not satisfy the onus of showing the persons in question were other than employees of Trylow that Trylow would not have shown that it relied on any of these documents. Nor can I see how this documentation is such that it would be implicit in the legislative scheme that such documentation was a relevant matter to be taken into account in remitting the penalty. I would reject the submission. REMISSION BACK TO THE COMMISSIONER. 150 I was asked by Counsel for the Commissioner to remit the matter to the Commissioner to enable the Commissioner to remit further the penalty tax. The remission decision which is presently before the Court was that the penalty of 100% imposed by the Act was not to be remitted at all. In other words, the level of culpability penalty imposed by the Act for failure to make deductions from salary and wages of group tax was 100% and the decision was that this culpability penalty be not remitted. However, it was said that in a public ruling relevant to remission, being TR 2000/3 "Remission of penalty and general interest charge for failure to make deductions from RPS, PAYE and PPS payments" the Commissioner has said that typically the penalty would be reduced to 60% where there was intentional disregard but subject to being further decreased or increased having regard to all the circumstances. In an application to the Administrative Appeals Tribunal decided on somewhat similar facts, the culpability component of 60% had been increased to 85%. As I understand what was said on behalf of the Commissioner, the Commissioner was prepared therefore in the present case to remit the 100% penalty imposed and the subject of the present appeal to 85% in conformity with the decision of the Administrative Appeals Tribunal on the basis that like cases should as a matter of good administration have like outcomes. 151 I have some doubt whether the Commissioner does have power now to remit the penalty as proposed and also some doubt as to the appropriateness of this Court ordering that the matter be returned to the Commissioner to permit the making of any remission of penalty. Ordinarily, the appropriate order would merely be that the application be dismissed with costs. However, and not without doubt, I will order that the application be dismissed, but that the matter be remitted to the Commissioner to permit the Commissioner to make such further decisions concerning remission as the Commissioner may be empowered by law to make. The applicants must pay the Commissioner's costs of the application. I certify that the preceding one hundred and fifty-one (151) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hill . Associate: Dated: 16 April 2004 Counsel for the Applicant: C J Bevan Solicitor for the Applicant: Hagarty & Elmgreen Counsel for the Respondent: D B McGovern SC and R S Quinn Solicitor for the Respondent: Australian Government Solicitor Dates of Hearing: 17, 18, 19, 22, 23, 24, 25, 26 and 29 March 2004 Date of Judgment: 16 April 2004