Supreme Court New South Wales Medium Neutral Citation: Integrated Trolley Management Pty Ltd v Chief Commissioner of State Revenue [2023] NSWSC 557 Hearing dates: 21, 22 February 2023; further written submissions ended 9 March 2023 Date of orders: 25 May 2023 Decision date: 25 May 2023 Jurisdiction: Equity - Revenue List Before: Parker J Decision: See [196] Catchwords: TAXES AND DUTIES – payroll tax – liability – employment agents – employment agency contracts – trolley collection and cleaning services provided by subcontractors to supermarkets – whether services of the service provider "in and for" business of a client of the employment agent Legislation Cited: Payroll Tax Act 2007, ss 6, 7, 37, 38, 39, 40 Cases Cited: Bayton Cleaning Co Pty Ltd v Chief Commissioner of State Revenue (2019) 109 ATR 879 Chief Commissioner of State Revenue v E Group Security Pty Ltd (2022) 109 NSWLR 123 Chief Commissioner of State Revenue v E Group Security Pty Ltd (No 2) [2022] NSWCA 259 Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (2022) 96 ALJR 89 HRC Hotel Services Pty Ltd v Chief Commissioner of State Revenue (2018) 108 ATR 84 JP Property Services Pty Limited v Chief Commissioner of State Revenue [2017] NSWSC 1391 Southern Cross Community Healthcare Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 1317 UNSW Global Pty Ltd v Chief Commissioner of State Revenue (2016) 104 ATR 577 Value Engineering (Australasia) Pty Ltd v Commissioner of State Taxation (WA) (1985) 16 ATR 296 Texts Cited: Nil Category: Principal judgment Parties: Integrated Trolley Management Pty Limited (Plaintiff) Chief Commissioner of State Revenue (Defendant) Representation: Counsel: M O'Meara SC/D Lewis (Plaintiff) S Balafoutis SC/D Stretton (Defendant) Solicitor: Ashurst (Plaintiff) Crown Solicitor for New South Wales (Defendant) File Number(s): 2021/226540 Publication restriction: Nil JUDGMENT 1. This a payroll tax case. Unless otherwise indicated, references in this judgment to "the Act" are to the Payroll Tax Act 2007 and references to sections are to sections of that Act. 2. The plaintiff (ITM) has been assessed for payroll tax by the defendant (the Commissioner). In these proceedings, ITM seeks review of those assessments. 3. The assessments in question relate to contracts which ITM has with three supermarket operators: Woolworths, ALDI and IGA. At the relevant time, the Woolworths contract covered "Big W" and "Dan Murphy's" stores, and one "Thomas Dux" store, as well as Woolworths supermarket stores. For convenience I will refer to all of these collectively as "Woolworths" stores. 4. Under these contracts, ITM undertakes to the supermarket operators to perform specified "trolley collection services" for them at specified stores. Each supermarket operator owns its own trolleys. The trolleys are made available to customers at bays outside the entrance to the store in question. The services provided by ITM essentially involve returning trolleys taken by customers to the store bays so as to keep those bays replenished at all times. Trolleys are generally collected from where they have been left within the shopping centre or the car park. From time to time, searches may be made of the neighbouring area to collect trolleys which may have been left there (such searches were referred to in the evidence as "street runs"). 5. ITM does not itself employ the people who perform the trolley collection services. It engages subcontractors to perform those services. ITM's subcontractors are a mixture of sole traders, partnerships, and small proprietary companies. Some of these operate as trustees for family trusts. The individuals who perform the actual trolley collection work may thus be sole traders, partners, employees or (in the case of the small proprietary companies) shareholders, directors, or other agents of the company. 6. The assessments mainly relate to trolley collection services provided for Woolworths and ALDI. The trolley collection services for IGA cover only two stores, and account for less than 1% of ITM's revenue in the relevant years. 7. The assessments, to the extent that they cover ALDI stores, include separate contracts for the provision of cleaning services at two stores in country New South Wales. The provision of those services was subcontracted by ITM to its trolley collection subcontractor for those stores. Again, this represents a very small proportion of ITM's revenue in the relevant years. Issues for determination 1. Liability for payroll tax is imposed by sections 6 and 7 on any "employer" by whom "taxable wages" (as defined) are paid or payable. The amount of payroll tax payable is calculated by reference to the total taxable wages paid by the employer, in accordance with schedules 1 and 2. 2. The critical provisions for the purpose of this case, appear in Division 8 of Part 3 of the Act, "Employment agents", which spans ss 36A to 42. The critical provisions of that Division are ss 37 to 40, which provide: 37 Definitions (1) For the purposes of this Act, an employment agency contract is a contract, whether formal or informal and whether express or implied, under which a person (an employment agent) procures the services of another person (a service provider) for a client of the employment agent. (2) However, a contract is not an employment agency contract for the purposes of this Act if it is, or results in the creation of, a contract of employment between the service provider and the client. (3) In this section— contract includes agreement, arrangement and undertaking. 38 Persons taken to be employers For the purposes of this Act, the employment agent under an employment agency contract is taken to be an employer. 39 Persons taken to be employees For the purposes of this Act, the person who performs work for or in relation to which services are supplied to the client under an employment agency contract is taken to be an employee of the employment agent. 40 Amounts taken to be wages (1) For the purposes of this Act, the following are taken to be wages paid or payable by the employment agent under an employment agency contract — (a) any amount paid or payable to or in relation to the service provider in respect of the provision of services in connection with the employment agency contract, (b) the value of any benefit provided for or in relation to the provision of services in connection with the employment agency contract that would be a fringe benefit if provided to a person in the capacity of an employee, (c) any payment made in relation to the service provider that would be a superannuation contribution if made in relation to a person in the capacity of an employee. (2) Subsection (1) does not apply to an employment agency contract to the extent that an amount, benefit or payment referred to in that subsection would be exempt from payroll tax under Part 4 (other than under section 50 or Division 4 or 5 of that Part), or Part 3 of Schedule 2 (other than clause 5 or 13A), had the service provider performed the services as an employee of the client, if the client has given a declaration to that effect, in the form approved by the Chief Commissioner, to the employment agent. 1. The application of the provisions requires a three-step approach. 2. The first step is to identify the putative employment agency contract under s 37. The question is whether there is a contract (within the extended sense provided for by subsections (1) and (3)) "under" which the putative employment agent "procures the services" of a "service provider" "for a client" of the agent. This is a matter of characterisation of the "contract" (in the extended sense which that term has). Usually, the agent and the service provider would be parties to the contract, but nothing in s 37 expressly requires this. 3. If the contract in question is an employment agency contract, then the employment agent is, by sections 38 and 39, deemed to be the employer of the person "who performs work for or in relation to which services are supplied to the client under the employment agency contract". The person in question need not himself or herself be the service provider. All that is required is that the person performs work "for or in relation to" the supply of the relevant services. 4. The third step is the calculation of the deemed wages. This includes "any amount paid or payable to or in relation to the service provider in respect of the provision of services in connection with the employment agency contract". Again, the amount is not confined to payments made to the service provider for the provision of services the subject of the employment agency contract. Furthermore, there are provisions governing fringe benefits and superannuation. 5. There are four assessments, and a further set of four amended assessments, which are the subject of the proceedings. They cover the financial years ending 30 June 2016, 2017, 2018 and 2019. The primary tax liability was about $2.87 million. This assessment also included a total of approximately $360,000 in penalty tax. The assessments also carry interest which is currently more than $400,000. 6. The assessments proceed on the basis that all of the payments made by ITM to its subcontractors under ITM's contracts with Woolworths, ALDI and IGA were deemed by s 40 to be "taxable wages" paid by ITM as a deemed employer, ITM being an "employment agent" and Woolworths, ALDI and IGA being the relevant "clients". 7. The assessments were issued in October 2020 and followed an audit by the Commissioner. The Commissioner's covering letter stated: Following well-established case law in the area such as UNSW Global [see below at [78]] …, JP Property Services [see below at [84]] … and HRC Hotels [see below at [91]] … we are of the view that the service providers (workers) provided by [ITM] to fulfill its obligations under the agreements with the respective supermarkets perform work and have duties that would otherwise be done by employees of the respective supermarket clients. This is because the provision and replenishment of trolleys in-store for customer use constitutes a necessary part of a supermarket's daily business and is an activity that is integral to the ongoing daily operation of a supermarket. We believe that the agreement between [ITM] and the respective supermarket clients is such that the supermarket not only bears much of the business risk should trolleys not be made available to customers as and when required but the work itself is performed by the service providers (workers) on or near the client's business premises ie in the shopping centre and within the boundaries of the shopping centre, at times (and to standards) essentially dictated by the client's business needs. The service providers (workers) provided by [ITM] not only perform work of a type required for the necessary conduct of a supermarket's core business but do so during the normal business operating hours of the supermarket clients. The amended assessments were issued in May 2021. It is unnecessary to go into the details of the amendments. 1. It is common ground that the onus in these review proceedings lies on ITM to demonstrate that the assessments are erroneous. The review however involves a de novo hearing and is not limited to the material before the Commissioner. 2. The area of dispute between the parties was confined. They agreed that all aspects of s 37 were satisfied in this case apart from one. That issue will be explained in due course, as it needs to be understood in the context of how s 37 has been construed in prior decisions. Evidence 1. ITM has been operating a trolley collection contracting business since 2005. It was founded, and continues to be managed, by two business partners: Dennis Roy Vickery and Steven Hills. 2. Mr Vickery gave evidence in support of ITM's case in these proceedings. In his affidavit, he described the way in which ITM's business was conducted during the relevant period (July 2015 to June 2019). 3. Mr Vickery was cross-examined by counsel for the Commissioner on some points of detail. For reasons given below, I am not sure that all of Mr Vickery's evidence is actually relevant to the Court's task; some of it may, in the end, be a matter of opinion. But I did not understand there to be any dispute about the basic facts stated by Mr Vickery. 4. ITM does not provide trolley collection services for all of the Woolworths, ALDI or IGA stores in New South Wales. It seems that there are other trolley collection contractors in the market. 5. Nor do all supermarkets use such contractors. Mr Vickery was cross-examined about the other main supermarket operator in New South Wales, Coles, and said that he understood that "in most cases" Coles' trolleys are collected by their own employees. 6. Often the trolley collection services which are relevant in the present case covered the whole period of the relevant store's operations. Sometimes it was only a restricted period. Occasionally, the only service provided by ITM for a store was to conduct street runs. In Woolworths stores, the remaining collection work was undertaken by Woolworths staff. Mr Vickery said that he believed the position for IGA was similar. According to Mr Vickery, however, all of ALDI's trolley collection work was contracted out. 7. It seems that equipment was often used in the process of collecting trolleys. For some stores, a tractor was used to tow trolleys, or a trailer containing trolleys, back to the store bays. In other stores, smaller pieces of equipment were used to help with handling trolleys. None of this equipment belonged to the supermarket operator. Mr Vickery gave evidence that the subcontractors used their own equipment. He did note that ITM would sometimes (Mr Vickery estimated, in about 20% of cases) loan equipment to new subcontractors (usually a trolley trailer) for some months until the subcontractor acquired its own. 8. The administration of ITM's contracts with the supermarket operators, and its subcontracts for the provision of the trolley management services pursuant to those contracts, was undertaken jointly by Mr Hills and Mr Vickery. Mr Hills spent more of his time on back-office work and Mr Vickery was more involved in onsite work. 9. On behalf of ITM, Mr Vickery and Mr Hills provided induction training for the subcontractors, as well as ongoing training. For this purpose, ITM provided its contractors with a Workplace Health and Safety and Compliance Manual ("ITM Compliance Manual"). A copy of the Manual, dated July 2016, is in evidence. 10. As part of its management of ITM's trolley collection contracts, Mr Hills and Mr Vickery regularly undertook site visits to the relevant shopping centres. During the relevant period, Mr Vickery was performing over 200 site visits per year. 11. Occasionally, site visits or other information would result in formal audits being undertaken by ITM. There were 360 site audits during the relevant period. Summaries of those audits, together with some of the underlying audit papers, were in evidence before me. 12. Mr Vickery stated that, to his observation, the trolley collectors had "very limited" engagement with the supermarket staff. They did not attend supermarket staff meetings, and the supermarket staff rarely ventured into the carpark or other areas where the trolley collectors would work. In general, trolley collectors who worked at supermarket sites would have no need to attend the retail part of the stores. An exception to this in Woolworths stores was that occasionally a collector would have to pass through the retail area to collect customer trolleys left at the back of the store, by store staff. When this happened, the trolley collectors would wear a sticker displaying the word "visitor". Although Woolworths permitted trolley collectors to use lunchrooms and restrooms, to Mr Vickery's observation they rarely did so. Instead, they tended to use the public restrooms in the shopping centres and took their meal breaks outside the store or in their cars. 13. According to Mr Vickery, he and Mr Hills encouraged both the Woolworths store managers and the subcontractors to communicate through them. In particular, any requests by store managers for a particular service would typically be directed to Mr Hills or Mr Vickery and would be relayed by them to the relevant subcontractor. If any request was outside the scope of the contract, it would be declined. 14. According to Mr Vickery, ITM's policy was that its subcontractors on the Woolworths, ALDI and IGA contracts were free to undertake trolley collection services for other stores in the same shopping centres, or for other trolley collection contractors (see also, [68] below). According to Mr Vickery, at any given time, "approximately half a dozen sub-contractors in New South Wales performed such other work". Indeed, the services provided to the Woolworths, ALDI and IGA stores at Park Beach Plaza, Coffs Harbour were all provided by the same subcontractor. Woolworths trolley collection services 1. The case was argued around the Woolworths contract. I will first summarise the terms of the contract and ITM's subcontracts, and the evidence about how the contract and the subcontracts were administered. I will then refer to the relevant authorities, before addressing the parties' arguments on the application of the legislation. Contractual provisions and administration 1. Woolworths contract: The trolley collection services provided by ITM to Woolworths during the relevant years were supplied pursuant to two contracts, one dated October 2011 and the other dated June 2012. The two contracts each applied to a group of stores. The terms of the two contracts however were relevantly the same. For simplicity, I will refer only to the October 2011 contract except where it is necessary to refer separately to the June 2012 contract. 2. Clause 1.1 provided that: 1.1 Appointment The Supplier agrees to provide the Services to Woolworths on the terms and conditions of this agreement and the Relevant Law. 1. Clause 3.1 provided that: 3.1 Supply of Services Subject to clauses 3.2 and 3.3, the Supplier agrees to provide the Services at each Site during the hours specified in Schedule 3, or such other hours as nominated by Woolworths from time to time. 1. "Services" was defined in clause 31.1: Services means the trolley collection services specified in Schedule 1. 1. Schedule 1 was headed, "Trolley Collection Services". It provided: 1 Main Collection Area The Supplier must provide the following trolley collection services: 1.1 Zones The Main Collection Area is divided into the four following zones. (a) Zone 1: all areas within the retail centre in which the Woolworths Premises is situated, including car parks, loading docks, specialty shops, stairwells and fire escapes; (b) Zone 2: all areas outside Zone 1 and within the perimeter of a 1 kilometre circle around the Woolworths Premises including Hot Spots as determined by Woolworths from time to time; (c) Zone 3: all areas outside Zones 1 and 2 and within a perimeter of a 2 kilometre circle around the Woolworths Premises including Hot Spots as determined by Woolworths from time to time; and (d) Zone 4: all areas outside Zones 1, 2 and 3, ("Main Collection Area"). 1.2 Supplier to provide map On the commencement of performing the Services the Supplier must submit to the store manager, for approval, a map for each of the Sites set out in Schedule 2 which shows the Main Collection Area, highlights each of the four Zones, Hot Spots and identifies a route for trolley collection street runs ("Collection Map"). The store manager may notify changes to the Collection Map from time to time in their absolute discretion. 2 Trolley Collection Frequencies The Supplier must provide a continuous supply of trolleys for the use of customers during trading hours by collecting trolleys throughout the Main Collection Area as follows: (a) Zones 1 and 2: collect trolleys on a continuous basis during trading hours; (b) Zone 3: collect trolleys at least once daily or as required from time to time by the store (c) Zone 4: collect trolleys as required by the store manager from time to time. The Supplier must increase the relevant trolley collection frequencies during peak trading periods or as required by the store manager. 3 Trolley Collection Bays The Supplier must collect the trolleys into the Site's external trolley bays and feed clean and dry trolleys to the internal trolley bays. 4 Trolley Collection Quotas The Supplier must ensure that: (a) the internal trolley bays are holding the full quota of trolleys (to be determined by the Supplier and the store manager on the commencement of the Services) at the commencement of trading each day; (b) the internal trolley bays hold no less than 75% of the full quota of trolleys during trading hours; (c) the full quota of trolleys at both internal and external bays are fully secured at the close of trade or soon afterwards; (d) where there are multiple Woolworths brands on the same Site, the relevant branded trolleys must be returned to the correct brand's internal trolley bay. The Supplier must not place different Woolworths branded trolleys in the same trolley bay. 1. Schedule 3 does not appear to have been used. It was headed "Charges (Not applicable" and said, "Insert rate sheet". There was, however, a Schedule 2 headed "Sites and Charges". Included was an excel spreadsheet with the following details, for 78 different stores: 1. Contractor Name (ITM for all) 2. Region Number (Numbers included were 1, 2, 6 and 8) 3. Area Number (Blank for all) 4. Store Number 5. Store Name 6. Banner (Relevant Woolworths brand. Those included were: Woolworths; Big W; Dan Murphy; Thomas Dux) 7. Collection Type (67 had "Full service"; 10 had "Street Run Only"; 1 had "Evening Cleanup & Street Run") 8. SITE Price (ranging from $64 to $5,800 (presumably, per week)) 9. Fixed Site Operating Hours (ranging from 0 to 100) 10. Site Labour Hours (ranging from 0 to 226) 11. Total Site Street Runs (ranging from 1 to 28) 1. Clause 4 provided that: 4 Title to trolleys The Supplier acknowledges that all Woolworths Branded Trolleys are, and will remain, the property of Woolworths. The Supplier will not claim any right, title or interest in respect of Woolworths' trolleys. 1. Clause 5 provided that: 5 Sub-contracting 5.1 Consent (a) The Supplier may not subcontract or otherwise arrange for all or any part of its obligations under this agreement to be performed by any other person without the written consent of Woolworths. (b) For the purposes of clause 5.1(a), Woolworths consents to the list of subcontractors set out in Schedule 4. (c) If the Supplier wishes to add or remove subcontractors from the list set out in Schedule 4, it must obtain Woolworths' prior written consent. 5.2 No more than 1 level of subcontracting If Woolworths approves any sub-contractor pursuant to clause 5.1(a) or (b), the Supplier must ensure that the sub-contractor does not further subcontract the performance of the Services. For the avoidance of doubt, this means that the Supplier must subcontract the Services at no more than 1 level. 5.3 Supplier's obligations Before engaging or entering into an agreement with a subcontractor, in addition to obtaining Woolworths' written consent under clause 5.1 (Consent), the Supplier agrees to ensure: (a) the suitability of each subcontractor to assist in performing the Supplier's obligations (including sufficient insurance coverage); (b) that the assistance that the subcontractor will give in performing the Supplier's obligations will meet the standards required under this agreement; and (c) that it monitors and audits the subcontractor for compliance with the standards required under this agreement at such frequency as notified by Woolworths from time to time. 5.4 No discharge Irrespective of: (a) the Supplier entering into the subcontract; or (b) the provisions in it, the Supplier is not discharged from any obligation or liability that it has to Woolworths under or arising from this agreement. Woolworths has no liability in respect of any subcontractor for whom consent has been given under clause 5.1 (Consent), and the Supplier remains liable to Woolworths for the acts, defaults and negligence of any subcontractor as fully as if they were the acts, defaults or negligence of the Supplier. 1. The list of subcontractors referred to in clause 5.1(b) was set out in Schedule 4. The Schedule contained a spreadsheet. The first six columns contained store details equivalent to (1)-(6) at [39] above. It then contained columns with subcontractor details. The columns were not labelled but appear to have contained the following details (see also [60] below regarding the corresponding part of the 2012 contract): 1. Subcontractor (some natural persons, others not) 2. ABN 3. ACN (blank for many) 4. An address 5. A name (presumably, contact name) 6. A mobile phone number (presumably, of the contact person) 1. Clause 6.2 provided: 6.2 General Supplier warranties The Supplier represents and warrants that: (a) in entering into and performing its obligations under this agreement it has not breached, and will not be in breach of, any Relevant Law or obligation owed to another person; (b) there is no current, pending or threatened litigation, arbitration, investigation, inquiry or proceeding in which it is involved or that may have a materially adverse effect on its ability to perform its obligations in accordance with this agreement; (c) it has all necessary licences, approvals, permits and consents to enter into this agreement and perform the obligations under it; (d) during the Term it will comply with all reasonable directions of Woolworth's staff; (e) all information which it has, or which any of its personnel or representatives have provided to Woolworths or any representative of Woolworths prior to the date of execution of this agreement is true and correct in every respect and is not misleading or deceptive; (f) it has disclosed in writing to Woolworths prior to the date of execution of this agreement any matters relating to the commercial, technical or financial capacity of the Supplier that might materially affect the Supplier's ability to perform any of its obligations under this agreement; and (g) it will perform the Services and all other obligations under this agreement with due care and skill and in accordance with industry best practice, 1. Clause 6.3 provided: 6.3 Supplier's acknowledgments The Supplier acknowledges and agrees that: (a) it has evaluated all aspects of this agreement and has the capability and expertise to provide the Services; (b) it has obtained all information necessary to enable it to understand Woolworths requirements; (c) it has satisfied itself as to the availability and suitability of materials, labour and the resources to provide the Services and all related services as required under this agreement; (d) it has satisfied itself of the nature and difficulty of the obligations to be satisfied under this agreement; (e) it has satisfied itself that it is able to provide the Services in accordance with this agreement; and (f) Woolworths makes no representation or warranty, express or implied, as to the accuracy or completeness of any information or data or statement given or made to the Supplier. The Supplier is responsible for forming its own independent judgements, interpretations, conclusions, and deductions about any information or data provided by Woolworths. 1. Clause 7 provided: 7 Licence (a) Subject to clause 7(b), Woolworths grants to the Supplier a non-exclusive licence to enter the Sites as reasonably required to enable the Supplier to perform its obligations under this agreement. (b) Woolworths may deny access to the Sites to Supplier Representatives who do not comply with clause 12 (Woolworths Policies). 1. Clause 8 provided: 8 Key performance indicators 8.1 Compliance The Supplier agrees to satisfy the key performance indicators ("KPIs") set out in Schedule 5. 8.2 Consequences of a single KPI Breach If the Supplier fails to comply with any KPI ("KPI Breach") the Supplier must within 3 Business Days of becoming aware of the KPI Breach, and at the Supplier's own cost: (a) investigate the underlying causes of the KPI Breach; (b) take whatever action is reasonably necessary to minimise the impact of the KPI Breach, correct it and prevent it from recurring; (c) provide written confirmation to Woolworths that the KPI Breach has been rectified and recommence performing the Services in such a way that ensures the relevant KPI(s) is satisfied in the future; and (d) attend any meeting Woolworths calls with reasonable notice regarding the KPI Breach and provide Woolworths with any relevant information relating to the KPI Breach that Woolworths may request during that meeting. 8.3 Consequences of multiple KPI Breaches If the Supplier fails to meet any of the KPls: (a) on 3 or more occasions; or (b) for a continuous period of 3 weeks in a Quarter, Woolworths may terminate the Agreement. 1. Clause 9 provided: 9 Performance Management Process (PMP) This c[l]ause applies in respect of Services carried out by the Supplier at all Sites other than the Big W Sites. (a) General: Without limiting clause 25 of this Agreement and in addition to compliance audits under clause 10 (Compliance audits), Woolworths may issue an Improvement Notice to the Supplier in respect of any non-compliance with the Supplier's obligations under this Agreement. (b) Consequences of failure to comply with Improvement Notice: (i) If the Supplier does not rectify the areas of non-performance within the time stipulated in the Improvement Notice, Woolworths will issue an "At Risk Notice" to the Supplier, substantially in the form set out as Attachment B. If the Supplier fails to meet its obligations under the Agreement, Woolworths may immediately terminate the Agreement in whole or in part in respect of the applicable Site(s). 9A Big W Store GAP Checks This clause applies in respect of Services carried out by the Supplier at Big W Sites. (a) General: In addition to compliance audits under clause 10 (Compliance audits), the Supplier will be required to participate in inspections of its Services with the Store Manager for each Big W Site. Woolworths will review the Supplier's performance of the Services at these inspections pursuant to the Store GAP Checklist set out as Attachment C. (b) Review frequency: Inspections will be undertaken on a monthly basis and the Supplier must attend the inspections at least once a month. Woolworths may vary the frequency of the inspections in its absolute discretion on notice to the Supplier. (c) Checklist: The original Store GAP Checklist will be retained by the store manager and a copy sent to the Woolworths regional office and Woolworths' nominated third party for reporting and data collection. One copy of the checklist will be given to the Supplier. The Supplier should ensure that it informs Woolworths of any issues that have arisen which may have affected its performance during the period under review. These issues should be noted in the Store Gap Checklist. (d) Performance ratings: Each GAP Check will iesuit in a performance ratiny expressed as a percentage and that rating will be marked on the Store GAP Checklist. The Supplier must achieve a minimum performance rating of 75% on each GAP Check. (e) Action plan: If the Supplier fails to meet the minimum performance rating of 75% on GAP Check(s) in any one month, the Supplier acknowledges that it will submit an action plan, detailing actions it will take to improve the performance of its Services and exceed the minimum performance levels, to an agency nominated by Woolworths upon request from that agency. (f) Consequences of failure to meet minimum performance ratings: (i) If the rating given by the Big W store manager at a GAP Check is below the minimum performance rating of 75% on any occasion, the Supplier will be required to attend weekly inspections of its Services. If the rating given by the Woolworths store manager at a GAP Check is below the minimum performance rating of 75%, Big W will issue a "Big W At Risk" letter to the Supplier, substantially in the form set out as Attachment D. If the Supplier fails to achieve the minimum performance rating of 75% in any GAP check conducted on any occasion in the 4 weeks after an "Big W At Risk" letter has been issued, Woolworths may immediately terminate the Agreement at the applicable Site. (ii) Woolworths may terminate the agreement at the applicable Site on 4 weeks notice if the Supplier's performance rating is below 75% on more than 3 occasions in any 5 month period. 1. Clause 10 provided: 10 Compliance audits (a) Woolworths may audit the Supplier for compliance with the agreement, by giving the Supplier 14 days prior notice at any time during the Term. If Woolworths gives the Supplier notice of an audit, the Supplier agrees to provide all reasonable assistance to Woolworths in connection with the audit. (b) Woolworths may retain copies of record or information gathered during the audit which relates exclusively to the agreement. 1. Clause 11 provided: 11 Reporting obligations 11.1 Information (a) The Supplier must, at its own cost, deliver monthly and year to date reports to Woolworths detailing its performance in relation to the Services. (b) The reports must include all information required by Woolworths as set out in clause 11.2 (Reporting). 11.2 Reporting The Supplier must, at its own cost, deliver monthly and year to date reports, detailing monthly and year to date numbers of: (a) trolleys unaccounted for; (b) trolleys impounded by the local Council; (c) trolleys on site (to be counted by the Supplier and verified by Woolworths); (d) public liability incidents; and any other information requested by Woolworths from time to time by written notice. 11.3 Form of reports The Supplier must, at its own cost, provide the reports: (a) either in hard copy or electronically (eg. email, secure web site), or in any other format that Woolworths requests from time to time by giving at least 1 weeks written notice; and (b) not later than 10 Business Days after the end of each 6 month period commencing on 1 January and 1 July. 11.4 Records During the Term, and for a period of 2 years thereafter, the Supplier must maintain true, up to date and complete records relating to its obligations under the agreement. 1. Clause 12 relevantly provided: … 12.2 Visitor's Book The Supplier must ensure that all Supplier Representatives who have access to any Woolworths Premises sign in and out in the Visitors Book (located at the front of the store) for the start and finish of every shift. … 12.5 SH&E Trolley Contractors Handbook (a) The Supplier will ensure that all employees, subcontractors and employees of subcontractors: (i) are provided with a copy of the Safety, Health and Environment Trolley Contractors Handbook which is located at www.wowlink.com.au/TopicCentre/ StandardsCompliance/SafetyHealth/Contractors; (ii) have read the handbook; (iii) have had the rules contained in the handbook explained to them; and (iv) have signed the acknowledgment form at the back of the handbook, before they attend any of the Woolworths Premises to commence work. (b) The Supplier must ensure that the Service Provider Manager acknowledgment form signed by the Supplier is returned to Woolworths within 2 Business Days of signing the agreement and all other acknowledgment forms that have been signed are made available to Woolworths on request. … 12.8 Non-compliance (a) If Woolworths informs the Supplier in writing that in its opinion, the Supplier or its Representatives are: (i) not providing the Services in compliance with the Woolworths Policies or Relevant Law; or (ii) conducting the work in such a way as to endanger the health and safety of the Supplier's or Woolworths' representatives, employees, subcontractors' employees, plant, equipment or materials, then the Supplier must promptly remedy the breach and Woolworths may direct that all Services he suspended until the breach is remedied. (b) During any period of suspension, Woolworths will not be required to make any payment to the Supplier. (c) If the Supplier fails to rectify any breach for which the Services have been suspended under clause 12.8(a), or if the Supplier's performance has involved recurring non-trivial breaches of health and safety, Woolworths may, at its option, terminate the agreement immediately without any further obligation to the Supplier. 1. Clause 13 relevantly provided: 13 Equipment 13.1 Provision, maintenance and storage The Supplier must: (a) provide and maintain in safe working order, at its own cost and in accordance with all Relevant Laws, all machinery, equipment, vehicles, tractors, trailers and other materials necessary for the performance of the Services; and (b) store the equipment in areas designated by the Woolworths store manager or the retail centre manager when it is not being used. 13.2 Registration, roadworthiness and specifications (a) Where vehicles, tractors and trailers are used, the Supplier must ensure those vehicles are: (i) duly registered; (ii) roadworthy; (iii) fitted with seatbelts for drivers and passengers; (iv) have Australian Standard AS 1636.1 approved roll cages where appropriate at all times; (v) fitted with, and maintain restraints to restrict trolley movement; and (vi) fitted with, and maintain noise suppressant mufflers and sponge floor matting to minimise noise. (b) Details of registration and insurance must be forwarded to Woolworths prior to the commencement of the Services and provide certificates of currency for such licences and permits upon Woolworths' request. 13.3 Training and licensing The Supplier must ensure that only trained, competent and suitably licensed persons operate the equipment. … 1. Clause 14 relevantly provided: 14 Safety 14.1 Trolley transport safety requirements The Supplier agrees to transport trolleys in accordance with the following requirements whilst performing the Services: (a) Clothing: High visibility (day/night) shirts or vests; suitable footwear with closed in uppers, preferably leather; suitable company uniform, including identification; wide brim hats in hot weather conditions; where necessary, wet weather clothing. (b) Grouping trolleys: no more than 12 trolleys may be pushed by one person at one time. Where the contour of the surface is inclining/declining/rough etc, then careful judgment should be made on the number of trolleys moved at one time however the number of trolleys must not exceed 12 at any time. (c) Grouping with support: If two or more people are moving trolleys then the maximum number is 20 and a person must be positioned at the front and rear ends of the trolley chain. (d) Travelators: If trolleys are transported on travelators at least one person must be present at the front and rear of the line being moved. For the avoidance of doubt, travelators must only be used for trolleys fitted with travelator wheels. (e) Securing trolleys: Trolleys in motion must be secured together using rope or leather strap. Elastic and rubber straps must not be used for this purpose. (f) Public areas: The Supplier must avoid transporting trolleys in public areas where possible. (g) Loading and unloading: Trolleys, including without limitation, Specialty Trolleys, must be loaded, unloaded and transported in a safe and controlled manner. (h) Trolley collection bays: The trolleys fed into the Sites' internal and external trolley collection bays must not exceed the capacity of the trolley bays or obstruct public areas. (i) Electrical devices: Electrical devices such as mobile phones, MP3 players, (pods, walkmans etc are not to be used whilst transporting trolleys. (j) Centre regulations: The Supplier must investigate and comply with the relevant centre management regulations that may apply to a Site, including the number of trolleys the Supplier may move and how they must be moved through the centre. (k) Vehicles: If the Supplier has indicated that 1 or more vehicles will be available at a particular site for the provision of the Services, then the Supplier must not use those vehicles during Trading Hours to provide services to other trolley owners at the same Site. … 14.3 Safety Plan (a) Prior to commencement the Supplier agrees to prepare, and throughout the Term the Supplier agrees to maintain, a safety plan which sets out its occupational health and safety policy, covering: (i) Staff induction and a tour of the workplace; (ii) notification of fire exits and evacuation procedures; (iii) notification of first aid kits and instructions for their use; (iv) its internal company policies and Woolworths company policies; (v) training for its Representatives in the safe use of equipment; (vi) training packages for its Representatives regarding work procedures and safety procedures; (vii) the procedure for disseminating standard work practice updates; (viii) the dispensation of personal safety kits and any personal protective equipment that may be necessary in order to perform the Services; (ix) ongoing training programs with refresher training at maximum annual intervals; (x) a record of past accidents or injuries that have been caused or sustained by the Supplier or its Representatives within the last 12 months; and (xi) any record of past Workcover prosecutions, prohibitions or improvement notices. (b) The Supplier must include an impact assessment of all other relevant factors on safety, including the nature and location of car parks. The Supplier must provide a copy of its safety plan to Woolworths immediately on request. 1. Clause 15 provided: 15 Trolley maintenance 15.1 Presentation The Supplier agrees to ensure that: (a) designated trolley collection areas are kept clean and tidy at all times; (b) all rubbish and debris is removed from the trolleys prior to feeding trolleys to the internal trolley bays; (c) rubbish removed from the trolleys is disposed of in the allocated bins, and both internal and external trolley bays are kept clean and free from rubbish at all times; (d) during wet weather, water spillages are contained, cleaned up and not carried into the store by the placement of mats and the use of caution signs; and (e) all damaged trolleys are isolated, danger tagged and stored for repair. 15.2 Damage (a) The Supplier must not mark or deface the trolleys, for identification purposes or otherwise, without Woolworths' written consent. (b) The Supplier agrees to notify the store manager of all damaged or defaced trolleys. Any trolleys fitted with incorrect wheels (for example non-travelator wheels at a Site with a travelator) need to be isolated, reported and not used. (c) The Supplier agrees to notify the store manager of all trolleys with missing or broken child restraints. (d) Without limiting clause 23.2, the Supplier is liable for the cost of repairs in the event of any damage or soiling caused by any or omission of the Supplier. Woolworths, in its sole discretion, will determine whether damage has been sustained and/or whether any repairs and/or cleaning is required. Woolworths will carry out any such repairs and/or cleaning at the Supplier's cost. Woolworths may set off this cost against the Supplier's weekly invoice cost. 15.3 Trolley preservation The Supplier must comply with the following requirements in order to preserve Woolworths trolley quotas and ensure public satisfaction. (a) Counts and reporting: On a weekly basis, the Supplier must, with the duty manager, count the total number of trolleys at that site and submit to the store manager a weekly trolley count of the total number of trolleys at that site as verified by the duty manager. In addition, if Woolworths, in its absolute discretion, requests the Supplier to conduct trolley counts at any other time on an ad hoc basis, the Supplier must, with the duty manager, count the total number of trolleys at that site and submit to the store manager the trolley count of the total number of trolleys at that site as verified by the duty manager. (b) Impounded trolleys: Unless otherwise agreed with a senior Woolworths Representative, all trolleys impounded by local Councils or other organisations must be collected and returned to Woolworths at the Supplier's expense regardless of the condition of the trolley. (c) Securing trolleys: At the end of each trading day, the Supplier must, at its own cost, secure trolleys by using its own padlocks and chains attached to secure fixtures in the internal and external trolley bays or areas nominated by Woolworths. The Supplier must provide duplicate keys to the store manager, for use in emergencies. (d) Misuse of trolleys: The Supplier must notify the store manager of all instances of misuse of the trolleys. If another person, retailer or contractor has Woolworths trolleys in its use, then the Supplier must identify yourself as a "Woolworths trolley collector", request permission to retrieve the trolleys, and if there are any problems, notify the relevant store manager. (e) Removal of trolleys: The Supplier must not remove trolleys from other contractor controlled Sites or any other Woolworths' or other retailer's site to replace any lost or misplaced trolleys under its immediate supervision. Any unauthorised use or removal of Woolworths' property in such circumstances will constitute a breach of the agreement and result in immediate termination. 1. Clause 16 relevantly provided: 16 Staff requirements 16.1 Key requirements (a) The Supplier agrees to ensure that: (i) its staff are fit and proper persons and are properly qualified to perform their tasks in accordance with the guidelines set out in the Safety, Health and Environment Handbook; (ii) if any of its staff are not Australian citizens or permanent residents, that the relevant staff member(s) are eligible to work in Australia and that there are no relevant work restrictions on the staff member's visa which would prohibit them from performing any of the Services pursuant to this Agreement; (iii) its staff act in a proper and appropriate manner throughout the course of performance of the Services; (iv) its staff are suitably and neatly dressed when performing the Services (allowing for weather conditions), comply with all OH&S requirements and clearly display its company logo or name; (v) subject to clause 16.1(a)(viii), its staff do not smoke or bring or consume any alcohol and/or drugs onto any part of the Site at any time; (vi) subject to clause 16.1(a)(viii), its staff do not smoke or consume any alcohol and/or drugs at any time when performing the Services (vii) subject to clause 16.1(a)(viii), its staff are not under the influence of alcohol and/or any drugs at any time when on the Site or when performing the Services; (viii) medication affecting personal performance of any of its staff must be discussed with a Woolworths contact prior to that staff member performing the Services; (ix) without limiting clause 17.1 in any way, if its staff receive an SMS on their mobile phones from Trolley Tracker regarding abandoned trolleys, its staff must: (A) pick up the reported trolley within 24 hours of the SMS notification from Trolley Tracker unless specified earlier by Trolley Tracker; and (B) after the trolley is collected, pull up the relevant SMS on their mobiles and select "reply" and "send" to confirm that the trolley has been collected. (b) The Supplier agrees to use its best endeavours to provide the same personnel to perform the Services at each Site during the Term. (c) The Supplier agrees to ensure that there are at all times sufficient numbers of suitably qualified and experienced Representatives who are dedicated to the performance of, and who are available to perform, the Services as required under the agreement. (d) Without limiting clauses 16.1(a)(i) and 16(c) in any way, the Supplier must ensure that it complies with the relevant state legislation regarding minimum working age of staff and any other applicable child employment legislation. (e) The Supplier must ensure that no less than the applicable award wages are paid to its Representatives working on the sites. (f) Subject to clause 16.1(e), the Supplier must ensure that all its Representatives working on the Sites are paid on time and to the full amount of their entitlement. (g) The Supplier must ensure that at least one Site representative can clearly understand instructions, requests or requirements from and communicate with Woolworths Representatives for the purposes of performing all or any part of the Services. (h) The Supplier must ensure that it provides a supervisor for each Site who can liaise with the store or duty manager on any day to day issues that may arise. The Supplier must ensure that the supervisor is readily contactable and have a working mobile number which must be communicated to the store or duty manager. 16.2 Conduct … (b) The Supplier agrees to take all necessary steps to ensure that its Representatives do not use Woolworths' telephones or other equipment without Woolworths prior consent. (c) The Supplier and its Representatives must comply with all Site security requirements, which include (but are not limited to): … (v) personal photo identification must be carried at all times by the Supplier and its Representatives when attending the Site in connection with the Services. … 1. Clause 17 relevantly provided: 17 Other Obligations 17.1 Co-operation with third parties (a) Woolworths may retain third parties from time to time to provide it with goods and services, including goods and services related to the Services. The Supplier agrees to: (i) cooperate with any such third parties; and (ii) comply with all other reasonable directions of Woolworths with respect to such third parties including attendance at relevant meetings with third parties regarding the management of trolley issues and trolley collection strategies. (b) The Supplier will, and agrees to ensure that its Representatives will: … (ii) reasonably cooperate with Woolworths and its Representatives. … 1. Clause 23 relevantly provided: … 23.2 Indemnity The Supplier indemnifies the Woolworths Group and its Representatives, against all losses, damages, liabilities, claims and expenses (including legal costs) incurred by the Woolworths Group and its Representatives, arising out of or in connection with: (a) any death or injury to persons, and any loss or damage to the real or personal property of the Woolworths Group or a third party, including, without limitation, loss of, damage, soiling or defacing to, omission of trolleys, caused by any act or the Supplier or its Representatives; (b) any infringement of the Intellectual Property rights of Woolworths or of any third party and any breach of clause 11 (Confidentiality and Privacy) or clause 12 (Intellectual Property) by the Supplier or its Representatives; and (c) Employment Related Liabilities. … 1. Clause 24 provided: 24 Insurance 24.1 Insurance policies (a) The Supplier agrees to maintain at the Supplier's own cost, comprehensive insurance policies in relation to any liability arising out of this agreement and ensure that its subcontractors have sufficient insurance for the services they will perform in relation to this agreement including: (i) workers compensation (ii) product liability insurance no less than $20,000,000; and (iii) public liability insurance no less than $20,000,000. (b) If a policy is a "claims made" or "claims made and notified" policy, the Supplier agrees to keep it or a "tail out" policy satisfactory to Woolworths in place for three years after the termination or expiration of this agreement. (c) Woolworths may request the Supplier to produce written evidence of such insurances at any time (including certificates of currency of insurance from the insurer). 1. Schedule 5 set out "Key Performance Indicators". Schedule 6 was titled "Governance and reports". 2. In the 2012 contract, Schedule 2 was in a similar form to the 2011 contract. It contained 15 stores, across the Woolworths, Big W and Dan Murphy's banners. 4 stores had Street Run collection types; 11 had Full service collection types. SITE Prices ranged from $124 to $5,029. Fixed Site Operating Hours ranged from 3 to 99. Site Labour Hours ranged from 3 to 159. Total Site Street Runs ranged from 3 to 35. 3. In the 2012 contract, Schedule 4 was also in a similar form to the 2011 contract. It contained store details across the first six columns of the spreadsheet. It then included subcontractor details, in comparable columns but this time with labels. Those labels were: 1. Subcontractor Business Name [along with a note, "[NONE for direct employ]". I note that "NONE" was not used for any entries] 2. Subcontractor Business ABN 3. Subcontractor Business ACN 4. Address 5. Contact (Full Name) 6. Contact Phone number 1. Woolworths subcontracts: ITM had a standard form subcontract which it used for its Woolworths contracts. 2. Recitals B, D and E provided: … In consideration for being granted this sub-contract agreement by ITM, the Contractor agrees to assume all requirements and obligations under the Woolworths Limited Trolley Agreement ("Woolworths Agreement") appended as Schedule 2 plus any further requirements which ITM specifies in this Agreement. These further requirements relate to the relationship between ITM and the Contractor. In the event of any conflict between these agreements, ITM will be the sole binding arbitrator of which applies. … The Contractor accepts that Woolworths and/or ITM may also reasonably vary these Contract requirements over the term of the contract. Such variations may be a clarification of existing requirements/procedures or new requirements/procedures due to changes in laws or regulations or other changes and when advised in writing to the Contractor, will thereafter form part of this Agreement. In this context, "reasonable" means one that incurs little or no extra cost to the Contractor. Other changes, where cost is a significant factor, could require a re-negotiation of the applicable rate with Woolworths by ITM. During the course of this Agreement, ITM may offer the Contractor further work for other Woolworths stores or other non Woolworths Ltd Group stores and it is hereby agreed between the parties that all Woolworths and other brand future stores (henceforth "the Stores") agreed with the Contractor shall be covered by under this Agreement relevant aspects. … 1. Clause 3 concerned ITM's general undertakings to the contractor. In summary, it provided that ITM undertook to: 1. Do everything in its power to preserve the contract with the relevant store, and assist the contractor in maintaining and building its business. 2. Assist the contractor in carrying out the work and to exercise oversight over compliance with the store contract and the subcontract agreement. 3. Oversee public liability insurance, at the contractor's expense, noting that a fleet policy could also be provided (again at the contractor's expense). 4. Provide uniforms, at the contractor's expense. 5. Use its buying power, contacts and experience to provide information and sources to help minimise business expenses, maximise efficiency and legal and contractual compliance. 6. Provide guidance on OH&S, Awards and Award entitlements, payroll records and vehicle safety. 7. Monitor compliance with the subcontract agreement and legal compliance more broadly. 8. Provide quarterly summary transactional information to assist with completing BAS obligations. 1. Clause 4 concerned payment. ITM would take 6.5% of the amount invoiced to the stores, leaving 93.5% as gross pay for the contractor. Provision was made for various instances in which the rate paid could be varied, temporarily or permanently. Below clause 4 was the following note (emphasis in original): NOTE: All Store rates under this Agreement are flat rate — that is, no extra payments will be made by Store(s) or ITM for increased staffing required to be provided by the Contractor to meet store demand at Christmas, Easter or other sales events. These extra costs are allowed for in the normal Weekly Rate and the Contractor agrees that he will set aside sufficient funds to be able to meet all service demands during these heightened periods. 1. Clause 5 concerned undertakings of the contractor. In summary, it undertook to: 1. Maintain an ABN and GST registration and provide ITM with periodic tax invoices. 2. Maintain Workers Compensations Insurance, and provide ITM with evidence of compliance with Workers Compensation legislation. 3. Purchase or hire all necessary equipment. 4. Have ITM check all foreign born employees prior to them starting work, and ensure they will comply with any visa conditions. 5. Abide by all relevant laws and regulations. 6. Maintain the WH&S system required by the Store and provided by ITM, and ensure proper induction, supervision, recordkeeping and consultation. 7. Provide ITM with written incident reports in specified circumstances, and suitably train employees to report. 8. Comply with the relevant award in payment, and maintain appropriate records. 9. Provide current contact details for the contractor and main supervisors during service hours, compliant with requirements. 10. Authorise ITM to deduct excesses of insurance claims for which the contractor or its staff are responsible. 11. Abide by all aspects of the store contract, with emphasis drawn to 15 requirements 12. Maintain ongoing goodwill and friendliness with Store management and staff, Shopping Centre Management and staff, customers, other Centre tenants, and any other contractors on site, in the carrying out of the work. 13. Maintain direct control over the work at all times, with delegations, subcontracting or assignments not permitted without prior and express permission of ITM, capable of being withheld at its sole discretion. 14. Indemnify the Stores (including subsidiaries and affiliate brands), ITM and Pacific Services Pty Ltd against fines, claims, legal or other costs arising from their performance of the work. 15. Attend personally the Shopping Centre site for at least 4 of 7 days, including Thursday to Saturday. 16. Make personal contact weekly with each Store Manager or Store Services Manager. 17. Permit ITM to deduct monies advanced or loaned or for purchases by them to ITM. 18. Permit ITM to deduct extra administrative charges in specified circumstances. 19. Keep any equipment owned by ITM or Pacific Services Pty Limited in a safe and roadworthy condition, ensure regular services of motors, authorise deductions of rentals and repair costs, agree to indemnify for fines, actions or charges due to failures to maintain in a roadworthy and safe condition. 1. Clause 6 provided that the parties agreed they were independent contractors, and not in any way entering into a partnership regarding the work. They also agreed that they were not entering an agency or employee arrangement. They agreed that apart from the agreement in question, neither had the authority to contract on the other's behalf or in the other's name, nor bind or create liability for the other. 2. Clause 9 concerned termination. The contractor had a right to terminate by giving 4 weeks written notice. ITM had a right to terminate immediately in one of seven specified circumstances. Those were, in summary: 1. Termination of the Store Contract, or Centre Management requesting termination of the contractor. 2. For natural person contractors – that person dying, becoming mentally ill, being declared bankrupt, entering a scheme of arrangement or making an assignment for the benefit of creditors. 3. For company, partnership or other business contractors – ceasing to retain entity or status, resolving to enter administration or liquidation or have a petition for winding up presented, entering a scheme, or having a liquidator, receiver or official manager appointed. 4. Breach by the contractor of any term of the agreement with ITM or ITM's agreement with Woolworths, accompanied by failure to rectify within 7 days, or comply with requirements expressly or impliedly contemplated per the agreement with ITM. Express provision was made that this was to include working for a different prime contractor for other stores in an ITM centre without ITM's written permission, which could be withheld at ITM's discretion. 5. Failure by a contractor to meet legal and contractual obligations, with a non-exhaustive list provided. 6. ITM reserved a right to terminate if the contractor left Australia for more than 1 month each year or left Australia without ITM's written consent. 7. A contractor bringing ITM or Woolworths into disrepute, including by having legal action taken against it by the ATO, FWO, Workcover authorities or the Department of Immigration. 1. Two points can be made about the last sentence of (4) above. First, the provision did not prevent contractors from working directly for other stores in an ITM centre. Mr Vickery gave evidence that this occurs. Second, the clause only required permission. Mr Vickery gave evidence that ITM never sought to stop subcontractors from providing trolley collection services directly to other stores or as subcontractors of other businesses. 2. There are references in the subcontract to a schedule. The schedule for the Woolworths subcontract does not appear to have been in evidence. There was however an example of a schedule to an ALDI subcontract. Item 1 of that schedule specified particulars, item 2 specified stores and corresponding rates, and item 3 specified charges. Presumably, the standard form Woolworths schedule took a similar form. Additionally, from the terms of the subcontract, it is clear that the schedule was to specify the parts of the main contract being subcontracted, together with the weekly rate and an itemisation of any additional charges payable beyond the 6.5% retained by ITM. 3. Woolworths contract administration: Also in evidence was an "EMS Services Manual – Trolley Collection" dated February 2016. This manual appears to have been an internal Woolworths document for the benefit of its store managers. A section of that manual was headed "Trolley Collection Do's and Don't's. It contained a subheading, "Operational Message: Trolley Collection", with text underneath explaining, "It's time … for a refresher on the "Do's" and "Don'ts" for Trolley Collection. Please review this with your team. The manual then set out "Do's" and "Don'ts". 4. The list of "Do's" stated: Do's Allow time for a weekly catch up with the trolley collection contractors - this will enable lines of communication on both sides Allow the trolley collection contractors to use the facilities (lunch room, toilets etc), trolley collectors will follow the WOW Code of Conduct Check Pegasus ID for any new trolley collection staff and randomly spot check existing staff Have a conversation with the trolley collection contractor for issues that need to be addressed. If this matter is not resolved, follow the PMP (Performance Management Process). StoreNet: StoreNet-Policies and Procedures / Store Management / Maintenance and Contractors/ EMS Services / Trolley Performance Management Ensure the PMPs are completed correctly (ie; Store number and name etc,) and faxed to the number stated on the form Ensure WOW Store staff understand and are aware of the Damaged Trolley Guideline StoreNet: Risk and Safety / StoreNet-Risk and Safety / Trolleys Ensure your trolley collection contractor understands the Damaged Trolley Guideline to isolate unsafe trolleys (Note: the ultimate responsibility still sits with the store) Ensure you notify your State Support/Administration Manager when you have been requested to attend a local Council meeting who will engage EMS Services Specialist and/or Trolley Tracker (PH: 02 4926 2755) to provide you with adequate support and direction. Ensure that the WOW 'Vendor Speak Up Line' brochures are easily accessible for all trolley collection contractors 1. The list of "Don't's" stated: Don't's Increase trolley collection contracted coverage hours during special events without going through the correct process. Any requests must be submitted with justification to your Group Manager who will review and forward to the State Support. Once approved this will be forward onto EMS for next steps Instruct the trolley collection contractor to fit the child restraints, it is the store's responsibility Instruct the trolley collection contractor to fill out and fit danger tags to damaged trolleys, this task must be completed by nominated store staff. Source your own trolley collection contractor. Any requests must be submitted with justification to your Group Manager who will review and forward to the State Support. Once approved this will be forward onto EMS for next steps Instruct trolley collections contractor to move trolleys between stores. Use damaged trolleys under any circumstances regardless of limited number of working trolleys in store (as this can pose a safety risk) Use separate time sheets or 'roster's. trolley collection contractors are to sign in using the Visitor's Sign In book at the start and finish of their shift, they are not required to wear a Visitor sticker Make direct contact with the trolley collection contractor via email/phone regarding coverage hours or contract pricing. Any queries you have regarding these matters need to be directed to your Group Manager who will then liaise with State Support and EMS 1. There was then a short list of "Tools" which stated: The `Site Service Summary' has been developed to assist in providing a high level summary of your Trolley Collection coverage hours (Note that the guide labour hours will move throughout the day / week depending on the peak trading patterns of the individual store, this is done by the contractor). If you require any changes then please speak to the Group Manager with justification who will then forward the request on to State Support and EMS for next steps. EMS / StoreNet-EMS / Trolley Collection Information / State If other retailers are using your store customer trolleys and you require them to be returned please print and issue the `Notice to Trolley Users.' This needs to be done by the store not the collector. StoreNet- Policies and Procedures / Store Management / Maintenance & Contractors \ EMS Services Authorities 1. The first E Group Appeal: The Court of Appeal recently considered the test to be applied under s 37(1) in Chief Commissioner of State Revenue v E Group Security Pty Ltd (2022) 109 NSWLR 123. The Court was invited to reconsider what is referred to as the "in and for" test, articulated by White J (as his Honour then was) in UNSW Global Pty Ltd v Chief Commissioner of State Revenue (2016) 104 ATR 577. 2. The Court delivered a unanimous joint judgment concluding that there should be no departure from White J's construction of s 37(1) (at [5]). The Court identified (at [11]) White J's construction by quoting the following passage from [62] of UNSW Global: "the definition of an employment agency contract as being a contract under which a person (the employment agent) '... procures the services of another ... for a client of the employment agent' can be read as meaning a contract under which a person procures the services of another person in and for the conduct of the business of the employment agent's client. That was the intended scope of the provisions. It does not do too much violence to the text (Taylor v The Owners – Strata Plan 11564 at [40]) to confine the operation of the phrase 'for a client' in that way, rather than as meaning for the client's benefit" (emphasis added). 1. For present purposes, it is not necessary to set out the reasons given by the Court of Appeal for affirming that construction. Both parties agreed that White J's construction must be applied. 2. The Court of Appeal observed at [12] that White J's construction "has been followed in a large number of cases" since. Some of those decisions were referred to by the parties in the course of argument. Before discussing the relevant decisions, it is necessary to say something about UNSW Global itself. 3. UNSW Global: White J's decision in UNSW Global was concerned with a wholly owned subsidiary of the University of New South Wales. It ran a business unit named "Unisearch", which facilitated the provision of experts to provide opinions for litigation ("expert opinion services") and other forms of consulting (ordinarily by way of a written report). The Commissioner had assessed payments to experts (providing both types of services) over a certain period to be subject to payroll tax. White J concluded that the assessments should be revoked. 4. UNSW Global submitted that the employment agency provisions did not, properly construed, apply where the service provider was in substance an independent contractor. Otherwise, many independent contractor relationships would attract payroll tax, a result which could not have been intended by Parliament. In the end, the Chief Commissioner conceded that giving literal effect to the provision "was not the preferred construction" (at [25]). 5. White J accepted the substance of UNSW Global's submission and the Chief Commissioner's concession. But his Honour was not satisfied that the construction adopted by the Commissioner in making this concession was necessarily correct. After a review of prior authorities and reference to prior versions of the legislation, his Honour derived the conclusion at [62] (which was quoted in E Group (No 1) (Court of Appeal) and extracted above). He continued at [63]: Whether the worker is to be characterised as an employee or a contractor, the employment agency contract provisions were intended to apply to cases where the employment agent provided individuals who would comprise, or who would be added to, the workforce of the client for the conduct of the client's business. The mischief apprehended by the legislature following the first instance decision in Drake Personnel Ltd v Commissioner of State Revenue (Vic) (2000) 2 VR 635; 44 ATR 413; 105 IR 122; 2000 ATC 4500 was that the supply of temporary personnel by a labour hire company resulted in the avoidance of payroll tax because it muddied the waters as to whether the individuals concerned might be classified as independent contractors, although they would be serving the same function for the client as its employees. 1. White J explained at [64]-[65]: One of the hallmarks of an independent contractor is that he or she carries on his or her own business. But sometimes that is done, or is said to be done, by the individual, in substance, working for the client in the same way as would an employee of the client. Where the services of the individual are provided through the intermediary, that is, the employment agent, to help the client conduct its business in the same way, or much the same way, as it would do through an employee, then the arrangement is within the intended scope of the section. But where the services, although provided for the client's benefit, are not provided by the service provider working in the client's business, the arrangement does not fall within the intended scope of the provision. In substance … this was conceded by the Chief Commissioner. 1. Applying this test, White J concluded that none of the payments made by UNSW Global for expert opinion services were taxable wages because "[in] none of those cases could it be said that the work done by the consultant was being done in the conduct of the client's business". The same was so for payments to experts for undertaking tests at the University laboratory (at [66]). 2. His Honour then dealt with the remaining payments for more general consultancy services (at [67]-[69]): the evidence as to the work done by experts retained by UNSW Global for clients in the domestic and international consulting project service lines is that the work done by such experts is provided for the benefit of the client's business, but is not carried out in the client's business. A Professor Greg Leslie, a professor in the school of chemical engineering, acted as an expert consultant on the development of a water recycling and desalination plant. This involved his visiting the site, participating in conference calls, attending meetings and the like and led to the production of a report on what he called the influent water quality envelope. Emeritus Professor Robin Fell was engaged to provide consulting work on dam projects in Australia and overseas. The work involved visits to site, attendance at meetings with the client's employees and other experts, the making of a presentation to management and the provision of reports. Associate Professor David Cohen specialises in geochemistry. He was retained by UNSW Global on a project undertaken for the government of Cyprus involving the compilation of a geochemical atlas of Cyprus. The work ultimately resulted in the production of the atlas. The largest expense of the project was the carrying out of geochemical analysis by another party. Associate Professor Cohen was paid for his time, much of which involved travel to Cyprus apparently for the purposes of sample collection. None of the witnesses called by UNSW Global was cross-examined. It was not suggested that the clinical trial conducted for a pharmaceutical company referred to at [8] was work that would otherwise have been done by the pharmaceutical company's employees. In none of the cases of which specific evidence was given of particular projects could it be said that the work of the experts whose services were procured by UNSW Global involved the carrying out by those experts of work in the client's business, as distinct from for the client's benefit. I do not accept the Chief Commissioner's contention that in its domestic consulting service line UNSW Global's consultants provided services in the ordinary conduct of the client's business. 1. JP Property Services: The next decision is that of Kunc J in JP Property Services Pty Limited v Chief Commissioner of State Revenue [2017] NSWSC 1391. His Honour had heard argument prior to the decision of White J in UNSW Global being handed down, but subsequently invited the parties to make further submissions with the benefit of the decision. Kunc J noted (at [70]) that had he decided the case on the basis of the law as it stood prior to UNSW Global, the plaintiff's claim "may well have failed". 2. The plaintiff provided "cleaning and property maintenance services". The predominant contracts in issue before Kunc J were with Franklins (the supermarket chain) for the provision of after-hours cleaning services. The other contracts in issue concerned the provision of after-hours services across a variety of other areas. These included, hotels, taverns, childcare, trucking, disability employment services, and property ownership/management. The plaintiff had consecutive written contracts with Franklins, across several years, in materially similar terms. The plaintiff had a mixture of written, oral and partly written and oral contracts with the other clients. The plaintiff provided services by using both its own employees, and subcontractors (both natural persons and corporations) (see [2]). 3. Kunc J identified three types of contracts (at [3]). First, contracts between the plaintiff and Franklins. Second, contracts between the plaintiff and other clients. Third, contracts between the plaintiff and subcontractors. Kunc J held that none of these types of contracts were employment agency contracts, as defined in s 37(1) (at [6]). The Commissioner's assessment that payroll tax was payable on payments made to subcontractors, on the basis that the subcontractor contracts fell within the scope of s 37(1) (see [4]), was revoked. 4. Kunc J stated (at [76]) that "the fundamental factual reason" for his conclusion was "that the services provided … are out of hours cleaning services" (emphasis in original). His Honour accepted the plaintiff's submission that while those services were incidental to Franklins' business, they were not in and for the conduct of its business (at [79]). Kunc J characterised Franklins' business as "sell[ing] mixed goods including food and produce to the general public from premises which generally include aisles between shelves or islands on which the items for sale are displayed" (at [79]). His Honour was not satisfied that the subcontractors were "working in Franklins' business". 5. Kunc J explained that he was "fortified in this conclusion" by drawing a contrast with the position of cleaners who are on call to clean spills during shopping hours. His Honour stated (at [80]): In my respectful view, such a cleaner is working in the supermarket's business because the cleaner is doing so during the hours the supermarket is open to sell goods to the public and discharges a function integral to the safe and lawful operation of the supermarket during that time. If JP had contracts to supply such a cleaning service during the hours the supermarket was open to the public, then such contracts would be EACs. 1. Kunc J also rejected an argument by the Commissioner that Franklins' ordinary hours extended to the times when the cleaners were working, because the premises would have been open to receive deliveries, stack shelves and other matters. In rejecting that argument, his Honour stated at [90]: The conclusion I have reached is based upon a combination of the nature of the services provided and the hours at which they are provided when considered in the context of Franklins' business as I have described it in paragraph [78] above. That conclusion does not change when it is recognised that Franklins' premises are open (but not to the public) at other hours for other purposes such as receiving goods and stacking shelves. Those things are, the Court infers, tasks done by Franklins' employees and are integrally part of Franklins' business of selling goods to the public. But does that not mean that because the cleaning is happening at that time, then the cleaners are working in Franklins' business ("for Franklins" in the requisite sense) in the same way as the loading dock personnel or shelf stackers. 1. Kunc J inferred that the clients other than Franklins did not "provide cleaning services to their customers or clients" (at [92]). The services were also provided out of business or office hours. Kunc J characterised the respective businesses (at [91]) as: (1) Various hotels and taverns … (2) Childcare providers … (3) Trucking services (freight management and logistics) … (4) Disability employment services … (5) Property ownership and management … His Honour was satisfied (at [92]) that the cleaning services "were not services provided in or for the conduct of those businesses" as characterised. That was because (at [92]): they were cleaning services (i.e. not something provided by them or expected to be provided by them as part of their businesses) and they were provided out of hours. The Subcontractors were not working in those businesses in providing the cleaning services. 1. HRC Hotel: HRC Hotel Services Pty Ltd v Chief Commissioner of State Revenue (2018) 108 ATR 84 was a decision of Ward CJ concerned with the provision of hotel room cleaning services. The factual matrix was reasonably complex. The following summary is sufficient for present purposes. HRC contracted with various hotels to provide room cleaning services. Those services were provided by staff sourced from a variety of sources: (1) HRC's own employees; (2) Employees (full-time, part-time and casual) of two other entities forming part of the same corporate group (HOS and HRT); (3) Third party subcontractors. The evidence indicated that around 60% of staff used were either employed or contracted by HRC, as opposed to HOS and HRT (see [2]). A further entity in the corporate group, HS, operated comparable arrangements (see [19]). 2. The Commissioner had assessed both HRC and HS as liable for payroll tax on payments to subcontractors. This was on the basis that the contracts they had with hotels were employment agency contracts (see [6]). Shortly after the assessments were issued, HS went into liquidation. The Commissioner responded by issuing assessments to HOS, as jointly and severally liable for the liability of HS (based on a grouping determination) (see [7]). 3. The evidence was that the subcontractors were sourced "[f]rom time to time" as "additional staff" (at [2]). Evidence was given that this was because of the "seasonal nature of the hotel industry … and the volatility in hotel custom" (at [20]). The entities with which HRC and HS had subcontracting arrangements are set out at [21] of the judgment. They were all Pty Ltd companies. 4. Ward CJ upheld the assessments. Her Honour concluded at [152]-[153]: It is clear from the evidence of the plaintiffs that in order to perform the obligation of cleaning and servicing hotel rooms to the requisite standard (i.e., to produce the required result under the hotel client contracts) it was necessary from time to time for HRC/Housekeeping Solutions to procure the services of additional housekeeping staff under the sub-contracting arrangements in place with the Platinum group companies and/or SWCA. The fact that those services were procured for the purpose of performance of the obligations under the hotel client contracts (and without which services those obligations could not be fulfilled) means in my opinion that the hotel contracts are ones "under which" the services were procured in the sense of the services being required to be supplied for the purposes of those contracts. In my opinion the evidence also compels the conclusion that the services were procured "for" the hotel clients' businesses in the sense of "in and for the conduct of those businesses". True it is that payment under the hotel client contracts was structured by reference to room "credits". However, in a practical sense the housekeeping staff did form an addition to the hotel's workforce - they not only wore the hotel branded uniform, but they also liaised with guests and other hotel staff in the services provided by way of the servicing and cleaning of hotel rooms and they were entitled to make use of the hotel staff dining rooms during lunch breaks and the like. On the evidence given by Ms Kelly in cross-examination, it is difficult to see how it would be apparent to the ordinary hotel guest that there was any distinction between, say, a hotel employee responsible for the stocking of items in the hotel room, or answering calls placed to the hotel's housekeeping telephone number, and a member of the additional staff sourced from Platinum/SWCA performing services in the cleaning of the guest rooms on the hotel premises. 1. The plaintiffs in that case advanced a further contention, by way of alternative, that payroll tax should be assessed on the payments made by subcontractors to their workers, instead of on the payments made by HRC and HS to the subcontractors (see [9], [155]-[157]). Ward CJ dealt with this contention at [180]-[181]: It is not necessary to explore the question whether, for the purposes of s 40(1)(a) the service provider in the present case is the third party sub-contractor (the primary contention advanced by the Chief Commissioner on this issue). That is because even if the service providers procured for the purpose of the employment agency contracts in this case are the housekeepers sourced through the sub-contractors, the same result would in my opinion follow. In this regard, it is significant in my opinion that the construction advanced by the plaintiffs gives no work for the words "in relation to" to do in s 40(1)(a) of the Payroll Tax Act. Those are words recognised to be of considerable breadth (as was accepted in the course of argument as to the narrower ambit of the words "under which" in s 37(1)). In my opinion, those words expand the reach of the deemed wages under s 40(1)(a) beyond the actual amounts paid to the additional housekeeping staff. Were it otherwise, the section could simply have referred to wages or amounts paid to the service provider without the inclusion of the words "in relation to". Accordingly, I consider that the amounts paid to Platinum/SWCA have been correctly identified as the amounts in respect of which payroll tax is payable and the assessments should be confirmed in this regard. 1. Bayton: In Bayton Cleaning Co Pty Ltd v Chief Commissioner of State Revenue (2019) 109 ATR 879, Ward CJ upheld payroll tax assessments in respect of two entities, Bayton and IHS. The two entities had a shared Chief Executive Officer (at [8]). Bayton predominantly contracted with commercial and aged care/health clients, to provide cleaning services (at [11]). IHS predominantly contracted with hotels to provide cleaning and housekeeping services (at [12]). Both entities used a mixture of employed staff and staff provided through subcontract agreements (at [13]). Ward CJ upheld the assessments. 2. Ward CJ regarded the hotel clients as "perhaps the clearest example of cleaners or housekeeping staff forming an addition to and comprising in effect part of the hotel's workforce" (at [272]). Her Honour referred to relevant features from HRC Hotel: wearing hotel branded uniforms; liaising with guests and other hotel staff in providing the services; being entitled to use hotel staff facilities; being difficult for hotel customers to distinguish from other staff. Ward CJ continued at [272]-[273]: In the present case, I accept that not all those elements are equally present, though in a number of instances the cleaning/housekeeping staff here do wear the hotel branded uniforms. True it is that there is evidence that the cleaners/housekeeping staff do not make use of the client's staff canteens or the like, though it beggars belief that they cannot make use of staff facilities such as toilets (and such evidence as there was on this issue supported the conclusion that they can). As for the supervision/complaint processes, although the evidence was that complaints are generally dealt with at a higher level than via the individual contractors (and there is a process whereby direction as to work generally flows through from the plaintiffs not the client), there is obviously also interaction between hotel guests and hotel staff on the one hand and the cleaners on the other; there is not always day to day supervision on-site by the International Hotel Services managers; and some level of day to day instruction is conveyed directly to the cleaning or housekeeping staff by hotel client staff. In one case, the cleaner/housekeeper reports directly to the hotel management. My conclusion in this regard is reinforced by the fact that there was at least one instance (the Lancemore Group) where the whole of the relevant client's cleaning staff was "transitioned" to International Hotel Services. That makes clear that, in a very practical sense, the cleaning staff that formerly formed part of the client's workforce (whose services are now being provided through the auspices of International Hotel Services) are for relevant purposes part of the hotel client's workforce (albeit no longer employed directly by the hotel client). 1. Ward CJ regarded the aged care/retirement villages' staff as "the next most obvious example". Her Honour referred to a man who had been a cleaner at a particular facility "for some years" as "a prime example" (at [274]). That was because: He is familiar to the residents. He is not someone who might be called in once in a while to carry out some maintenance item or special one-off cleaning task. He regularly works there and for all intents and purposes would be seen as an addition to the Uniting staff. Her Honour added at [275]-[276]: Further, I cannot accept the proposition that the "core" business of retirement villages or aged care centres is real estate, even though I readily accept that the sale of interests in long term leases in the villages or the like is the source from which operators of such business would earn their profits. In much the same way, I cannot accept that the provision of clean rooms for hospital patients or retirement village or aged care centre residents is not an essential part of the service to be provided by those operating such institutions (albeit through outsourced specialist cleaners). But even if the characterisation placed on the businesses by the plaintiffs in this regard were to be accepted, I still would not consider that to be determinative of a conclusion that the cleaners were not providing services in and for the conduct of those businesses (because I reject the proposition that it is necessary that the services be for the core business of clients). Again, it is relevant to note here that Bayton has promoted the fact that it has "transitioned" a number of aged care facilities with their staff to Bayton employment (T 39.30) and has promoted its ability seamlessly to replace in-house teams with its own cleaning services (T 39.26). There is no reason to think that that is not precisely what it does; and it speaks eloquently to the fact that what Bayton is providing is in essence an addition to the client's workforce. 1. Ward CJ then turned to the "commercial and corporate clients". It can be inferred from her Honour's other comments that she regarded those clients as the least clear of the client types. Her Honour accepted at [277] that: if the cleaning services were sufficiently segregated or divorced from the conduct of the relevant commercial or corporate client's business then this might lead to the conclusion that the services were not in and for the conduct of the client's business in a particular case (say, where the services of cleaners were required on a one-off basis to deal with an unexpected cleaning problem). But Ward CJ went on to state that: However, I see no real distinction between the provision of cleaning services after an accounting office has effectively closed for the day and the provision of after-hours typing services in a law firm (to adopt an example postulated by the Chief Commissioner) - those services are equally required "in and for the conduct" of the relevant business. 1. E Group: A further decision to which the parties made significant reference was that of Ward CJ in E Group. The plaintiff in that case provided security services. The Commissioner advanced two alternative contentions. The first contention was that the plaintiff, E Group, was the employment agent, and its various clients constituted the "client" for the purposes of s 37(1) (see [4]). The second contention was that a related entity of E Group was the "employment agent" and that E Group itself was the "client" (see [7]). 2. Neither contention succeeded at trial. Grounds of appeal based on the second contention, however, eventually succeeded on appeal: see Chief Commissioner of State Revenue v E Group Security Pty Ltd (No 2) [2022] NSWCA 259. An application for special leave to appeal from that judgment was refused by the High Court in April. I have already referred to the first appeal judgment. There has been a further Court of Appeal judgment concerning costs. 3. The first Court of Appeal decision was, technically speaking, concerned with an appeal from the parts of Ward CJ's judgment dealing with the plaintiff's first contention (above). Nonetheless, as noted earlier, the grounds of appeal were confined to the appropriate construction of s 37. They were not concerned with Ward CJ's application of that construction, which, as a result, has not been the subject of appellate comment. This explains the reliance placed by the parties on the primary judgment in these proceedings. 4. The plaintiff in those proceedings, E Group, was described as the "main operating company" in a corporate group operating in the security industry (at [8]). The group comprised various other wholly owned subsidiaries (see [8]). In almost all instances, E Group was the entity which contracted with clients, and it also contracted with third party contractors who agreed to supply contracted security guards (see [12]). Security services were provided to clients across a wide range of industries, embracing what Ward CJ described as "stereotypical security guard services" and "other services … that might not necessarily require any form of security license" (see [9]). 5. Ward CJ stated at [318]: Those legislative provisions [(which her Honour had earlier extracted)], and [White J's] construction of the relevant terms have been considered in a number of decisions (to which reference has been made already). It is well-recognised that the analysis is a fact sensitive one and much was made of the indicia identified in cases such as HRC Hotel Services when determining whether there is the requisite integration of the service providers into the relevant client's workforce. It is not disputed (though the emphasis placed on each varies in the respective parties' submissions) that those indicia include, as the Chief Commissioner has submitted, matters such as the location at which the services are provided by the workers; the regularity with which the workers provide the services to the client; the level of any interaction between the workers and the client's customers on the one hand and the client's employees on the other; the level of any direction or instruction provided by the client to the workers; the workers' access to, and use of, client staff facilities; and the relevance or connection to the client's business of the services provided by the workers to the client. What is not relevant in this context is whether the services performed by the workers are integral or ancillary, as the case may be, to the client's business. 1. Ward CJ set out (at [328]) what was established on the evidence "of the factors identified as relevant in considering whether the workers are provided "in and for" the client's business": The location at which the services are provided by the workers is generally that of the client's premises (although, as with Baiada, the location is physically separate from the client's main business operations; and with the Department of Education holiday school patrols the location might be described as a roving location that necessarily extends beyond the boundary of the schools themselves). There is a regularity with which the workers provide the services to the clients in the Commercial sector but a more ad hoc provision of services in, say, the health sectors or Event sector and certainly for one-off or shortterm clients. The level of interaction as between the workers and the client's customers or contractors varies but there is generally at least some interaction between them (except in the Department of Education holiday patrols and the HammondCare out-of-hours vehicle patrols). There is some level of direction or instruction reserved to the client under the contractual documentation that was in evidence though, as noted above, I do not accept that it would extend to the control over or giving of binding instructions as to security decisions of a kind required under the legislation to be made by the security licence holder. I see as significant the distinction drawn by various of the witnesses between security issues and non-security issues. The workers' access to and use of client staff facilities is limited or non-existent in most cases (and I do not regard access to the JOCC at the Australian Turf Club on race days relevant in this regard, since I consider that a necessary incident of control over the security aspects of the work performed by E Group Security personnel – and, equally, others have access thereto, such as the police officers, who on no view would be regarded as integrated into the Club's own workforce). Last, I accept that there is an obvious significance (or necessity) to the clients of the security services provided by E Group Security's workers; and the clients may or may not be in a position to obtain or hold licences which would permit the clients themselves to perform those services. 1. Ward CJ gave her overall conclusion at [329]: Balancing all of those factors, I have concluded that the arrangements by which E Group Security provided security guard services to the clients in the present case do not constitute employment agency contracts and do not give rise to payroll tax liability. Ward CJ then gave reasons regarding "particular categories of clients" (at [330]). 1. Ward CJ first dealt with "one off-clients and those clients for whom services were provided on an ad hoc basis" (at [331]). Her Honour concluded that she could "see no basis on which the security guards could be said to be integrated into the client's workforce". 2. Ward CJ analysed the position of school holiday patrols for the Department of Education in some detail. Her Honour clarified that she was not merely relying on the fact that the patrols occurred outside of the school term or after hours. Her Honour noted that "in some cases after hours workers – say cleaners, for example – could well be sufficiently integrated to form part of the client's workforce". Ward CJ, however, emphasised evidence of "an almost complete lack of interaction by the security guards with anyone at the schools". Her Honour added (at [331]): I would have thought that no-one seeing a security car patrolling outside a school would think that this was a Department of Education employee foraying into the security guard's world. 1. Ward CJ thought this pointed to "a very significant issue" – that security guards "need to be readily distinguishable" (at [332]). Her Honour thought this was particularly so for guards "monitoring crowd control or bag screening or the like at sporting events or other such events but also no doubt those located in public or other areas of commercial buildings". Ward CJ noted that some clients (giving the examples of the Australian Turf Club and occupants of buildings at the Barangaroo site) had their own security licence or employed their own security guards, but observed that, "even then, there is no suggestion that E Group Security's guards would be indistinguishable or mistaken for employees of the client". Her Honour went on to say: There is, for example, no suggestion that those E Group Security guards patrolling Randwick Racecourse on race days or carrying out bag services or other crowd control were not readily distinguishable to the public from ordinary Australian Turf Club employees (and the evidence is that they were in fact used as a quite separate taskforce at race day events). The fact that some E Group Security personnel had access to a joint control or operations area (say, the JOCC at the Australian Turf Club) does not change my opinion in that regard. Nor does the fact that in situations of emergency (such as a lost child) all staff at the venue are likely to be diverted to the emergency at hand (as was one example explored in the course of cross-examination at the hearing). 1. Ward CJ then discussed (at [333]), "Club and Pub Clients and the like". Her Honour regarded the security guards as "not sufficiently integrated into the client's workforce". Her Honour referred to evidence that guards "use public facilities … take instruction from E Group Security, and … wear distinguishing clothing". Ward CJ noted that "[w]hile they provide an integral function for the clients, they are not an addition in the sense of being integrated into the workforce". 2. From [334], Ward CJ discussed "the commercial buildings (including those where security staff may be deployed to sit at a concierge desk or as additional concierge staff or in the loading dock) and the one Food Industry client, Baiada". These were the "categories in respect of which" her Honour had "some concern". 3. Ward CJ observed (at [335]) that some commercial buildings had a separate, clearly identifiable, concierge desk. Her Honour was not concerned about those buildings. Ward CJ added that: The fact that E Group Security are instructed to be polite to clients of their clients' business (and might give directions to the bus stop or a helping hand to old ladies in need of assistance from time to time) is not to the point (indeed, it is no more than good manners and courtesy, which no doubt is the professional face that E Group Security would wish for the workers it provides to display). 1. Ward CJ was also not concerned (at [335]) about guards relocating to a concierge desk after hours to perform a security function there. Her Honour noted: I accept that in some of the commercial buildings there seems to be less distinction in the clothing that is worn (the relevant distinction seemingly being a lanyard or perhaps a badge – particularly where the E Group Security branded white shirt is covered by a suit jacket) and it might be that a casual observer would not appreciate the difference between a security guard and, say, a receptionist or concierge if the guard were sitting at the concierge desk. However, the evidence is that for the most part any security guards that were located at the concierge desk did so after hours. As Mr Camilleri says in relation to 52 Martin Place, by the time the security guard sits at the concierge desk (6 pm), only people with access cards can enter the building (T 242). Moreover, in most of the material to which I was taken it was apparent that the security guards are not (or should not be) spending their time at a desk – they are patrolling or roaming or being placed at strategic static positions to monitor for risks to the security of the building or harm to its occupants. 1. Ward CJ's "area of concern" (at [336]) was security guards "being invoiced to a client as a concierge". Her Honour had "less difficulty with ad hoc invoicing for an "additional concierge"", and more difficulty with buildings where invoicing was consistent. Nonetheless, her Honour concluded that: even where a security guard is stationed consistently at the concierge desk, this is still a small proportion of the work provided by E Group Security's guards (as I noted above, most of the evidence was that the guards are patrolling the buildings, performing access control or at the loading dock). Moreover, I also accept that some security function is no doubt performed at the concierge desk, indeed, there is an invoice (Ex 6 at 9052) for a representative of E Group Security to "[i]nvestigate poor CCTV system connection at Concierge Desk 100 William St". While it may be that an ordinary observer would have difficulty distinguishing between the E Group Security guard seated at the concierge desk in those particular buildings from the client's employees, I am not persuaded that, as a whole, the E Group Security guards are indistinguishable. Ultimately, considered with the other relevant factors as to control, use of 239 client's facilities, and E Group Security uniforms for example, I find that the E Group Security guards in the commercial buildings are not sufficiently integrated in the relevant client's workforce. 1. Ward CJ added (at [337]) that she accepted that there was a security function involved in carrying out loading dock functions at commercial buildings more generally. Her Honour was "not satisfied that the security guards are otherwise sufficiently integrated into the workforce at those locations to warrant a different conclusion". 2. Ward CJ then commented on the "Baiada chicken operation" (at [338]). Her Honour commented that the security guards were "in a physically separate location and readily identifiable as E Group security personnel". Her Honour expressed "some hesitation as to the weighbridge tasks performed" but accepted "that there is a security function in ensuring that there is not access by unauthorised persons (or objects) to the Baiada sites". Ward CJ accepted evidence that guards "also perform access control, CCTV and alarm monitoring". Her Honour also observed that the guards were "physically separated from Baida's workforce" and wore "highly distinct clothing". Ward CJ concluded: "[a]ll factors combined, I am satisfied the plaintiff's guards were not integrated into the Baiada workforce". Submissions and conclusion 1. The case was argued on the basis that the sole issue in dispute was whether the "in and for" aspect of s 37(1), in the sense outlined by White J in UNSW Global, was satisfied. 2. Submissions for ITM: Counsel for ITM submitted that I should apply the test stated by Ward CJ in Eq in E Group at [318] (quoted above at [104]), namely whether the workers performing the Woolworths trolley collection services were sufficiently integrated into Woolworths' business to be seen as additional to Woolworths' workforce. This test, in counsel's submission, had also been applied in the HRC Hotel case (at [153]). It is a fact-sensitive analysis depending on various different indicia. 3. In the application of the test to the Woolworths trolley collectors, counsel referred to numerous indicia in order to characterise the relationship between the trolley collectors and Woolworths. I think the points made by counsel can be summarised by reference to four main factors. 4. The first factor was the location of the trolley collectors' work. Counsel noted that the service involved, in its essence, returning trolleys to the bays outside the relevant Woolworths store. Apart from occasionally collecting trolleys left at the rear of the store by Woolworths staff, there was no need for the trolley collectors to go into the store. The service was essentially an external one. Counsel acknowledged that the trolley collectors had access to Woolworths' toilet and eating facilities, but noted Mr Vickery's evidence that this was rarely taken up. 5. The second factor was the nature of the task. Counsel pointed out that the subcontractor's obligation was to ensure that the store's trolley bays were filled to a certain percentage level, and otherwise to retrieve trolleys belonging to the store within the shopping centre (or, in the case of street runs, within a defined geographical area). These obligations were objectively defined in the contract and the subcontract. In return the subcontractor was to receive a specified fee. Fulfilling the labour and equipment requirements for undertaking these tasks was left entirely to the subcontractor. 6. The third factor was demarcation. Counsel emphasised the requirement imposed by ITM that all trolley collectors wear an ITM uniform identifying them as part of the ITM organisation. This uniform was quite distinct from the uniform worn by Woolworths staff. Counsel also referred to the requirement to sign into the visitor's book, and to wear a "visitor" tag, when trolley collectors were on Woolworths' premises. In counsel's submission, no one could have been in any doubt that the trolley collectors belonged to a separate organisation from the Woolworths staff. 7. The fourth factor was the degree of interaction between the trolley collectors on the one hand and Woolworths' staff and customers on the other. Counsel noted the evidence that it was ITM's practice to field complaints and requests from Woolworths, supervise and provide training for the trolley collectors. There might be occasional contact with staff, but this was unusual. Similarly, trolley collectors would occasionally help Woolworths customers with their trolleys, but this was not formally part of the job. 8. Submissions for Commissioner: Counsel for the Commissioner, in inviting me to apply the "in and for" test, emphasised the formulation by Emmett AJA in Southern Cross Community Healthcare Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 1317 at [241]. Counsel quoted as follows: [A]n employment agency contract is one where the services are provided by individuals who would comprise, or would be added to, the workforce of the client for the conduct of the business of the client, in order to help the client to conduct its business in the same way, or in much the same way, as the client would conduct its business through an employee. Where the services, although provided for the benefit of the client, are not provided by the service provider working in the business of the client, the provisions will not apply. Focus on whether the services are provided in and for the conduct of the business of the client leads to emphasis being placed on the nature of the business of the client. 1. Counsel submitted that the test should be applied at a general level: it was not necessary to ask whether a particular trolley collector was being procured to work in Woolworths' business. Also, the fact that the task to be done was defined by reference to achieving a particular outcome or result said little about whether the test was satisfied: Bayton at [105]. Counsel also submitted that the "in and for test" did not represent a binary choice between working in the client's business and the employment agent's business. In counsel's submission, the trolley collectors could still have been working in and for Woolworths' business even if they were simultaneously working for ITM. 2. Counsel submitted that use of the "integration test" risked error. The word "integration" does not appear in s 37, nor did it appear in White J's construction which was approved by the Court of Appeal in E Group (No 1). 3. Counsel submitted that the test was potentially erroneous for another reason. Counsel submitted that s 37(2) made clear that if there is a common law employment relationship between the client and worker, there can be no employment agency contract under s 37. Counsel submitted that the "integration test" was effectively the same as the common law test of employment. Circumstances that satisfied the "integration test" therefore necessarily fell outside s 37. 4. Counsel for the Commissioner had their own list of factors which they contended were relevant to the application of the "in and for" test in the present case. 5. First, counsel submitted that the collection of trolleys played an important part in, and was indeed essential to, the conduct of Woolworths' business. Counsel also noted that the trolleys were owned by Woolworths. The fact that the trolley collectors were dealing with property belonging to Woolworths reinforced, in counsel's submission, that their activities were part of Woolworths' business. Counsel also suggested that the abandonment of its trolleys in the streets was something which could potentially damage Woolworths' reputation. 6. Counsel next submitted that an important factor was the continuity and regularity of the service being provided. The trolley services were provided for as long as the Woolworths stores were open and operated continually during the period of store opening. ITM's practice was to give continuity to the same subcontractors at the same stores, if possible. There was also an obligation on the subcontractors to use their best endeavours to ensure continuity of the staff who worked as the actual trolley collectors under a subcontract. 7. Counsel also submitted that Woolworths retained a substantial degree of control over the provision of services. Counsel pointed to contractual provisions requiring ITM to comply with Woolworths' directions and policies. The policies affected the way in which work was carried out: for instance, they restricted the number of trolleys which could be pushed at any one time and even prevented collectors wearing MP3 players. Woolworths also had power to insist on a new representative being appointed by the subcontractor. 8. Counsel next noted that the trolley collection task was regarded as requiring good relations between the trolley collectors on the one hand, and Woolworths store management and customers on the other. Counsel referred to the list of tasks for Woolworths managers, which included having regular meetings with the trolley collector representative (see [71] above). Counsel also referred to ITM's Woolworths Checklist, point 16 of which stated: Subcontractor should have weekly meeting with Services/Store manager and daily contact with front desk. (Customers sometimes leave addresses for trolleys near their house). Counsel also quoted various passages from audit reports showing that the communication in particular cases was good, or unsatisfactory. 1. The ITM Compliance Manual contained various pages headed "Contractor Guide". Counsel referred to the following passage from pages headed "Contractor Guide #26 – Trolley Supply": Our role as trolley collectors isn't just to push trolleys into the store. We are part of the total shopping experience of every customer from when they drive into the car park (and hopefully can find a parking spot without loose trolleys in it); to finding the trolley type they want, free of rubbish, in the store bay and to driving off (hopefully not having to dodge a row of trolleys or a trailer left by the collector behind their car). We are part of the customer service team for the stores. Be clean and tidy, smiling and helpful! Counsel also referred to pages headed "Contractor Guide #19 – Wet Weather Procedures", as indicating the need for communication between contractors and the Woolworths Service Desk Staff in instances of wet weather. Those pages made clear that contractors were required to draft a wet weather plan, using a model provided (which referred to communication with the Woolworth service desk), submit it to ITM for approval, and then seek agreement to it from the store manager and centre management. 1. Counsel also referred to the two trolley collector employment contracts in evidence. These were contracts between one subcontractor and two individuals who worked for that subcontractor. Counsel referred to how they described the collector as "part of the customer service function" and required the collector to "maintain friendly and helpful relations with centre customers and other centre workers at all times". 2. As to the location of the services, counsel noted that sometimes trolley collectors came into stores to pick up and organise trolleys. Counsel acknowledged the evidence that trolley collectors rarely used the Woolworths toilet and eating facilities. Counsel however observed that a right to use the facilities was the important thing. Whether that right was exercised was less important. In any event, this was less significant than the manner in which the services were provided by the trolley collectors. 3. Counsel acknowledged that ITM's adoption of a distinctive uniform for trolley collectors was, on the authorities, a factor in favour of ITM. But counsel submitted that this was far from decisive. There was some evidence that customers remained unsure about the demarcation. Counsel also referred to the trolley contractors' obligation to identify themselves as "Woolworths trolley collectors" (with reference to clause 15.3(d)) where they saw someone using Woolworths' trolleys without authorisation. 4. Counsel submitted that a critical factor was whether the Woolworths trolley collectors were doing work which would otherwise have been done by Woolworths' employees. Counsel acknowledged that, at a simple level, it was always possible to say that the work could have been done by an employee. Counsel submitted that the test was not so crude, but that it was relevant to ask whether the work in question was work which was "ordinarily" done by a typical contractor. Counsel pointed to the academics working as experts in the UNSW Global case, as an example of such independent contractors, along with sole tradesmen such as plumbers and electricians. Counsel submitted that, by contrast, trolley collectors were not, in substance, "genuine" independent contractors. 5. Counsel submitted that simultaneous employment was not a problem. Counsel submitted that it was common for people to work as causal employees. Counsel also submitted that being a casual employee did not prevent employment for another employer, with reference to Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (2022) 96 ALJR 89, 112 [84]. 6. Counsel pointed to evidence showing that, in some situations, Woolworths' own staff were involved in moving the trolleys. Counsel submitted that this tended to indicate the artificiality of what was going on. 7. Conclusions: In evaluating these submissions, the starting point is the language of s 37. The employment agency contract must be identified. That is the contract (in the extended sense of that term in s 37) under which the putative employment agent procured services for the "client". 8. One way of looking at the case assumes that the employment agency contract is the contract between ITM and Woolworths. Seen in this way, the question is primarily a question of characterisation of that contract. If it is an "employment agency contract" then all of the payments under the subcontracts are caught; if it is not, none of them are. That is, I think, the way it was analysed in the Commissioner's covering letter which accompanied the assessments. Counsel for the Commissioner took the same approach at the hearing. 9. I do not accept this analysis. In E Group (No 2), Brereton JA said at [7] (emphases in original): In my opinion, [the question posed in the case: see [100]-[101] above] directs attention not to the arrangements made between the agent and the client, but those between the agent and the service provider, who is in effect deemed to be an employee of the agent for payroll tax purposes. This construction is supported by the specific identification of agent and provider in s 37; the requirement that the contract be one under which the agent procures the services of a service provider; and the reference in s 40 to wages paid or payable by the employment agent to the service provider. An employee agency contract is a contract under which the agent procures the services of a service provider for a client. The client is the person for whom the employment agent procures the services of a service provider – that is, the person who receives the services. In the context of this case, the relevant payments are those made in relation to the guards (service providers) in respect of the provision of their services to E Group Security (client). ... The focus is not the arrangements between the employment agent and the client, but those between the employment agent and the service providers. … 1. At [3], his Honour stated that in taking this view he was taking a "slightly different" approach to that taken by the majority. But I see nothing in the majority's decision to contradict his Honour's analysis, and I respectfully agree with it. 2. If this is correct, the question is not whether ITM's head contract with Woolworths was an employment agency contract. Of course, the terms of the head contract remain relevant, because the terms of that contract inform the terms of the subcontracts. But the real question is whether each of the subcontracts was an employment agency contract. There were dozens of such subcontracts. Although, so far as the evidence goes, they were all in standard form, the services under each of them differed, as potentially did other relevant circumstances. Each should have been separately identified in the assessment. 3. It also needs to be remembered that the statutory task begins with identifying an "employment agency contract". It is true that this is not limited to the terms of a formal contract and may include an "arrangement" or an "undertaking". But essentially it is still a matter of identifying the terms of the contract, arrangement or undertaking between the relevant parties and asking whether that contract, arrangement or undertaking is an "employment agency contract" for the purposes of s 37. 4. It seems to me that, if the task is as I have described it, the relevance of some of the evidence presented to me by the parties may be questionable. I did not understand the Commissioner to suggest that, beyond the terms of the written contract and subcontracts, there was any "undertaking" or "arrangement" which introduced any relevant additional terms or features into the contractual relationships between the parties. The essential question therefore seems to be one of characterisation of the written contracts (and, if I am right in the point made previously, it is a question of the characterisation of each of the subcontracts, rather than the single head contract). 5. In these circumstances, evidence about the way in which the contracts operated in practice may not be relevant. For instance, it is difficult to see how the actions of individual Woolworths store managers, as recorded in the audit reports, can be used to characterise the contractual relationship between the parties. If I am right in saying that the focus is on the subcontracts, the relevance of such evidence is even more questionable. Even if relevant to the individual subcontracts in question, such evidence could on no view be relevant to the characterisation of other subcontracts. 6. I do not think it is necessary in this case to go into the validity of the "integration test", as stated by Ward CJ. It may be accepted that neither s 37 nor the "in and for" test stated by White J uses the term "integration". On the other hand, the use of the word "in" inevitably must bring in some of the same concepts as the integration test stated by Ward CJ. Indeed, counsel for the Commissioner, having submitted that "integration" was potentially erroneous, nevertheless went on to present submissions of a multi-factorial nature in much the same way as counsel for ITM had. 7. In applying the "in and for" test formulated by White J, I think it is important to look at the origin of that test. His Honour was concerned by the possibility that, read literally, s 37 might have the effect of converting fees paid to persons who were independent contractors, operating their own businesses, into deemed wages. His Honour considered that this could not possibly have been contemplated by the Parliament: see UNSW Global at [47], [49]; E Group (No 1) (Court of Appeal) at [46]. It follows, in my view, that when his Honour referred, in formulating the "in and for" test, to the business of the client, he was drawing a distinction between the client's business on the one hand, and a business operated by the service provider on the other: see UNSW Global at [64]-[65] (quoted above at [81]). Independent contractors operating their own businesses who were retained by a client through an intermediary, would remain independent contractors operating their own businesses and therefore could not be seen as undertaking the relevant work "in and for" the business of the client. 8. It follows that I disagree with the submission of counsel for the Commissioner about the possibility of working for more than one business. Counsel's submission presented the dichotomy as if it was one between working for the business of the client on the one hand and the service provider on the other. But in my view, the true dichotomy is between working "in and for" the business of the client on the one hand, and conducting one's own business as an independent contractor, on the other. 9. I also disagree with the submission by counsel for the Commissioner that an employment agency contract for the purposes of s 37 necessarily falls outside a contract of employment at general law. I am not sure that the common law test of employment will always be relevant, but I think the statement is too broad, having regard to the origin of the "in and for" test, as I have described it. Furthermore, I do not think that the argument works contextually. The exclusion in s 37(2) accepts the possibility that an employment agency contract might result in, or be, a contract of employment according to the application of common law principles. I do not think that they necessarily exclude each other. 10. Nor do I accept the submission that a person engaged in the collection of trolleys on a contract basis is not a "genuine" independent contractor. In my view, the scope of s 37 must depend on applying the statutory language to the particular contractual relationship in question. It would be wrong to construe s 37 upon some sort of a priori assumption as to what is a "genuine" form of permissible contracting and what is not. 11. I turn now to the factors identified by the parties in their submissions. 12. In my view, the fact that the trolley collection services involved activities which take place outside Woolworths' premises is significant. This is not a case where employees of a business took their work home or performed it remotely. Substantially, the whole of the task took place away from the Woolworths staff and did not require any supervision by, or co-ordination with, them. I do not think that individual cases where Woolworths managers may have observed or commented upon work done by the trolley collectors affects this conclusion. Nor does the occasional collection of trolleys from within the Woolworths store. 13. It may be accepted that a ready supply of trolleys for customers is an important, and perhaps vital, part of the conduct of Woolworths' business. But in emphasising this, counsel for the Commissioner raised a tension with their own earlier submission that the Court should not make a judgment about whether the service provider's work relates to a "core" or "non-core" aspect in the client's business. In truth, however, I think some characterisation of the nature of the client's business is required if one is to ask whether an activity is "in and for" that business, as distinct from merely being for its benefit: see JP Property Services at [75]. 14. In the present case, I would characterise Woolworths' business as one of selling goods by retail using a supermarket format. That is how its business income is derived. It may be accepted that stacking the shelves should be seen as an activity "in and for" that business: see JP Property Services at [90] (quoted above at [89]). The collection of trolleys may be for the benefit of the business, in the sense that it is one of the conditions which must be satisfied for the business to be carried on. But, in my view, it is no more "in and for" the business than the delivery, by truck, of the goods to be sold in the business. 15. I also consider that the defined nature of the task done by the trolley collectors, and the associated maintenance of demarcation, are significant factors in this case. Some stores were served by a street run service only. But for all stores the provision of the specified service was a discrete, defined task. What is important is that there appears to be an established market within which trolley collection contractors operate and which extends well beyond the three supermarket operators in the present case. ITM is only one of the contractors in that market. 16. For present purposes, I do not see that Woolworths' ownership of the trolleys makes any real difference. Nor does the requirement in clause 15.3(d) for the trolley collectors to identify themselves as "Woolworths trolley collectors" when dealing with the public. I am not sure why the perception of a third party is relevant at all for the purposes of characterising the contract in question. In any event, because Woolworths owned the trolleys, the trolley collectors had to have been delegated, explicitly or implicitly, authority from Woolworths to retrieve those trolleys on its behalf. For the collectors to identify themselves as "Woolworths trolley collectors" in that context is not in the slightest surprising, but it says nothing about whether such collectors are comparable to a Woolworths employee. 17. What I do think is important about the ownership arrangements is that the subcontractors were responsible for supplying and maintaining the equipment needed to collect the trolleys, some of which was quite substantial. That is a typical indication of an independent contractor conducting its own business. The subcontractors' charges would not have consisted entirely of wages and on-costs for individual trolley collectors. Their charges would have included a component representing the costs of financing and depreciating, or leasing, the equipment in performing the services. 18. Also important is the fact that ITM's subcontractors could, and in some cases did, perform work for more than one store at the same shopping centre. It provides a practical illustration of the independence of their businesses from Woolworths' business (and indeed ITM's business). The point made by counsel for the Commissioner about casual employees working for different employers does not answer this. Everyone accepts that a casual employee might work on Monday for one employer and on Tuesday for another. But what is under consideration in the present case includes a "service provider" working for multiple "clients" simultaneously. I find that hard to fit into s 37. 19. It is true that Woolworths retained some powers of direction over trolley collectors. But despite their broad language, these were powers which were to be read down to accord with the contract in which they appeared. It cannot be supposed that Woolworths would have a power to, for instance, direct a trolley collector to come into the store and work on the checkout to cover a gap in Woolworths' own staff. The power to give a direction would have been limited to directions having some relevant connection with the discharge of ITM's functions under the contract. 20. In this regard, I do not think that, properly analysed, the list of "do's and don't's" in the Woolworths ERM Services Manual, if relevant at all, assists the Commissioner's argument. It is true that Woolworths' managers were encouraged to maintain a good relationship with the trolley collector representatives working at their stores. But read as a whole, the list (which of course applied to all trolley collection contractors, not merely ITM's) emphasised Woolworths' acknowledgement that the services in question had been contracted out, and a desire to respect the demarcation created by that. The trolley collectors were there to undertake a certain task as defined by the contract, and were not to be asked to step outside that area. I refer, in particular, to the general instructions not to make direct contact with the contractors about selection of contractors, contractual coverage and pricing, and to the instructions which emphasised that dealing with damaged trolleys and fitting child restraints were the responsibilities of Woolworths staff. 21. The statements in the ITM Compliance Manual about the trolley collectors being part of the customers' shopping experience are, in my view, of minimal, if any, significance. The author of that Manual may have believed that this was so. But this can only be a matter of opinion. It is hard to see how that can be used to characterise the subcontracts between ITM and subcontractors (or the contract between ITM and Woolworths, for that matter). One only has to ask whether it would have made a difference if the author had instead asserted the importance of remaining independent and performing no more and no less than the allotted task in the contract. 22. Finally, I should deal with the submission from counsel for the Commissioner that the trolley collectors' work could have been, and to some extent was, carried out by Woolworths employees. 23. As counsel acknowledged, such a submission, at least at a broad level, is available in every case. To apply such a test therefore tends to beg the question. In terms, the "in and for" test under s 37 does not refer to it. In some factual situations, the fact that the service providers are undertaking the same work as was formerly (cf Bayton at [273]), or is currently (cf HRC Hotel at [153]), done by the client's employees, may illustrate features of the work which make it "in and for" the client's business. Otherwise, I find it difficult to see how such circumstances are relevant. 24. The evidence in the present case illustrates part of the difficulty. It was said that Coles had trolley collection done exclusively by employees. ALDI exclusively used contractors. Woolworths used contractors and its own employees (at least in some locations, or in some places for part of the time). It seems strange to think that Woolworths' business, for the purposes of s 37, varied from the businesses of Coles and ALDI. It seems even stranger to think that Woolworths' business varied between different stores according to the trolley collection system it used. But if Coles, ALDI and Woolworths were all conducting the same type of business for the purposes of s 37, it is hard to see how the use of employees at some Woolworths stores could be of any relevance. 25. For these reasons, I do not think that, on the evidence before me, the Woolworths trolley collectors satisfied the "in and for" test under s 37. The assessments fail for that reason. 26. This is enough to dispose of the case so far as it concerns the Woolworths trolley collection services. But I wish to make some observations about other issues which may arise in the application of the Act to such services. 27. As I understood the argument presented by counsel for ITM, counsel did not dispute that, apart from the "in and for test", s 37 was satisfied. As counsel put it, there was no dispute that the trolley collectors had been "procured" by ITM. Nor was any point taken about the application of s 40. 28. Nevertheless, there was some reference to these questions in the argument. I asked counsel for the Commissioner whether the "service providers" for the purposes of s 37 were the actual trolley collectors or the subcontractor entities. Counsel submitted that it was the latter, and a "service provider" did not need to be a natural person. Counsel also submitted that there was no difficulty with the inclusion of the whole of the amount paid to the subcontractor being treated as deemed wages under s 40. Counsel referred to what Ward CJ said in HRC Hotel at [181] (quoted above at [95]) about the width of the term "in relation to" in s 40. 29. I am not sure, however, about these conclusions. I think there is much to be said for the view that the reference in s 37 to a service provider is to the person who actually provides the service, rather than (in the present case) the subcontractor entity. That seems to me, more consistent with the views of Brereton JA in E Group (No 2) to which I have referred above at [142] (see in particular the parenthetical reference to individual guards as service providers at [7]). 30. Furthermore, the way in which the Commissioner applied s 40 seems to me to have been questionable. The categories of payment listed in s 40 are all payments to or for the benefit of employees in that capacity. But as I have pointed out, it was not necessary for a contractor to employ anyone to discharge the contract. It would be possible where the subcontractor was the trustee of a family trust, for the work to have been done by some family members without pay, with the resulting profit distributed to other family members as beneficiaries. I find it difficult to see how such distributions could properly be treated as deemed wages under s 40 (cf Value Engineering (Australasia) Pty Ltd v Commissioner of State Taxation (WA) (1985) 16 ATR 296 at 303-5 per Brinsden J). 31. Given the way the case has been argued, it is not necessary to go any further into these questions. ALDI trolley collection services 1. The ALDI trolley collection services which are the subject of the assessments were supplied pursuant to five trolley collection contracts between ITM and ALDI. They began on 1 June 2015; 4 July 2016; 1 December 2017 (in fact two separate contracts); and 1 September 2018. ITM had a standard form subcontract for its ALDI contracts, a copy of which was in evidence. 2. ALDI Contracts: There was variable specification of the services to be provided across the different iterations of the ALDI contracts. The 2015 contract merely referred to "Trolley Collection Services". By the 2016 and 2017 contracts, reference was also made to specifications in the corresponding tender, with the 2017 contract also referring to an appendix defining the scope of work. I note that I was unable to locate the 2017 appendix in evidence. By 2018, the description evolved to "The supply of trolley collection services on both an ad hoc or regular basis", along with an annexure entitled "Specifications/Scope of Works". 3. The annexure to the 2018 contract included a note that it was "to be used for all Trolley Collection contracts regardless of the service company contracted to perform the service". It then contained a table describing particular aspects of the work and the corresponding frequency of performing those aspects, along with accompanying notes for particular categories. Some were to be performed every visit: collecting and returning trolleys, as well as maintaining trolley supply; removing rubbish from trolleys, bays and carparks; checking trolleys were of the right kind; checking starter chains and baby straps were in working order and notifying Store Management if in need of replacement. Others were only to be performed "Ad hoc as reported" (street runs; collecting impounded trolleys from the Council, or "as required" (isolating damaged trolleys and notifying ALDI staff of repairs needed). 4. The ALDI contracts contained less stringent subcontracting provisions. As opposed to the Woolworths contracts which required ITM to obtain the written consent of Woolworths before subcontracting, ALDI only required ITM to disclose subcontractor details on request. As with the Woolworths contracts, provision was made that ITM would not be discharged of its responsibilities by subcontracting. Additionally, as with the Woolworths contracts, ITM was required to ensure the suitability of any subcontractors used (the language of "personnel" used in the ALDI contracts), by way of expertise, skill, experience and resources. 5. The ALDI contracts made similar provision to the Woolworths contracts in terms of direction and control, by requiring ITM to comply with all reasonable directions of ALDI. One difference is that the 2015 ALDI contract also required ITM's personnel to comply with reasonable directions of ALDI personnel, but that requirement was not maintained in later iterations. An additional provision across the iterations was that ALDI could direct ITM to alter the services. Further, from 2016 to 2018, ITM was expressly solely responsible for the management, direction and control of its personnel and the manner in which they performed the work. 6. The ALDI and Woolworths contracts alike contained obligations on ITM to perform the services in question with due care and skill. They also both made provision for ITM to indemnify the relevant operator, and required ITM to maintain workers compensation and public liability insurance. 7. A contractual requirement for contractors to use a visitor's book, akin to that in the Woolworths contracts, was only introduced in the 2018 ALDI contract. That contract also introduced requirements for ITM to maintain appropriate systems, policies and procedures, as well as training. 8. The ALDI contracts appear to have not contained corresponding express provisions for the matters addressed in clauses 4, 6.3(c), 7(a), 8, 9, 9A, 10, 11, 12.8, 13.1, 13.2, 13.3, 14.1, 14.3, 16.1, 16.2(b), 16.2(c)(v) or 17.1(b)(ii). So much was put to me in a table provided by counsel for ITM during the course of the hearing, and I did not understand it to be contested by counsel for the Commissioner. 9. ALDI Subcontracts: The ALDI standard form subcontract in evidence appears to be almost identical to the Woolworths standard form subcontract, apart from differences attributable to ensuring compliance with different requirements of ALDI and Woolworths contracts respectively. Those differences included: ITM undertaking under the Woolworths contract (clause 3(g)) to "monitor the Contractor's compliance with the Trolley Agreement and legal compliance" whereas no such undertaking appeared in the ALDI Contract; references to different WH&S systems in clause 5(f); and references to aspects of the respective contracts in clause 5(k), to draw those to the contractor's attention. There was also a different note below clause 4 of the ALDI subcontract (cf the Woolworths clause quoted above at [64]). It provided (emphases in original): NOTE: All Store rates under this Agreement are flat rate — that is, an equal payment for each week/month across the year. There will be variations in the required service across the year and the Contractor will need to adjust the hours worked accordingly. However for peak times such as Christmas and Easter, ITM will endeavour to secure payment for extra paid hours — otherwise the normal roster only is to be worked. 1. I have discussed the schedule to the ALDI subcontract above at [69], where I presumed that the schedule to the Woolworths subcontract (which was not in evidence) took a similar form. 2. Conclusions: Counsel for the Commissioner accepted that the ALDI contracts were "less prescriptive" than the Woolworths ones; I did not understand counsel to contend that the Commissioner's case under the ALDI contracts was stronger than the Commissioner's case under the Woolworths contracts. The same conclusions I have reached about the Woolworths contracts apply to the ALDI contracts. ALDI cleaning services 1. The cleaning services supplied by ITM to ALDI were supplied pursuant to informal arrangements constituted by exchange of emails. This began in May 2015. Services were provided for stores at Gunnedah and Tamworth. Provisions of services ceased at Tamworth in November 2015. A formal written contract was entered into for Gunnedah which covered the period from July 2016 to September 2018. This contract was apparently a standard form ALDI contract for the provision of services. The schedule to the contract specified that there were to be two visits per week, with a total of 6 hours per week. That appears to be consistent with a schedule indicating the position in Gunnedah prior to the formal contract. One of the emails also refers to 10 hours per week in Tamworth. In evidence is also an ALDI Cleaning Checklist specifying various areas, cleaning details and frequencies. 2. The decision of Kunc J in JP Property Services concerned the provision of cleaning services for a supermarket. It is thus apparently in point. But counsel for the Commissioner pointed out that the services in question were provided after hours whereas the services in the present case were (apparently) provided during usual working hours. 3. Counsel for the Commissioner also relied upon the decision of Ward CJ in Bayton, noting that, in that case, which concerned hotel, commercial, and aged care/health cleaning services, her Honour reached the opposite conclusion from Kunc J. Counsel submitted that some of her Honour's reasoning was inconsistent with some of that employed by Kunc J. For their part, counsel for ITM contended that her Honour's decision was distinguishable: they noted in particular that the ITM cleaners used their own distinctive uniform whereas that was not necessarily the case in Bayton. Also, ITM assumed sole responsibility for management, direction, and control of the employees, who were not directed by ALDI as the client. 4. I agree that there may be some tension between the two decisions. But Ward CJ did not directly consider Kunc J's conclusion or express disagreement with it. Additionally, the fact that the cleaning services were provided after hours was not the only element in Kunc J's decision; his Honour also relied on the fact that the cleaning was not done to protect members of the public while they were shopping and therefore was not directly related to the sale of goods. 5. In these circumstances, I think the best course for me is to apply the decision of Kunc J of JP Property Services. In my view, that means rejecting the assessments so far as they relate to the ALDI cleaning services. IGA trolley collection services 1. In evidence was a trolley collection contract between a company called Walleyfish Pty Ltd and Franklins (the previous owner of the IGA stores) in 1999. This contract referred only to Franklins' Wentworthville store in Sydney. According to Mr Vickery, this was the contract under which cleaning services were provided to Franklins (he did not explain the role of Walleyfish, or why the contract only referred to the Wentworthville store). 2. Mr Vickery stated that IGA took over and rebranded the Franklins stores in 2001 and ITM took over the provision of trolley collection services at some point thereafter. During the relevant period, such services were provided for two IGA stores, one at Summer Hill in Sydney and one at Coffs Harbour. No formal contract was entered into between IGA and ITM. 3. There was no standard form IGA subcontract. Mr Vickery stated that instead the subcontractors (who were apparently subcontractors under Woolworths or ALDI contracts) were asked to sign a new schedule which included reference to the relevant IGA store. It is difficult to see how these "subcontracts" could have been effective in their terms, because there was no head contract for them to pick up. 4. I do not think that it is necessary to describe the terms of the Walleyfish contract in detail. I do not think the evidence actually establishes that the terms of that contract were in fact novated between ITM and IGA. In any event, counsel for the Commissioner did not contend for a more favourable result under the Walleyfish contract (or a basic oral contract, if there was no novation) than under the Woolworths contracts. My conclusions under the Woolworths contracts therefore apply here as well. Conclusions and orders 1. I have concluded that: 1. the trolley collection services provided to Woolworths, ALDI and IGA were not services procured under an employment agency contract within the meaning of that term in s 37 of the Act; 2. nor were the cleaning services provided to ALDI. 1. These conclusions mean that the assessments should be revoked. On the face of it, costs should follow the event in the ordinary way, but I will reserve costs to allow the parties to seek any different order. 2. The orders of the Court are: 1. Revoke the assessments made by the defendant that were notified to the plaintiff by: 1. the assessment notice for the financial year ended 30 June 2016 issued on 19 October 2020 with assessment number 11294408; 2. the assessment notice for the financial year ended 30 June 2017 issued on 19 October 2020 with assessment number 11294413; 3. the assessment notice for the financial year ended 30 June 2018 issued on 19 October 2020 with assessment number 11294415 4. the assessment notice for the financial year ended 30 June 2019 issued on 19 October 2020 with assessment number 11294418 5. the assessment notice for the financial year ended 30 June 2016 issued on 26 May 2021 with assessment number 11630588 6. the assessment notice for the financial year ended 30 June 2017 issued on 26 May 2021 with assessment number 11630590 7. the assessment notice for the financial year ended 30 June 2018 issued on 26 May 2021 with assessment number 11630592; and 8. the assessment notice for the financial year ended 30 June 2019 on 26 May 2021 with assessment number 11630597. 1. Costs reserved. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 May 2023