New South Wales Court of Appeal CITATION: Chief Commissioner of State Revenue v Tasty Chicks Pty Ltd & Ors [2010] NSWCA 326 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S): 09/09/2010 JUDGMENT DATE: 21 December 2010 JUDGMENT OF: Giles JA at 1; Macfarlan JA at 2; Handley AJA at 3 (1) Appeal allowed with costs. (2) Judgment and orders of Gzell J set aside. DECISION: (3) In lieu thereof order that the appeal to the Supreme Court from the assessments of the Chief Commissioner be dismissed with costs. (4) The respondents to have certificates under the Suitors Fund Act in respect of the costs in this Court. [The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] CATCHWORDS: PAY ROLL TAX - Grouping - De-grouping - PAY ROLL TAX - De-grouping - Criterion - Satisfaction of Commissioner - Court not entitled to substitute its opinion - TAXATION STATE - Appeal to Supreme Court - Taxation Administration Act s 97 - Appeal in right and proper sense - appellant must establish error - Court not entitled to substitute its opinion Administrative Decisions Tribunal Legislation Amendment (Revenue) Act 2000 LEGISLATION CITED: Payroll Tax Act 1971 Stamp Duties Act 1920 Taxation Administration Act 1996 CATEGORY: Principal judgment Affinity Health Ltd v Chief Commissioner of State Revenue [2005] NSWSC 663, 205 ATC 4637 Avon Downs Pty Ltd v FCT [1949] HCA 26, 78 CLR 353 Ballarat Brewing Co Ltd v Commissioner of Payroll Tax (Vic) 79 ATC 4452 Builders Licensing Board v Sperway Constructions (Syd) Pty Ltd [1976] HCA 62, 135 CLR 616 Commissioner of Stamp Duties v Garrett F Hunter Pty Ltd (1997) 69 SASR 275 Commissioner of State Revenue (Vic) v Muir Electrical Co Pty Ltd [2003] VSCA 112, 8 VR 200 FCT v Brian Hatch Timber Co (Sales) Pty Ltd [1972] HCA 73, 128 CLR 28 CASES CITED: Kolotex Hosiery (Aust) Pty Ltd v FCT [1975] HCA 5, 132 CLR 535 MacCormick v FCT [1945] HCA 10, 71 CLR 283 Mickelberg v R [1989] HCA 35, 167 CLR 259 Muir Electrical Co Pty Ltd & Ors v Commissioner of State Revenue [2001] VSCA 86, 4 VR 70 Pearse v Commissioner of Stamp Duties [1954] AC 91 Tasty Chicks Pty Ltd & Ors v Chief Commissioner of State Revenue [2009] NSWSC 1007 Tsai Mei-Lan Lee v Commissioner of State Revenue (NSW) 2000 ATC 4600 Victorian Stevedoring and General Contracting Co Pty Ltd v Dignan [1931] HCA 34, 46 CLR 73 A: Chief Commissioner of State Revenue 1R: Tasty Chicks Pty Ltd PARTIES: 2R: Angelo Transport Pty Ltd 3R: Souris Holdings Pty Ltd 4R: Minas Souris 5R: Jenny Souris FILE NUMBER(S): CA 08/277732 COUNSEL: A: GC Lindsay SC / I Latham Rs: CC Branson QC / PM Fraser SOLICITORS: A: IV Knight Crown Sol Rs: Legal Ease Lawyers LOWER COURT JURISDICTION: Supreme Court - Equity Division LOWER COURT FILE NUMBER(S): SC 1769/08 LOWER COURT JUDICIAL OFFICER: Gzell J LOWER COURT DATE OF DECISION: 25/09/2009 LOWER COURT MEDIUM NEUTRAL CITATION: [2009] NSWSC 1007 - 1 - IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 08/277732 GILES JA MACFARLAN JA HANDLEY AJA TUESDAY 21 DECEMBER 2010 CHIEF COMMISSIONER OF STATE REVENUE v TASTY CHICKS PTY LTD & Ors HEAD NOTE On 4 September 2007 the Chief Commissioner of State Revenue issued assessments for Pay Roll Tax for the years ended 30 June 2002 to 30 June 2007 in which he included Tasty Chicks Pty Limited and Angelo Transport Pty Limited (the taxpayers) in a group with a partnership and three other companies. The respondents objected to the inclusion of the taxpayers in the group and when their objections were disallowed they appealed to the Supreme Court pursuant to s 97 of the Taxation Administration Act 1996. The assessments related to three periods governed by different legislative provisions, the first from 1 July 2001 to 30 June 2003, the second from 1 July 2003 to 30 June 2005, and the third from 1 July 2005 to 30 June 2007. The respondents challenged the Commissioner's decision in the first period to include the taxpayers in the group and not to de-group them. They accepted the Commissioner's decisions in the second and third periods to include the taxpayers in the group, but challenged his decisions not to de-group them. The Commissioner included the taxpayers in the group during the first period pursuant s 16C(a) and (b) of the Pay Roll Tax Act. Paragraph (a) applied to employees of an employer who performed duties solely or mainly for or in connection with "a business carried on by that employer and another person". Paragraph (b) applied where an employer has "in respect of the employment or the performance of duties by one or more employees an agreement … with another person relating to a business carried on by that other person." De-grouping in respect of the three periods depended on the Chief Commissioner being "satisfied" in terms of the relevant legislation of various matters, essentially that the relevant businesses were carried on substantially independently of the other members of the group. The taxpayers' appeal was heard by Gzell J who held that the Commissioner was not entitled to group the taxpayers in the first period. In respect of the second and third periods where grouping was not challenged he followed his decision in Affinity Health Ltd v Chief Commissioner of State Revenue (2005) 205 ATC 4637, and held that he was entitled to re-exercise the discretion under the de-grouping provisions and substituted his opinion for that of the Commissioner. On that re-exercise he held that the taxpayers should be de-grouped. On appeal HELD: (1) In an appeal to the Supreme Court under s 97 of the Taxation Administration Act the Court was not entitled to re-exercise the discretion under the de-grouping provisions and substitute its decision for that of the Commissioner; (2) The appeal was an appeal in its right and proper sense, and since the Commissioner's satisfaction was the relevant criterion, the question for the Court was whether he had exercised his discretion according to law: MacCormick v FCT 71 CLR 283, 308; Avon Downs Pty Ltd v FCT 78 CLR 353, 360, 362-3 applied; (3) Affinity Health Pty Limited v Chief Commissioner of State Revenue (above) overruled; (4) The Commissioner was not entitled to group in the first period pursuant to s 16C(a): Commissioner of State Revenue v Muir Electrical Co Pty Limited (No 2) (2003) 8 VR 200 followed; (5) The Commissioner was entitled to group in the first period pursuant to s 16C(b): Muir Electrical Co Pty Limited v Commissioner of State Revenue (No 1) (2001) 4 VR 70 distinguished; (6) The Commissioner's refusal to be satisfied of the relevant matters under the de-grouping provisions was not vitiated by any error of the kinds identified by Dixon J in Avon Downs Pty Limited v FCT (above); (7) The Commissioners' appeal should be allowed. ORDERS (1) Appeal allowed with costs. (2) Judgment and orders of Gzell J set aside. (3) In lieu thereof order that the appeal to the Supreme Court from the assessments of the Chief Commissioner be dismissed with costs. (4) The respondents to have certificates under the Suitors Fund Act in respect of the costs in this Court. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 08/277732 GILES JA MACFARLAN JA HANDLEY AJA TUESDAY 21 DECEMBER 2010 CHIEF COMMISSIONER OF STATE REVENUE v TASTY CHICKS PTY LTD & Ors Judgment 1 GILES JA: I agree with Handley AJA. 2 MACFARLAN JA: I agree with Handley AJA. 3 HANDLEY AJA: These appeals from the decision of Gzell J: Tasty Chicks Pty Ltd & Ors v Chief Commissioner of State Revenue [2009] NSWSC 1007, involve the construction and application of the grouping and de-grouping provisions of the Payroll Tax Act 1971 and the Taxation Administration Act 1996 (the Administration Act) as in force at relevant times between 1 July 2001 and 30 June 2007. The Commissioner applied the grouping provisions to treat the respondents and others as a group, and refused to de-group Tasty Chicks Pty Ltd and Angelo Transport Pty Ltd (the taxpayers). 4 The issue arises because of the tax threshold of $600,000 in Sch 4 cll 7 & 11 of the Payroll Tax Act which applied in the relevant years. Prima facie each taxpayer has the benefit of this threshold but the grouping provisions are designed to counter tax avoidance through the use of additional entities attracting additional thresholds. The de-grouping provisions are available where, it would be unreasonable to apply the grouping provisions. 5 On 4 September 2007 the Commissioner issued assessments to the respondents, listed below, treated as part of a group, for the years ending 30 June 2002, 2003, 2004, 2005, 2006, and 2007 (blue 1/311-356): M & J Souris Partnership (the Firm), Tasty Chicks Pty Ltd, Angelo Transport Pty Ltd, and Souris Holdings Pty Ltd. 6 The members of the Firm were Minas and Jenny Souris. The group also included Pelagia Investments Pty Ltd and KD Land Pty Ltd. The notice of objection dated 27 September 2007 (1/100) accepted the grouping of the Firm, Souris Holdings Pty Ltd, Pelagia Investments Pty Ltd and KD Land Pty Ltd, but objected to the inclusion of Tasty Chicks and Angelo Transport. 7 The assessments relate to three periods, 1 July 2001 to 30 June 2003, 1 July 2003 to 30 June 2005, and 1 July 2005 to 30 June 2007. Those for the first period are governed by the Payroll Tax Act 1971 ss 16A, 16C, 16E, and 16H. The assessments for the second are governed by ss 16A, 16B, and 16C of the Payroll Tax Act, and ss 106H, and 106K of the Administration Act. The assessments for the third are governed by ss 16A, 16B, and 16C of the Payroll Tax Act, and ss 106E, 106H, and 106K of the Administration Act. 8 The respondents challenged the Commissioner's decision to include the taxpayers in the group during the first period. Gzell J held that the Commissioner was not entitled to apply the grouping provisions, and did not consider de-grouping. 9 The application of the grouping provisions to the taxpayers during the second and third periods was not challenged, and the appeals from those assessments turned on the applicable de-grouping provisions. 10 Gzell J held that he was entitled to re-exercise the discretion under the de-grouping provisions and substitute his opinion for that of the Commissioner, following his decision in Affinity Health Ltd v Chief Commissioner of State Revenue [2005] NSWSC 663, 205 ATC 4637 (Affinity Health). On his re-exercise of the discretion he held that the taxpayers should be de-grouped. The assessments were set aside (red 10-12) and the Commissioner was directed to reassess the liability (if any) of the taxpayers in accordance with the Court's decision. 11 The Commissioner challenged Affinity Heath and submitted that an appeal from his decision under the de-grouping provisions had to be determined in accordance with the principles stated by Dixon J in Avon Downs Pty Ltd v FCT [1949] HCA 26, 78 CLR 353 (Avon Downs). The respondents argued that this ground was not open to the Commissioner in this Court because he had not challenged Affinity Health below. This is debateable but the question is one of law, indeed of power, and, since it could not have been answered by evidence, it can be raised on appeal for the first time. 12 Avon Downs was applied by Gray J in Ballarat Brewing Co Ltd v Commissioner of Payroll Tax (Vic) 79 ATC 4452 to the refusal to apply comparable de-grouping provisions in the Victorian Act. Gzell J distinguished these cases because of differences in the legislation. 13 The Commissioner's challenge to Affinity Health is fundamental to the appeal in respect of the second and third periods, and will be fundamental in respect of the first should this Court find that the relevant grouping provisions applied. 14 The Court should therefore determine at the outset the nature of the appeal under s 97 of the Administration Act. 15 The relevant provisions of the Administration Act did not change during the periods under consideration. Section 97 relevantly provides: "(1) A taxpayer may apply to the Supreme Court for a review of the decision of the Chief Commissioner that has been the subject of an objection under Div 1 if: (a) The taxpayer is dissatisfied with the Chief Commissioner's determination of the taxpayer's objection, or (b) … (4) A review by the Supreme Court is taken to be an appeal for the purposes of the Supreme Court Act 1970 and the regulations and rules made under that Act, except as otherwise provided by that Act or those regulations or rules." 16 Section 96 dealing with applications for review by the Administrative Decisions Tribunal (the Tribunal) relevantly provides: "(1) A taxpayer may apply to the Administrative Decisions Tribunal for a review of the decision of the Chief Commissioner that has been the subject of an objection under Div 1 if: (a) The taxpayer is dissatisfied with the Chief Commissioner's determination of the taxpayer's objection, or (b) …" 17 Section 96 in the 1996 Act provided for an appeal to the Supreme Court and there was no right to a review by the Tribunal. This was changed by the Administrative Decisions Tribunal Legislation Amendment (Revenue) Act 2000 with effect from 1 July 2001. That Act established the Revenue Division of the Tribunal (Pt 3C of Sch 2) with functions under the Administration Act, and amended the latter by substituting a new Div 2 of Pt 10 which included ss 96 and 97 substantially in their present form. It also included s 101 which provides: "The court or tribunal dealing with the application for review may do any one or more of the following: (a) confirm or revoke the assessment or other decision to which the application relates, (b) make an assessment or other decision in place of the assessment or other decision to which the application relates, (c) make an order for payment to the Chief Commissioner of any amount of tax that is assessed as being payable but has not been paid, (d) remit the matter to the Chief Commissioner for determination in accordance with its finding or decision, (e) make any further order as to costs or otherwise as it thinks fit. (2) Nothing in this section limits the application of the following provisions of the Administrative Decisions Tribunal Act 1997 in respect of an application for review before the Administrative Decisions Tribunal: (a) Division 3 of Part 3 of Chapter 5, (b) Section 88" 18 Thus the Supreme Court on an appeal and the Tribunal on a review have identical powers, a matter on which Gzell J placed considerable reliance in Affinity Health and in this case. 19 Parliament did not spell out the nature of the appeal to the Court conferred by s 97, but there could be no doubt about the nature of the review by the Tribunal conferred by s 96. Section 63 of the Tribunal Act provides: "(1) In determining an application for a review of a reviewable decision, the Tribunal is to decide what the correct and preferable decision is having regard to the material then before it, including the following: (a) any relevant factual material, (b) any applicable written or unwritten law. (2) For this purpose, the Tribunal may exercise all of the functions that are conferred or imposed by any relevant enactment on the administrator who made the decision. (3) In determining an application for the review of a reviewable decision, the Tribunal may decide: (a) to affirm a reviewable decision, or (b) to vary the reviewable decision, or (c) to set aside the reviewable decision and make a decision in substitution for the reviewable decision it set aside, or (d) to set aside the reviewable decision and remit the matter for reconsideration by the administrator in accordance with any directions or recommendations of the Tribunal." 20 Section 101(2) of the Administration Act provides that the section does not limit the application of Div 3 of Pt 3 of Ch 5 of the Tribunal Act which includes s 63. Thus the Tribunal is entitled to substitute its opinion for that of the Commissioner and to act on the material before it without having to identify error by the Commissioner. 21 In Affinity Health and in this case Gzell J held that s 101 of the Administration Act had so far assimilated the roles of the Court and the Tribunal that the Court had conferred on it, by implication, the powers expressly conferred on the Tribunal by s 63. This flowed from s 101(1) of the Administration Act which gave the same powers to both and ss 96 and 97 which gave taxpayers the right to have decisions of the Commissioner reviewed by the Supreme Court or by the Tribunal. 22 The result is a little surprising as it involves treating s 101(1) of the Administration Act as conferring on the Supreme Court by implication the additional powers conferred expressly on the Tribunal by s 63 of the Tribunal Act. 23 The reasons of Gzell J for concluding that the Court was entitled to substitute its opinion for that of the Commissioner, without having to find error, were: "148. In Affinity Health Ltd v Chief Commissioner of State Revenue (NSW) [2005] NSWSC 663; 205 ATC 4637, I pointed to the abrogation of a distinction in the powers of the Administrative Decisions Tribunal on the one hand and the Supreme Court of New South Wales on the other in section 101 (1) of the … Administration Act . I concluded at [57] – [58] that the Court was empowered to exercise the Chief Commissioner's discretion if it disagreed with it: 'But against those considerations, is the clear language of … s 101(1). It provides that the Court or the Tribunal may do any one or more of the specified actions. And that clear language is not to be cut down, in my view, by any of the considerations of the functions and purpose of the Tribunal. In my view the Court is empowered by … s 101(1) to take any of the specified actions stated therein and is not limited to a review of the Chief Commissioner's exercise of discretion in terms of the principles stated by Dixon J in Avon Downs or the principles in House v R (1936) 55 CLR 499, 504-5. I propose to consider afresh the exercise of discretion under the Duties Act 1997 s 119(2).' 149. Reference was made to Ballarat Brewing Co Ltd v Commissioner of Payroll Tax (Vic) 79 ATC 4452, 4460 where Gray J adopted the approach of Dixon J in Avon Downs to the exercise of the discretion of the Victorian Commissioner of Pay-roll Tax with respect to the grouping of the taxpayer with another company. 150. It was appropriate for his Honour to do so. The legislation with which he was concerned adopted the same dichotomy between the powers of the Court and the powers of a Tribunal that were in the provisions of the Income Tax Assessment Act with which Dixon J was concerned." 24 Avon Downs [1949] HCA 26, 78 CLR 353 was an appeal from the Commissioner's decision to deny the taxpayer a deduction for earlier year losses because it had not established certain matters "to his satisfaction". Dixon J said at 360, 362-3: "But it is for the commissioner, not for me, to be satisfied of the state of the voting power at the end of the year of income. His decision, it is true, is not unexaminable. If he does not address himself to the question which the sub-section formulates, if his conclusion is affected by some mistake of law, if he takes some extraneous reason into consideration or excludes from consideration some factor which should affect his determination, on any of these grounds his conclusion is liable to review … I am not prepared to find that the commissioner's refusal to be satisfied upon the issue formulated by s 80(5) is due to any such misapprehension, mistake, misconception, unreasonableness or miscarriage of judgment as authorised me to interfere and set aside his conclusion." 25 Dixon J did not refer to the position in the Taxation Boards of Review, the relevant predecessor of the Administrative Appeals Tribunal, or to the powers of the Court on taxation appeals. However he had considered these questions in MacCormick v FCT [1945] HCA 10, 71 CLR 283, 307: "This Court has, I think, adopted the general view, in dealing with Federal legislation in pari materia , that references to the opinion, judgment, discretion and satisfaction of the Commissioner are intended to make his decision the criterion of the specific matter indicated, subject usually to reconsideration by a Board of Review. The result is that in such cases the Court on appeal does not substitute its decision for that of the Commissioner, but considers only whether he has proceeded according to law and has exercised his judgment or discretion unaffected by extraneous or relevant considerations or any misconception or misapplication of the law." 26 Dixon J's analysis in Avon Downs was applied in FCT v Brian Hatch Timber Co (Sales) Pty Ltd [1972] HCA 73, 128 CLR 28, 40, 52-3, 56-7, 59-60, and 62 and in Kolotex Hosiery (Aust) Pty Ltd v FCT [1975] HCA 5, 132 CLR 535, 567-8. 27 The reasoning of Dixon J in Avon Downs does not depend on the nature of the orders which the Court could make on a successful appeal, but on the nature of the appeal. An appeal "in the proper sense" is the right of entering a superior court to redress the error of the court below: Victorian Stevedoring and General Contracting Co Pty Ltd v Dignan [1931] HCA 34, 46 CLR 73, 109 per Dixon J. In Builders Licensing Board v Sperway Constructions (Syd) Pty Ltd [1976] HCA 62, 135 CLR 616, 69 Mason J applied this reasoning to an appeal from an administration decision to a court. He said: "An appeal is not a common law proceeding. It is a remedy given by a statute … Upon an appeal stricto sensu the question considered is whether the judgment complained of was right when given … that is whether the order appealed from was right on the material which the lower court had before it. An appeal stricto sensu is to be distinguished from an appeal by way of rehearing …". 28 Mason J repeated this analysis in Mickelberg v R [1989] HCA 35, 167 CLR 259, 267-8, 269 where he referred to "an appeal in its right and proper sense" which he contrasted with an appeal by way of rehearing. 29 The nature of the appeal to the Supreme Court under s 97(4) of the Administration Act depends on that section, and related provisions of the Supreme Court Act. Section 97(4) provides that: "A review by the Supreme Court is taken to be an appeal for the purposes of the Supreme Court Act". Section 19(2) of the latter provides that "For the purposes of this Act … proceedings in the Court under an Act … are an appeal if described in that Act … as an appeal". 30 Section 75A(1) applies "to an appeal to the Court" and, "subject to any Act" (subs (4)), where (subs (5)) "the decision … under appeal has been given after a hearing, the appeal shall be by way of rehearing." The Commissioner received and considered submissions from the taxpayers' agents before making the assessments under challenge, but there was no "hearing" in any ordinary sense. 31 The right to apply to the Supreme Court "for a review" of the Commissioner's decisions which, by s 97(4), is taken to be "an appeal" is within ss 19(2)(a) and 75A(1) of the Supreme Court Act but is not an appeal by way of rehearing within s 75A(5). The Court was not referred to any other provision by statute or delegated legislation which made the appeal under s 97 a rehearing. 32 The powers of the Court under s 101 of the Administration Act, once it decides to intervene, do not determine, or in this case throw light on the logically anterior question concerning the nature of the appeal itself. Those powers are appropriate whether the appeal is one in its strict and proper sense or a rehearing. In my judgment therefore the appeal under s 97 is an appeal in its "right and proper sense", that is a right to redress error by the Commissioner on the materials that were before him at the time, and is not a rehearing or a hearing de novo. 33 It follows that the principles stated by Dixon J in Avon Downs apply in appeals under s 97 from the exercise of powers and discretions which depend on the Commissioner's state of mind. Affinity Health, in so far as it decided otherwise, should be overruled. On such an appeal the Court must consider whether the appellant has established that the Commissioner erred on the materials that were before him. Where, as in this case, the Pay-roll Tax Act makes the taxpayer's liability depend on the Commissioner being "satisfied" that a fact exists, the question for the Court on appeal is whether the Commissioner's decision to the contrary was vitiated by error of the kinds referred to by Dixon J. 34 Decisions on the former appeal provisions in ss 124 and 124A of the Stamp Duties Act 1920 such as Pearse v Commissioner of Stamp Duties [1954] AC 91 and Tsai Mei-Lan Lee v Commissioner of State Revenue (NSW) 2000 ATC 4600 are not relevant to the construction of the very different provisions in the Administration Act, particularly since s 124A(1), considered in the second of those cases, provided that an appeal to the Court was "by way of rehearing." Grouping in the first period: s 16C(a) 35 The primary grouping provision was s 16C of the Pay-roll Tax Act which provided: "For the purposes of this Act, where: (a) an employee of an employer, or two or more employees of an employer, performs or perform duties solely or mainly for or in connection with a business carried on by that employer and another person or other persons, or by another person or other persons, or (b) … that employer and: (c) each such other person, or (d) both or all of those other persons, constitute a group." 36 Liability to be grouped under this section depends on the objective facts, and not on the Commissioner's opinion or state of mind about those facts. The Court exercising appellate jurisdiction under s 97 of the Administrative Act is therefore entitled and bound to find the facts on the evidence before it and is not confined to the material before the Commissioner. 37 Gzell J held that the singular "a business" in para (a) (and in para (b) [61] below) did not include the plural because a contrary intention excluded the operation of s 8(b) of the Interpretation Act 1987. He followed Commissioner of State Revenue (Vic) v Muir Electrical Co Pty Ltd [2003] VSCA 112, 8 VR 200 (Muir Electrical No 2) where the Commissioner had assessed as a group (ibid at 202) a service company which also operated two retail stores, and 14 retailers to whom it provided banking, administration, accounting and ancillary services. The Commissioner conceded that his assessment could only be supported if the singular "a business", in the section equivalent to s 16C, included the plural (ibid at p 205). 38 Callaway JA, with whom Ormiston and Eames JJA agreed said at 207, 208: "… parliamentary counsel did not rely on the Interpretation of Legislation Act very much or at all in drafting … s 9A. [It is] replete with expressions such as 'an employee … or two or more employees', 'another person or other persons', 'a director or directors' and 'the trustee or trustees'. The expression 'a business' in para (c) stands in contrast with both the opening words ('an employee of an employer is, or two or more employees of an employer are') and the immediately succeeding reference to 'another person or other persons'. … The apparently careful choice between the use of both the singular and the plural for some expressions and the use of the singular only for other expressions suggests a contrary intention of the kind referred to … There is more than the mere fact that the reading of words suggests an emphasis on singularity as opposed to plurality. … The plain meaning of the present para (c) is that it applies only in relation to a business in the singular. It is not just a matter of impression. The factors referred to above leave the matter in little doubt." 39 Mr Lindsay SC, who appeared with Mr Latham for the Commissioner, did not squarely challenge the decision in Muir Electrical No 2, but invited the Court to apply the decision of Doyle CJ, sitting as a single judge, in Commissioner of Stamp Duties v Garrett F Hunter Pty Ltd (1997) 69 SASR 275. 40 Section 16C(a) and the corresponding provisions in the Victorian and South Australian Acts considered in those cases are indistinguishable. Callaway JA did not refer to the South Australian decision which does not appear to have been cited. 41 Doyle CJ upheld the grouping of two incorporated medical practices with a service company which provided serviced consulting rooms, secretarial, and administrative services to the practice companies. 42 He held (ibid at 282) that a secretary employed by the service company who spent most of her time working for one of the doctors was "performing duties mainly for or in connection with the business carried on" by that doctor's service company. He rejected a submission that "the performance of duties for the service company would be a complete description" of what she was doing. 43 He had said earlier (at p 281): "If an employee of [the service company] performs duties 'solely or mainly for or in connection with a business carried on by' that practice company, then [the service company] and that company constitute a group. I approach the matter thus because there is no suggestion that an employee of [the service company] performed duties in connection with a business carried on by [the service company] and a practice company jointly." 44 It is clear that Doyle CJ did not consider the argument accepted by the Victorian Court of Appeal in Muir Electrical (No 2) that the equivalent of s 16C(a) required a finding that the employee performed duties in connection with a single business carried on by the two entities. 45 In these circumstances the Court should affirm the decision of Gzell J to follow Muir Electrical (No 2) where that argument was fully considered. In any event that decision appears, with respect, to be correct. 46 Gzell J found [92], [93] that in providing services to the Firm employees of Tasty Chicks performed duties in connection with both businesses, as did employees of Angelo Transport. He found [94] that Muir Electrical No 2 prevented the Commissioner grouping those companies with the Firm if they carried on different businesses. 47 His Honour noted [98] that the Firm had no ownership interest in either taxpayer, and did not control their businesses. He held that the purpose of the grouping provisions was to eliminate the practice of splitting of business activities among separate employers. They did not extend to "grouping independent service providers with their customers" and that "splitting requires ultimately common ownership or control of the service provider and its customer". 48 Section 16C(a) should be interpreted in accordance with its terms without any pre-supposition that it is directed to the "splitting" of an existing business. Although common ownership and control of both businesses would support a finding that the section applied there is, in my judgment, no justification for reading in any such requirement. A partnership and at least some types of joint ventures would also be within the section. 49 Paragraph (a) applies where employees perform duties "solely or mainly for or in connection with a business carried on by that employer and another person". This focuses attention on whether employees of Tasty Chicks or Angelo Transport, as the case may be, performed duties wholly or mainly for "a business" carried on by Tasty Chicks and the Firm, or Angelo Transport and the Firm. 50 Gzell J found [34] that 45% of Tasty Chicks' business was for the Firm in New South Wales, 20% for the Firm in Victoria, 30% for Pelagia Investments, 4% for Angelo Transport, and 1% for its "independent customers". As mentioned there was no challenge to the Commissioner's decision to group the Firm with Pelagia Investments. 51 Minas Souris occasionally lent funds to Tasty Chicks [22] generally for periods of less than 12 months. The Firm guaranteed its overdraft when the proprietors' house burnt down. Its office was on the first floor of premises at Marrickville which it leased from Souris Holdings Pty Ltd at a commercial rent [5]. Its landlord was admittedly part of the group. 52 Tasty Chicks provided secretarial, accounting, sales, marketing and clerical services for its clients [3]. It handled orders for chicken products to be supplied by the Firm [24], and generated the packing slips, labels for the boxes containing the products supplied by the Firm, and the invoices to their customers. The latter were entered in the debtor's ledger maintained by Tasty Chicks for the Firm. 53 Tasty Chicks managed the Firm's banking and maintained its creditors' ledger [28]. It checked invoices from creditors and included them in daily financial reports for Minas Souris. It also prepared cheques for his signature. 54 It managed the Firm's payroll from time sheets received from the Firm [29]. 55 It provided Minas Souris each day with financial reports which included cash flows and creditors due for payment. Its staff had authority to sign cheques and make electronic payments on behalf of the Firm when Minas Souris was not available [32]. 56 The question is whether the Court should find that the Firm and Tasty Chicks carried on "a business". The Firm and Pelagia Investments carried on "a business" in New South Wales, Victoria and Queensland, and employees of Tasty Chicks performed duties "solely or mainly" for that business. 57 Although 95% of Tasty Chicks business was for the Firm, and it undertook essential functions, it had its own business, and only an indirect interest in the business of the Firm. 58 A finding that "a business [was] carried on by" Tasty Chicks and the Firm is not fairly open on the evidence and the primary findings. The businesses were highly integrated, but there were two businesses in fact and in law. The outsourcing of back office functions to Tasty Chicks did not bring the case within s 16C(a). Tasty Chicks did not, in any sense, carry on the same business as that carried on by the Firm with its employees. The Firm did not, in any sense, carry on the same business carried on by Tasty Chicks with its employees. 59 The same reasoning necessarily applies to Angelo Transport and the Firm. The decision of Gzell J that the assessments for the first period could not be supported under s 16C(a) was correct. Grouping in the first period: s 16C(b) 60 The services performed by Tasty Chicks for the Firm and Angelo Transport were provided pursuant to written agreements which the Commissioner considered brought the parties within s 16C(b). 61 Section 16C(b) provided: "For the purposes of this Act, where: (a) … (b) an employer has, in respect of the employment of, or the performance of duties by, one or more of his or her employees, an agreement, arrangement or undertaking (whether formal or informal, whether expressed or implied and whether or not the agreement, arrangement or undertaking includes provisions in respect of the supply of goods or services or goods and services) with another person or other persons relating to a business carried on by that other person or those other persons, whether alone or together with another person or other persons, that employer and: (c) each such other person, or (d) both or all of those other persons, constitute a group." 62 Gzell J found [35] that Victoria Phylactou, one of the proprietors of Tasty Chicks, obtained a precedent for the deeds of agreement it used. Agreements in this form were signed each year by Tasty Chicks and the Firm (2/483), and by Tasty Chicks and Angelo Transport (2/566). 63 Gzell J summarised the provisions of the deed [37], [38]: "37. The deeds of agreement between Tasty Chicks and [the Firm] provided that Tasty Chicks and its employees should faithfully and to the best of their skill and ability conduct and manage [the Firm's] business as Tasty Chicks should direct and they should use their best endeavours to promote and improve the same. Tasty Chicks covenanted that it and its employees would not during the period of Tasty Chicks employment engage or be interested in, financially or otherwise, any business of a similar nature to that carried out by [the Firm]. Tasty Chicks was subject to such orders and directions as might be given to it by [the Firm] from time to time all of which orders and directions Tasty Chicks should promptly and faithfully obey, observe and comply with. 38. The deeds of agreement provided that Tasty Chicks should have authority to draw against the bank account of [the Firm] for petty cash and wages in respect of staff as well as its own remuneration. Tasty Chicks had, subject to the directions of [the Firm], the general management of all persons employed in or about the business of [the Firm] provided that it could not dismiss without cause or increase wages without the consent of [the Firm] except in accordance with award increases." 64 The Judge then made the following finding [39]: "39. Those provisions in the deed of agreement were honoured in the breach rather than the observance. [The Firm] paid an amount each month into Tasty Chicks' bank account to cover the monthly amount of the management fee. Tasty Chicks and its employees did not manage the business of [the Firm]. The latter had its own employees managed by Minas and Jenny Souris. Tasty Chicks provided administrative services to [the Firm]. [The Firm] did not exercise any restraint of trade against Tasty Chicks and its employees … Tasty Chicks did not draw against [the Firm's] bank account for petty cash, wages and its remuneration. Victoria and Sam Phylactou had authority to sign cheques and to make electronic funds transfers only when Minas Souris was not available. Tasty Chicks did not exercise general management over the employees of [the Firm]." 65 Gzell J followed the decision of the Victorian Court of Appeal in Muir Electrical Co Pty Ltd & Ors v Commissioner of State Revenue [2001] VSCA 86, 4 VR 70 (Muir Electrical (No 1)) on an equivalent provision. Callaway JA, giving the principal judgment, said at pp 75-76 [9], [10], [11], [12]: "The difference between the parties was as to whether the words 'in respect of the employment of, or the performance of duties by, one or more employees' were … satisfied … [Counsel for the taxpayer] submitted that for para (d) to apply, the agreement relating to the other person's business must also be an agreement in respect of the performance of duties by one or more of the employer's employees … In my opinion [the] submission [of counsel for the taxpayer] should be accepted … Paragraph (d) does not speak of an agreement that has a particular result but of an agreement that is in respect of a particular subject matter … it cannot be said that the supplemental deed is an agreement in respect of the performance of duties by one or more of Muir's employees. It is an agreement for the provision of services by Muirs, leaving Muirs free to choose how it will provide those services. It was not denied on behalf of the [Commissioner] that the provision of the services could be sub-contracted to another company, nor was it suggested that the retailers had stipulated for personal performance by Muirs, ie performance by its own officers or employees." 66 Callaway JA concluded at p 76[13] that it was not sufficient "that an agreement … had the result that employees of one person performed duties in relation to the business of another." 67 In the present case the critical question is whether the deeds of agreement were "in respect of the employment of, or the performance of duties by, one or more of [Tasty Chicks'] employees." 68 Gzell J made the following further findings: "109 Apart from the requirement that Tasty Chicks employed staff in its leased premises at Marrickville, the agreement does not deal with Tasty Chicks' employment of its employees. It deals with the provision of services by Tasty Chicks to the [Firm] and the sort of constraints and protection of its confidential information and restraint of trade that one would expect. … 111. I do not regard the singular requirement that Tasty Chicks employ its employees at Marrickville, [with] no other controls of the way in which its employees are to work in Tasty Chicks' provision of services to [the Firm's] business, as sufficient to enable the Commissioner to group Tasty Chicks and Angelo Transport with [the Firm]. 112. A fortiori if the agreement is construed in light of the variations to it constituted by the parties' conduct. … 114. … A service agreement that leaves it to the service provider as to how its employees will perform duties in relation to its customer's business would not, normally, answer the statutory description." 69 The deeds contained appropriate provisions in a contract for the performance of administrative and financial services for these clients which, on the authority of Muir Electrical (No 1), did not bring the parties within s 16C(b). 70 However there are several provisions which call for special consideration. 71 Clause 2 (2/484 L-M) provided: "… IT IS NOTED AND AGREED that in providing such services the Company shall in the absence of agreement to the contrary employ the greater part of its staff at 28-32 Sloane Street Marrickville occupied by the Company as Lessee or Licensee." 72 Tasty Chicks had 17 staff in addition to its proprietors Sam and Victoria Phylactou (blue 1/4 T-U). 73 Clause 7 (2/486) provided: "Subject to such orders and directions as may be given to it by the [client] from time to time (all of which orders and directions the Company shall promptly and faithfully obey, observe and comply with) the company shall at all times have control of the business …". The business referred to was that of the Firm or Angelo Transport as the case may be. 74 Clause 11 (2/487) provided: "The Company shall (subject to the directions of the [client]) have the general management of all persons employed in or about the Business PROVIDED THAT: (a) the Company shall not discharge any person employed in the business without the previous consent of the [client] even in the case of serious misconduct or sudden emergency in which case he (sic) shall immediately report such matter to the [client] for action. (b) The Company shall not without the consent of the [client] in writing make any arrangement whereby the aggregate weekly amount paid in respect [of] wages in connection with the business shall be increased other than in compliance with any statutory award or the like." 75 Clause 14 (2/487) provided: "The rights of a party pursuant to this Deed may not be assigned by a party nor may the obligations of a party be subcontracted without the prior written consent of the other party …". 76 Gzell J found that Tasty Chicks did not have the general management of the business of either client and that the parties, by their conduct, had varied the deeds of agreement in this and other respects. That conduct varied so much of cl 2 (2/483) as provided: "The [client] hereby appoints the Company who shall provide managerial services … in the conduct of the [client's] business …" 77 Tasty Chicks did not provide general managerial services but it did provide the specialised services referred to in cl 2 paras (i), (ii), at least part of (iii), and (vi) and perhaps parts of others. Clause 2 relevantly provided: "The [client] hereby appoints the Company who shall provide … the following services: (i) Running of account system; (ii) Financial accounts to management; (iii) To collect and pay accounts; … (vi) To prepare the payroll for all employees, payroll tax and other State and Federal fiscal records and requirements, attend to the filing of them, to prepare the filing and maintenance of records required by the … Income Tax Department and State requirements." 78 In my judgment its obligation to employ the greater part of its staff at the Marrickville premises applied to its staff providing those specialised services. Similarly its obligation under cl 7 to obey the orders and directions of the client still applied, but only to those functions which Tasty Chicks performed. 79 In my judgment the obligation of Tasty Chicks under cl 2 to employ "the greater part of its staff" at the Marrickville premises was "an agreement" "in respect of the employment of … one or more of" its employees within the section. The provisions of cl 11(a) which prohibited Tasty Chicks discharging "any person employed in the business" without the previous consent of the client was also "an agreement" "in respect of" their employment. 80 Clause 11(b) which prevented Tasty Chicks "making any arrangement whereby the aggregate weekly … wages … in connection with the business shall be increased" was also capable of attracting this section. It prevented Tasty Chicks without the client's written consent, employing additional staff in connection with "the business", of providing specialised services for the clients. It also prevented Tasty Chicks, without such consent, increasing the remuneration of any staff member except in accordance with applicable industrial awards. 81 I doubt whether cl 14, without more, could be "an agreement" "in respect of … the performance of duties by one or more employees". In Muir Electrical (No 1) Callaway JA referred, (para [65] above), to the absence of such a provision in the agreements under consideration in that case but I do not understand him to have decided, or even suggested, that this, without more would have justified grouping under the corresponding provision in the Victorian Act. However cl 14 does prevent the evasion of cll 2 and 11 by subcontracting some or all of the work. 82 In my judgment these provisions, in combination, brought these deeds of agreement within s 16C(b) and justified the grouping of Tasty Chicks and Angelo Transport with the other employers. De-grouping during first period: s 16H Payroll Tax Act 83 The de-grouping provision for this period was s 16H(1) which provided: "(1) Where the Chief Commissioner is satisfied, having regard to the nature and degree of ownership or control of the businesses, the nature of the businesses and any other matters that the Chief Commissioner considers relevant, that businesses carried on by members of the group constituted under section 16C are carried on substantially independently of and are not substantially connected with, the carrying on of a business or businesses of another member or other members of the group, the Chief Commissioner may, by order in writing served on those first mentioned members, exclude them from that group." 84 The notices of assessment were issued on 4 September 2007 (1/311 -- 356). A single notice of objection was lodged on behalf of the taxpayers on 27 September (1/100). It included an objection to the Commissioner's refusal to de-group the taxpayers during this period. The objection was disallowed on 8 January 2008 (1/109). The Commissioner's reasons for refusing to de-group, which applied to all three periods, were (1/109): "Having regard to all the information available and the connections that exist between the businesses, it is considered that the businesses carried on by Tasty Chicks Pty Ltd, [the Firm] and Angelo Transport Pty Ltd are not carried on substantially independently of one another, and are substantially connected with each other. The different group members complement each other's businesses. When viewed as a whole it becomes apparent that the business activities are structured in such a way that each business performs an integral role in the whole process ie the procurement, processing, sale and transportation of chicken meat products to customers including the management of the whole process. Whilst the chicken meat products are procured, owned and processed by [the Firm], employees of Tasty Chicks Pty Ltd are performing much of the administration, taking orders, invoicing and managing customer accounts throughout the whole process. With respect to Angelo Transport Pty Ltd, its income is derived exclusively from the arrangement between itself and the [Firm]. The company owns the transport vehicles and employs the drivers. However these drivers are also performing much of the maintenance work for the chicken meat products owned and sold by the [Firm]. Clearly the drivers are required to ensure that chicken meat products are adequately maintained in the cool rooms prior to transportation as well as when the boxes are packed and placed on the delivery vehicles during transportation. In view of the above we are unable to issue exclusion orders to exclude Tasty Chicks Pty Ltd and Angelo Transport Pty Ltd from group membership." 85 The discretion to de-group conferred by s 16H(1) depends on the Commissioner being satisfied that the "businesses carried on by members of the group … are carried on substantially independently of and are not substantially connected with, the carrying on of … businesses of … other members of the group." 86 The Commissioner is required to "have regard to" the nature and degree of ownership or control of the businesses, the nature of the businesses, and any other matters he considers relevant. The Commissioner did not rely on the ownership or control of the businesses, and on the evidence and the findings of Gzell J. each business was separately owned and controlled. 87 The Commissioner did rely on "the nature of the businesses" in that Tasty Chicks performed "much of the administration [for the Firm] … throughout the whole process" and performed an integral role in it. 88 Gzell J found (para [50] above) that 65% of Tasty Chicks' business was for the Firm in New South Wales and Victoria, and 30% for Pelagia Investments, the grouping of which has not been challenged. A further 4% was for Angelo Transport, whose grouping is challenged, and only 1% for independent customers. The evidence before Gzell J and his findings did not establish any significant factual error in the Commissioner's conclusions about the integration of the businesses of Tasty Chicks and the other members of the group. 89 In the case of Angelo Transport the Commissioner relied on the fact that it derived its income "exclusively from the Firm". He also relied on the fact that its drivers performed "much of the maintenance work for the chicken meat products" and were required to ensure that the products were adequately maintained in the cool rooms at the Marrickville premises prior to transportation to customers. 90 Gzell J found that Angelo Transport derived 99% of its income from the Firm (para [68]). This was also the finding of Mr Weedmore, the Senior Compliance Officer in the Office of State Revenue (1/113). It is clear that the Commissioner treated the 1% difference as de minimis. 91 Gzell J found that the drivers maintained their trucks to ensure the requisite standards of hygiene and food safety, but they only entered the processing plant to collect stock from the cool room (para [46]). They did not carry out maintenance work on the cool room as, on one reading of his decision (1/110 D-F), the Commissioner may have concluded. 92 Angelo Transport leased its premises at Marrickville from Souris Holdings, one of the members of the group. Its vehicles carried advertising for the Firm (para [52]). It did not advertise itself and was not listed in the White or Yellow Pages (para [53]). Its payroll was maintained by Tasty Chicks (para [55]). 93 Mr Weedmore, who investigated the group on behalf of the Commissioner, did not report that the drivers maintained the Firm's cool room (1/113, 141). He concluded that Angelo Transport owned the trucks "and maintenance work is primarily done in house". 94 Mr Michael Souris, the proprietor of Angelo Transport said that his drivers maintain their vehicles. They are required to check the temperature of the product when they collect it and during its transport. For this purpose they use special food grade thermometers (1/54-5). The drivers only enter the plant to pick up boxes of product and they don't perform any function in connection with the processing or packing (1/55). 95 Although the Commissioner would have erred if he concluded that the drivers carried out maintenance work on the Firm's cool room his conclusions that Angelo Transport played an integral role in the whole process and that its business complemented that of the Firm were clearly correct. 96 In these circumstances findings that the businesses of Tasty Chicks and Angelo Transport were "carried on substantially independently of … the carrying on of … [the] businesses of … other members of the group" were not open even on the evidence before Gzell J. However, as I have held, the real question is whether the Commissioner's failure to be satisfied of this was vitiated by any error of the kinds referred to by Dixon J in Avon Downs [1949] HCA 26, 78 CLR 353, 362-3 (para [24] above). In my judgment no such error was established. 97 In my judgment therefore the Commissioner's refusal to de-group the taxpayers during the first period must be affirmed and the appeal in this respect should be allowed. De-grouping during the second period: s 16B, s 16C Payroll Tax Act 1971 98 The relevant provisions are s 16B(1), and s 16C(1)(a), (3) and (4). Section 16B(1) provided: "The Chief Commissioner may, by order in writing, determine that a person who would, but for the determination, be a member of a group is not a member of the group." 99 Section 16C(1)(a), (3), and (4) provided: "(1) A determination may be made by the Chief Commissioner under section 16B in respect of the following persons only: (a) a person who would, but for the determination, be a member of a group arising under section 106H … of the Taxation Administration Act 1996, (b) … (2) … (3) The Chief Commissioner must not make a determination under section 16B unless satisfied that the person who is the subject of the determination has continuously carried on the business concerned, and will continue to carry on that business, substantially independently of the other members of the group. (4) In determining whether a person carries on business substantially independently of the other member or members of a group, the Chief Commissioner is to have regard to the nature and degree of ownership or control of the business of each member of the group, the nature of each of those businesses and any other matter that the Chief Commissioner considers relevant." 100 Section 106H(1) of the Taxation Administration Act provided: "(1) If 2 persons have an agreement under which an employee of 1 of them works solely or mainly in connection with a business carried on by: (a) the other, or (b) both of them, then the 2 persons constitute a primary group." 101 Gzell J noted [118] that the taxpayers did not challenge their grouping pursuant to s 106H(1) during the second period, and the appeal in respect of that period turns on the de-grouping provisions referred to above. He said [126]: "The independence of the person or the business conducted by the person required by the statute is to be judged in terms of ownership, control and nature of the businesses." 102 He found that Tasty Chicks and Angelo Transport were owned and controlled by their proprietors [127]-[128], and their businesses and that of the Firm were "separate and distinct" [129]. 103 He then dealt with the various matters relied on by the Commissioner one by one. The location of the businesses in the same premises he characterised as "a matter of convenience", and noted that the taxpayers occupied under leases at commercial rents [132]. The loans and guarantees provided by the Firm to Tasty Chicks and Angelo Transport were found to be for "comparatively small amounts, usually repaid within a year". He said that accrual accounting "may explain" the loans, but there was no evidence of this. 104 The Commissioner had relied on the use of the same computer system, but the Judge found that the Firm and Tasty Chicks had separate systems [134]. The advertisements for the Firm carried on the trucks of Angelo Transport were described as an additional service which was not uncommon with transport vehicles [135]. The fact that all businesses banked with St George Bank did not indicate "a lack of independence" [136], and the employment of the same external accountant was "a matter of administrative convenience, not demonstrating a lack of independence" [137]. 105 The Commissioner relied on the deeds of agreement in this period but Gzell J said that that matter had been addressed in relation to the first period [140]. The proportion of Tasty Chicks' business derived from the group was noted, but the Judge said it had 10 independent customers. Although Angelo Transport derived 99% of its income from the Firm its proprietor had plans to expand the number of its customers [141]. 106 The Judge concluded [142]: "In my view the evidence establishes a substantial independence of Tasty Chicks and Angelo Transport or the businesses they conduct from the business of [the Firm]. The Chief Commissioner was not prevented by s 16C(3) of the Payroll Tax Act from making a determination under s 16B(1)." 107 The Judge then held that the Court was entitled to re-exercise the de-grouping discretion afresh, and on that re-exercise he ordered that the taxpayers be de-grouped. 108 I have already concluded that Gzell J was not entitled to re-exercise the discretion afresh and that the taxpayers' challenge to the Commissioner's decision to de-group must proceed in accordance with the principle stated by Dixon J in Avon Downs (above). 109 Gzell J considered the factors relied upon by the Commissioner one by one and, with respect, explained them away or treated them as of little weight without considering whether, in combination, they brought the group within s 16C(3). In addition, with respect, he asked himself the wrong questions. In [126] he said with reference to s 16C(3): "The independence of the person or the business conducted by the person required by the statute is to be judged in terms of ownership, control and [the] nature of the businesses." 110 However s 16C(4) also provided that the Commissioner is to have regard to "any other matter that the Chief Commissioner considers relevant". The relevance of other matters is to be determined by the Commissioner, and the function of the Court on appeal is that identified in Avon Downs (above). The matters considered relevant by the Commissioner cannot be disregarded simply because the Court has a different opinion. 111 Moreover the test in s 16C(3) is whether the taxpayer "has continually carried on the business concerned … substantially independently of the other members of the group". The ownership and control of the businesses is not the test. They must be considered but the test is whether the relevant business has been carried on substantially independently of the group. 112 The factors relied on by the Commissioner, viewed in that light, established a powerful case. Tasty Chicks and Angelo Transport derived about 99% of their business from the group: above [34], [68]. The businesses of the taxpayers and that of the Firm were located in the same building, Tasty Chicks managed the payrolls of the group, members had the same accountant and the same bank. The deeds of agreement created other links between Tasty Chicks the Firm and Angelo Transport. In these circumstances findings that the taxpayers carried on their businesses "substantially independently of the other members of the group" were not open even on the evidence before Gzell J. 113 However, as I have held ([96] above) the real question is whether the Commissioner's failure to be satisfied of this (1/109) was vitiated by any error of the kinds identified by Dixon J in Avon Downs. My conclusion that no such error was established in respect of the first period applies in respect of the second period as well. The Commissioner had ample reasons for not being satisfied of the matters in s 16C(3) during that period. 114 In my judgment therefore the Commissioner's appeal in respect of the second period must be allowed. De-grouping during the third period: s 16B, s 16C Payroll Tax Act. 115 Section 16B(1) continued to apply, in the same terms, during the third period as did s 16C(1)(a), and s 16C(4). Section 16C(3) however applied in an amended form. The subsection as amended prevented the Commissioner making a de-grouping determination unless "satisfied that the business carried on by the person … has been continuously carried on … substantially independently of the other members of the group." 116 Section 16C(3) in its earlier form during the second period was expressed in the active voice ie "the person … has continuously carried on the business." The subsection in its amended form is expressed in the passive voice ie "the business has been continuously carried on". Gzell J considered [131] that the change made no relevant difference, and with respect I agree. 117 The legislation being otherwise unchanged it follows that the Commissioner's appeal in respect of the third period must also be allowed. Conclusion 118 The following orders should be made: (1) Appeal allowed with costs. (2) Judgment and orders of Gzell J set aside. (3) In lieu thereof order that the appeal to the Supreme Court from the assessments of the Chief Commissioner be dismissed with costs. (4) The respondents to have certificates under the Suitors Fund Act in respect of the costs in this Court. ********** 08/02/2011 - the word "agreed" should read "agree" - Paragraph(s) 2 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.