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Clarence River Jockey Club Ltd and Commissioner of Taxation (Taxation) [2024] AATA 2729 (30 July 2024)

Last Updated: 22 August 2024

Clarence River Jockey Club Ltd and Commissioner of Taxation (Taxation) [2024] AATA 2729 (30 July 2024)

Division: TAXATION AND COMMERCIAL DIVISION

File Number(s): 2022/6827

Re: Clarence River Jockey Club Ltd

APPLICANT

And Commissioner of Taxation

RESPONDENT

DECISION

Tribunal: Senior Member D K Grigg

Date: 30 July 2024

Place: Sydney

The Tribunal affirms the decision under review save to the extent that the Commissioner’s assessment be amended to remove the imposition of the following administrative component imposed on the Applicant by the Commissioner in error:

..............................[SGD]..........................................

Senior Member D K Grigg

Catchwords

TAX – assessment of superannuation guarantee charge - whether correctly imposed – whether jockeys deemed “employees” of turf racing clubs pursuant to section 12(3) or section 12(8) of the Superannuation Guarantee (Administration) Act 1992 – decision under review varied

Legislation

Acts Interpretation Act 1901 (Cth)

Administrative Appeals Tribunal Act 1975 (Cth)

A New Tax System (Goods and Services Tax) Act 1999 (Cth)

AJC Principal Club Amendment Act 1997 (NSW) (No 24 of 1997)

Pay-roll Tax Assessment Act 1941-1942 (Cth)

Proceeds of Crime Act 2002 (Cth)

Superannuation Guarantee (Administration) Act 1992 (Cth)

Superannuation Guarantee Charge Act 1992 (Cth)

Taxation Administration Act 1953 (Cth)

Thoroughbred Racing Act 1996 (NSW)

Thoroughbred Racing Board Act 1996 (NSW)

Thoroughbred Racing Legislation Amendment Act 2004 (NSW)

Workers Compensation Act 1926 (NSW)

Cases

Apollo Shower Screens Pty Ltd v Building and Construction Industry Long Service Payments Corporation (1985) 1 NSWLR 561

Asset Insure Pty Ltd v New Cap Reinsurance Corp Ltd (In Liq) [2006] HCA 13; (2006) 225 CLR 331

Beiruti and Commissioner of Taxation [2013] AATA 634

Bosanac v Commissioner of Taxation [2019] FCAFC 116; (2019) 267 FCR 169

BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266

Brinkley and Commissioner of Taxation [2002] AATA 218; 49 ATR 1178

Carter v Murray (1937) 11 WCR 231

Chiodo v Silk Contract Logistics [2023] FCA 1047

Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; (2012) 250 CLR 503

Commissioner of Taxation v Glencore Investment Pty Ltd [2020] FCAFC 187; 281 FCR 219

Commissioner of Taxation v Racing Queensland Board [2019] FCAFC 224; (2019) 374 ALR 241

Commissioner of Taxation v Racing Queensland Board [2019] FCAFC 224; 374 ALR 241

Commissioner of Taxation v Scone Race Club [2019] FCAFC 225

Commissioner of the Australian Federal Police v Hart (2018) 262 CLR 7

Commissioner of the Australian Federal Police v Hart [2016] QCA 215; 336 ALR 492

Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd [1986] HCA 14; (1986) 160 CLR 226

Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1

Federal Commissioner of Taxation v Commonwealth Aluminium Corporation Limited [1980] HCA 28; (1980) 143 CLR 646

Federal Commissioner of Taxation v Dalco [1990] HCA 3; (1990) 168 CLR 614

Gauci v Federal Commissioner of Taxation [1975] HCA 54; (1975) 135 CLR 81

Guardian Ait Pty Ltd ATF Australian Investment Trust v Commissioner of Taxation [2021] FCA 1619; 114 ATR 136

Haberfield v Department of Veterans' Affairs as Delegate for Comcare [2002] FCA 1579

Haureliuk v Furler [2012] ACTCA 11; 6 ACTLR 151

Jamsek v ZG Operations Australia Pty Ltd (No 3) [2023] FCAFC 48; 296 FCR 336

JMC Pty Ltd v Commissioner of Taxation [2023] FCAFC 76; 297 FCR 600

Maroney v The Queen [2003] HCA 63; 216 CLR 31

Minister for Immigration and Citizenship v SZJGV [2009] HCA 40; 238 CLR 642

Performing Right Society Ltd. v. Mitchell and Booker (Palais de Danse) Ltd (1924) 1 K.B. 762

Queensland Stations Pty Ltd v Federal Commissioner of Taxation [1945] HCA 13; (1945) 70 CLR 539

Realestate.com.au Pty Ltd v Hardingham [2022] HCA 39; 97 ALJR 40

Rigoli and Commissioner of Taxation [2015] AATA 169

Scone Race Club Limited v Commissioner of Taxation [2019] FCA 976; 373 ALR 676

Scone Race Club Limited v Commissioner of Taxation  [2020] HCA Trans 95 

Simmons v Heath Laundry Co [1910] UKLawRpKQB 33; [1910] 1 KB 543

SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; (2017) 262 CLR 362

The Tax Agents’ Board of New South Wales v Martin (1997) 97 ATC 4192

Trautwein v Federal Commissioner of Taxation [1936] HCA 77; (1936) 56 CLR 63

Uelese v Minister for Immigration and Border Protection (2015) 256 CLR 203

Uelese v Minister for Immigration and Border Protection [2015] HCA 15; 256 CLR 203

Vabu Pty Ltd v Commissioner of Taxation (1996) 81 IR 150

Secondary Materials

Australian Rules of Racing

Australian Taxation Office, Superannuation Guarantee Ruling, “SGR 2005/1 – Who is an employee”

General Practice Direction – Direction given under section 18B of the Administrative Appeals Tribunal Act 1975

Local Rules of Racing NSW

Macquarie Dictionary Online

Oxford Online Dictionary

Second Report of the Senate Select Committee on Superannuation, Superannuation Guarantee Bills

Contents

REASONS FOR DECISION

Senior Member D K Grigg

30 July 2024

1. The Clarence River Jockey Club Limited (CRJC) is a thoroughbred racing club.
2. According to its Articles of Association CRJC’s objects include:^[1]
   1. To promote, conduct and hold race meetings for the recreation and enjoyment of members and persons interested in or connected with horse racing subject to the conditions of any licence issued by any authority for that purpose.
   2. To encourage horse racing by the promotion of race meetings and to provide trophies, prizes, stakes and rewards for horse races.
3. In October 2020 a notice of amended assessment (NOA) for a Superannuation Guarantee Charge (SGC) was issued to the CRJC by the Australian Tax Office (ATO). The SGC concerned jockeys who participated in various horse races conducted by the CRJC in the 2014 financial year.^[2]
4. In April 2021 an NOA for a Superannuation Guarantee Charge was issued to the CRJC by the ATO. The SGC concerned jockeys who participated in various horse races conducted by the CRJC in the 2010 financial year.^[3]
5. When a jockey is selected to ride a specific racehorse in a specific race at a licensed thoroughbred horse racing club, the jockey is paid a riding fee. The riding fee amount is set by Racing New South Wales.^[4] The SGC was imposed by the Commissioner in relation to the riding fees.
6. The logistics of how riding fees are paid to jockeys have changed over time. This matter concerns the 2010 and 2014 financial year and whether jockeys were CRJC’s “employees” during that period according to section 12 of the Superannuation Guarantee (Administration) Act 1992 (Cth) (SGAA).
7. The CRJC contends the jockeys are not their “employees” as that expression is defined in section 12 of the SGAA. The CRJC’s primary contention is that the jockeys are employees of racehorse owners and/or racehorse trainers, and the payments made by the CRJC to the jockeys for participating in its races were payments made “on behalf of” the owners/trainers. Given CRJC’s position, it paid no superannuation guarantee payments to the jockeys, and it submitted, that no superannuation guarantee shortfall arose.
8. The CRJC submits that subsection 12(3) of the SGAA applies. Subsection 12(3) applies where a person works under a contract that is wholly or principally for the labour of the person. In that scenario, the labour provider is an employee of the other party to the contract. The CRJC’s contention is that subsection 12(3) applies to the owners and/or trainers of the horses because the owners have a contract with jockeys for their labour, the labour being the jockeys’ participation in races.^[5]
9. The Commissioner disputes subsection 12(3) of the SGAA is applicable because he contends a contract entered into to engage a jockey to ride a particular horse in a particular race is not a contract “for the labour” of the jockey. Further, the Commissioner submits the CRJC has not discharged its burden of proving there were contracts entered into between owners and jockeys for the jockeys to ride races.
10. By contrast to the CRJC, the Commissioner contends that subsection 12(8) is the applicable sub-provision, not subsection 12(3). Subsection 12(8)(a) of the SGAA applies, relevantly, where a person is paid to perform or to participate in the performance of a sport. In that circumstance, the performer is deemed to be the “employee of the person liable to make the payment” for that performance. The Commissioner contends this provision is to be read in conjunction with a NSW Local Racing Rule known as Local Rule 72 (LR72).
11. LR72 states that clubs shall pay a fee to jockeys or apprentice jockeys for riding a horse in a race or barrier trial, with the quantum of the fee being set by Racing NSW. ​

ASSESSMENT AND APPLICATION PROCESS

12. The ATO issued the NOA for the amended SGC assessment for the tax period ending 31 December 2009 and 30 June 2014 (Relevant Periods).^[6]
13. The total amount of the superannuation guarantee charge owing by the CRJC (including interest thereon) is $164,447.58.^[7]
14. On 12 July 2021 the CRJC objected to the SGC assessments.^[8]
15. On 27 June 2022 the ATO advised the CRJC that they had considered the objection and determined that jockeys who raced at their club were employees of the CRJC for the purposes of the SGAA and that therefore the CRJC had an obligation to pay superannuation contributions on their behalf.^[9]
16. On 24 August 2022, the CRJC applied to this Tribunal for review of the ATO’s decision.^[10] The Tribunal has jurisdiction to review decisions under the SGAA pursuant to section 25 of the Administrative Appeals Tribunal Act 1975 (Cth), section 42 of the SGAA and Part IVC of the Taxation Administration Act 1953 (Cth) (TAA).
17. CRJC’s application for review was heard at the same time as four other applications for review. The applicants in those matters were the Armidale Jockey Club (Armidale), Illawarra Turf Club (lllawarra), Australian Turf Club (ATC) and Grenfell Jockey Club Limited (Grenfell) (collectively the “Clubs”). All of the matters involve an application for review of the decisions of the Commissioner to disallow each of the objections to amended assessments of SGC for the quarterly tax periods from 30 September 2009 to 30 June 2014. ​The amended assessments reflect the Commissioner's conclusion that each Club was liable to pay riding fees to jockeys and should have been making superannuation contributions. ​
18. The applicants agreed that the evidence filed in one matter applied to all matters. The legal representatives for CRJC also represented Armidale, Illawarra, ATC and Grenfell. Submissions made in this matter were also stated to have been made concerning all applications. Despite all five matters being heard together, the parties requested separate decisions for each applicant.
19. Some 95 other thoroughbred racing clubs are awaiting the outcome of these decisions to determine the impact, if any, on their circumstances.^[11]
20. The ultimate issue for resolution in each proceeding is whether each of the Clubs have discharged the burden of proving that the amended assessments are excessive or otherwise incorrect. ​
21. Each Club must demonstrate that it was not liable to pay the riding fees during the Relevant Periods. ​
22. The burden of proof lies with each Club to provide evidence to support their contention that they were not liable to make payments of riding fees to jockeys during the specified periods. ​
23. As was made apparent in a recent test case in Commissioner of Taxation v Scone Race Club [2019] FCAFC 225 (Scone Race Club), each matter needs to be determined on its facts.
24. Based on the evidence in that case, the majority of the Full Court in Scone Race Club concluded that Scone Race Club was liable to make the payment of riding fees to jockeys, and LR72 does not provide for owners to be liable for such payments. ​
25. Scone Race Club was a test case funded by the Commissioner. Scone Race Club was successful at first instance in the Federal Court but failed on appeal and was unsuccessful in its High Court special leave application.^[12]
26. Scone Race Club did not have the intended effect of a test case in that the majority judgment of the Full Federal Court held Scone Race Club failed to discharge its onus based on the evidence presented. That is, the majority felt the evidence did not support the inference that the industry custom prior to 1 July 2000 of clubs paying riding fees to jockeys on behalf of owners continued after 1 July 2000. This left open the possibility that different evidence (such as evidence of an owner, trainer, or jockey) may result in a different outcome.
27. Scone Race Club is not binding on the Tribunal but the decision is highly persuasive to this Tribunal. It should not be departed from lightly.^[13] It is expected that, “in the ordinary course the Tribunal would be expected to defer to and follow a considered conclusion, even if strictly obiter, reached by a judge of the Federal Court of Australia”: TCXG and Director-General of Security and Anor [2013] AATA 377; 135 ALD 600, at [21]. It is particularly persuasive because of the similarities of this matter to Scone Race Club and the fact that the Tribunal finds the evidence in this matter has not shone additional light on the situation. The similarities between this matter and Scone Race Club result from the fact that they involved the same taxation periods and regulatory frameworks.

ISSUES FOR THE TRIBUNAL

28. The issue for the Tribunal is whether the CRJC has discharged its burden of proving that the amended assessments are excessive or otherwise incorrect and what the assessments should have been: subsection 14ZZK(b)(i) of the TAA.
29. The following matters need to be determined.
30. Was the CRJC, at material times, “liable” to make payments to jockeys of the kind described in subsection 12(8)(a) of the SGAA, such that the jockeys were “employees” of the CRJC and, therefore, the CRJC was assessable for superannuation guarantee shortfalls in respect of those jockeys?
31. If the CRJC is an employer pursuant to subsection 12(8) of the SGAA, the following further issues arise:

    (a) is the owner or the trainer of the horse ridden by the jockey also an employer and, if so, is it an employer pursuant to:

    (i) subsection 12(3) of the SGAA; and/or

    (ii) subsection 12(8) of the SGAA?

32. If the CRJC and the owner/trainer are both “employers”, can they both be liable for the superannuation guarantee charge in respect of the jockey for the same performance?

Leave to Raise New Grounds

33. Following the objection decision, the CRJC raised new grounds of objection to the Amended NOAs. The new grounds are:

    (a) it was an implied term of the contract between owners/trainers and jockeys that the owners/trainers were obliged to pay jockeys the riding fee fixed from time to time by the NSW Thoroughbred Racing Board (subsequently, Racing NSW);^[14] alternatively,

    (b) owners/trainers assumed at least an obligation arising in restitution/quantum meruit to provide reasonable remuneration for the services of jockeys; and

    (c) that LR72(1), properly construed, imposed an obligation on clubs to pay owners the riding fees that were otherwise payable by the owners to jockeys.

34. Pursuant to subsection 14ZZK(a) of the TAA the CRJC is, unless the Tribunal orders otherwise, limited to the grounds stated in the taxation objection to which the decision relates.
35. The Commissioner informed the Tribunal it would not object to the Tribunal considering these new grounds provided no new evidence in support of those grounds was led.
36. At the hearing leave was granted to the CRJC to rely on these additional grounds of objection on the condition no further evidence would be adduced.^[15] This conditional leave was agreed to by both parties.

LEGISLATIVE BACKGROUND

Superannuation Regime

37. The Full Federal Court in Jamsek v ZG Operations Australia Pty Ltd (No 3) [2023] FCAFC 48; 296 FCR 336 (“Jamsek”) described the purpose of the superannuation scheme (which includes the SGAA) as being:

    46. ... to secure Australian workers with a minimum level of superannuation by the application of a charge to all employers in respect of their individual employees, through an efficient mechanism based on self-assessment and administration by employers and the Australian Taxation Office^[16]

Superannuation Guarantee Charge

38. The purpose of the SGAA is to establish and administer the Superannuation Guarantee Scheme, and related purposes.
39. A "superannuation guarantee charge" (SGC) is a “charge imposed by the Superannuation Guarantee Charge Act 1992”: section 6, SGAA.
40. Pursuant to section 5 of the SGAA, an SGC is imposed on any superannuation guarantee shortfall of an employer for a quarter.
41. An SGC is payable if the minimum amount of the superannuation guarantee for an employee has not been paid into the appropriate superannuation fund by the due date.
42. Pursuant to section 16 of the SGAA, the “Superannuation guarantee charge imposed on an employer's superannuation guarantee shortfall for a quarter is payable by the employer”. Only “employers” are liable to pay SGC (see paragraph 47 below).
43. Section 19 of the SGAA provides the formula (based on the “salary or wages” of an employee) to determine the individual superannuation guarantee shortfall:

    (1) An employer's individual superannuation guarantee shortfall for an employee for a quarter is the amount worked out using the formula:

44. Section 11 of the SGAA provides that “salary or wages” includes, relevantly:

    (ba) payments under a contract referred to in subsection 12(3) that are made in respect of the labour of the person working under the contract;

    (d) payments to a person for work referred to in subsection 12(8)...

45. Superannuation guarantee is not payable other than for employees.
46. Pursuant to section 36 of the SGAA, where an employer has not lodged a superannuation guarantee statement for a quarter and the Commissioner is of the opinion that the employer is liable to pay SGC for the quarter, the Commissioner may make a default assessment of the amount that should have been paid (i.e. the superannuation guarantee shortfall).

Who is an “Employer” and “Employee” for the purpose of the Superannuation Guarantee Scheme?

47. For the purpose of the superannuation guarantee scheme, section 12 of the SGAA defines “employer” and “employee” relevantly as follows:

    12 Interpretation: employee, employer

    (1) Subject to this section, in this Act, employee and employer have their ordinary meaning. However, for the purposes of this Act, subsections (2) to (11):

    (a) expand the meaning of those terms; and

    (b) make particular provision to avoid doubt as to the status of certain persons.

    ...

    (3) If a person works under a contract that is wholly or principally for the labour of the person, the person is an employee of the other party to the contract.

    ...

    (8) The following are employees for the purposes of this Act:

    (a) a person who is paid to perform or present, or to participate in the performance or presentation of, any music, play, dance, entertainment, sport, display or promotional activity or any similar activity involving the exercise of intellectual, artistic, musical, physical or other personal skills is an employee of the person liable to make the payment;

    (emphasis added)

48. Subsections 12(2) to (8) of the SGAA expand the ordinary meaning of “employer” and “employee” by deeming certain persons to be employer/employee in specified circumstances.
49. The issue here is whether either subsection 12(3) or 12(8) of the SGAA:

    (a) applies to deem jockeys to be employees; and

    (b) deems CRJC, or the racehorse owner/trainer, the employer, and therefore the entity liable to make the SGC payment.

50. The CRJC submitted it is also necessary to determine whether, on the proper construction of the SGAA, a person can be a deemed “employer” under subsection 12(8)(a) if another entity is also an “employer” under (relevantly) subsection 12(3) and, if so, whether the jockeys had several employers.^[17]

Burden of Proof

51. Subsection 14ZZK(b)(i) of the TAA provides that the CRJC has the burden of proving that the assessment is excessive or otherwise incorrect and what the assessment should have been.
52. The standard of proof a taxpayer must meet is the civil standard of the balance of probabilities.^[18]
53. The High Court decision in Federal Commissioner of Taxation v Dalco [1990] HCA 3; (1990) 168 CLR 614 (Dalco) confirms that the onus is on the taxpayer to establish that assessments issued by the Commissioner are excessive. The High Court explained that where the Commissioner and taxpayer have not agreed on the assessment (at 624):

    The manner in which a taxpayer can discharge that burden varies with the circumstances. If the Commissioner and a taxpayer agree to confine an appeal to a specific point of law or fact on which the amount of the assessment depends, it will suffice for the taxpayer to show that he is entitled to succeed on that point. Absent such a confining of the issues for determination, the Commissioner is entitled to rely upon any deficiency in proof of the excessiveness of the amount assessed to uphold the assessment, though the taxpayer is limited to the grounds of his objection. In Gauci v. Federal Commissioner of Taxation [1975] HCA 54; (1975) 135 CLR 81, Mason J. said (at p 89):

    The Act does not place any onus on the Commissioner to show that the assessments were correctly made. Nor is there any statutory requirement that the assessments should be sustained or supported by evidence. The implication of such a requirement would be inconsistent with s.190(b) for it is a consequence of that provision that unless the appellant shows by evidence that the assessment is incorrect, it will prevail." That view, expressed in a dissenting judgment, now prevails: Macmine Pty. Ltd. v. Commissioner of Taxation (1979) 53 ALJR 362 at pp 366, 371, 381; McCormack's Case at pp 303,306,323.

54. The approach in Dalco has become known as the “all or nothing” approach.^[19]
55. In Trautwein v Federal Commissioner of Taxation [1936] HCA 77; (1936) 56 CLR 63 Latham CJ found as a general rule:

    [2]. “...the taxpayer must...go further and show, not only negatively that the assessment is wrong, but also positively what correction should be made in order to make it right or more nearly right.”

56. The CRJC submitted that:^[20]

    56... Where a person has the burden of proving a negative, consistently with High Court authority, they are ordinarily not expected to disprove all possibilities, but only those raised in a defence...

57. The CRJC submitted:^[21]

    60. In these appeals the only case propounded by the Commissioner in his appeal statements is that:

    (a) jockeys were paid riding fees pursuant to LR 72: Commissioner’s Statements at [24]; and

    (b)the Clubs were liable to pay those riding fees by reason of LR 72: Commissioner’s Statements at 32(c).

    61.That is the case that must be met by the Clubs.

58. The CRJC referred to Commissioner of the Australian Federal Police v Hart [2018] HCA 1; (2018) 262 CLR 76 where the High Court was concerned with the construction and application of subsection 102(3) of the Proceeds of Crime Act 2002 (Cth). The applicant had to prove on the balance of probabilities that, among other things, certain property was not used in connection with an unlawful activity. The High Court stated (at [7]) the burden of proving those matters is to be “conducted in accordance with the civil procedure of that court” in an “adversarial proceeding”.
59. Some argue that proceedings in the Tribunal are not “adversarial” and that, as a result, different rules and procedures apply. This notion of non-adversarial proceedings in the Tribunal can be seen from the objects of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) which requires informality,^[22] and from provisions like section 33 which require proceedings to be conducted with little formality and technicality and empower the Tribunal to inform itself on any matter as it thinks appropriate. The Tribunal has its own procedural rules and practice directions which differ in some respects from those found in Courts.
60. There have been several decisions, in the Tribunal and Federal Court, which discuss the inquisitorial versus adversarial nature of Tribunal proceedings. For example, in The Tax Agents’ Board of New South Wales v Martin (1997) 97 CRJC 4192 Tamberlin J observed “The proceedings before the AAT are adversarial in nature”. Other decisions have held that Tribunal proceedings are more inquisitorial in nature (see the discussion in Rigoli and Commissioner of Taxation [2015] AATA 169, at [56]-[61]).
61. In Beiruti and Commissioner of Taxation [2013] AATA 634, Deputy President S A Forgie spoke of the Tribunal’s role as distinguished from that of a Court as follows:

    [61] The first is that the task of the Tribunal is not that of a court. It is not required to decide a matter between two parties engaged in adversarial proceedings in which the issues have been defined by pleadings lodged on their behalf and referred to in determining the relevance and admissibility of evidence at the trial. It is an administrative tribunal which must decide issues that are defined not by the parties but by the legislation under which the administrative decision it is reviewing was made.

    [emphasis added]

62. In Uelese v Minister for Immigration and Border Protection [2015] HCA 15; 256 CLR 203 at [62]- [63] (per French CJ, Kiefel, Bell and Keane JJ), the High Court rejected the Minister's submission which sought to import into the inquisitorial review function of the Tribunal notions appropriate to adversarial proceedings conducted in accordance with formal rules of pleading. The Court held “that approach is inappropriate to the kind of review undertaken by the Tribunal”, and also held that:

    “it would be to give undue weight to conceptions drawn from adversarial litigation to accept that the Tribunal was not required to take into account the interests of the appellant's two youngest children because [the appellant] had not sought to advance their interests as a positive part of his case”.

63. The Commissioner submitted the cases referred to by the CRJC are not applicable in matters before the Tribunal. First, because matters before the Tribunal are not conducted by way of pleadings, and second, taxation matters differ in that the CRJC has the burden of proving a negative. The Commissioner submitted that the CRJC’s contentions in this regard “are thus both misguided and inconsistent with authority” including Dalco and Bosanac v Commissioner of Taxation [2019] FCAFC 116; (2019) 267 FCR 169 (Bosanac).^[23] In Bosanac the Full Court said, at [47]:

    As stated by Dowsett J in Weyers v Commissioner of Taxation [2006] FCA 818 at [146], ‘[t]he Commissioner need not justify the decision, save in response to an appropriate attack upon it’. The grounds that may be relied upon are confined to those raised before the Commissioner in the objection, unless the court otherwise orders. So, the evidence that may be led to discharge the onus is likewise confined. It is a matter for the parties whether they stipulate the correctness of factual matters before the Commissioner. However, in the absence of such matters being agreed or such matters being presented as evidence of the truth of those matters without objection, it is for the appellant to provide the necessary evidence on the hearing before the court on the ‘appeal’. The court does not simply receive the record before the Commissioner on the objection and make its decision on that basis. Nor does it consider whether there has been error demonstrated in the decision by the Commissioner. Even less so does it consider whether an amended assessment issued after the objection decision is correct. Therefore, as noted by Greenwood J in Aurora Developments Pty Ltd v Federal Commissioner of Taxation (No 2) [2011] FCA 1090; (2011) 196 FCR 457 at [32], ‘an appeal under s 14ZZ(c) bears some of the characteristics of an appeal by way of a hearing de novo in that the taxpayer has an extensive, though not unqualified, right to put additional evidence before the Court’.

64. The Commissioner submitted:^[24]

    Where the question of who is liable cannot simply be resolved by reference, say, to the terms of one comprehensive written instrument, the Commissioner will be at an evidentiary disadvantage, inasmuch as taxpayers have access to evidence in relation to documents or practices relevant to ascertaining the locus of liability. The Commissioner can only really point to objective circumstances or gaps in the evidence with a view to assisting a tribunal of fact to resolve the ultimate issue before it.

65. In this matter there has been no agreement between the Commissioner and the CRJC to confine any specific point of law or fact on which the amount of the NOA depends.^[25]
66. CRJC’s proposition does not account for the High Court and Federal Court authorities regarding a taxpayer’s burden of proof (see paragraphs 53-55, 63-65) or the nature of proceedings in the Tribunal. Section 14ZZ proceedings are proceedings where the facts or events lie wholly within a taxpayer’s knowledge. The authorities relied on by the CRJC are not particularly helpful in administrative merits review in tax cases. Matters before the Tribunal are not founded in pleadings. Pleadings require parties to a proceeding to admit and deny alleged facts and set the boundaries of the case.^[26] In review matters before the Tribunal each party sets out its position in what is known as a Statement of Facts, Issues and Contentions where admissions and denials are not required.^[27] While there is an overarching need for the mechanism of review to be “fair”,^[28] the Commissioner is not bound to prove any matter, nor does he have to defend the assessment under review (see Gauci above). While it appears that the taxpayer is proving a negative, the taxpayer is also required to prove a positive. The applicant taxpayer should be able to succeed in its application without any assistance or evidence being led by the Commissioner. The task of the Tribunal is to determine the correct or preferable decision in light of the issues which arise under the legislation in question.
67. In Apollo Shower Screens Pty Ltd v Building and Construction Industry Long Service Payments Corporation (1985) 1 NSWLR 561 Hunt J (565-566) stated as follows in relation to the burden of proving a negative:

    ...provided that the plaintiffs have established sufficient evidence from which the negative proposition may be inferred, the defendant carries what has been called an evidential burden to advance in evidence any particular matters with which (if relevant) the plaintiffs would have to deal in the discharge of their overall burden of proof: cf Purkess v Crittenden [1965] HCA 34; (1965) 114 CLR 164 at 167-168, 171.

68. Hunt J noted this was akin to the burden in tax cases. He said:

    It is also somewhat akin to the evidential burden placed upon the Commissioner of Taxation in an appeal against his assessment of taxation (in which the taxpayer bears the onus of proof) to raise a particular matter in evidence so as to require the taxpayer to deal with that issue in his discharge of his overall burden of proof.^[29]

69. Ultimately the issue is one of procedural fairness. In Haberfield v Department of Veterans' Affairs as Delegate for Comcare [2002] FCA 1579 Sackville J said:

    [59] The task of the AAT is not necessarily limited by the issues identified by the parties. As was said by Brennan J in Bushell v Repatriation Commission [1992] HCA 47; (1992) 175 CLR 408, at 425, in substance the AAT’s review of the primary decision is inquisitorial in character, with the AAT under a duty to arrive at the correct or preferable decision on the material before it. Subject to the rules of procedural fairness, the AAT is entitled to inform itself on any matters relevant to the pleadings in such manner as it thinks appropriate: s 33(1)(c).

    [emphasis added]

70. It is unclear to the Tribunal what CRJC’s complaint is, giving regard to what has been briefly described above. No issue was raised by the Commissioner that the CRJC was not made aware of in advance.
71. CRJC’s burden is to prove that it was not the deemed employer of the jockeys by virtue of section 12. It is a matter for the CRJC how it goes about doing this.

A New Tax System (Goods and Services Tax) Act 1999 (Cth) (GST Act)

72. The GST Act contains provisions which deal with the situation where an entity enters into an arrangement on behalf of another entity.
73. Relevantly here, subsection 153-50(1) of the GST Act provides:

    Arrangements under which intermediaries are treated as suppliers or acquirers

    (1) An entity (the principal ) may, in writing, enter into an arrangement with another entity (the intermediary ) under which:

    (a) the intermediary will, on the principal's behalf, do any or all of the following:

    (i) make supplies to third parties;

    (ii) facilitate supplies to third parties (including by issuing * invoices relating to, or receiving * consideration for, such supplies);

    (iii) make acquisitions from third parties;

    (iv) facilitate acquisitions from third parties (including by providing consideration for such acquisitions); and

    (b) the kinds of supplies or acquisitions, or the kinds of supplies and acquisitions, to which the arrangement applies are specified; and

    (c) for the purposes of the GST law:

    (i) the intermediary will be treated as making the supplies to the third parties, or acquisitions from the third parties, or both; and

    (ii) the principal will be treated as making corresponding supplies to the intermediary, or corresponding acquisitions from the intermediary, or both; and

    (d) in the case of supplies to third parties:

    (i) the intermediary will issue to the third parties, in the intermediary's own name, all the * tax invoices and * adjustment notes relating to those supplies; and

    (ii) the principal will not issue to the third parties any tax invoices and adjustment notes relating to those supplies; and

    (e) the arrangement ceases to have effect if the principal or the intermediary, or both of them, cease to be * registered.

    (2) For the purposes of subsection (1), an entity can be an intermediary whether or not the entity is the agent of the principal.

NSW RACING INDUSTRY

Governance and Regulation

74. In New South Wales, thoroughbred racing is governed by Racing Australia Limited (Racing Australia) (formerly known as the Australia Racing Board) and Racing NSW. Racing Australia was “established to make, change and administer the Australian Rules of Racing [ARR] and otherwise do all things whatsoever that the Board considers to be conducive to developing, encouraging, promoting or managing the Australian thoroughbred racing industry”.^[30]
75. The Australian Rules of Racing (ARR) is a national regulatory scheme for the thoroughbred racing industry.^[31] ARR2 provides that any person who takes part in any matter or race meeting coming within the ARR agrees with Racing Australia and each Principal Racing Authority to be bound by and comply with them.
76. The ARR were described by the Full Federal Court in Commissioner of Taxation v Racing Queensland Board [2019] FCAFC 224; (2019) 374 ALR 241 at 262 [92] as embodying a contract. The ARR “creates a standing offer to persons intending to participate in the industry to the effect that, if they choose to participate, then they are agreeing to be bound to comply with the prescribed rules”.^[32]
77. Racing NSW^[33] is the regulating body for thoroughbred racing in NSW and is what is referred to in the ARR as a Principal Racing Authority.^[34] As a Principal Racing Authority, Racing NSW can make local rules (LR) provided they are not inconsistent with the ARR.^[35] Racing NSW’s function is to, among other things, “control, supervise and regulate horse racing” in NSW.^[36] Racing NSW has many powers as set out in section 14 of the Thoroughbred Racing Act 1996 (NSW), including the power to register or licence, or refuse to register or licence, or cancel or suspend the registration or licence of, a race club, or an owner, trainer, jockey, stable hand, bookmaker, bookmaker's clerk or another person associated with racing, or disqualify or suspend any of those persons permanently or for a specified period.^[37] Racing NSW also has the power to supervise the activities of race clubs.^[38]
78. The LR “apply to the administration, supervision and control of racing”.^[39]
79. Under the ARR, a "Club" includes any person or body holding or proposing to hold a race meeting in the Commonwealth.^[40]
80. The CRJC is a NSW Race Club^[41] registered with Racing NSW.
81. The CRJC conducted race meetings in NSW in accordance with the ARR and LR during the Relevant Periods.

Rules Regarding Jockeys

82. Under the ARR, a “jockey” is defined as a person “licensed by a Principle Racing Authority or an association to ride for hire”.
83. A jockey cannot ride in a race conducted in accordance with the ARR without appropriate qualifications and satisfying relevant licence requirements: ARR 81.
84. The Licence Applications require jockeys to acknowledge and agree to be subject to and bound by the ARR and the Local Rules.
85. Pursuant to LR35(1):

    The nominator [owner] or trainer of any horse intended to be run in a race must declare to the secretary of the Club, or other official or agent appointed for the purpose, the name of the rider engaged.

86. Jockeys must have satisfactory and current public liability insurance before being eligible to be licensed or to ride: LR54.
87. LR72 provided (at the relevant time):

    Clubs shall pay such fee for a jockey or apprentice jockey in consideration for their riding a horse in a race or a barrier trial as may be set from time to time by the Board...

    (emphasis added)

88. It is not in dispute that during the Relevant Periods jockeys were paid riding fees in accordance with LR72.^[42]
89. During the period between 1 July 2009 and 30 June 2014, the ride fees payable to jockeys, as set by Racing NSW, were as follows:

90. LR72 was amended in 2014, following consultation with the ATO, and now specifically provides the Clubs are not personally liable for the jockeys’ fees. The current version of LR 72 provides:

    LR 72. (1) For such time that Racing NSW has a policy that various expenses of owners are paid on their behalf as part of the returns to owners:

    (a) Clubs shall at the direction of Racing NSW pay, on behalf of the owners of a horse, such fee for a jockey or apprentice jockey in consideration for their riding a horse in a race or a barrier trial as may be set from time to time by Racing NSW. [amended 1.3.2023]

    (b) Nothing in this LR72 (1) makes the Clubs personally liable for those fees, other to the extent that they are making those payments on behalf of the owners as part of the returns to owners.

CRJC’S SUBMISSIONS - SUMMARY

91. The CRJC submitted during the objection phase that:

    (a) each jockey was an employee of an owner or trainer with respect to a race or barrier trial pursuant to subsection 12(1), subsection 12(3) or subsection 12(8) of the SGAA;

    (b) for the purpose of the SGAA:

    (i) there can only be one employer of an employee;

    (ii) the other employer(s) of each jockey are solely responsible for satisfying SG obligations under the SGAA.

    (c) Alternatively, CRJC submitted:

    (i) the administrative measure in LR72, was introduced as a result of the commencement of the goods and services tax (GST) regime and was in the nature of a gratuitous subsidy that did not impose legal liability on the Clubs to pay the riding fees;

    (ii) if the Clubs were an employer for the SGAA as regards a jockey who rides in a race conducted by CRJC, jockeys receiving salary or wages (as defined in section 11 of the SGAA) of less than $450 per month were “excluded employees” in the relevant tax periods (subsection 27(2) of the SGAA).

92. The CRJC contends that it is not an employer pursuant to subsection 12(8) of the SGAA.^[43] CRJC relies on the following asserted matters in support of its contention:^[44]

    a. During the Tax Periods, a jockey contracted with a trainer or with an owner, either directly or through the horse’s trainer.

    b. During the Tax Periods, neither the Taxpayer nor Racing NSW had any contractual relationship with the jockey (save, in the case of Racing NSW, for the contract created by AR2 between a jockey and Racing NSW).

    c. During the Tax Periods, LR 72 did not establish a legal relationship between a race club and a jockey.

    d. During the Tax Periods, any payment made by the Taxpayer to a jockey pursuant to LR 72 was made in discharge of a liability of, and on behalf of and for the benefit of, an owner or a trainer.

    e. During the Tax Periods, LR 72 did not absolve an owner or a trainer from their contractual obligations as regards the payment of a jockey, nor did it absolve them from:

    i. any statutory obligation to contribute to a complying superannuation fund for a jockey for riding a horse in a race; or

    ii. a liability to pay the superannuation guarantee charge in respect of a jockey who receives a payment in relation to a race.

93. In relation to subsection 12(8) of the SGAA, CRJC submitted that if CRJC is an employer, so too is the owner/trainer.^[45]

COMMISSIONER’S SUBMISSIONS - SUMMARY

94. The Commissioner submits:^[46]

    (a) in Scone Race Club, Steward J identified that the plain meaning of former LR72 does not support the proposition that CRJC was not liable to pay riding fees.

    (b) there was no evidence differentiating the CRJC’s position from that in Scone Race Club; and

    (c) the CRJC was the employer of jockeys who rode in races held by it in the relevant quarters within the meaning of s12(8)(a) of the SGAA.

95. The Commissioner submits that the decision under review should be affirmed save to the extent that the Commissioner’s assessment be amended to remove the imposition of the following administrative component imposed on the CRJC by the Commissioner in error:

EVIDENCE

Witnesses

96. The CRJC relied on evidence from:

    (a) Mr Scott Kennedy, general manager of industry and analytical at Racing NSW;

    (b) Mr Roderick Watt - committee member of Armidale/racehorse owner;

    (c) Mr Michael Beattie – chief executive officer of CRJC/racehorse owner; and

    (d) Ms Gabrielle Beryl Hollows - racehorse owner.

97. No witnesses were called by the Commissioner.
98. No evidence was given by a jockey or trainer who had ridden or trained horses during the Relevant Periods.

Scott James Kennedy[47]

99. Mr Kennedy is the general manager of industry and analysis at Racing NSW.^[48] He is a Certified Practicing Accountant.
100. Mr Kennedy is not an employee of the CRJC. Mr Kennedy told the Tribunal he had raced one horse in 2000. Mr Kennedy gave no details regarding any contractual arrangements he was involved in relating to his racehorse ownership.
101. Mr Kennedy states he is familiar with the process of how a horse ends up running in a race due to his twenty years of experience. Mr Kennedy explained the process as follows:

     (a) in most instances the trainers nominate a horse for a race;

     (b) the Clubs and Racing NSW have no control over the nomination of horses;

     (c) it is almost always the trainer who selects the jockey;

     (d) jockeys are engaged by the trainer;

     (e) the agreements between jockey and trainer are often verbal;

     (f) the Clubs and Racing NSW have no involvement in the agreements between jockey and trainer;

     (g) trainers instruct jockeys how to ride in a particular race.

102. Mr Kennedy gave evidence of his knowledge about the payment process to jockeys between 1998 and throughout the Relevant Period. Mr Kennedy states his knowledge of the arrangements between jockeys, trainers, owners and clubs, comes from “discussions with jockeys and trainers over the course of [his] career”.^[49]
103. Mr Kennedy said prior to July 1999 jockeys were paid riding fees directly by the owners or trainers on behalf of the owners. Riding fees are payable once a jockey has been declared to ride a horse for a race.
104. From July 1999 jockeys were paid riding fees by the Clubs. From 1 July 2000, a “stakes payment system” (SPS) was introduced as part of the “return to owners” policy. From that time, Racing NSW assumed an administrative role and acted as a clearing house for funds flowing to and from stakeholders in the New South Wales thoroughbred racing industry.
105. Mr Kennedy described the “return to owners” metric or measurement as a means of eliminating costs that were previously borne by owners to reduce the costs to owners of owning a racehorse.^[50] Prior to July 1999 owners would pay riding fees to jockeys directly. When the SPS was introduced in 2000, the owners did not pay the jockeys riding fees and were not charged riding fees. Instead, riding fees were picked up by the Clubs.
106. Racing NSW has taken a number of steps to implement the “return to owners” policy including:^[51]

     (a) Clubs ceasing to charge nomination and acceptance fees for races; and

     (b) reducing the impact of costs such as riding fees “by paying them for the benefit of owners”.

107. The SPS is a centralised system for the processing of amounts paid to and received from racing industry stakeholders (such as owners, trainers, jockeys). Mr Kennedy provided the following summary of the flow of funds through the Stakes Payment Account:^[52]

108. Mr Kennedy was questioned about a document titled “chart of accounts summary”.^[53] The chart of accounts summary sets out a list of categories of accounts. Mr Kennedy explained it was a chart of accounts that race clubs could adopt for their MYOB accounts. It was intended to make account descriptions and references consistent with that used by Racing NSW. “Riding fees” were recorded in the chart of account under the code 6-1130. Mr Kennedy has no knowledge of whether racing clubs, such as CRJC, ever adopted this chart of accounts.^[54]
109. From 2000, when the SPS was introduced, riding fee payments made by Racing NSW would be recorded on statements of accounts issued to the clubs.^[55] Racing NSW sent a Statement of Accounts to Clubs and jockeys showing that riding fee payments were debited to the owner’s account and credited to the jockey’s accounts.
110. Mr Kennedy said there was no need for jockeys to render invoices for riding fees and prize money because the necessary information is automatically generated by the SPS.
111. Mr Kennedy’s evidence of his familiarity comes in part from his “discussions” with “participants” of the NSW racing industry.^[56] Mr Kennedy does not identify the participants and contents of those discussions to any specific degree and those persons did not give evidence at the hearing.

Roderick James Watt[57]

112. Mr Watt is a committee member of the Armidale Club and was previously a President of the Armidale Club.
113. Mr Watt is “familiar” with the ATC, CRJC, and Armidale clubs.^[58] Mr Watt has never been employed by those Clubs. He is not responsible for preparing Armidale’s accounts.
114. Since 1983 Mr Watt has part-owned more than 30 racehorses. During the Relevant Period he part-owned two racehorses, “Brave Ali” and “Country Squire”. Brave Ali and Country Squire rode in races at the ATC, CRJC and Armidale Clubs.
115. Mr Watt described his experience of the relationship between owners, trainers and jockeys as follows:-

     (a) Owners did not have written contracts with trainers.

     (b) Owners did not have direct relationships with jockeys.

     (c) Trainers select the jockeys.

     (d) Trainers generally do not have written contracts with jockeys, except possibly for the top jockeys who are on retainers.

     (e) Trainers would issue an invoice to owners from time to time.

116. In relation to the payment of riding fees Mr Watt gave the following evidence:

     (a) prior to the introduction of subsidised racing on 1 July 2000, trainers paid jockeys and put the jockey fees on the monthly bill to the owner;

     (b) he did not know how the trainers paid the riding fees to the jockeys;

     (c) a “returns to owners policy” was introduced to “encourage people to become involved in racing”.

     (d) “After the implementation of “returns to owners”, riding fees no longer appeared on [his] accounts as an owner. Jockeys were paid directly by Racing NSW.

117. In Mr Watt’s experience Armidale has never paid jockeys and “riding fees do not in any way appear on the club’s accounts”.^[59]
118. Mr Watt was not certain whether the fees that were debited to the Armidale club’s account or charged to the Armidale club by Racing NSW included riding fees.
119. At the hearing Mr Watt clarified that when he referred in his witness statement that he would have spoken to numerous owners, he could not recollect any of those discussions. Mr Watt acknowledged he had an impression that it was by far the most common to be told the trainer had engaged the jockey for their services, but he did not know the terms, or the form of arrangements made between jockeys, owners and trainers.
120. Mr Watt’s evidence about the arrangements with jockeys was of a general recollection of what he believed was the case based on discussions with third parties. Mr Watt’s evidence lacked specificity regarding the discussions held with third parties, and there was no corroborating evidence given by a trainer or any jockey engaged during the Relevant Period regarding any information provided to Mr Watt.

Michael Beattie[60]

121. Mr Beattie has been the chief executive officer of CRJC since 2013. Other than CRJC, Mr Beattie has not been an employee of any of the Clubs to the proceedings. Mr Beattie has been involved in the racing industry in an official capacity (as a steward, handicapper, and chief executive officer) since March 1975. Mr Beattie has also been the owner of over 100 racehorses.
122. In his written statement Mr Beattie gave the following evidence regarding the engagement of jockeys for horse races from the 1970s to post July 2000.
123. Mr Beattie described the arrangements and practice of paying jockeys prior to July 2000 as follows:^[61]

     (a) “There was generally no written contract between owners and trainers”;

     (b) “Jockeys were engaged by the trainer on behalf of the owner”;

     (c) “100% of the engagements were oral. There were no written contracts”;

     (d) “Trainers passed on all costs of the engagement with the jockey to owners”, including nomination fees, acceptance fees and riding fees;

     (e) As a racehorse owner he had never entered into a written contract with a trainer;

     (f) “About 45 minutes prior to a race, trainers would deliver to the local race club a fee for the trainer’s jockey”;

     (g) If a riding fee was not provided the horse was not permitted to race; and

     (h) To “ensure jockeys got paid”, “Clubs then paid the riding fee in cash to the jockey at the end of the day”.

124. Mr Beattie states in 2000 the “returns to owners” policy was introduced. This policy was to encourage race-horse ownership by minimising the expenses incurred by owners in owning and racing racehorses. This was implemented by the race clubs not charging owners any fees or any jockey riding fees.
125. Mr Beattie describes the arrangements and practice of paying jockeys from 1 July 2000, as follows:^[62]

     (a) his recollection is that “riding fees were paid directly by Racing NSW to jockeys”;

     (b) the riding fees were paid “‘on behalf of” owners in the sense that it defrayed a cost that the owners otherwise would have borne, and had been bearing for many years”;

     (c) the “stakes payment system” was introduced;

     (d) jockeys were still engaged “by the trainer on behalf of the owner”;

     (e) the arrangements with jockeys were not reduced to writing;

     (f) trainers would invoice owners;

     (g) the trainers’ invoices “did not show riding fees”;

     (h) Racing NSW paid the riding fees directly to the jockeys; and

     (i) Prize money is paid directly by Racing NSW to owners.

126. Mr Beattie described the role of stewards in determining disputes between owners, trainers and jockeys:^[63]

     41. Stewards make determinations after investigating the matter.

     42. The most common dispute is where two jockeys have been engaged to ride the one horse. In that case, the owners’ preference would prevail. The determination was that the owner’s preferred jockey would ride the horse. However, in that case, the owner would be obliged to pay the second jockey’s lost riding fees. That would not be paid by Racing NSW.

     43. It is rare for there to be other arbitrated disputes between owners and trainers on the one hand and jockeys on the other. Disputes tend to be self-resolving. If the owner is unhappy with the jockey, the owner just will not allow the jockey to be used again

     [emphasis added]

127. In Mr Beattie’s written statement he asserted that 100 per cent of engagements between jockeys and trainers were oral. At the hearing he acknowledged he could only speak from his personal experience.
128. No invoices from any trainers were before the Tribunal.
129. Mr Beattie recalled the SPS was introduced in around July of 2000. He said prior to the introduction of the SPS, owners paid jockeys’ riding fees. He agreed that the SPS worked like a clearing house, so that all the funds that needed to be collected from or paid to participants in the NSW thoroughbred racing industry were dealt with by Racing NSW, and that any payments that had to be made to trainers, owners, or jockeys were made by Racing NSW.
130. Mr Beattie said although he was not responsible for preparing CRJC’s accounts, he was aware:

     (a) of the statements of account issued to Clubs by Racing NSW;

     (b) the statements of account recorded some credits to the account and some debits to the account that were processed by Racing NSW;

     (c) that one of the debits to the clubs’ account for each race meeting would be an amount on account of jockeys’ riding fees.

131. Mr Beattie told the Tribunal: “I wouldn’t say I was familiar with [the statement of accounts]” but he accepted that Racing NSW would debit riding fees to the Clubs’ statements of account.^[64]
132. In relation to arrangements with jockeys, he said could not comment on whether there was direct engagement of a jockey by a horse’s owner.^[65]
133. Unexpectedly, despite CRJC being an applicant in these proceedings, Mr Beattie, as its CEO told the Tribunal he:

     (a) was not aware that there were five proceedings being heard before this Tribunal;

     (b) did not know CRJC was an applicant; and

     (c) had not given instructions about the conduct of the proceedings.

Gabrielle Beryl Hollows[66]

134. Ms Hollows:

     (a) is a member of the ATC; and

     (b) was a part owner of a racehorse, “What a Shifter”, between 2007 and 2013 which raced at various race meetings held in New South Wales during the period from 23 April 2011 to 18 September 2013.

     (c) has not been involved with the Armidale, Grenfell, Illawarra or CRJC clubs.

135. In her written statement Ms Hollows described her arrangements with trainers and jockeys during the Relevant Period as follows:

     (a) she was responsible for the management of all matters associated with training and racing What a Shifter;

     (b) she did not enter into any formal written agreement with the trainer of What a Shifter;

     (c) the trainer engaged the jockeys to race What a Shifter “on her behalf”;

     (d) she trusted the trainer to complete all tasks associate with entering What a Shifter in a race, including engaging a jockey and determining race tactics;

     (e) she never entered a written contract with a jockey; and

     (f) the trainer would send invoices to the owners which covered “every aspect of training and racing.”

136. No invoices from the trainer of What a Shifter were before the Tribunal.
137. In relation to arrangements with jockeys Ms Hollows told the Tribunal she did not know whether trainers and jockeys ever entered into a written contract.
138. At the hearing Ms Hollows could not:

     (a) comment on whether there was direct engagement of a jockey by a horse’s owner;

or

(b) give evidence on the terms of any written or oral agreement made by What a Shifter’s trainers with a jockey.

139. Ms Hollows could not specifically recall each or any specific arrangement with a jockey. Her evidence was of a general recollection of what she believed was the case. Ms Hollows’ evidence lacked specificity and there was no corroborating evidence given by the trainer of What A Shifter, or any jockey engaged by her trainer during the Relevant Period.

CONSIDERATION

Conclusion on Evidence

Riding Fee Payment Practices

Period to July 2000

140. Prior to July 2000 some jockeys were engaged by the trainer on behalf of the owner/s of a racehorse.
141. Some trainers would invoice owners for all fees and expenses involved in training and engaged jockeys including for riding fees.
142. The precise terms of the arrangements are not known.

Period from July 2000

143. From July 2000, the “returns to owners” policy was introduced and implemented through the SPS. The intention was to maximise the returns to owners, by reducing costs, to improve the economic viability of owning a racehorse thereby increasing racehorse ownership participation.^[67]
144. When the SPS was introduced, riding fee payments made by Racing NSW would be recorded on statements of accounts issued to the clubs.^[68] Racing NSW sent a Statement of Accounts to clubs and jockeys showing that riding fee payments were debited to the owner’s account and credited to the jockeys’ accounts.
145. Since mid-2000 the riding fee payments by the clubs to the jockeys were facilitated and administered by Racing NSW.
146. The riding fees were paid directly by Racing NSW to jockeys.
147. Prize money is paid directly by Racing NSW to owners and jockeys.
148. Trainers and/or owners engaged jockeys for races. The precise terms of the arrangement are not known. It cannot be said that all arrangements would have been oral. No written contracts were produced.
149. Some trainers would invoice owners for all fees and expenses involved in training and engaging jockeys including for riding fees.
150. From this time LR72 provided the clubs “shall” pay riding fees and the riding fees were paid directly by Racing NSW to jockeys.
151. During the Relevant Periods, the riding fees were paid by Racing NSW as agent for the CRJC in accordance with former LR72. The club assuming the liability so that owners would not bear that liability, is consistent with the "returns to owners" policy. ​
152. As a result of the “returns to owners” policy, owners were no longer obligated to pay riding fees.
153. Some clubs may have recorded riding fees as an expense in their accounts.
154. There is no evidence of an owner being charged riding fees from July 2000 to the end of the Relevant Periods.
155. Racing NSW would debit the riding fees to the clubs' accounts and credit the jockeys’ accounts.

Scone Race Club Limited

156. This matter is analogous to Scone Race Club.
157. In Scone Race Club the issue was whether Scone Race Club was liable to pay SGC in respect of riding fees it had paid to jockeys engaged to ride in races or barrier trials. It is the same issue under consideration in this case, albeit this matter concerns a different club.
158. As in Scone Race Club, the CRJC contended it was the owners or trainers of racehorses, not the Club, that were liable to pay riding fees.
159. The salient features of Scone Race Club were found to be as follows:^[69]
     • Racing NSW paid the fees on behalf of the taxpayer (the taxpayer being the respondent in that case, Scone Race Club);
     • the taxpayer never sought to recover the fees from owners or anybody else;
     • the taxpayer booked the fees as an expense in its accounts;
     • the taxpayer claimed input tax credits for GST purposes when it paid the fees to jockeys which it treated as “subcontractors”;
     • the concept of “returns to owners” was concerned with the elimination of costs which had been imposed on owners in order to promote racing in New South Wales;
     • LR72 “clearly stated that the taxpayer, as a club, “shall” pay such fees to jockeys”;
     • There was no evidence led that it was a term of any contract entered into between owners and jockeys that the owners were liable to pay riding fees;
     • no evidence was led from any owner, trainer or jockey; and
     • No statement of account sent out by Racing NSW suggested that liability lay with the owners.
160. The majority found these features pointed against the inference sought by Scone Race Club.
161. The primary judge held that the Club was not liable to pay SGC for that period because the Club was not an employer of the jockeys within the meaning of subsection 12(8)(a) of the SGAA.^[70] Derrington and Steward JJ upheld the appeal from this decision (Griffiths J dissenting). The majority found the Club had not discharged its onus of proof pursuant to section 14ZZO of the TAA. As in this case, the issue was whether the Club had sufficiently discharged its onus of proving, on the balance of probabilities, that it was not liable to pay jockeys for the races conducted by the Club. Steward J pointed out that the fundamental flaw in Scone Race Club ’s case was that it:

     [84] ... led no direct or actual evidence about who was liable to pay riding fees. It could not point to any contemporaneous document which established that someone else was liable to pay such fees. Instead, its case rested on the drawing of an inference from the evidence about the legal capacity of Racing NSW when it physically made payments of riding fees to jockeys “on behalf of” the taxpayer during the period in dispute.

162. The Court found the evidence to be highly generalised and lacking in specificity. There was no direct evidence of who was liable to pay the riders, only assertion and suggested inference.
163. As in Scone Race Club, for the reasons that follow, the Tribunal finds the CRJC has not sufficiently discharged its onus.
164. The following facts/features accepted in Scone Race Club arose out of the evidence in this matter:^[71]

     (a) As a general rule:

     (i) Clubs did not “engage” jockeys to ride horses;

     (ii) trainers nominated which horses ran in which races,

     (iii) jockeys were engaged by trainers (on behalf of owners);

     (iv) Racing NSW paid the riding fees on behalf of CRJC;

     (v) LR72 stated that CRJC, as a club, “shall” pay such fees to jockeys;

     (vi) the concept of “returns to owners” was concerned with the elimination of costs which had previously been the burden of racehorse owners in order to encourage participation in horse racing;

     (a) there is no evidence that it was a term of any contract entered into between owners and jockeys that the owners were liable to pay riding fees;

     (b) no evidence was led from any trainer or jockey; and

     (c) There was no evidence that a “statement of account sent out by Racing NSW suggested that liability for payment of riding fees lay with the owners”.

165. Unlike in Scone Race Club, no one from the CRJC with the requisite knowledge gave evidence. There are no CRJC accounts, no evidence from an accountant, and no evidence from anyone involved in the preparation of the CRJC’s accounts. It is not known if CRJC booked the riding fees as an expense in its accounts because this material was not in evidence. Despite not producing this evidence in this matter, the CRJC submitted that the amounts were identified as an “expense” in the Clubs’ accounts.^[72] The CRJC submitted this does not assist because the Clubs had assumed an obligation to the owners (via LR72(1)) to pay the owners the amount of the riding fees.
166. There is limited financial information relating to the CRJC. CRJC’s Annual Financial Statements for the year ended 30 June 2010, 30 June 2011, 30 June 2012, 30 June 2013, and 30 June 2014 show riding fees are treated as an expense.^[73]
167. Armidale’s Income and Expenditure Statements show jockey riding fees recorded as an expenditure.^[74]
168. However, the directors report of the CRJC for the year ended 30 June 2013 does not specifically identify riding fees as an expenditure item.
169. As in Scone Race Club:

     (a) the statements of accounts before the Tribunal do not reflect owners paying riding fees; and

     (b) there is no evidence before the Tribunal which points to or infers that owners are still liable for riding fees.

170. No evidence was given from anyone from ATC, Illawarra, or Grenfell and Mr Beattie, CEO of CRJC did not know CRJC was an applicant in these proceedings.
171. It was accepted that Racing NSW and the clubs never sought to recover riding fees from owners.^[75] In closing submissions, the CRJC accepted that the clubs:^[76]

     ... were never going to recover the fees from owners because the whole point of returns to owners was to alleviate owners from the economic burden of ... paying the fees.

172. The same evidence Steward J identified as pointing against an inference being drawn that Scone Race Club was not liable to pay riding fees during the period in dispute (at [101]) emerges from the evidence in this matter, namely:

     (a) Racing NSW paid the riding fees as agent for the racing clubs;

     (b) Owners/trainers never made riding fee payments to jockeys;

     (c) There was no evidence that a racing club ever sought recompense from any owner for the payment of the riding fee. Steward J found that, as is the case here:^[77]

     The complete assumption of the economic burden of paying riding fees by the taxpayer is at odds with the proposition that owners were legally liable to pay such fees. What, one may ask, would be the point of such a liability being retained by owners given those circumstances

     (d) The claiming of such input tax credits under the GST Act by the taxpayer is consistent with the presence of a legal liability to make such a payment: section 11-5 of the GST Act;

     (e) Mr Kennedy’s evidence that the “returns to owners” concept meant that riding fees, previously paid by owners, are now paid by the clubs. As in Scone Race Club, Mr Kennedy agreed that his use of the phrase “on behalf of” was not intended to convey any opinion on the legality of the arrangement.^[78]

173. In Scone Race Club Steward J held that Scone Race Club ’s accounts showed riding fees were treated as a “race day expense” and that “in the absence of contradictory evidence, the taxpayer’s accounts comprised “prima facie” evidence of its liability to pay riding fees: s 1305 of the Corporations Act 2001 (Cth)”.^[79] Steward J held that this evidence:

     [103]

     (e)...shows that the “returns to owners” concept represented a subsidy, or assumption of liability, paid by the clubs to promote horse racing in New South Wales.

     [as part of the returns to owners policy] it was in the interests of the racing clubs to assume the liability to pay riding fees, as a way of promoting the sport of racing horses. It was paid “on behalf of” owners in the sense that it was paid for their benefit. The contention that owners somehow retained a legal liability to pay riding fees is, I think, inconsistent with the very purpose of this policy;

     [emphasis added]

174. Unlike in Scone Race Club, CRJC’s accounts were not before the Tribunal.
175. The Tribunal is persuaded by the majority decision in Scone Race Club and holds the same opinion. The majority of the Full Federal Court in Scone Race Club described the inferences that could be drawn from the available facts.
176. As in Scone Race Club, there was no evidence called in the Tribunal hearing from any trainer or jockey. Steward J found that such lack of evidence, particularly given that the evidence available was that the contracts were “oral” was “telling”. Here, CRJC called some owners, but, as it turns out, they were not privy to or could not state the terms of the arrangements with the jockeys. The Tribunal also finds it telling that CRJC did not call any trainers or jockeys to give evidence, perhaps even more so given the lack of evidence lesson from Scone Race Club.
177. As in Scone Race Club, there was no persuasive evidence before the Tribunal “that it was a term of the contracts entered into between owners/trainers and jockeys, that owners were liable to pay riding fees”.^[80] The evidence was merely that Mr Kennedy believed the payments were made “on behalf of” the owners.
178. The statements of accounts issued to the clubs by Racing NSW were also considered by the Court in Scone Race Club. Consistently with the evidence before this Tribunal, the statements of accounts in evidence in Scone Race Club:^[81]

     (a) had been prepared in accordance with Racing NSW’s “Cash Flow Management Policy”;

     (b) showed debits for a “rider payment”; and

     (c) the statement of account sent by Racing NSW to an owner recorded a credit of that account for prize money. The statement of account sent to the trainer recorded a series of credits for the receipt of prize money. There was no evidence of the owners' or trainers' accounts being debited on account of riding fees. The statement of account sent to the jockey contained a series of credits for prize money and for riding fees. It contained a “GST summary”.

     (d) the “statements of account” were prepared consistently with the “Stakes Payment System” operated by Racing NSW which was a “centralised system” for the processing of amounts paid to and received from stakeholders in the racing industry.

179. In Steward’s J opinion, the SPS system and statements of account, “do not support the existence of a liability on owners to pay ridings fees to jockeys. Rather, they only show Racing NSW paying riding fees and billing the taxpayer for those fees”.^[82]
180. The Court also found (at [104]) the plain meaning of LR72:

     ...does not support the proposition that the taxpayer was not liable to pay riding fees”.

     ...The fact is:

     Local Rule 72 rule identified the clubs as the entities that “shall pay” the riding fee. It did not identify anyone else. It also expressed that such a fee shall be paid “in consideration” for a jockey riding a horse. The language of this rule may usefully be compared with the applicable language of s 12(8)(a) of the Superannuation Guarantee (Administration) Act 1992 (Cth) (the “SGA Act”) as follows:

     a person who is paid to perform ... sport ... is an employee of the person liable to make the payment;

     In a very real sense, Local Rule 72 tells one precisely the identity of the person who is liable to make the payment of riding fees to jockeys: it is the Club who “shall” make such payments; and

     the Local Rule simply does not state that the Clubs are to make the payment “on behalf of” owners, or anyone else. In my view, if owners are truly liable to make such payments Local Rule 72 would have expressly said so.

     [emphasis added]

181. The ordinary meaning of “shall” according to the Macquarie Dictionary Online and Oxford Online Dictionary expresses intention, resolve or an obligation.
182. The Tribunal agrees with the conclusion of the majority of the Federal Court in its interpretation of LR72. The Tribunal also agrees with the conclusion of the majority of the Federal Court that the above evidence, does not sufficiently support “the drawing of an inference that the liability to pay riding fees had never been imposed on the taxpayer during the relevant period, which had only ever paid such fees on behalf of owners”.^[83]

Construction of section 12 of the SGAA

General Principles

183. The ordinary meaning of a word must be taken as its ordinary meaning within the purpose and context of the legislative scheme in which it is found.^[84] This is set out in section 15AB of the Acts Interpretation Act 1901 (Cth) (AIA) which provides relevantly that:

     (1) Subject to subsection (3), in the interpretation of a provision of an Act, if any material not forming part of the Act is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material:

     (a) to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act.

     [emphasis added]

184. That extrinsic material may be used is reflected in section 15AA of the AIA which provides:

     “In interpreting a provision of an Act, the interpretation that would best achieve the purpose or object of the Act (whether or not that purpose or object is expressly stated in the Act) is to be preferred to each other interpretation.”

185. The Queensland Court of Appeal in Commissioner of the Australian Federal Police v Hart [2016] QCA 215; 336 ALR 492 said “where possible, meaning must be given to the words used”.^[85]
186. Although extrinsic materials may be used, they “cannot displace the meaning of the statutory text”: Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; (2012) 250 CLR 503, at 519 [39].
187. In SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; (2017) 262 CLR 362 at [14] where Kiefel CJ, Nettle and Gordon JJ explained the starting point as follows:

     “The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute, whilst at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, the meaning must be rejected.”

188. Neither party is relying on the ordinary meaning of employer and employee.^[86] This issue is whether any of the expanding provisions in subsections 12(2) to (11) apply. This matter is only concerned with subsections 12(3) and 12(8).
189. The parties agree that it was not intended by parliament that there be an apportionment of payments where there is a liability to make payments pursuant to more of these subsections.^[87]
190. The CRJC contends subsection 12(3) is the most appropriate and the Commissioner contends subsection 12(8) is the most appropriate.
191. The purpose of the deeming provisions in subsections 12(2)-(8) is to bring people into the SGC scheme as liable employers who may not otherwise have been caught. It extends the liability to make SGC payments.
192. There are construction principles to follow in construing deeming provisions. The High Court noted in Maroney v The Queen [2003] HCA 63; 216 CLR 31 that it should be remembered:

     11...The effect of statutory deeming provisions is often to arrive at results quite different from those which the ordinary meanings of words would produce.

193. A deeming provision is to be construed “strictly” and “only for the purpose for which [it is] resorted to”: Federal Commissioner of Taxation v Comber [1986] FCA 92; (1986) 10 FCR 88 at 96; [1986] FCA 92; 64 ALR 451 at 458; Commissioner of Taxation v Glencore Investment Pty Ltd [2020] FCAFC 187; 281 FCR 219, at [155].
194. The CRJC contended that section 12 should be construed sequentially. The Tribunal does not agree - there is no indication that the section is to be read/interpreted in this manner. No authority for the CRJC’s proposition was cited.
195. The parties agreed that in the event it is determined that more than one provision in section 12 applies to make two employers liable to pay SGC in relation to the same activity performed by the employee that “a coherent approach to applying the extended definition of employer within the Act requires the application of the most relevant section to the entity with a liability to pay the employee, which will generally be the entity paying the amount”.^[88]

Section 12(3)

196. The Second Report of the Senate Select Committee on Superannuation, Superannuation Guarantee Bills, noted (at page 146) that subsection 12(3) was “designed to include a person who may not be an employee in the normal sense but who is in fact not very distinguishable from an employee.”
197. In relation to subsection 12(3), the Superannuation Guarantee Ruling by the ATO, “SGR 2005/1 – Who is an employee” (SGR 2005/1) states:

     87... [Section 12(8)] is not limited in the way that subsection 12(3) is limited to contracts wholly or principally for a person's labour.

198. SGR 2005/1 sets out the Commissioner’s view as to when an individual is considered to be an “employee” under section 12 of the SGAA.^[89] It provides in relation to subsection 12(3) that:

     78. Where the terms of the contract in light of the subsequent conduct of the parties indicates that:

     • the individual is remunerated (either wholly or principally) for their personal labour and skills;

     • the individual must perform the contractual work personally (there is no right of delegation); and

     • the individual is not paid to achieve a result (paragraphs 43 to 47 discuss when a contract is one to achieve a result), ^[90]

     the contract is considered to be wholly or principally for the labour of the individual engaged and he or she will be an employee under subsection 12(3).

199. In the Tribunal decision of Brinkley and Commissioner of Taxation [2002] AATA 218; 49 ATR 1178, the issue was whether a captain and deckhands engaged by the skipper of a fishing vessel were employees of the skipper under section 12 of the SGAA. As in this matter there were no written agreements. However, in Brinkley all parties to the contract gave evidence (although their accounts of the arrangements differed). The Tribunal found that the captain and deckhands were employees and were not conducting their business as principals. The Tribunal found the nature of the relationship, in particular the skipper’s retention of the right to control the operations of the vessel, suggested the relationship was in substance a contract for the supply of labour.
200. In Dominic B Fishing Pty Ltd and Commissioner of Taxation [2014] AATA 205 the Tribunal had to determine whether crew members on a commercial fishing vessel operated by the taxpayer were employees for the purposes of subsection 12(3) of the SGAA. In Dominic, unlike the present matter, there was a written contract. The Tribunal found the crew members were not employees for the purpose of subsection 12(3) because the written contract suggested the parties intended the crew members should be contractors conducting their own business rather than employees. The contract specified crew members were to bear the cost of their own sickness and accident insurance and confirmed “no party is liable for any accident or mishap that occurs during the voyage”. The Tribunal found there was little scope for the exercise of supervision and control.
201. Brinkley and Dominic demonstrate the importance of having evidence from all parties to the contract, particularly where there is no written contract, for the purpose of determining the status of the relationship.
202. The Full Federal Court has determined that for section 12(3) to apply the following elements must exist:^[91]

     (a) a “contract”;

     (b) the contract must be “wholly or principally for the labour” of a person; and

     (c) the person must “work” under that contract.

203. Subsection 12(3) of the Act was considered recently in Jamsek v ZG Operations Australia Pty Ltd (No 3) [2023] FCAFC 48 (Jamsek). The issue before the Court on the remitted appeal was whether the primary judge was correct to find that Mr Jamsek and Mr Whitby did not fall within the extended definition of “employee” for the purposes of subsection 12(3) of the SGA Act:

     [31]... The words “other party to the contract” show that s 12(3) contemplates the relevant contract as having two sides to the contract with the person performing the work being the first party and the client being the “other party”.

     [32] On its proper construction, the first element of s 12(3), (i.e. that there should be a “contract”) requires a bilateral exchange of promises of labour and payment between two sides of the contract...

     [33] We accept the submission of the Commissioner that s 12(3) only has application where the putative “employee” is an identified natural person who is a party to the contract in their individual capacity, rather than in any other capacity such as a partner or trustee of a personal service trust. The actual language of s 12(3) suggests that it operates only when an individual, (i.e. a natural person) in that capacity, works under a contract. The ordinary meaning of the phrase “works under a contract” and the word “labour” each point to an individual worker in their individual capacity. The concepts of “works under a contract” and “labour” are concepts of personal exertion and personal effort: JMC Pty Ltd v Commissioner of Taxation [2022] FCA 750 at [189] (Wigney J).

     [34] This also accords with the legislative intent evident in the Senate Select Committee’s Second Report on the Superannuation Guarantee (Administration) Bill 1992 (Cth) at [2.9] p 147 (Committee Report), otherwise the word “other” in the phrase “other party to the contract” in s 12(3) has no work to do.

     [36] Section 12(3) is not satisfied where a contract is properly characterised as being for the provision of a result and not for labour: Neale at 425; World Book (Australia) Pty Ltd v Commissioner of Taxation (FCT) (1992) 27 NSWLR 377 at 382, 385-386; JMC Pty Ltd v Commissioner of Taxation [2022] FCA 750 at [31], [195]; Vabu Pty Ltd v Federal Commissioner of Taxation (1996) 96 CRJC 4898 at 4903, special leave refused: Federal Commissioner of Taxation v Vabu Pty Ltd (1997) 35 ATR 340; Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21 (Hollis v Vabu) at 48 [68], although no s 12(3) issue arose there, see Hollis v Vabu at 31 [20].

     [37] That s 12(3) only has application where the putative “employee” is an identified natural person who is a party to the contract in their individual capacity is further reinforced by the combined operation of s 11(1)(ba) and s 19(1) of the SGA Act. This is also made clear by the purpose of the superannuation guarantee regime, which is to provide for adequate living standards in retirement for natural persons, individual workers and employees. The SGA Act and the extrinsic materials including the Committee Report are replete with references to that objective.

     [40] Reading ss 11(1)(ba) and (19)(1) together discloses that s 12(3) is only capable of operating where: (a) an identified natural person (the Worker) is a party to a contract in their individual capacity; (b) the Worker works under the contract; and (c) the party on the other side of the contract makes payments to the Worker in respect of their labour under the contract.

     [41] The requirement that the Worker be a party to the contract in order for s 12(3) to apply is further supported by the need to avoid the anomalous and unintended outcome which could otherwise arise in triangular labour hire agreements where both the labour hire entity and the employer would become liable to a superannuation guarantee charge in respect of the same Worker’s labour.

     [emphasis added]

Element 1 – there must be a contract

204. What is known here? Clearly someone is engaging the jockeys to ride in races conducted by the CRJC. However, it is not known with sufficient certainty who the parties are to the contact. If, as was accepted in Scone Race Club, and as was asserted by the CRJC, the contract was between the trainer and jockey, why was no evidence called by either of those parties? Even if it could be said that all contracts were made by trainers on behalf of owners, it was the trainers, not the owners, who entered into the arrangements and dealt with the jockeys. The owners who gave evidence in this matter could not provide any details. The vagueness of the evidence also means it cannot be presumed that these arrangements were uniform.
205. It is reasonable to infer that someone engages a jockey to ride a race. Even the CRJC could not definitively submit who it was that engaged the jockey (instead proffering alternatives - owner or trainer). There is insufficient evidence to establish a custom. Those giving evidence could not recall specifics.
206. There were no contemporaneous records in evidence of any jockey arrangements.
207. Given these circumstances the Tribunal is not satisfied there was a “contract”.

Element 2 - Is the engagement of the jockey “wholly” or “principally” for the labour of the jockey?

208. “Principally” ordinarily means chiefly or mainly: Federal Commissioner of Taxation v Commonwealth Aluminium Corporation Limited [1980] HCA 28; (1980) 143 CLR 646 at 658-8. ^[92]
209. In Jamsek the Court said, at [49]-[50], whether the contract is wholly or principally “for” the labour of the person, “is to be assessed from the perspective of the putative “employer” client” and ““determined by reference to [the] terms” of the contract”. The Court said (at [51]-[52]):

     51. A contract that “leaves the contractor free to do the work himself or to employ other persons to carry it out” is not “wholly or principally for the labour of the person”: Neale at 425. It does not matter that “the contractor has himself performed the bulk of the work under the contract or that it was the expectation of the parties that he would do so if, in truth, the contract did not create the relationship of master and servant”: Neale at 425.

     52. A contract “whereby the contractor has undertaken to produce a given result” is also not “wholly or principally for the labour of the person”: Neale at 425. It follows from the above analysis, that “s 12(3) only applies in relation to contracts for the personal performance of work by the worker who is a party to the contract”: On Call at [309] per Bromberg J.

210. A jockey could have told the Tribunal who it was that engaged them and for what purpose, but no jockeys were called. A similar evidential issue arose in Commissioner of Taxation v Racing Queensland Board [2019] FCAFC 224; 374 ALR 241 (Racing Queensland Board). In Racing Queensland Board, the Court was concerned with the Racing Queensland Board’s obligation, as a Principal Racing Authority, for the payment of riding fees and SGC for jockeys. Griffiths and Derrington JJ thought it was a “matter of some curiosity and certainly worthy of comment that the QPC adduced no direct evidence of the circumstances of the payment of riding fees made by it to jockeys in the Relevant Periods”. RQB did not produce invoices or other financial records. No jockey was called to give evidence. The Court found “the actual nature of the transactions and the rights and liabilities of the parties were left somewhat opaque”.
211. In JMC Pty Ltd v Commissioner of Taxation [2023] FCAFC 76; 297 FCR 600 (JMC) the Full Court noted that remuneration by the hour pointed against contracts being characterised as stipulating a given result. Here the jockeys were paid a flat fee determined by Racing NSW. The Full Court said:

     [23] A contract is not wholly or principally for the labour of the putative employee if the contract is a contract for the provision or production of a result and the putative employee is paid for that result^[93].

212. We do not know the terms of the “engagement” other than that a jockey was paid a riding fee by the CRJC for each race. It is accepted that a jockey engaged to ride a particular horse in a particular race is unlikely to be permitted to delegate that task. The terms of the contract could not be considered and scrutinised. It is possible however that the engagement of a jockey for a single race is a contract whereby the jockey has undertaken to produce a given result – i.e. a win or a place to be rewarded prizemoney (which after all is presumably the sole reason tactical instructions are given to a jockey before a race). A placing in a horse race is a quantifiable result.
213. The Full Court in JMC noted that remuneration by the hour pointed against contracts being characterised as stipulating a given result. Here the jockeys are paid a flat fee per race determined by Racing NSW.
214. The CRJC submits that the terms of an oral contract can “be inferred from the circumstances, including in whole or in part from the parties’ conduct or a course of dealing between them, or implied where necessary for business efficacy”.^[94]
215. By way of analogy, barristers are engaged by clients, through solicitors, on an ad-hoc case-by-case basis. They are not deemed “employees” of the clients or solicitors. There is a costs agreement, and the work is performed in accordance with that contract, and the work (generally) cannot be delegated. There is no obligation for solicitors and clients to pay superannuation guarantee payments for barristers because of subsection 12(3).
216. Similarly, jockeys are engaged on a race-by-race basis.
217. The terms of the contractual arrangements between the owners and jockeys or trainers and jockeys are not known with any sufficient degree of certainty. Without explanation from the CRJC, no jockey or trainer (the people said to be the parties to the said contract) gave evidence.
218. What is known from the anecdotal or generalised evidence is that jockeys are engaged on an ad hoc basis, i.e. on a race-by-race basis. Jockeys could, it can reasonably be inferred, refuse to ride in a particular race for a particular owner. It can also be inferred that jockeys were free to ride for any number of owners at any particular race meet albeit only for one owner per race. The relationship appears to be more akin to that of joint venture for each race rather than a contract wholly or principally for the labour of the jockey. It is also reasonable to presume there is little scope for control beyond a set of desirous tactical instructions relayed to a jockey before a race. Once a race is underway it is the jockey alone who decides how the race is to be run. They are not under another’s control once the race has commenced. We also know there is no negotiation of any fee to be paid. Jockeys are not paid hourly for example, as the riding fee remuneration for a jockey’s race performance is set. Jockeys are, it can be inferred, contracted to produce a result (the racing of a horse in a particular race).
219. In Chiodo v Silk Contract Logistics [2023] FCA 1047 the issue was whether a truck driver was an employee. In that case, the Court found the driver was contracted to produce a result, namely the successful delivery of goods rather than the provision of labour.
220. The contract was verbal and in part implied. Concerning verbal contracts Kennett J noted the following from the authorities:

     [8] ... where the contract is not written and its terms are to be inferred in whole or in part from the parties’ conduct. The terms of an oral contract may not be limited to express terms; terms may be inferred from the circumstances, including a course of dealing between the parties, or implied where necessary for business efficacy: Realestate.com.au Pty Ltd v Hardingham [2022] HCA 39; 406 ALR 678 at [21]–[22] (Kiefel CJ and Gageler J).

     [9] Where there is no written contract and no evidence of a particular conversation in which a contract was formed orally, evidence of the parties’ conduct must necessarily be considered in order to draw inferences as to whether the meeting of minds necessary to create a contract has occurred and what obligations they have thereby undertaken (see Personnel Contracting at [177] (Gordon J, Steward J agreeing)).

     [emphasis added]

221. In Queensland Stations Pty Ltd v Federal Commissioner of Taxation [1945] HCA 13; (1945) 70 CLR 539 the High Court had to determine whether moneys paid to drovers under certain agreements were “wages” within the meaning of the Pay-roll Tax Assessment Act 1941-1942 (Cth). The determination involved a consideration of the difference between a contract “for” services and a contract “of” service. The High Court held:

     If the work to be done by one person for another is subject to the control and direction of the latter person in the manner of doing it, the person doing the work is a servant and not an independent contractor, and prima facie his reward would be wages. An independent contractor undertakes to produce a given result, but is not, in the actual execution of the work, under the order or control of the person for whom he does it.

     [emphasis added]

     ...

     the payment made to the drover represents much more than a payment for his work. Payments under the contracts in question are not wages in the ordinary sense and do not otherwise fall within the statutory definition of wages. They are therefore outside the Act.

     ...

     ... The contract between the parties is a contract for services but it is not a contract of service (Simmons v. Heath Laundry Co.[16]). The tests applicable in deciding whether a man be a servant or an independent contractor are discussed at length in Performing Right Society Ltd. v. MCRJChell and Booker (Palais de Danse) Ltd.[17]; Dowd v. W. H. Boase & Co. Ltd.[18]. The facts I have referred to appear to me to show that the drover undertook to produce or bring about a specified result employing his own means to accomplish that result. The owner had no control over the particular details of the job as it went on. The calling of a drover—one of great antiquity—is distinct and separate from the business of graziers. By trade and usage, he is at liberty to drive the cattle of any other person. While engaged in the operation he is, apart from specific agreements, in exclusive possession of the cattle and is free from the control of the owners. ...

     ... In the instant case it is clear from the facts that the owner had parted with the possession and control of the cattle. The obligation imposed on the drover to obey and carry out all lawful instructions is not a reservation of detailed control and possession having regard to the terms of the agreement as a whole.

     [emphasis added]

222. Similarly, the owner parted with the possession and control of the racehorse to the jockey. The instructions from the trainer were most likely “not a reservation of detailed control and possession having regard to the terms of the agreement as a whole”. Dixon J said “a reservation of a right to direct or superintend the performance of the task cannot transform into a contract of service what in essence is an independent contract”.
223. Even if this presumption was wrong, as Dixon J (at 552) said there is nothing to stop parties from forming an employee relationship but whether that is in fact what occurs depends on the facts.
224. In relation to the degree of control a trainer has over a jockey. See Carter v Murray (1937) 11 WCR 231 (“Carter”). In Carter, the Workers Compensation Commission of New South Wales had to determine, for the purpose of a compensation claim, whether a jockey, while riding for fee or reward in a hurdle race run under the management of the Australian Jockey Club at Randwick, was an employee of the racehorse trainer and owner. The jockey argued he was working under a contract of service with the racehorse trainer and owner; that he was a "casual" worker who had worked under successive contracts of service with two or more employers in the "horse racing industry". Perdiau J found the jockey did not work under a "contract of service" with the trainer owner, who neither exercised nor retained control over the manner in which the applicant rode as a hurdle jockey in a measure sufficient to constitute the relationship of employer and employee.
225. As in this matter, the jockey in Carter was paid a riding fee for races run under the management of the applicant club. In Carter the jockey gave evidence of the instructions he was given by the owner/trainer of the horse prior to the race under consideration - "[A]fter you jump the 5-furlongs hurdle, go to the front." The Commissioner found the jockey used discretion as to how he rode a horse right through the race. It was argued for the jockey that:

     In races it is the general thing for the trainer to make certain suggestions to the jockey; they were useful if the jockey did not know the horse; the trainer would know the horse well and the most suitable way to ride it; when the jockey knew the horse, had ridden him, and was fairly familiar with his moods, the trainer would not give any instructions.

The trainer argued:

...although a great amount of discretion may have been left to the applicant in riding a horse, if his employer issued instructions the applicant was bound to observe them, and consequently the contracts were "of service".

226. The jockey argued that knowing how to ride a race and using his discretion throughout the race was part of the skill of a jockey. Although no jockey or trainer was called in this matter, it is obvious that a jockey is engaged for their skills, not just for their ability to “parrot” instructions given from a trainer.
227. Perdiau J referred to Simmons v Heath Laundry Co [1910] UKLawRpKQB 33; [1910] 1 KB 543 where Buckley LJ said (at 553):

     In each case the question to be asked is, what was the man employed to do; was he employed upon the terms that he should, within the scope of his employment, obey his master's orders, or was he employed to exercise his skill and achieve an indicated result in such manner as in his judgment was likely to ensure success

228. Perdiau J also referred to Performing Right Society Ltd. v. MCRJChell and Booker (Palais de Danse) Ltd (1924) 1 K.B. 762 where the issue was whether an agreement between band members and a music hall, was such that the band were independent contractors or were servants of the defendants. The Court held (at 765-766) that “the question whether a man be a servant or an independent contractor is often a mixed question of fact and law”. Some examples of cases were given:

     whilst a labourer employed to cleanse drains at 5s. for the job was held to be a servant and not a contractor: see Sadler v. Henlock (1), a plumber called in by a landlord to mend a leaky cistern was held to be an independent contractor and not a servant see Blake v. Woolf. (2) A licensed drover has been held to be an independent contractor and not a servant: see Milligan v. Wedge (3), on the ground that he exercised an independent calling. So, too, in Rapson v. Cubitt (4) a gas-fitter was held to be an independent con-tractor. On the other hand, I conceive that a general manager, at a high salary, of a partnership, or the managing director of a limited company at an even higher salary, are usually servants and not independent contractors, and in many cases a partnership or a limited company has been held liable for their negligence or breach of duty.

     ...

     (at 767): The nature of the task undertaken, the freedom of action given, the magnitude of the contract amount, the manner in which it is to be paid, the powers of dismissal and the circumstances under which payment of the reward may be withheld, all these bear on the solution of the question. But it seems clear that a more guiding test must be secured...

     ...the final test, if there be a final test, and certainly the test to be generally applied, lies in the nature and degree of detailed control over the person alleged to be a servant...

     (at 768)

     An independent contractor is one who undertakes to produce a given result, but so that in the actual execution of the work he is not under the order or control of the person for whom he does it, and may use his own discretion in things not specified beforehand

     ...

229. The terminology used in the contract and the degree of control over how the work was performed was relevant to an understanding of the nature of the relationship.^[95]
230. Here the Tribunal is deprived of that detailed information. These cases demonstrate the necessary information required to form a view of the nature of an employer/employee relationship with a sufficient degree of certainty.
231. It is not unheard of for jockeys to be considered as employees of race clubs in Australia. At the time Carter was decided the section 6(10) of the Workers Compensation Act 1926 (NSW) deemed a “jockey engaged to ride for fee or reward in any horse or pony race run under the management of any racing club” to be employee of the club for the purposes of that Act (emphasis added).
232. On the evidence available the Tribunal is not satisfied that this second element has been established.

Element 3 - the person must “work”

233. Given the findings above it is unnecessary to consider this element although it is reasonable to infer that the jockey “works”.

Conclusion re subsection 12(3)

234. The CRJC carried the onus of establishing that they fell within subsection 12(3) of the Act. There is insufficient evidence before the Tribunal to determine whether subsection 12(3) applies here. As a result, the Tribunal finds the CRJC has not discharged its onus of proving that any of the “contracts” were principally for the labour of the jockey.
235. In the Tribunal’s opinion, the extension in subsection 12(3) is not applicable here. That leaves subsection 12(8).

Construction of subsection 12(8)

236. In Scone Race Club, Steward and Derrington JJ agreed with Griffiths J’s construction of subsection 12(8)(a) of the SGAA which followed from the Court’s reasons for judgment in Commissioner of Taxation v Racing Queensland Board [2019] FCAFC 224.
237. Griffiths J explained:

     [9] Section 12(8)(a) of the SGA Act plainly expands the ordinary meaning of the expression “employee” (emphasis added):

     ...

     [10] Subsections 12(2) to (11) undoubtedly expand or clarify the ordinary meaning of the word “employee”, but none of those provisions directly addresses the counterpart position regarding the meaning of “employer”. In response to the Court’s invitation, the parties filed brief post-hearing written submissions on this issue. As Griffiths and Derrington JJ pointed out in the Racing Queensland Board appeal at [51] the drafting of s 12 is not ideal. For the reasons given by their Honours there (with which Steward J agreed), ss 12(2) to (11) should be construed as expanding (or clarifying) in a coordinated way the meaning of both “employee” and “employer”. Accordingly, although there is no explicit provision which expands the meaning of the term “employer” with respect to s 12(8)(a), the proper construction is that the term “employer” is expanded coordinately so as to apply to the person who is liable to make the payment referred to in s 12(8)(a).

     [11] Section 12(8)(a) operates by reference to a person who falls within its terms as being “an employee of the person liable to make the payment” (emphasis added). The mere fact that a person makes a payment is not determinative – there has to be a liability to make the payment for the purposes of s 12(8)(a). The scheme operates on the basis that that person is the employee’s employer to whom the obligation to pay SGC under s 16 of the SGA Act applies. This gives rise to the central issue in these proceedings, namely whether the Club discharged its onus of showing that it was not liable to pay jockeys for riding in races (or barrier trials) conducted by the Club.

238. SGR 2005/1 states:

     87... [Section 12(8)] is not limited in the way that subsection 12(3) is limited to contracts wholly or principally for a person's labour.

239. In terms of the construction of subsection 12(8) of the SGAA there is consensus between the parties that:^[96]

     (a) subsection 12(8) is a deeming clause, deeming certain persons to be employers;

     (b) the object of subsection 12(8)(a) is to ensure that where a person assumes a liability to pay someone in order for that person to (inter alia) play sport, then that person should be the employer of the person for the purposes of the SG Act;

     (c) subsection 12(8)(a) should be construed in the context of that purpose;

     (d) subsection 12(8)(a) refers to a “person liable to make the payment”. When the section refers to “the payment”, it must be referring to the words earlier in the section which relevantly stated, “a person who is paid to ... play ... sport” (emphasis added). The liability referred to in subsection 12(8)(a) is a liability to make a payment to a person to play sport.

240. Jockeys are paid to perform/participate in a sport when they are engaged to ride horses in barrier trials or races at one of the CRJC’s race courses.
241. The parties do not agree on who was “liable to make the payment” of the riding fees to jockeys during the Relevant Periods. This is where LR72 is relevant. As already found, the actual contractual terms are not known. Even if they were, all possible parties to the contracts have agreed with Racing NSW to be bound by and comply with the ARR and LR. LR72 is, as identified in Scone Race Club, clear in identifying who is liable for the riding fee payment.

Local Rule 72

242. As outlined above, Steward J noted that LR72 identifies it is the Clubs that “shall pay” and no one else.
243. The CRJC submitted the discernment of the function of LR 72(1) starts from the recognition that LR 72(1) is to be construed against the backdrop of the custom and practice which preceded its introduction.^[97] That backdrop was the “returns to owners” policy which took away any obligation on owners to pay riding fees.
244. The CRJC submitted:^[98]

     LR 72 provides an administrative mechanism whereby moneys held by a race club are paid to a jockey on behalf of the owner or trainer, for the benefit of the owner or trainer, in discharge of a liability of the owner or trainer, and not in discharge of any liability on the part of the race club or Racing NSW.

245. There is no express reference in LR72 to payments being made on behalf of anyone. The CRJC seeks to import words into LR72. The Tribunal is not persuaded the words are necessary in order for LR72 to be understood, nor for LR72 to be effective and/or able to be implemented.
246. Before words can be read into a statutory provision certain conditions must be met. It must be apparent that the words were inadvertently overlooked and there must be certainty about what it is said to have been omitted. If it is not certain it cannot be justified.^[99] In R v Young 46 NSWLR at 687, Spigelman CJ said:

     Putting to one side obvious typographical errors ... the court supplies words ‘omitted’ by the draftsperson only in the sense that the words so included reflect in express, and therefore more readily observable, form, the true construction of the words actually used. In my opinion, the authorities do not warrant the court supplying words ‘omitted’ by inadvertence per se

247. In Haureliuk v Furler [2012] ACTCA 11; 6 ACTLR 151, it was said of Spigelman J that he:

     [27] Spigelman CJ expressed what he considered the relevant principle to be that words are not inserted to perfect the intention of Parliament; rather, the actual words are construed to conform with the intention, where they may reasonably be so construed.

248. It is the racing rules that provide the “custom” because the rules regulate the entire industry.
249. The CRJC’s proposed construction of LR72 and subsection 12(8) flies in the face of the clear plain language of the rule and section, respectively.
250. It does not matter that LR72 is silent as to whom the Clubs pay the fee, all that matters is whether it is the Club that is liable to make the payment. The owner does not have to remain liable.
251. Further LR72 does not state the payment is made on anyone’s behalf (as was found by the majority in Scone Race Club).
252. The majority of the Full Court noted that the rule could have, but did not, expressly provided that the Club made the payment as an agent for or on behalf of someone else.
253. The use of the phrase “on behalf of” by some witnesses was not clarified. In Racing Queensland Board (at [58]) Griffiths and Derrington JJ noted those words could mean:
     • using the money of another person to discharge the first person’s debt;
     • one person using their own money to discharge another’s debt;
     • a person using their own money to discharge a debt and seeking recompense from the principal; or
     • assuming the liability of another, with or without any expectation of being recompensed in the future.
254. As Steward J pointed out in Scone Race Club, the necessary or precise meaning was never established. He said:

     [92] ... without more, [the words “on behalf of”] insufficiently identify the source of the legal liability to pay riding fees. A similar observation can be made about Mr Kennedy’s assertion that riding fees were paid “on behalf of the owners”. Such an inexact pronouncement, in and of itself, does not establish that the liability to pay riding fees lay with the owners.

     [emphasis added]

255. The evidence in this matter has not taken this issue any further.
256. On the evidence it cannot be said that the contracts with jockeys (whomever they are with) make subsection 12(3) the more appropriate provision to apply to this situation as opposed to subsection 12(8). The Tribunal agrees with the Commissioner that this cannot be determined without knowing the terms and the parties to those relationships.^[100] Mr Beattie could not comment on whether there was direct engagement of a jockey by a horse’s owner.^[101] So how can the Tribunal be sufficiently certain of the parties to the contract?
257. Subsection 12(3) talks about contracts wholly or principally for labour, as opposed to subsection 12(8) which refers to the situation where “a person is paid to perform or participate in a performance or sport”. On its face, these provisions contemplate different factual scenarios.
258. The common law “employer”, if any, of the jockeys is irrelevant to the inquiry as to whether section 12(8) applies to make the Clubs liable.
259. The Tribunal finds that the evidence does not give rise to an inference that the CRJC was not liable to pay the riding fees pursuant to subsection 12(8) of the SGAA during the Relevant Periods.

Can more than one party be liable at the same time under subsection 12(8) for the same engagement?

260. The CRJC submits the use of the definite article before the words “person liable to make the payment” necessarily indicates that only one person may be liable.^[102] The Commissioner disagrees and submits that the constructional question does not bear upon the Tribunal’s resolution of the ultimate question in the present proceeding.^[103]
261. The Tribunal agrees with CRJC that “the person” as opposed to “a person” means only one person can be liable at the same time for the payment for the same performance.
262. The CRJC referred to Uelese v Minister for Immigration and Border Protection (2015) 256 CLR 203 (Uelese). In Uelese the High Court held (in construing a provision in a different Act) that:

     [108] ... the selection of the indefinite article “a” in preference to the definite article the suggests that the drafter anticipated the possibility of more than one hearing in relation to an application for review.

     [quotation marks before and after “a” inserted]

263. The CRJC also referred to Jamsek where the Full Court of the Federal Court recently described the proposition that the SGAA might have that operation as an “anomalous and unintended outcome” in relation to triangular labour agreements.
264. This does not necessarily mean that a person could not be deemed an employee under both subsection 12(3) and 12(8) for example. The question would then be what is the most appropriate application of section 12 in the circumstances.
265. Ultimately this question does not arise for determination in this matter.
266. The Tribunal finds that multiple employers for one activity is not contemplated by the SGAA.

Conclusion re subsection 12(8)

267. The CRJC has not sufficiently discharged its onus of proving, on the balance of probabilities that it was not liable to pay jockeys for the races conducted by it pursuant to section 12(8) of the SGAA.

ALTERNATIVE CONTENTIONS

Implied Term – was it an implied term of the contract between owners/trainers and jockeys that the owners/trainers were obliged to pay jockeys the riding fee?

268. The CRJC seeks to imply certain terms into the arrangements by which jockeys are engaged to ride in races. The prerequisites for implying a term into a contract are as stated in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, at [283]:^[104]

     ...for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.

     [emphasis added]

269. The CRJC submitted it was an implied term of the contract between owners/trainers and jockeys that:^[105]

     the owners/trainers were obliged to pay jockeys the fee fixed from time to time by the NSW Thoroughbred Racing Board (subsequently, Racing NSW). The term was a species of the term described in Mason, Carter and Tolhurst, Mason & Carter’s Restitution Law in Australia (2021, 4th ed) at [913], namely, “a promise (express or implied) to pay a reasonable sum as the price of performance”, with the reasonable sum here being fixed by the riders’ fees published from time to time by the premier State racing body.

     [emphasis added]

270. The CRJC also submits that the “promise” was implied to ensure the business efficacy of the contract and is reasonable as it ensures that jockeys are paid by those by whom they are engaged.
271. The CRJC submits it is obvious and goes without saying that owners/trainers should be obliged to pay jockeys. The Tribunal disagrees and notes this proposition goes against the whole purpose of introducing the “returns to owners” policy. The “returns to owners” policy is reflected in LR72 and ensures that the obligation to pay jockeys no longer rests with the owners. The obligation that existed prior to 2000 was eliminated and is no longer enforceable against the owner(s).
272. The CRJC also submitted this promise does not contradict any express term of the contract.^[106] What are the express terms? The express terms relied on by the CRJC have not been identified so this submission cannot be tested. The Tribunal notes that in closing submissions the CRJC acknowledged that the Clubs were obligated to pay amounts in respect of riding fees and said it was:^[107]

     ...common ground that the way in which clubs’ obligation or liability to pay amounts was effected in practice was by Racing NSW debiting amounts as between Racing NSW and the clubs. And the tribunal will recall the cross-examination yesterday about those debits. So we accept that riding fees were an expense; there as an obligation to pay them. We just say that that obligation was not one that – to which section 12(8)(a) is attracted.

273. How can a term be implied in circumstances when at least one party, possibly both parties, to the “contract” have not been called to give evidence? The CRJC submits that it (the term) is so obvious it goes without saying, but that is not apparent from the evidence before the Tribunal.
274. In circumstances where all potential parties to the contracts have not given evidence, it is not possible to form a view of the express terms of the arrangements to any sufficient degree. Without this level of satisfaction, how then can the Tribunal determine what terms are or should be implied in order to give business efficacy to the arrangement?
275. More recently, in Realestate.com.au Pty Ltd v Hardingham [2022] HCA 39; 97 ALJR 40 (Realestate.com.au) the High Court discussed (at 15]) that in circumstances where the terms of an agreement between the parties have not been articulated, those terms must be ascertained by reference to the parties' words and conduct:

     ...The words and conduct of each party must be understood by reference to what the words and conduct would have led a reasonable person in the position of the other party to believe.^[108]

276. The High Court in Realestate.com.au went on (at [16]) to cite the authorities that make it clear the “first step in ascertaining what was included in the agreement is one of inference of the actual intention of the parties, taking account of the circumstances disclosed by the evidence [emphasis added].”^[109] The High Court held that it “is only when that first enquiry is complete that consideration might be given, in an appropriate case, to whether a term may be implied as a matter of imputed intention”.
277. Here we do not know the words or the conduct of the proposed party or parties to the contract. There is a paucity of evidence other than at the generalised level based on anecdotal accounts and faded memories.
278. This is not intended as a criticism of the witnesses. The events in question took place some 10 to 14 years ago and there are no contemporaneous records of these arrangements for the witnesses to reflect upon.
279. The evidence adduced in this matter does not allow that first step to be concluded.
280. The CRJC submitted that the promise to pay jockeys a fee does not contradict any express term of the contract. But none of the witnesses before the Tribunal attested to any express terms.
281. Alternatively, the CRJC submits this promise can be implied by custom, based on the “longstanding, notorious, uniform, certain and reasonable custom of owners assuming a legal liability to pay the jockeys they engage”.^[110]
282. Concerning whether there was an implied term because of a custom which retained an owner’s liability to pay riding fees, the High Court in Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd [1986] HCA 14; (1986) 160 CLR 226 (Con-Stan Industries) set out the propositions developed from the cases:

     [8] ...

     (1) The existence of a custom or usage that will justify the implication of a term into a contract is a question of fact: ...

     (2) There must be evidence that the custom relied on is so well known and acquiesced in that everyone making a contract in that situation can reasonably be presumed to have imported that term into the contract: ... In the words of Jessel M.R. in Nelson v. Dahl, at p 575, approved by Knox C.J. in Thornley v. Tilley [1925] HCA 13; (1925) 36 CLR 1, at p 8:

     "(The custom) must be so notorious that everybody in the trade enters into a contract with that usage as an implied term. It must be uniform as well as reasonable, and it must have quite as much certainty as the written contract itself."

     However, it is not necessary that the custom be universally accepted, for such a requirement would always be defeated by the denial by one litigant of the very matter that the other party seeks to prove in the proceedings.

     (3) A term will not be implied into a contract on the basis of custom where it is contrary to the express terms of the agreement: ...

     (emphasis added; most citations omitted)

283. The evidence before the Tribunal leaves the following questions unanswered:

     (a) Are all contracts by which jockeys are engaged to ride races in New South Wales alike? The witnesses called here could not give evidence of any express term of a riding contract let alone give evidence as to their uniformity with respect to any particular club;

     (b) Is it correct that all riding contracts were oral? It would have been preferable to hear evidence from jockeys and trainers in relation to this issue.

284. Given the lack of persuasive evidence of a custom, the Tribunal finds that a term cannot be implied by virtue of a “custom”. The evidence is not sufficient to satisfy the Tribunal that there is an identifiable custom that is “notorious, reasonable and certain”: Asset Insure Pty Ltd v New Cap Reinsurance Corp Ltd (In Liq) [2006] HCA 13; (2006) 225 CLR 331 at 353 [60]; Con-Stan Industries (at 236). How could such a custom be found when all parties to a riding contract have not given evidence?^[111] It is precisely this problem which arose in Scone Race Club. In Scone Race Club the majority held the evidence did not “justify the drawing of an inference that [Scone Race Club] was not liable to make payments of riding fees to jockeys during the period 1 July 2009 to 30 June 2014”. As set out at paragraphs 159-162, Steward J set out the factors which pointed against an inference. The same salient features appear in this case.
285. In Scone Race Club, Scone Race Club was unsuccessful in discharging its onus.
286. Here, the evidence at its highest does not:

     (a) demonstrate notoriety;

     (b) enable the Tribunal to conclude express terms; and

     (c) does not demonstrate reliance in the trade on such an implied term. In fact, the opposite is more apposite.

Restitution/Quantum Meruit Claim

287. As an alternative proposition, CRJC submits owners/trainers assumed at least an obligation arising in restitution/quantum meruit to provide reasonable remuneration for the services of jockeys in riding the horses in races.^[112]
288. The CRJC submits the facts demonstrate owners arranged with the Clubs for the Clubs to discharge the payment obligation of the owners to the jockeys.^[113] The Tribunal finds the evidence does not support this submission.
289. This alternative submission was confusing. It was reliant on a finding of fact that was not established and further was reliant on Mr Kennedy’s evidence and use of the phrase “on behalf of”. That phrase has already been discussed above.
290. The CRJC asserted owners “assumed an obligation to pay jockeys for the jockeys to play sport. It was owners who paid the jockeys, via a continuing and implicit direction and authority to the Clubs to effect the payment”.^[114] The Tribunal finds this submission is not made out on the evidence and is too far a stretch from a plain reading of the section and the rules. It is not necessary to give efficacy to any contract, it imports assumptions and inferences not made out on the scintilla of evidence given from the owners. Not even an authorised representative with the requisite knowledge from CRJC gave evidence. This submission is also silent on the earlier submission that it might be the trainers who contract with the jockeys. All of this just demonstrates that there is insufficient evidence to support the CRJC’s claims.
291. The CRJC submitted the Commissioner’s case would mean that, if LR72(1) were repealed or revoked, jockeys would have no entitlement to be paid for racing.^[115] This is purely speculative. If LR72 was repealed, then, presumably if an owner wanted a jockey to ride a horse, the obligation to pay that jockey would revert to the owner, who would then become liable.
292. The CRJC submitted the Commissioner’s case would mean that the sole source of the obligation to pay jockey fees lay with a person (the Clubs) who did not engage jockeys, did not control whether jockeys rode, and did not control how much they rode.^[116] As it happens, that is the current position. That is what was determined and implemented. To say that the Clubs have no control over racing is to not give proper weight to the fact that they control and determine all aspects of a race run at the clubs and as a PRA have the power to include or exclude any owner, jockey, or trainer. Racing NSW and the clubs have overarching authority over all aspects of racing.
293. The CRJC submitted the Commissioner’s case would mean that the person who engaged jockeys to ride and took the benefit of those rides (viz, owners) had no obligation to remunerate jockeys for that engagement.^[117] Again, that is because of the “returns to owners” policy. Further, it assumes the Clubs did not obtain a benefit when they did.
294. The CRJC submitted the Commissioner’s case would mean that jockeys, when they agreed with owners to ride a horse, did so on the basis that the owners would not pay them anything for their services. Again, jockeys presumably knew, by the rules, that they would be paid by the clubs. No jockeys were called to give evidence.

Are the jockeys “excluded employees”?

295. Apparently during the Relevant Periods CRJC claimed input tax credits in relation to a riding fee, the CRJC claimed input tax credits under the GST Act. The CRJC submitted in claiming the input tax credits related to jockeys, the CRJC was acting as an intermediary pursuant to Subdivision 153-B of the GST Act and was deemed to have received a taxable supply.^[118]
296. There was no evidence in this case regarding the CRJC claiming input tax credits in relation to a riding fee, the CRJC claimed input tax credits under the GST Act.^[119]
297. In its Statement of Facts, Issues and Contentions the CRJC submitted “the accounts of the [CRJC] did not treat the payments to jockeys as wages”. As already noted, no accounts of the CRJC were before the Tribunal.
298. These issues were not expanded upon or discussed at the hearing.
299. There is no record of evidence of the terms of any purported arrangement between CRJC and an owner/trainer. The Tribunal fails to comprehend what relevance the existence of any arrangement in writing between the CRJC in the capacity of intermediary and another entity in the capacity of principal within the meaning of subsection 153-50(1) of the GST Act has to the interpretation of subsection 12(8). In any event there are no records before the Tribunal demonstrating the CRJC acted as an intermediary pursuant to Subdivision 153B of the GST Act when it claimed input tax credits referable to riding fees paid by the CRJC to jockeys during the relevant quarters.
300. The CRJC contended that if it was the employer of the jockey, that any jockey paid salary or wages of less than $450 per month is “excluded”.
301. This matter was not expanded upon at the hearing. No evidence has been filed in relation to this issue. As a result, the Tribunal will not proceed to deal with it.

CONCLUSION

302. The CRJC has failed to discharge its onus of proving that it was not the employer of jockeys who rode in races held by it in the Relevant Periods within the meaning of subsection 12(8)(a) of the Act.
303. The decision under review should be affirmed save to the extent that the Commissioner’s assessment is amended to remove the imposition of an administrative component imposed on the CRJC by the Commissioner in error (see below).

DECISION

304. The Tribunal affirms the decision under review save to the extent that the Commissioner’s assessment is amended to remove the imposition of the following administrative component imposed on the CRJC by the Commissioner in error:

I certify that the preceding 304 (three hundred and four) paragraphs are a true copy of the reasons for the decision herein of Senior Member D K Grigg

.................................[SGD].......................................

Associate

Dated: 30 July 2024

^[1] Amended Tribunal Book (Tb), T9, p 3097.

^[2] Tb, T3, p 209.

^[3] Tb, T8, p 211.

^[4] Australian Rules of Racing (ARR), 9.

^[5] Transcript (Tr), p 10.

^[6] Tb, p 209, 211.

^[7] Applicant Statement of Facts, Issues and Contentions (ASFICS), Schedule 1; Tb, p 246.

^[8] Tb, T1, p 224.

^[9] Tb, T1, p 224.

^[10] Tb, T1, p 189.

^[11] Tb, T9, p 87, List of Racing Clubs.

^[12] Scone Race Club Limited v Commissioner of Taxation  [2020] HCA Trans 95. 

^[13] Ying v Song [2009] NSWSC 1344, at [19].

^[14] The NSW Thoroughbred Racing Board was established by the AJC Principal Club Amendment Act 1997 (NSW) (No 24 of 1997) (the 1997 Act): see Sch 1, cl 7. The 1997 Act amended and became named the Thoroughbred Racing Board Act 1996 (NSW): see 1997 Act Sch 1, cl 2. In 2004, the name of the “NSW Thoroughbred Racing Board” was changed to “Racing NSW”: see Thoroughbred Racing Legislation Amendment Act 2004 (NSW) Sch 1 cl 4 (amending s 4) and Pt 9, cl 30, 31.

^[15] Tr, p 13.

^[16] Citing Bluescope Steel (AIS) Pty Ltd v Australian Workers’ Union [2019] FCAFC 84; (2019) 270 FCR 359 at 373 [43] (Allsop CJ), 428 [258] (Collier J).

^[17] Submissions of the Racing Clubs, p 5, para 21-22.
^[18] Guardian Ait Pty Ltd ATF Australian Investment Trust v Commissioner of Taxation [2021] FCA 1619; 114 ATR 136 at [3]; McCormack v Federal Commissioner of Taxation [1979] HCA 18; (1979) 143 CLR 284, at 301 per Gibbs J; Condon v Commissioner of Taxation [2023] FCA 561, at [57]; Commissioner of Taxation v Cassaniti [2018] FCAFC 212; 266 FCR 385, at [88].

^[19] See Condon v Commissioner of Taxation [2023] FCA 561 at [29].

^[20] Submissions of the Racing Clubs, page 11, para 56-58, citing Commissioner of the Australian Federal Police v Hart [2018] HCA 1; (2018) 262 CLR 76, at [6]-[7], and Lordianto v Commissioner of the Australian Federal Police [2019] HCA 39; (2019) 266 CLR 273 at [124] and Commissioner of the Australian Federal Police v Hart [2016] QCA 215; (2016) 314 FLR 1 at 197 [935]; see also The Commissioner of the Australian Federal Police v Chen (No 4) [2022] NSWSC 1719 at [23].

^[21] Submissions of the Racing Clubs, page 12, para 56-58.

^[22] Section 2A, AAT Act.

^[23] Respondent Outline of Submissions, p 2-3, para [8]-[10].

^[24] Respondent Outline of Submissions, p 4, para 12.

^[25] Respondent Outline of Submissions, p 3-4, para 11.

^[26] Dare v Pulham [1982] HCA 70; (1982) 148 CLR 658, at [6].

^[27] General Practice Direction, para 4.31.

^[28] AAT Act, s 2A(b).

^[29] See for example, Federal Commissioner of Taxation v Casuarina Pty Ltd (1971) 127 CLR 62 at 72; Coppleson v Federal Commissioner of Taxation (1981) 52 FLR 95 at 98; 34 ALR 377 at 380-381; Gwynville Properties Pty Ltd v Federal Commissioner of Taxation (1985) 16 ATR 143; 85 CRJC 4046.
^[30] ARR 208.

^[31] The Tribunal notes that the ARR has been subject to change and amendments over time. The pinpoints to the rules in these Reasons refer to the ARR as it was during the Relevant Periods.
^[32] See also, R v Wadley, ex parte Burton [1976] Qd R 286, at 292.
^[33] a body corporate established by the Thoroughbred Racing Act 1996 (NSW).
^[34] ARR1.
^[35] ARR6-7.
^[36] Section 13, Thoroughbred Racing Act 1996 (NSW).

^[37] Section 14(2)(b), Thoroughbred Racing Act 1996 (NSW).

^[38] Section 14(2)(c), Thoroughbred Racing Act 1996 (NSW).

^[39] Tb, p 577.

^[40] ARR1.

^[41] ARR1.

^[42] ASFICS, p 2, para 16.

^[43] ASFICS, p 8, para 52.

^[44] ASFICS, p 8, para 53.

^[45] ASFICS, p 9, para 54.

^[46] Respondent Statement of Facts, Issues and Contentions (RSFICS), p 5-6, para 31-37.

^[47] Tr, p 26-39.

^[48] Tb, p 905-920, Statement of Scott James Kennedy (Kennedy), p 1, para 1.

^[49] Kennedy, p 4, para 19.

^[50] Kennedy, p 7, para 35.

^[51] Kennedy, p 8, para 40-42.

^[52] Kennedy, p 14-15, para 73.

^[53] Tb, p 826.

^[54] Tr, p 30.

^[55] Tb, p 840, 849, 842.

^[56] Kennedy, p 3, para 13.

^[57] Tr, p 49-54.

^[58] Tr, p 50.

^[59] Tb, p 493.

^[60] Tr, p 56-60.

^[61] Tb, p 487-493.

^[62] Tb, p 489-490.

^[63] Tb, p 490.

^[64] Tr, p 60.

^[65] Tr, p 60.

^[66] Tr, p 64-67.

^[67] See also ASFICS, para 27-28.

^[68] Tb, p 840, 849, 842.

^[69] Scone Race Club, [109].

^[70] Scone Race Club Limited v Commissioner of Taxation [2019] FCA 976; 373 ALR 676.

^[71] Scone Race Club, at [100] - [101].

^[72] Submissions of the Racing Clubs, p 18, para 90; Tr, p 82.

^[73] Tb, T9, pp 3156, 3210, 3234, 3282, 3318.

^[74] Tb, pp 1016 - 1078.

^[75] Submissions of the Racing Clubs, p 18, para 89; Tr, p 82.

^[76] Tr, p 8, lines 22-24.

^[77] Scone Race Club, at [103].

^[78] Tr, p 42, lines 25-26.

^[79] Scone Race Club, at [103].

^[80] Scone Race Club at [103].

^[81] Scone Race Club at [103].

^[82] Scone Race Club at [103](h).

^[83] Scone, [106]-[107]

^[84] Stevens v Kabushiki Kaisha Sony Computer Entertainment [2005] HCA 58; 224 CLR 193 at 230, [124].
^[85] Citing Alphapharm Pty Ltd v H Lundbeck A/S [2014] HCA 42; (2014) 254 CLR 247; Lacey v Attorney-General (Qld) [2011] HCA 10; (2011) 242 CLR 573 at [43]; Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 35; (1998) 194 CLR 355 at [69]- [71].
^[86] Tr, p 10.

^[87] Tr, p 21; RSFICS, p 5, para 35.

^[88] Tr p 15; Section 37 T-Documents, T2, p 9, para 27; Respondent’s Outline of Submissions, p 11, para 47.

^[89] This Ruling is being reviewed in light of the decisions of the High Court in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1 and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2.

^[90] See Neale v Atlas Products (Vic) Pty Ltd [1955] HCA 18; 94 CLR 419, at 426.

^[91] Dental Corporation Pty Ltd v Moffet [2020] FCAFC 118; 278 FCR 502 (Moffet) per Perram and Anderson JJ at [82] and Wigney J at [111] and [117].

^[92] See also Gray v Mercantile Mutual Insurance (Australia) Limited (1994) SASR 154 at 159 citing Lockhart J in Parker Pen (Australia) Pty Ltd v Export Development Grants Board [1983] FCA 77; (1983) 67 FLR 234 at 240-241; Cascade Brewery Co Pty Ltd v Commissioner of Taxation [2006] FCA 821; (2006) 153 FCR 11 at [25] per Sundberg J.

^[93] Citing Neale v Atlas Products (Vic) Pty Ltd [1955] HCA 18; (1955) 94 CLR 419 at 425 (Dixon CJ, McTiernan, Webb, Kitto and Taylor JJ); World Book (Australia) Pty Ltd v Commissioner of Taxation (1992) 27 NSWLR 377 at 385-386 (Sheller JA, with Clarke JA agreeing); Vabu Pty Ltd v Commissioner of Taxation (1996) 81 IR 150 at 155 (Sheller JA, with Beazley JA agreeing).

^[94] Submissions of the Racing Clubs, p 14, para 72, citing EFEX Group Pty Ltd v Bennett [2024] FCAFC 35 at [9].

^[95] Performing Right Society Ltd. v. Mitchell and Booker (Palais de Danse) Ltd (1924) 1 K.B. 762, at 771.

^[96] Submissions of the Racing Clubs, p 7, para 29, 30, 32.

^[97] Submissions of the Racing Clubs, p 15, para 77.

^[98] Submissions of the Racing Clubs, p 15, para 77.

^[99] R v Young (1999) 46 NSWLR 681, at 686-687; Wentworth Securities v Jones [1980] AC 74, at 105–106; Minister for Immigration and Citizenship v SZJGV 238 CLR 542, at 651–652 [9].

^[100] Respondent’s Outline of Submissions, p 11, para 48.

^[101] Tr, p 60.

^[102] Submissions of the Racing Clubs, p 7, para 31.

^[103] Respondent’s Outline of Submissions, p 8, para 30.

^[104] See also Realestate.com.au Pty Ltd v Hardingham [2022] HCA 39; 97 ALJR 40, at [18].

^[105] Submissions of the Racing Clubs, p 14, para 73.

^[106] Citing BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283.

^[107] Tr p 69.

^[108] Citing Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179 [40].

^[109] Hawkins v Clayton [1988] HCA 15; 164 CLR 539, at 570; Byrne v Australian Airlines Ltd [1995] HCA 24; 185 CLR 410, at 422 and 442; Breen v Williams [1996] HCA 57; 186 CLR 71, at 90-91.

^[110] Submissions of the Racing Clubs, p 14, para 73, citing Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd [1986] HCA 14; (1986) 160 CLR 226 at 236.

^[111] Uszok v Henley Properties (NSW) Pty Ltd [2007] NSWCA 31 at [23].

^[112] The CRJC refers to Lumbers v W Cook Builders Pty Ltd [2008] HCA 27; (2007) 232 CLR 635 at [89]; see also Australian Salaried Medical Officers’ Federation v Peninsula Health [2023] FCA 939 at [79].

^[113] Submissions of the Racing Clubs, p 16, para 82.

^[114] Submissions of the Racing Clubs, p 17, para 84.

^[115] Submissions of the Racing Clubs, p 17, para 85.

^[116] Submissions of the Racing Clubs, p 17, para 85.

^[117] Submissions of the Racing Clubs, p 17, para 85.

^[118] ASFICS, p 7, para 49.

^[119] Tr p 83.