7 February 2025

The Court of Appeal held that the appeal be dismissed.

The Appellant, Marmota Ltd, submitted an appeal against a decision of a single judge of the Supreme Court of South Australia (refer to Commissioner of State Taxation v Marmota Ltd [2023] SASC 134).

The Respondent, the Commissioner of State Taxation, commenced proceedings in the District Court of South Australia for a monetary claim against the Appellant, in respect of unpaid payroll tax, penalty and interest under the Taxation Administration Act 1996 (SA) (“TAA”) for the period between 1 July 2010 to 30 June 2015. An auxiliary master of the District Court transferred the proceedings to the Supreme Court. A single judge of the Supreme Court granted summary judgment to the Respondent and dismissed the Appellant’s application for a permanent stay of proceedings.

The Appellant raised numerous grounds of appeal, submitting that the judge erred in:

• granting the Respondent’s application for summary judgment (Grounds 1 and 2);
• dismissing the Appellant’s application for a permanent stay of the primary action (Grounds 3 and 4);
• applying the incorrect test in determining not to grant a stay by requiring a balance be struck between community interests in collecting taxes and the Appellant receiving a fair trial (Ground 5); and
• finding that section 100 of the TAA was not an unlawful privative clause insofar as it prevented the Applicant from raising a collateral attack (Ground 6).

Within Grounds 1 and 2, the Appellant asserted various defences to the claim, which they submitted constituted bars to summary judgment. The Appellant contended that the assessment of payroll tax was a nullity, it could not challenge the validity of such a nullity under Part 10 of the TAA, and that it should have been allowed to raise such challenges in the debt recovery proceedings.

In relation to Grounds 3 and 4, the Appellant contended that the Commissioner’s application for summary judgment constituted an abuse of process in the context that an auxiliary master of the District Court had already refused an application for summary judgment. The Appellant also relied on delays on part of the Commissioner and other aspects of the Commissioner’s conduct.

A premise of the Appellant’s contention in Ground 6 was that section 100 prevented judicial review. In what was effectively an alternative position, the Appellant submitted that if section 100 did not prevent judicial review for jurisdictional error, it necessarily permitted collateral challenges to the validity of assessments in other proceedings.

Held (by the Court) dismissing the appeal:

1. The judge correctly granted summary judgment, as section 100 of the TAA operated to preclude the Appellant from raising its defences of invalidity of the assessments in the debt recovery proceedings. It had been open for the Appellant to raise any challenge to the assessment by way of proceedings under Part 10 of the TAA.
2. The Appellant’s contention that section 100 is an invalid privative clause did not properly arise in the proceeding and was untenable as a matter of ordinary construction.
3. The judge correctly concluded it was not an abuse of process for the Commissioner to have brought a second application. Further, the delay and other aspects of the Commissioner’s conduct did not warrant a permanent stay. The Appellant failed to show how these matters prejudiced its defence in the context of the permissible limits of the recovery proceedings.
4. The judge’s reference to the need to strike a balance of interests did not appear to have meaningfully informed her ultimate decision, which turned primarily on a question of statutory construction.

Taxes and duties – payroll tax – assessment, collection and recovery of payroll tax

Taxes and duties – payroll tax – objections, appeals and reviews

Procedure – State And Territory courts: jurisdiction, powers and generally – inherent and general statutory powers – to stay or dismiss orders or proceedings generally

Procedure – civil proceedings in state and territory courts – ending proceedings early – summary disposal – summary judgment for plaintiff or applicant – generally

Marmota Ltd v Commissioner of State Taxation [2025] 11

27 September 2023

The Supreme Court held that the Respondent’s application for a permanent stay of proceedings be dismissed.

The Applicant, the Commissioner of State Taxation, brought a monetary claim against the Respondent, Marmota Ltd, for unpaid payroll and penalty tax plus interest for the period, 1 July 2010 to 20 June 2015 inclusive.

The Applicant alleged that this tax arose from a partnership between Marmota Ltd and Monax Mining Ltd. The Respondent denied such a partnership existed at law and as such disputed the tax assessments.

On 19 September 2022, the Applicant filed an interlocutory application seeking summary judgment.

On 26 September 2022, the Respondent filed an interlocutory application for a permanent stay of proceedings.

The Honourable Justice McIntyre of the Supreme Court of South Australia held:

1. The Respondent’s application for a permanent stay of proceedings is dismissed.
2. The Respondent’s defence constitutes a challenge to the validity or correctness of an assessment in respect of which rights of objection and appeal are conferred under Part 10 of the Taxation Administration Act 1996 (“TAA”).

   Section 100 of the TAA prevents those challenges being mounted in the context of debt recovery proceedings.

3. The proper course for ventilating such a challenge is limited to the avenue provided by Part 10 or alternatively the bringing of judicial review proceedings.
4. Section 100 of the TAA is not an unlawful privative clause as contended by the respondent.

Taxes and duties – payroll tax – assessment, collection and recovery of payroll tax

Taxes and duties – payroll tax – objections, appeals and reviews

Procedure – State And Territory courts: jurisdiction, powers and generally – inherent and general statutory powers – to stay or dismiss orders or proceedings generally

Procedure – civil proceedings in state and territory courts – ending proceedings early – summary disposal – summary judgment for plaintiff or applicant – generally

Commissioner of State Taxation v Marmota Ltd [2023] SASC 134