Birdseye and Tax Practitioners Board
[2020] AATA 1250
•8 May 2020
Birdseye and Tax Practitioners Board [2020] AATA 1250 (8 May 2020)
Division:TAXATION AND COMMERCIAL DIVISION
File Number(s): 2020/1829
Re:Nicholas Birdseye
APPLICANT
AndTax Practitioners Board
RESPONDENT
File Number(s): 2020/1830
Re:Claim IT (SA) Pty Ltd
APPLICANT
Tax Practitioners BoardAnd
RESPONDENT
DECISION
Tribunal:Senior Member R J Olding
Date:8 May 2020
Place:Adelaide
The applications for stays of the decisions under review are refused.
............................[SGD]............................................
Senior Member R J Olding
CATCHWORDS
PRACTICE AND PROCEDURE – STAY APPLICATION – termination of tax agent registrations – whether Applicants denied procedural fairness by decision-maker – whether conditional stays should be granted pending decisions on applications for review – whether conditional stays should be granted pending determination of procedural fairness issue as a preliminary issue – where Tribunal not satisfied there are prospects of success – stays refused
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth), ss 2A, 41, 42D, 43
Superannuation Industry (Supervision) Act 1993 (Cth), s 35D
Tax Agent Services Act 2009 (Cth), ss 2-5, 20-15, subdivisions 30-A, 40-A, ss 60-95, 60-100, 60-115, 60-125, 70-10
CASES
Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd (1979) 24 ALR 307
Delis v Tax Practitioners’ Board [2016] FCA 570
Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577
Le’Sam Accounting Pty Ltd and Tax Practitioners Board [2020] AATA 890Levi v Auditors and Liquidators Disciplinary Board [2013] FCA 719
Kender and Australian Securities and Investments Commission [2018] AATA 4445Kioa v West (1985) 159 CLR 550
Poidevin and Australian Securities and Investments Commission [2018] AATA 124
Re Josip Dekanic and Tax Agent’s Board of New South Wales (1982) 62 FLR 154
Scott and Australian Securities and Investments Commission [2009] AATA 798
Secretary, Department of Social Security v Alvaro (1994) 50 FCR 213Williams and Members of the Companies Auditors and Liquidators Disciplinary Board [2019] AATA 504
SECONDARY MATERIALS
TPB Information Sheet TPB(I) 34/2018 Code of Professional Conduct – complying with taxation laws in the conduct of your personal affairs
REASONS FOR DECISION
Senior Member R J Olding
8 May 2020
WHAT ARE THESE REASONS ABOUT?
The Tax Practitioners Board (“the Board”) terminated the tax agent registrations of Nicholas Birdseye (“Mr Birdseye”) and Claim IT (SA) Pty Ltd (“the Company”) of which Mr Birdseye is the sole director and a 50% shareholder (collectively, “the Applicants”).
Mr Birdseye and the Company applied to the Tribunal for review of those decisions and also for stays of the decisions. The Tribunal granted interim stays, subject to conditions, until the hearing and determination of the stay applications.
These reasons relate to the stay applications.
ORDERS SOUGHT
The Applicants seek orders in these terms:
1That subject to any further order of this Tribunal, the operation of the decisions of the respondent dated 4 February 2020 terminating the applicants’ registration as tax agents is stayed until the decision of the Tribunal on the applications for review comes into operation.
2The stay order is subject to the following conditions:
(a)The applicants are:-
(i) not to take on any new taxation service clients whilst the stay is in effect except for those informed by letter that the Tax Practitioners Board has made a decision terminating the applicants’ registration as a tax agent and that decision has been stayed pending final determination by the Administrative Appeals Tribunal; and
(ii) to lodge all required individual, company and trust income tax returns and business activity statements by their due date, or any extended date agreed to in writing by the ATO.
However, the Applicants’ submissions also suggest shorter stays might be granted pending resolution of the “procedural fairness issue” as a preliminary matter, as discussed further below.
THE ISSUES – IN SUMMARY
The Applicants say they were denied procedural fairness by the Board because they were not given an effective opportunity to be heard before the termination decisions were made. They also say that aside from that issue other considerations do not warrant departing from what is said to be the “ordinary practice” of the Tribunal to grant stays of decisions to cancel tax agent registrations.
The Board denies the Applicants were denied procedural fairness and submits that the Applicants have not discharged the evidentiary burden that falls upon them to establish facts that would cause the Tribunal to conclude that it is desirable to grant the stays. Public interest considerations, in particular, make the grant of stays undesirable, the Board says.
The Applicants also say that the stays could be for a relatively short period. This is because, they say, the procedural fairness issue could be considered by the Tribunal as a preliminary issue. If the Applicants succeeded on that preliminary issue, the Tribunal could remit the decisions under review to the Board for reconsideration. In other words, the stays need only be until determination of the procedural fairness issue.
Because of the nature of the submissions made on behalf of the Applicants, before turning to consider these issues it is necessary to set out in some detail the relevant statutory framework and legal principles relating to the tax practitioner regulatory regime and the role of the Tribunal in reviews generally and in consideration of applications for stays.
THE TAX AGENT DISCLIPINARY REGIME
The regulatory regime for tax practitioners is found in the Tax Agent Services Act 2009 (Cth) (“the TASA”). The object of the Act is:
to ensure that tax agent services are provided to the public in accordance with appropriate standards of professional and ethical conduct.[1]
[1] TASA, s 2-5.
The object is achieved through a system of registration of tax agents administered by the Board. In addition to relevant qualifications, experience, professional indemnity insurance and, for renewals, continuing professional education, for an individual to be eligible to be a registered tax agent the Board must be satisfied that the individual is a “fit and proper person”. For a company, the Board must be satisfied that each director is a fit and proper person.[2] Whether an individual is a fit and proper person requires the Board to have regard to specified criteria, particularly “whether the individual is of good fame, integrity and character”.[3]
[2] TASA, s 20-5.
[3] TASA, s 20-15.
The system of registration of tax agents is supported by a Code of Professional Conduct (“the Code”) and disciplinary sanctions.
Code of Professional Conduct
The Code is found in subdivision 30-A of the TASA. The obligations under the Code include that a registered tax agent must:
(a)“act honestly and with integrity”;[4]
(b)“comply with the taxation laws in the conduct of your personal affairs”.[5]
[4] TASA, s 30-10(1).
[5] TASA, s 30-10(2).
The expression “personal affairs” is not defined in the TASA. The Board takes the view that it includes a tax practitioner’s personal tax obligations and those of associated entities of the tax agent, such as companies, partnerships and trusts, that the tax agent has direct or indirect control over.[6] The Applicants did not submit otherwise, nor did they submit that any of the findings of failing to comply with tax obligations did not relate to the Applicant’s personal affairs. I proceed on that basis.
[6] TPB Information Sheet TPB(I) 34/2018 Code of Professional Conduct – complying with taxation laws in the conduct of your personal affairs.
Investigation procedure
The Act lays down a procedure for disciplinary actions, features of which include:
(a)The Board may investigate any conduct of a tax agent that may breach the TASA.[7]
(b)If the Board decides to investigate a tax agent, it must notify the tax agent in writing within two weeks of the decision to conduct the investigation and the investigation is taken to commence on the date of the notice.[8]
(c)The Board has a discretion as to its procedure for an investigation[9] and has various investigatory powers, including to require information, documents or things to be produced;[10] and to require that witnesses appear before the Board and give evidence under oath or affirmation in relation to which the privilege against self-incrimination is relevantly abrogated.[11]
(d)Unless a longer period applies as explained below, the decision upon completion of the investigation must be made within six months after notice of the investigation is given.[12] If the decision is not made within the six months period, or the longer period, the Board is taken to have decided to take no further action.[13]
(e)The Board may extend the period for completion of an investigation due to complexity or other reasons, but the decision to do so must be made no later than two weeks before the expiry of the initial six-month period.[14]
(f)Within 30 days of its decision, the Board must give written notice of, and written reasons for, the decision.[15]
[7] TASA, ss 60-95(1)(b).
[8] TASA, ss 60-95(2), 60-95(3).
[9] TASA, s 60-95(4).
[10] TASA, s 60-100.
[11] TASA, ss 60-105, 60-110, 60-115.
[12] TASA, s 60-125(3).
[13] TASA, s 60-125(7).
[14] TASA, ss 60-125(3)(b), 60-125(4), 60-125(5).
[15] TASA, 60-125(8).
Sanctions
On completion of an investigation, the Board must make a decision to take no further action or to impose one or more sanctions under the TASA, subdivision 30-B, for breach of the Code; terminate the entity’s registration under subdivision 40-A; and/or apply to the Federal Court for an order for payment of a pecuniary penalty and/or an injunction.[16]
[16] TASA, s 60-125(2).
The range of sanctions under subdivision 30-B for failing to comply with the Code includes:
(a)a written caution;
(b)an order requiring completion of a course of education or training;
(c)an order limiting the tax agent services the tax agent is permitted to provide or requiring services to be provided under supervision;
(d)suspension of the tax agent’s registration;
(e)termination of the tax agent’s registration.
An individual tax agent’s registration may be terminated under subdivision 40-A if, amongst other events, the individual ceases to meet one of the tax practitioner registration requirements which, it will be recalled, includes that the tax agent is a “fit and proper person”. Similarly, if a director of a tax agent company ceases to be a fit and proper person the company’s registration may be terminated.
Where the Board terminates a tax agent’s registration following an investigation, the Board may also determine a period of not more than five years in which the tax agent may not re-apply for registration.[17]
[17] TASA, s 40-25.
Administrative review
A decision to terminate a tax agent’s registration is reviewable by the Tribunal, as is a decision to impose a period during which the tax agent may not re-apply for registration.[18]
[18] TASA, s 70-10(e) and (h) respectively.
In accordance with the usual principles applicable to applications for review, the Tribunal’s role is to stand in the shoes of the decision-maker, here the Board, and make a fresh decision on the merits to determine the correct or preferable decision in relation to the decisions under review.[19]
[19] Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577, 589.
Section 2A of the Administrative Appeals Tribunal Act 1975 (Cth) (“the AAT Act”) states:
In carrying out its functions, the Tribunal must pursue the objective of providing a mechanism of review that:
(a)is accessible; and
(b)is fair, just, economical, informal and quick; and
(c)is proportionate to the importance and complexity of the matter; and
(d)promotes public trust and confidence in the decision‑making of the Tribunal.
Section 43(1) of the AAT Act sets out the decisions available to the Tribunal on hearing an application for review in these terms:
(1) For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision and shall make a decision in writing:
(a)affirming the decision under review;
(b)varying the decision under review; or
(c)setting aside the decision under review and:
(i) making a decision in substitution for the decision so set aside; or
(ii) remitting the matter for reconsideration in accordance with any directions or recommendations of the Tribunal.
Additionally, under s 42D(1) of the AAT Act, at any stage in a proceeding the Tribunal may, subject to exceptions that are not relevant in this case, remit a decision to the decision-maker for reconsideration.
APPLICABLE LEGAL PRINCIPLES – STAYS OF DECISIONS
Statutory framework
The making of an application to the Tribunal to review a decision does not, in itself, affect the operation of a decision.[20]
[20] AAT Act, s 41(1).
However, a party to a proceeding before the Tribunal, subject to exceptions that do not arise in this case, may apply for a stay of a decision under s 41(2) of the AAT Act, which states:
(2) The Tribunal may, on request being made by a party to a proceeding before the Tribunal (in this section referred to as the relevant proceeding), if the Tribunal is of the opinion that it is desirable to do so after taking into account the interests of any persons who may be affected by the review, make such order or orders staying or otherwise affecting the operation or implementation of the decision to which the relevant proceeding relates or a part of that decision as the Tribunal considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review.
(Emphases added.)
Relevant considerations
As will be seen from the highlighted portions of s 41(2) extracted above, to make a stay order the Tribunal must be of the opinion that it is “desirable” to do so and consider that the order is appropriate “for the purpose of securing the effectiveness" of the hearing and determination of the relevant application for review. A stay may be subject to conditions (s 41(6)(a)) and instead or in addition to a stay the Tribunal may make orders “otherwise affecting the operation or implementation of the decision”.
The considerations which it is appropriate for the Tribunal to consider in determining whether to make a stay are well established:
(a)The prospects of success of the application for review.
(b)The consequence for the applicant of refusing a stay.
(c)The public interest.
(d)The consequences for the respondent in carrying out its functions depending on whether a stay is granted or not.
(e)Whether the application for review would be rendered nugatory if a stay were not granted.
(f)Other relevant matters.[21]
[21] Scott and Australian Securities and Investments Commission [2009] AATA 798, [4].
The Tribunal’s task in considering the prospects of success of the substantive review has been described in this way:
. . . Clearly, it is not the role of the Tribunal in an interlocutory application of this nature to conduct a review of the merits or strength of the arguments, even on a preliminary basis, because such an undertaking would not only be lengthy but it would be unlikely to take into account the possibility of further evidence and submissions that may be more appropriately advanced at the substantive hearing…
The Tribunal is, however, at least obliged to determine whether there are facts or circumstances or points of law that may be argued at a substantive hearing which may lead to a different result . . . If the reviewable decision discloses findings and reasoning that an applicant cannot or does not challenge, this would be critical to the issue of prospects and would be a significant factor that would weigh against the granting of a stay. It is incumbent on the applicant for a stay to establish the existence of such facts and circumstances or the possibility of legal error that may lead to a different result, through new evidence or submissions that were not raised before the delegate or by contesting findings of fact or conclusions of law (or a combination of both) that are open to challenge.[22]
[22] Poidevin and Australian Securities and Investments Commission [2018] AATA 124, [39], [40]
Accordingly, I do not conduct a “mini trial”[23] but it is incumbent on the Applicants to establish the existence of facts or the possibility of legal error that may lead to a different result. In particular, to the extent that the Applicants have not disputed key findings of the Board, that may weigh against granting the stays.
An “ordinary practice” of staying termination of tax agent registrations?
[23] Le’Sam Accounting Pty Ltd and Tax Practitioners Board [2020] AATA 890, [13]
The Applicants’ submissions, while accepting that such practice must admit of exceptions, submitted that the Tribunal’s “ordinary practice” for stay applications relating to cancellation of tax practitioner registrations is to grant a stay pending an expedited hearing of the application for review.
This submission has its foundation in the reasons for a 1982 decision of Davies J, sitting as President of the Tribunal, in Re Josip Dekanic and Tax Agents’ Board of New South Wales,[24] in relation to the predecessor regulatory regime for tax practitioners. His Honour noted that, as is alleged in the present case, the applicant had not had an opportunity to be heard in relation to the allegations leading to the cancellation of his registration and that in those circumstances granting a stay may increase the effectiveness of the review which otherwise might be rushed and, if favourable to the applicant, could not compensate the applicant for dislocation to his practice if a stay were not granted.[25]
[24] (1982) 62 FLR 154
[25] (1982) 62 FLR 154, 157.
Against that background, his Honour observed:
For those reasons, it is the ordinary practice of the Tribunal in the review of a cancellation of a tax agent’s registration to grant a stay if the Tribunal is asked to do so, and it grants that stay until the hearing and the determination of the review.[26]
[26] (1982) 62 FLR 154, 157
However, as Dr Gray, who appeared for the Applicants, very properly pointed out, his Honour also went on to note that it was the usual practice – I pause to note, almost 40 years ago and under a different regulatory regime – of the then Tax Agents’ Board to consent to applications for stays of such decisions.[27]
[27] (1982) 62 FLR 154, 157.
The Applicants also noted that the Tribunal in a recent decision, Norman and Tax Practitioners Board,[28] referenced Davies J’s remarks in Dekanic. In Norman, Deputy President Dr P McDermott RFD noted that the Tribunal had applied the considerations outlined in Dekanic in recent decisions.[29] However, I do not read that statement by the learned Deputy President as endorsing the relevance of any “ordinary practice” of allowing stays of cancellations of tax agent registrations. That is apparent from the two cases footnoted in the reasons, both of which resulted in refusal of the stays sought.[30] In any case, there are various examples of the Tribunal refusing applications for stays of decisions to cancel tax agent registrations in recent times, including a decision by another Deputy President of the Tribunal as recently as the same week in which this matter was heard.[31]
[28] [2020] AATA 640.
[29] [2020] AATA 640, [17].
[30] [2020] AATA 640, [17], footnote 3.
[31] Le’Sam Accounting Pty Ltd and Tax Practitioners Board [2020] AATA 890.
In short, I do not find it helpful or appropriate to approach this matter with any so-called “ordinary practice” of the Tribunal in mind. As Davies J himself noted in Dekanic, “in every particular case the circumstances of the case must be considered and not in every case will it be appropriate that a stay should be granted”.[32]
[32] (1982) 62 FLR 154, 157.
Relevance of denial of procedural fairness
As already noted, and discussed in more detail below, the Applicants submitted that the Board denied them procedural fairness by not giving them an effective opportunity to be heard before making the termination decisions. Before considering the specific allegation, it is appropriate to consider the principles which would govern my consideration of any denial of procedural fairness.
The Tribunal’s role in administrative review generally is not to adjudicate on alleged deficiencies in decision-making processes, but rather, as noted above, to make a fresh decision on the merits on the evidence and submissions before it.
Under administrative law principles, a “decision” infected by denial of procedural fairness is not a valid decision and liable to be declared to be of no effect and set aside by a court. Unless that occurs, the decision remains a decision reviewable by the Tribunal, but may be set aside by the Tribunal upon review.[33]
[33] Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd (1979) 24 ALR 307; Secretary, Department of Social Security v Alvaro (1994) 50 FCR 213 per von Doussa J, 219-20.
Even if an applicant were to establish denial of procedural fairness by the decision-maker, it does not follow that the applicant would succeed in an application for review. The Tribunal may set aside the impugned decision and substitute its own decision.
However, it also does not follow that denial of procedural fairness by the decision-maker is irrelevant to a stay application. The extent to which procedural fairness was provided by the decision-maker may have some impact upon whether to grant a stay – in respect of the question of whether the Tribunal is satisfied that the applicant may achieve a different result in the substantive application for review.
As Farrell J noted in Levi v Auditors and Liquidators Disciplinary Board:[34]
For the purpose of determining “prospects of success”, the [Tribunal] would not have been entitled to ignore the issue that there may be evidence available at the Substantive Proceeding which was not available to the Board . . . on the basis that any breach of natural justice would be subsumed in the determination by the AAT in the Substantive Proceedings . . .[35]
[34] [2013] FCA 719.
[35] [2013] FCA 719, [34].
Accordingly, the Tribunal deciding a stay application would need to take into account the prospect of different evidence and arguments being put forward in the review that were not considered by the decision-maker as a consequence of the denial of procedural fairness.
In theory at least, the Tribunal might, in a case where it concludes that the applicant was denied procedural fairness by the decision-maker, set the decision aside and remit it for reconsideration by the decision-maker. However, in practice the Tribunal would need to be satisfied that is an efficient and expeditious approach in comparison to the Tribunal proceeding to consider that matter on its merits and substituting its own decision.
Accordingly, I approach the stay applications on the basis that I should have regard to the extent to which the Applicants had an opportunity to present their evidence and submissions before the Board when considering whether I am satisfied that they might achieve a different result in the substantive applications for review. The relevant question is whether, having regard to what occurred leading up to the Board’s decisions and since, there may be relevant evidence available at the substantive hearing that was not before the Board and that might lead to a different decision.
Consideration of that question would not require the Tribunal to formally decide whether procedural fairness was afforded by the Board, nor would it be appropriate to do so in the context of stay applications. However, I have concluded that I should consider the argument that the Board denied the Applicants procedural fairness, since:
(a)the procedural fairness issue was at the heart of the Applicants’ submissions;
(b)it is at least theoretically possible that, if a finding of denial of procedural fairness were made, the Tribunal could set the termination decisions aside and remit the matters to the Board for reconsideration;
(c)that possibility is relevant to whether I should be satisfied the Applicants might achieve a different result in the substantive applications; and
(d)Dr Gray submitted that the procedural fairness issue could be resolved as a preliminary issue and stays granted until that occurs.
The Tribunal’s “oversight role” in “enforcing good administrative practice”?
Dr Gray also submitted that “at its core” the Tribunal’s role involves “enforcing good administrative practice” by Commonwealth agencies. Granting the stays where procedural fairness had not been provided, and remitting the matter to the Board for reconsideration, as I understood the submission, would be consistent with that role. Since it was incumbent upon the Board to afford procedural fairness to the Applicants and it failed to do so, it should be forced to consider the matter properly in accordance with the principles of procedural fairness.
Strictly speaking, of course, the Tribunal does not enforce good decision-making practices but rather may affirm, vary, set aside or substitute its own decisions for decisions of agencies whose decisions fall for review by the Tribunal or remit them for further consideration by the decision-maker. Further, I note that the objects of the Tribunal stated in section 2A of the AAT Act, as extracted above, include promoting public trust and confidence in the decision-making of the Tribunal, but do not refer explicitly to encouraging or enforcing good decision-making by agencies.
Nevertheless, it has been said that the Tribunal’s role is not simply a dispute-resolution mechanism and that its decisions promote sound public administration and better decision-making.[36] Thus, decisions of the Tribunal and its reasons for decisions may have a normative effect upon the decision-making practices of agencies.
[36] Kender and Australian Securities and Investments Commission [2018] AATA 4445, [6]; Williams and Members of the Companies Auditors and Liquidators Disciplinary Board [2019] AATA 504, [25].
That effect is promoted “by modelling good decision-making behaviour in particular cases” including by properly taking into account the objects of the relevant statutory regime under which a decision under review falls for consideration.[37] However, I am not persuaded that, even if I were to conclude there was a denial of procedural fairness by the Board in this case, I should take into account as a discrete consideration in favour of granting the stays that remitting the matters to the Board for reconsideration would enforce or encourage good administrative practice.
[37] Williams and Members of the Companies Auditors and Liquidators Disciplinary Board [2019] AATA 504, [25].
It seems to me the correct approach is to exercise the Tribunal’s jurisdiction in accordance with established principles and the requirements of s 41(2) of the AAT Act free of any overarching or additional notion of enforcing or encouraging good administrative practices. A decision by the Tribunal as a practical matter may have the desirable effects mentioned, but I am not persuaded that such potential practical effects would be properly taken into account in favour of granting the stays.
THE FINDINGS AND OTHER ALLEGATIONS
The Board made various serious findings, including:
(a)failure to comply with a significant number of taxation lodgement and payment obligations of various entities with which he is personally associated;
(b)issues relating to clients’ tax affairs, where Australian Taxation Office (“ATO”) audits resulted in assessments of tax shortfalls and penalties involving a substantial number of clients;
(c)unprofessional communications with ATO officers including unsubstantiated allegations.
The Board also points to the Applicants’ failure to comply with the conditions attached to the interim stay ordered by the Tribunal and inaccurate answers given in the Applicants’ recent renewal of registration forms.
Failure to comply with personal tax obligations
While Mr Birdseye filed affidavits in support of the stay applications, his evidence does not positively deny allegations relating to his personal taxation affairs.
In that regard, I note that over two months had passed between the Applicants receiving the Board’s submissions and decisions detailing the allegations and the hearing of the stay applications. Further, the allegations do not relate to matters on which Mr Birdseye should have needed advice or verification from others; he is a tax agent of many years standing and they relate to his and his entities’ own taxation affairs.
Given their serious nature and relevance to the Applicants’ prospects of success in the substantive reviews, it is to be expected that if these findings are disputed Mr Birdseye would have denied them in his affidavits. Indeed, advice and evidence that some such obligations had been met within the last month implicitly confirms that those obligations were previously outstanding, in some cases for extended periods.
The alleged non-compliance with tax obligations of entities associated with Mr Birdseye includes the following.
Birdseye Children Family Trust – income tax returns
In its reasons for decision, the Board alleged that five income tax returns for this trust – for the 2014 to 2018 income years – were outstanding.
Mr Birdseye’s affidavit exhibited an ATO printout for the trust dated 15 April 2020 stating “Lodgments are up to date”.[38]
[38] Affidavit of Nicholas Birdseye, 17 April 2020, Annexure NGB-2, p 14.
That is true, but the returns were not lodged until 2 March 2020.[39] Until then, they had been overdue in certain cases for some years. Mr Birdseye’s affidavit offered no explanation for why these returns were lodged late.
[39] ATO ICP Statement of Account Extract, Supplementary T documents, p 55.
Nicholas Birdseye Family Trust – activity statements and payments
In its reasons for decision, the Board alleged that seven activity statements were outstanding for this trust – for periods from May 2019 to November 2019 – and that it had at that time an integrated client account debt of $69,376.01.
Mr Birdseye’s affidavit also indicated that these statements were up to date.
However, I infer that these activity statements were also lodged recently, based on the ATO statement of account[40] for this taxpayer showing they were all processed on 26 March 2020. Furthermore, those activity statements disclosed the following liabilities: [41]
[40] ATO ICP Statement of Account Extract, Supplementary T documents, p 82.
[41] Payment Plan dated 31 March 2020 - Affidavit of Nicholas Birdseye, 17 April 2020, Annexure NGB-2, pp 19-22.
Month
Liability
May 2019
$ 10,881
June 2019
$ 19,716
July 2019
$ 6,571
August 2019
$ 9,692
September 2019
$ 33,338
October 2019
$ 5,775
November 2019
$ 7,271
Total:
$93,244
As at 31 March 2020, the trust’s total activity statement debt was $188,434.01.[42] The 12-month payment plan entered into on that date envisages a substantial payment of $94,217 by 29 May 2020 and the balance payable by monthly instalments of $9,500.
[42] Payment Plan dated 31 March 2020 - Affidavit of Nicholas Birdseye, 17 April 2020, Annexure NGB-2, p 19.
Mr Birdseye says that because of the payment arrangement “there is no outstanding tax payable”. That may be debatable – the ATO’s agreement to accept payment by instalments does not seem to me to indicate that the tax is not outstanding – but whatever the technical position may be, the substance is that substantial liabilities were not paid as they fell due and remained unpaid for months. On any view, the amounts were outstanding before the payment plan was entered into on 31 March 2020.
Mr Birdseye’s affidavit offered no explanation for the late lodgements and non-payments.
N&T Birdseye Superfund – income tax returns
In its reasons for decision, the Board alleged that four income tax returns for this trust – for the 2016 to 2019 income years – were outstanding. This is consistent with an extract from the ATO’s Integrated Core Processing report for this fund and the ATO printout annexed to Mr Birdseye’s affidavit.[43]
[43] Supplementary T documents, p 57; Affidavit of Nicholas Birdseye, 17 April 2020, Annexure NGB-2, p 15.
Mr Birdseye in his affidavit of 17 April 2020 deposed that the fund “did not trade” in the earlier years and that only the 2019 return is due which he would lodge by 20 April 2020 with an anticipation that the return would disclose no tax payable. I am unclear what “did not trade” means in the context of a superannuation fund.
There was no discussion at the hearing regarding whether the earlier returns were nevertheless required to be lodged or the ATO notified that no return was required. In particular, the Applicants’ submissions did not respond to the point made in the Board’s submissions that, in accordance with s 35D of the Superannuation Industry (Supervision) Act 1993 (Cth), every trustee of a superannuation fund must lodge an annual income tax return for the fund.
Even if Mr Birdseye is correct in respect of the previous year returns not being required, there is no explanation in his affidavit for the 2019 return being lodged after the due date.[44]
[44] According to the ATO printout annexed to Mr Birdseye’s affidavit of 17 April 2020, this return was due on 31 October 2019. Mr Birdseye did not suggest otherwise.
Medlow Chocolates Pty Ltd – income tax returns and activity statements
In its reasons for decision, the Board alleged that these returns for this company were not lodged by the due date:
(a)four income tax returns for the 2015 to 2018 income years; and
(b)11 quarterly activity statements for the September 2015 to June 2018 periods.
Mr Birdseye’s affidavit exhibited an ATO printout for this company dated 15 April 2020 showing no outstanding lodgements.[45]
[45] Supplementary T documents, p 57; Affidavit of Nicholas Birdseye, 17 April 2020, Annexure NGB-2, p 11-12.
However, this does not indicate when the lodgements were brought up to date. Nor did the submissions made on behalf of the Applicants confront the allegations in the Board’s submissions that this company previously had outstanding superannuation guarantee charge obligations which were only brought up to date following audits[46] and had defaulted on payment arrangements during the time Mr Birdseye was a director of the company.
[46] Supplementary T documents, p 46.
Mr Birdseye’s affidavit does not deny or seek to explain these allegations nor that the company was assessed for further tax and penalties following a GST audit relating to claiming input tax credits for private expenses.
Sazzii Pty Ltd – income tax
In its reasons for decision, the Board alleged that Mr Birdseye facilitated an unsubstantiated R&D tax offset claim of $341,648 for this company, including a substantial sum said to have been paid to Mr Birdseye for consultancy services.
Mr Birdseye’s response was that:
(a)he is a minority (10%) shareholder in this company;
(b)he was never the accountant for the company;
(c)the registered tax agent for the company was “someone other than me, but employed by [the applicant Company]”; and
(d)he did not manage the tax agent in respect of her taxation advice to clients, including to this company.
Mr Birdseye did not deny that he was a director of this company when the R&D claim was lodged or that the company had an outstanding tax debt of $124,189.29 when he resigned as director on 3 December 2018.
Other tax history
By Deed of Settlement dated 13 March 2018, between the Commissioner of Taxation, Mr Birdseye and the trustee of the Nicholas Birdseye Family Trust, the Commissioner agreed to vote in favour of a Deed of Company Arrangement for the Company. Under the terms of the settlement, all activity statements for the trust were to be lodged and outstanding activity statement liabilities paid by 31 March 2018 or any later date agreed to by the Commissioner.[47]
[47] T documents in application 2020/1830, T4, p 184 and following.
However, by 22 June 2019 the trustee had an outstanding activity statement debt of $67,603.62 and on that date a payment plan requiring that debt to be paid off by instalments by 28 January 2020 was entered into. No payments were made under the payment plan and, as already noted, the trust’s debt had risen to $188,434.01 by the time a new payment plan was entered into on 31 March 2020.
Aside from those summarised above, there are other findings that are contested, and allegations first raised in the Board’s submissions on the stay applications which I have not taken into account. For example, various findings relating to AFG Group Pty Ltd (including an overdue superannuation guarantee charge debt of $122,255.97 in respect of which Mr Birdseye denies that he was a director at the relevant time, although that evidence is inconsistent with Australian Securities and Investments Commission records) and allegations of outstanding income tax and activity statements for Torrens Finance Brokers Pty Ltd raised in the Board’s submissions.
Even putting these additional matters aside, the findings already outlined which are either implicitly accepted or not denied in the Applicants’ materials are both individually and collectively of a serious nature and reveal a pattern of substantial and ongoing non-compliance with taxation laws.
Issues relating to clients’ tax affairs
The Board alleges that tax returns prepared by the Applicants for clients over a number of years wrongly claimed deductions for work expenses that were not deductible. For the 2016 income year alone, putting aside those who lodged objections, some 40 clients suffered adjustments and in some cases penalties.
Given the number of findings – and that the Applicants were only formally advised of the allegations about two weeks before the termination decisions were made – it is not surprising that the Applicants have not responded in detail to all of the matters relating to each client at this point.
However, with one exception, and notwithstanding that over 10 weeks had passed between the Applicants receiving the Board’s draft submissions and the stay hearings, the Applicants’ materials do not respond to these findings at all. In particular, there is no denial or any attempt to present any explanation of any kind.
Unsubstantiated allegations and unprofessional communications
In response to an email from an ATO officer following up an earlier request for copies of working papers and contact details for three of his clients, Mr Birdseye responded two days later with an email that did not appear to provide the papers and information sought but included these comments:
I HAVE ASKED FOR THE COMPLETE AUDIT RESULTS. CAN YOU SEND THEM. I will do a blanket objection on the lot.
I CONgratulate (sic) you on you (sic) new business model to fuck me over. Don’t pay refunds to clients and audit the lot.
You don’t work in a fair environment against tax agents and their clients cos (sic) taxpayers can not afford to fight. – but that is your business model, Just corrupt.
We have to put up with your planned incompetence in the audit process for you and your staff. . .
I hope you enjoy the commissions you receive for your lies and excess power. . .
I hope you get cancer, have a heart attack and have a really bad family life along with chris jordan (sic).
(Capitalising in original. Bolding added.)
Mr Birdseye’s affidavits do not mention this finding. No doubt there is further context to the email but none is provided.[48] There is no suggestion or evidence that Mr Birdseye was unwell when he sent the email. It is not even a case where the email was rushed off immediately and later regretted; Mr Birdseye sent the email two days after the ATO’s follow up email. Nor is there evidence of an apology or expression of remorse either subsequently to the ATO or in the material filed in the Tribunal some nine months later, or other evidence to suggest any insight by Mr Birdseye into the unacceptable nature of this communication.
[48] Mr Birdseye sought from the Board a recording of an earlier telephone conversation said to provide context for this email but it appears this had not been provided.
Failure to comply with conditions of interim stays
The interim stays were subject to conditions to the effect that the Applicants:
(a)not take on any new clients “except for those informed by letter” of the terminations and that the terminations have been stayed pending determination by the Tribunal and provide a copy of the notice to the Board;
(b)notify all active clients in the same way “in a letter by 7 April 2020”.
Those conditions were not complied with. Mr Birdseye acknowledges in his affidavit of 17 April 2020 that he was aware of the conditions when they were imposed at a hearing on 31 March 2020 and that he received a copy of the interim stay orders on 7 April 2020, but says he “overlooked the details of the undertaking and failed to appreciate the amount of work that was required for me to comply”.
In respect of the first condition, the non-compliance was that on 4 April 2020 Mr Birdseye saw a new client who was the partner of one of his long-term clients. Before he commenced the meeting, he verbally advised her of the information that was required by the Tribunal’s orders to be in the form of written notice, with a copy provided to the Board. Thus it is clear that, notwithstanding the new client being the partner of an existing client, Mr Birdseye was aware that she was a new client.
When he swore his affidavit on 17 April 2020, Mr Birdseye deposed that he believed “that his client and partner were included within group to whom the notices are being circulated to (sic)”. Aside from overlooking the details of the orders, Mr Birdseye’s affidavit offers no explanation for not complying with the requirement to give the new client a written notice. Nor is there positive evidence that even by 17 April 2020 a written notice had been given to this client as required by the Tribunal’s orders, only that she was within a group to whom notices “are being circulated”.
In relation to the requirement to notify existing clients, somewhat surprisingly Mr Birdseye deposed that he “did not have readily available to hand a list of active tax clients and their contact details”. Mr Birdseye went on to say that his attempts to put together a list were slow and cumbersome and on 15 April 2020 – I pause here to note, some eight days after the date by which he was required by the conditions of the interim stays to notify clients – he realised he could not get all the emails sent without assistance and engaged a contractor to access his records, obtain clients’ contact details and send the notices.
Mr Birdseye deposed that the same contractor advised him that if he sent some 2,500 emails at the same time Microsoft would treat them as spam and recommended that the emails be sent at the rate of three or four per minute. By midday on 15 April 2020, the contractor had sent 750 emails and Mr Birdseye instructed him to proceed urgently and advise him “the moment that he completed sending all of the messages”. Mr Birdseye was still awaiting that confirmation on 17 April 2020 but believed all of the emails would have been sent by 20 April 2020. Even inferring that the emails were sent by 20 April 2020, I am left with the following findings:
(a)The written notice required to be given before taking on the new client was not given even though Mr Birdseye was aware that she was a new client.
(b)None of the notices required to be given to existing clients were given by the required date, 7 April 2020.
(c)By 15 April 2020, over a week after date specified in the conditional stays for giving notices to existing clients, Mr Birdseye was aware that less than a third of the clients required to be notified had been notified.
(d)It was not until almost two weeks after the required date that all clients had been notified.
I accept that the Applicants had difficulty compiling their client list which delayed compliance with the conditions and that the contractor’s advice about spam markings also delayed despatching the emails. However, no approach was made to the Tribunal to vary the orders either before or after the date for compliance with the conditions nor was the Board informed of the non-compliance until after it followed up the Applicants on 14 April 2020.
Inaccurate answers in tax agent renewal application
On 31 March 2020, in their applications for renewal of their tax agent registrations the Applicants:
(a)answered “No” to questions about whether Mr Birdseye or a director of the Company in the previous five years had “matters that may affect their good fame, integrity and character e.g. subject to any disciplinary action by a regulator or professional association”; and
(b)answered “No” to questions about whether Mr Birdseye or the Company had outstanding tax obligations.
However, on 23 April 2020, the Applicants’ lawyers wrote to the Board to “clarify” the answers about regulatory matters by noting the terminations of the tax agent registrations, the applications for review and the interim stays. That communication offered no explanation for the errors but being despatched the day after the Board’s submissions on the stay applications were filed and served, I infer it was prompted by those submissions noting the inaccurate answers relating to regulatory matters.
I accept that, notwithstanding the obvious inaccuracies in the renewal applications, there was no attempt to mislead the Board in relation to the Board’s own disciplinary action. Those inaccuracies would have been immediately evident to the Board.
The letter of 23 April 2020 made no reference to the answers relating to tax obligations. As noted above, outstanding returns were lodged and a payment plan entered into with the ATO on 31 March 2020, the same date the renewal applications were lodged. As indicated above, it appears that Mr Birdseye took the convenient but debatable view that, because of the payment arrangement entered into on the same date, there were no outstanding tax obligations.
SHOULD THE STAYS BE GRANTED?
The procedural fairness issue
Since the main focus of the Applicants’ submissions related to the procedural fairness issue, I start my consideration of whether the stays should be granted with that issue.
What occurred
The Board made its termination decisions without the benefit of a response by the Applicants to draft submissions. The relevant events preceding the decisions include:
(a)On 4 February 2020:
(i)an officer of the Board, Mr Limnios, telephoned Mr Birdseye and advised that he would be sending an email with submissions containing the allegations against Mr Birdseye;
(ii)Mr Birdseye responded that he would defend himself against the allegations, would be engaging legal assistance and the legal advisers would seek an extension of time to respond to the allegations;
(iii)the Board emailed letters from the Chief Executive Officer and Secretary of the Board, Mr Michael O’Neill, to Mr Birdseye and the Company.
(b)Mr O’Neill’s letters in each case:
(i)were received after normal business hours in the period from 6-00 pm to 6-10 pm;
(ii)attached a submission of 22 pages in the case of Mr Birdseye and 13 pages in respect of the Company;
(iii)also attached approximately 1,000 pages of supporting documents (including materials relating to some 50 of the Applicants’ clients) which were not paginated nor presented in a logical order;
(iv)stated:
You must notify the Board in writing pursuant to subsection 30-10(14) of the Code of Professional Conduct (Code) in the TASA as to whether you admit to the allegation [that you breached the TASA], or whether you contest it. If you contest the allegation, please include reasons as to why.
The written response must be received by George Limnios by close of business, 18 February 2020. If no response is received the Board will determine whether you have breached the Code as alleged in the attached submission.
(Emphasis in original.)
(v)contained contact details for Mr Limnios but not for Mr O’Neill.
(c)On 12 February 2020, Mr Birdseye commenced providing instructions to his solicitor, Mr Robert Chrzaszcz, to respond to the Board on behalf of both Applicants.
(d)On or about 14 February 2020, Mr Birdseye instructed Mr Chrzaszcz to seek an extension of time to respond.
(e)On 14 February 2020, Mr Chrzaszcz wrote to the Board to seek the extension of time. The email was addressed to Mr O’Neill, notwithstanding that the Board’s letter requested that questions be directed to Mr Limnios but used an incorrect email address for another Michael O’Neill employed by the Board. It was also intended to be copied to Mr Limnios.
(f)On 20 February 2020 at 3:42 pm, Mr Chrzaszcz left a message for Mr Limnios which was returned on 21 February at 9:35 am; in the ensuing telephone discussion:
(i)it emerged that Mr Limnios had not received Mr Chrzaszcz’s letter of 14 February 2020 seeking the extension and that letters in the email address for Mr Limnios had been transposed;
(ii)Mr Chrzaszcz advised that he had instructions to seek an injunction if the Board did not agree to the extension;
(iii)Mr Limnios said that such legal action should be unnecessary and should be avoided.
(g)In a further telephone discussion between Mr Limnios and Mr Chrzaszcz on 21 February 2020:
(i)Mr Limnios advised that the 14 February 2020 letter had been located in Mr O’Neill’s spam folder and forwarded to the case officer, and that he would commence paginating the attachments to the submissions;
(ii)Mr Limnios did not state that the Board had met and made its decisions.
(h)In the meantime, on 20 February 2020, unknown to the Applicants – and, it appears but I need not decide, Mr Limnios – the Board met and made its decisions to terminate the registrations and prohibit the Applicants from re-applying for five years.
(i)The Applicants learned of the decisions for the first time on 26 February 2020 in another telephone conversation between Mr Chrzaszcz and Mr Limnios.
(j)The Applicants received formal notification of the Board’s decisions and reasons on 2 March 2020.
(k)On 9 March 2020, Mr Limnios emailed to Mr Chrzaszcz the submissions and paginated attachments considered by the Board on 20 February 2020.
The Board pointed out various aspects of the Applicants conduct after receiving the submissions and attachments, such as the delay between the Applicants receiving the materials and instructing their solicitors; the attempt to direct the request for an extension to Mr O’Neill when the letter required responses to be directed to Mr Limnios; and the failure to follow up the request until after the 14 day period had expired.
However, I do not need to discuss these aspects further. The Board does not dispute that it was required to afford the Applicants procedural fairness. The content of that obligation depends on the context in which it arises.[49] In the context of a substantial number of serious and detailed allegations, and around 1,000 pages of unpaginated and uncollated materials being provided for each Applicant, albeit largely duplicated, I accept that the Applicants have a reasonably arguable case that they were denied procedural fairness by being required to respond in 14 days. Arguably, it would have been a practical impossibility to prepare detailed responses in that timeframe.
Significance of denial of procedural fairness in consideration of prospects of success of substantive applications
[49] Kioa v West (1985) 159 CLR 550, [32]-[33].
However, even if the Applicants establish at the substantive hearing, or as Dr Gray suggested at a preliminary hearing on the topic, that the Board denied them procedural fairness, it does not follow that the Applicants may persuade the Tribunal to set aside the decisions on that basis and remit them to the Board for further consideration. The usual course would be for the Tribunal to consider the matter and make its decision on the basis of all of the relevant evidence and submissions the applicant might put forward. The Applicants were not able to identify a single case where the Tribunal had, on the basis that an applicant had been denied procedural fairness by the decision-maker, remitted the matter for reconsideration by the decision-maker.
Prospects of success of the applications for review
For the reasons already outlined, I am not satisfied that the Applicants have reasonable prospects of persuading the Tribunal on the basis of denial of procedural fairness to set aside the decisions and remit them to the Board for further consideration, either in a substantive hearing of the applications for review or in a preliminary hearing confined to the procedural fairness issue.
In relation to the Applicants’ prospects in a substantive hearing on other bases, the earlier discussion of the Board’s findings demonstrates what I am left with is at least this:
(a)substantial and ongoing non-compliance with personal tax obligations, both as to lodgement and payment, and across a number of entities, the details of which are either implicitly accepted or not denied by the Applicants;
(b)serious allegations regarding invalid deduction claims for a large number of clients, also of an ongoing nature, which with one exception is not explicitly denied or even confronted in the Applicants’ materials or submissions;
(c)highly offensive language directed at tax officials which, whatever the context, is unprofessional by any standard;
(d)no expression of remorse or other indication that the Applicants will in the future respect and observe their obligations as tax agents.
Against that background, I consider that the Applicants have not established an evidentiary foundation upon which I could be satisfied that they have a reasonably arguable case for having the terminations set aside altogether or the period during which they are prohibited from re-applying for registration reduced to such an extent it would be shorter than the time likely to be taken for the applications for review to be heard and decided. In particular, I am not satisfied that the Applicants have reasonable prospects of persuading the Tribunal that Mr Birdseye is a fit and proper person to be a tax agent, that termination is an excessive sanction in the circumstances or that the period of prohibition from re-applying is excessive or in any case could be reduced to a period that is shorter than that required for the substantive reviews to be completed.[50] This consideration weighs heavily against the grant of the stays.
[50] This conclusion makes it unnecessary to separately consider whether the Applicants have reasonable prospects of persuading the Tribunal that termination under s 30-30 for breaching the Code by failing to comply with taxation laws in the conduct of the Applicants’ personal affairs is not the correct and preferable decision. In that regard, I note that it has been held that non-compliance with a tax agent’s own tax obligations and those of companies related to the tax agent is relevant to whether the tax agent is a fit and proper person: Delis v Tax Practitioners’ Board [2016] FCA 570.
Consequence for the Applicants of refusing the stays
I accept that the refusal of the stays would have substantial adverse effects on the Applicants, resulting in the closure of their business and severe financial consequences, having regard to Mr Birdseye’s limited financial means and obligations to dependents to which he deposed in general terms.[51]
[51] Whether that would lead to the Company being wound up, as Mr Birdseye asserts, is not clear on the evidence before me, but I accept that is a possibility.
These are, of course, inevitable consequences of the terminations, especially since the Applicants are prohibited from re-applying for registration for the maximum period of five years. However, persons who enjoy the benefits of regulated occupations but fail to observe the requirements of registration do so at their peril. Nevertheless, these factors weigh to some extent in favour of granting the stays.
Public interest
The public interest in the integrity of the tax agent registration system in my view would not be served by granting stays in circumstances where I have concluded that the Applicants have not presented a foundation on which I could be satisfied they have reasonable prospects of success in the substantive applications and most findings of serious, repeated non-compliance with the requirements of registration have either been implicitly accepted or not denied. This weighs heavily against granting the stays.
Consequences for the Board in carrying out its functions
I do not accept that granting stays would entirely impede the Board in carrying out its functions. The mere fact that it has terminated the registrations sends a strong message to the tax agent community. It is, however, not irrelevant that granting the stays would mean that clients would be exposed to risk notwithstanding the Board having carried out its function of investigating the conduct of the Applicants, finding what appears to be serious and repeated non-compliance and taking what it regards as appropriate action. Exposing clients to such risk is contrary to the object of the TASA to ensure that tax agent services are provided to the public in accordance with appropriate standards of professional and ethical conduct.
Whether the applications for review would be rendered nugatory if stays are not granted
If the Applicants were to succeed in the substantive reviews in having the terminations set aside or the five-year prohibition period shortened, the reviews would not be rendered nugatory. They could recommence and rebuild the tax agent services practice.
Nevertheless, it is self-evident that there would be a substantial adverse effect upon the Applicants in dislocation of their business and consequent lost income and reputation that a successful outcome in the substantive reviews would not remedy. Many clients forced to go elsewhere may not return to the Applicants even if the decisions were to be set aside in the substantive reviews. Again, these are inevitable consequences of termination of which tax agents who repeatedly fail to comply with registration requirements place themselves in jeopardy.
Interests of other persons affected
The closure of the tax agent services practice would have an adverse effect on employees of Applicants’ practice who would lose their current employment. This weighs in favour of granting the stays.
It would also be disruptive to the practice’s clients who would need to engage other tax agents. As the Applicants submit, this would be particularly acute for those clients needing immediate assistance to access support under the COVID-19 assistance measures.
On the other hand, granting the stays would continue to expose clients to the risk of their tax affairs being handled by a tax agent against whom serious findings have been made in circumstances where, based on the material currently before the Tribunal:
(a)to a considerable extent the findings are not denied;
(b)there is no indication that the Applicants accept the seriousness of the findings;
(c)the history of non-compliance with registration requirements provides no confidence that during the period of any stay the Applicants would be compliant.
Further, the risk for clients but also the broader community is in fact more acute during the forthcoming period where the community will rely upon tax agents to conduct themselves with diligence and integrity in acting for clients seeking to access the COVID-19 assistance measures.
On balance, in the particular circumstances with which I am confronted, the interests of clients provide some, but limited, support for granting stays.
Other considerations
As pointed out by Davies J in Dekanic, refusing the stays but expediting the substantive applications could result in the determination of the applications being rushed and the decisions of less quality than might otherwise be the case.[52] That consideration is perhaps more acute in this case because of the large number of findings and allegations especially in relation to taxpayers’ affairs. This factor provides some weight in favour of granting the stays.
[52] (1982) 62 FLR 154, 157.
Finally, as the interim stays were expressed to be “subject to” the conditions, and the conditions were not complied with, it might be thought that the interim stays ceased to be operative from 8 April 2020 and that accordingly the terminations took effect again from that date. If that is so, to the extent the Applicants provided tax agent services on and from that date without being registered as tax agents they may have been in breach of the TASA. However, since the Board did not raise the prospect that the Applicants have been committing criminal offences by providing tax agent services while unregistered, I have not pursued this aspect further, nor taken it into account in consideration of whether to grant the stays.
Weighing up these considerations
I have carefully weighed up the considerations outlined above. Having regard to all of those considerations, I am not satisfied that it is desirable to grant the stays even on the conditions sought by the Applicants. In particular, the view I have formed that the material before me does not provide a foundation for concluding that the Applicants have reasonable prospects in the substantive reviews of having the terminations set aside – or at least the period of prohibition against re-applying for registration reduced to a period that would be shorter than that likely to be required for the Tribunal’s final decision on the substantive reviews to be made if the Applicants pursue the applications diligently – militates against granting the stays. That in turn is supported by the fact that on the material before me I could not have a reasonable level of confidence that the Applicants would comply with registration requirements during the period of any stays.[53]
[53] The Board pointed out that the Applicants by the time of the stay hearing had still not complied with the Board’s requirement in its letter of 4 February 2020 that they notify the Board in writing pursuant to subsection 30-10(14) of the Code whether they admit or contest the allegations. That too does not inspire confidence that the Applicants would be compliant in the future, although I give limited weight to this as it may be that any focus on that requirement was overshadowed by the termination decisions and, perhaps, although there is no relevant evidence of this, regarded as no longer relevant following those decisions. On the other hand, the fact that, as the Board’s reasons for the termination decisions indicate, the Applicants were previously sanctioned by the Board in 2013 adds to the apprehension that I cannot have a reasonable level of assurance that the Applicants would be compliant if the termination decisions were stayed.
Further, the Applicants’ approach to the conditions upon which the interim stays were granted – recalling not just that the Applicants failed to comply with those conditions, but did not advise or approach the Tribunal for additional time in which to comply – I am not confident that conditions imposed on further stays would be complied with. That is so whether I consider the conditions sought in the Applicants’ submissions or extended conditions of the kind imposed by the Tribunal in Norman which Dr Gray in oral submissions also urged me to consider.
I have also carefully considered whether stays should be granted only until consideration of an application by the Applicants for determination of the procedural fairness issue as a preliminary point. This has the attraction that such stays would be for relatively short periods, thus reducing the risk to the community while avoiding the immediate disruption of clients and adverse consequences of the terminations for the Applicants and their staff. However, for the reasons already indicated I am not satisfied that such an application would have reasonable prospects of success and that the benefits to the Applicants and their staff and clients would outweigh the risks to clients and the community. Nor, for the reasons already indicated and on the basis of the material before me and the history of this matter, am I satisfied that the Applicants would comply with registration requirements or conditions upon which the stays might be granted in the period during which such stays might be operative.
DISPOSITION OF THE STAY APPLICATIONS
As I am not satisfied that it is desirable to stay the operation of the decisions, it follows that the applications for stays must be refused. Consequent upon that refusal the interim stays are discharged.
I certify that the preceding 122 (one hundred and twenty-two) paragraphs are a true copy of the reasons for the decision herein of Senior Member R J Olding
...........................[SGD].............................................
Associate
Dated: 8 May 2020
Date(s) of hearing: 24 April 2020 Counsel for the Applicant: Dr R Gray Solicitors for the Applicant: Robert Chrzaszcz & Associates Pty Ltd Counsel for the Respondent: G Walker Solicitors for the Respondent: Tax Practitioners Board
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