Bond Patterson Pty Ltd and Anor and Tax Agents' Board of NSW

[2005] AATA 1223

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 1223

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2004/1286

GENERAL ADMINISTRATIVE  DIVISION		)              N2004/1287
Re		BOND PATTERSON PTY LTD AND TAXATION AND FINANCIAL COUNSELLING PTY LTD

Applicant

And TAX AGENTS' BOARD OF NSW

Respondent

WRITTEN REASONS FOR ORAL DECISION

Tribunal   Senior Member, Mrs Josephine Kelly

Date  25 November 2005

Date of Written Reasons             12 December 2005

Place  Sydney

Decision   The reviewable decision is affirmed.

[sgd]  Senior Member, Mrs Josephine Kelly

CATCHWORDS

TAX AGENTS’ BOARD – Applicant companies seeking re-registration as tax agents – issue is whether Tribunal satisfied the nominee and executive officer is a person of good fame, integrity and character – nominee and executive officer failed to respond to Board request, provided seriously deficient service to client, conducted himself in an arrogant, self-righteous and bullying fashion, and showed no regret or contrition  – Tribunal not satisfied nominee and executive officer is a person of good fame, integrity and character – decision affirmed.

LEGISLATION

Income Tax Assessment Act 1936 ss 251BC and 251JC

WRITTEN REASONS

1. At the conclusion of the hearing of this matter, the terms of the decision made and the reasons for that decision were stated orally. The Applicant and Respondent requested the Tribunal to furnish a statement in writing of the reasons for its decision pursuant to sub‑section 43(2A) of the Administrative Appeals Tribunal Act 1975.

2.      The oral reasons for decision have been transcribed by Auscript, the Commonwealth Reporting Service, and edited only to the extent necessary to ensure clarity of expression, without in any way changing the reasons. The edited transcript comprises the reasons for the Tribunal’s decision and is annexed, and furnished to the Applicant and to the Respondent.

WRITTEN REASONS FOR ORAL DECISION

Senior Member, Mrs Josephine Kelly      

Introduction

1. Mr Anthony Patterson is a nominee and executive officer of both the Applicants in this case, Bond Patterson Pty Limited and Taxation and Financial Counselling Pty Limited, as those terms are used in section 251JC(1)(c) of the Income Tax Assessment Act 1936 (“the Act”).

2.      The decision I am reviewing is that made by the Tax Agents’ Board of New South Wales, (“the Board”), on 26 August 2004, refusing to re-register those companies as a tax agent (T2 p 5). The refusal was because the Board was not satisfied that Mr Patterson was a person of good fame, integrity and character, which is the test that must be satisfied in respect of a person who is a nominee of a company, and each executive officer of a company, section 251JC(1)(c)(i) and (ii)(B), and section 251BC(1)(d) of the Act.

Issues 

3.      It follows that the issue is whether I am satisfied that Mr Patterson is a person of good fame, integrity and character.

Background 

4.      On 27 May 2002 Mr Aurisch, a client of Bond Patterson Pty Limited, (“BP”), complained in writing to CPA Australia, an accounting body, about the handling of his financial affairs by BP and Mr Patterson. He sent a copy to the Board (T12 p31).  On 20 March 2003 the Board deferred the matter until the complaint before CPA Australia had been completed.

5.      The CPA Appeals Committee made its decision on 2 June 2004 affirming the decision of the CPA Disciplinary Committee made on 14 January 2004. The CPA Appeals Committee suspended Mr Patterson for 12 months from membership and imposed conditions for the lifting of the suspension. The Appeals Committee held hearings on 6 May 2004 and 2 June 2004. The Board made its decision on 26 August 2004. As refined by the end of the hearing the Board relied on several areas of Mr Patterson's conduct, which it argued  established its case:

(1)Mr Patterson failure to respond to correspondence from the Board concerning Mr Aurisch's complaint;

(2)His misleading the CPA Appeals Committee about delivery of documents as noted by that Committee in its Statement of Findings;

(3)      The findings of the CPA Appeals Committee;

(4)      The whole of Mr Patterson's conduct towards Mr Aurisch;

(5)Mr Patterson's conduct during his various hearings with the CPA bodies and in this Tribunal.

6.      The findings of the CPA Appeals Committee, which the Board relies on, are:

(a)Mr Patterson failed to reply to the Change in Professional Appointments letter from the new accountant for Mr Aurisch dated 30 April 2002;

(b)Mr Patterson failed, after a change in appointment had been effected, to promptly make available for collection all books, papers, documents and other records belonging to Mr Aurisch and/or his related entities;

(c)Mr Patterson failed to lodge income tax returns for Mr Aurisch and/or his related entities for the financial years ended 30 June 1994 and onwards;

(d)Mr Patterson failed to provide Mr Aurisch with invoices for work rendered despite numerous requests from Mr Aurisch to do so;

(e)Mr Patterson failed to forward to either Mr Aurisch or his new accountant,Land Tax Assessments, Final Notices and a company Winding-up Notice;

(f)Mr Patterson failed to reply to the professional correspondence of CPA Australia dated 12 September 2002 requesting his comments on the complaint by Mr Aurisch.

7.      The case before me for Mr Patterson did not seek to go behind those findings.

Matters Not in Dispute

8.       The following was not in dispute by the end of the hearing. Mr Aurisch appointed Mr Patterson as his tax agent in 1989 and ceased using his services in 2002. The four financial entities that Mr Aurisch had were:

(1) Mechanical Project Engineering Pty Limited (“Mechanical Project Engineering”)

(2)       Aurisch Family Trust,

(3)_Staff Superannuation Fund for Mechanical Project Engineering Pty Limited (“Superannuation Fund”), and

(4)      Petrochem Services Pty Limited (“Petrochem”).

9.      Mr Aurisch was satisfied with Mr Patterson's service until 1995. From October 1996 until his complaint to the CPA in May 2002, Mr Aurisch requested an account from BP on numerous occasions. Mr Aurisch paid $5,000 to Mr Patterson in 1995, but not in response to an invoice.

10.     The documentary evidence in Exhibit R1 includes Mr Aurisch's request for an account on 11 August 1998 and on 6 September 1998 (Attachment F); on 3 April 2000 (Attachment N);  on 6 April 2000 (Attachment O); on 21 June 2002 (Attachment P); on 4 July 2000 (Attachment Q); on 11 July 2000 (Attachment R); on 20 September 2000 (Attachment T); and 22 August 2001 (Attachment Z). It was not contested that Mr Aurisch had also made oral requests through the same period. He changed accountants in April 2002.

11.     No account was provided by Mr Patterson until Sunday morning, 30 May 2004, when he arrived unannounced on the doorstep of Mr Aurisch's home with some documents, which included an invoice for $86,000. This was just before the resumption of the hearing before the CPA Appeals Committee on 2 June 2004. The appeal to the CPA Appeals Committee did not challenge any of the factual findings made by the CPA disciplinary committee in January 2004. It alleged various breaches of procedural fairness and attacked the severity of the penalty.

12.     At the hearing before the CPA Appeals Committee on 6 May 2004, Mr Patterson said that a member of his staff had delivered to Mr Aurisch documents, including copies of his tax returns, financial accounts, the statutory reports, minutes, and "documents to be signed to enable those all to be brought up to speed or lodged" (Exhibit R2).  They did not include any source documents.

13.     The CPA Appeals Committee adjourned on 6 May 2004 to the hearing of 2 June 2004. It wanted to be satisfied of two matters to assist its deliberations. It required, by 4 pm on Wednesday, 26 May 2004, a letter of confirmation from Mr Aurisch stating that he had received all taxation returns and other statutory returns and reports for all entities up to and including the year ended 1 June 2000, and invoices from Mr Patterson for all work completed up to and including the financial year ended 30 June 2000, against which he had paid $5,000 in 1995.

14.     In fact the documents were not delivered on that day. Mrs Patterson was the staff member who was to deliver the documents. She drove Mr Patterson and Mr Capsanis, Mr Patterson's solicitor, to the hearing in Harrington Street, Sydney, and then travelled to Surry Hills to deliver the documents. No one was at home. She tried again about half an hour later and again no one was at home. She had not contacted Mr Aurisch before going to his home. No further attempt was made to deliver those documents until Mr Patterson's visit to Mr Aurisch's home on 30 May 2004.

The Evidence of Mr Aurisch

15.     Mr Aurisch said that on 30 May 2004, when Mr Patterson came to his door, Mr Patterson became very agitated and angry, which Mr Aurisch found very intimidating, and he became nervous. He said that a neighbour came out to see what was going on. Mr Aurisch was aghast at the bill being $86,000 and said that he would need time to pay it progressively. Mr Patterson responded, saying he could discount it to $55,000 if there were an immediate retraction of the complaints to the CPA and the Board, because he had to go to a meeting of the CPA.

16.     Mr Aurisch denied that he reached any agreement with Mr Patterson. He said that he was not going to make a decision until he had sought advice from his solicitor and accountant and made that clear to Mr Patterson. He said that he was not going to make a decision when someone who was "spitting and angry" was at his front door. He said that the meeting went on for about two hours or more. He prepared a file note over that day and the next day, (Attachment L-2 of Exhibit R1).

17.     He refused to accept the receipt of the box of documents Mr Patterson had brought, asking him to take them to the offices of his new solicitors. He did accept a covering letter and some documents that were with it. He said that he has not been given the opportunity to get the source documents and did not have them at the date of the hearing, despite numerous requests. A meeting had been arranged with his solicitor and Mr Patterson in 2002, where the source documents would be available.  But when his accountant determined that the source documents would not be available, the meeting was cancelled. He was unable to say whether or not his accountant had requested the source documents since 6 May 2004.

18.     In cross-examination Mr Aurisch agreed that Mr Patterson had looked through some contracts relating to several properties he, Mr Aurisch, was considering purchasing, and that Mr Patterson attended an auction for him. He said he had paid $5,000 in 1995 to minimise the bill that would arrive. He acknowledged that he had met Mr Patterson by chance in Bronte in the period after the complaints had been lodged and had a chat. He described an occasion when his accountant sent a courier to collect the source documents which were not available.

19.     Following is a summary of the documentary material in Exhibit R1, reflecting Mr Aurisch's failed attempts to have BP act in relation to the Australian Tax Office (“the ATO”).   

20.     On 11 May 1998 the ATO contacted Mr Aurisch's brother about outstanding tax returns from 1994, 1995 and 1996, and Mr Aurisch sent a fax to BP. On 14 May 1998 Mr Aurisch received a fax from Mrs Patterson saying that everything is under control. On 25 May 1998 he requested full copies of the tax returns for his company for 1994, 1995 and 1996, as well as requesting a bill.

21.     In October 1998 the ATO sent a notice that prosecution action would occur for the 1996 and 1997 income tax returns that remained outstanding. Mr Patterson was contacted about this issue by fax. Mr Aurisch sent a facsimile to Mr Patterson on 23 November 1998, which indicates that proceedings were on foot with the ATO regarding the non-lodgement of returns for his Superannuation Fund.

22.     On 29 July 1999 Mr Aurisch sent a fax to Mr Patterson which stated that he wishes to have a meeting with Mr Patterson to explain his tax affairs. On 9 August 2000 he sent a letter to Mr Patterson with an attached fine from the ATO which had been forwarded to Mr Patterson on 3 May 2000. The ATO claimed that they had not received the required information.

23.     On 13 December 2000 Mr Aurisch sent a letter to Mr Patterson asking for an explanation about a letter he had received from the ATO advising him of a $200 fine for outstanding matters. Mr Aurisch wanted to know if this was a mistake by the ATO or an oversight by BP. On 12 June 2001 the ATO sent a letter to Mr Patterson stating that it had no record of income tax returns being lodged for Mr Aurisch for the years ending 1998, 1999 and 2000. A deadline of 17 July 2001 was given with the provision of a full statement of total income from all sources.

24.     Mr Aurisch raises all of his concerns with Mr Patterson in a letter dated 25 June 2001. His concerns included finalising an account and problems of communication. The letter dated 12 July 2001 is in similar terms. On 27 July 2001 the ATO sent a letter to Mr Aurisch explaining that despite the 17 July 2001 deadline, he had not complied and they do not have income tax returns from those years. He was informed that this matter is now being handled by the ATO prosecution area. Mr Aurisch then attempted to gain access to the premises of BP and use the contact phone numbers. However, he could not get access nor contact anyone.

25.     On 9 January 2002 he sent an email to Renee Patterson setting out his inability to contact anyone. In a handwritten note dated 30 April 2002 Mr Aurisch stated that he no longer trusted BP and would be seeking different accounting representation. On 21 May 2002 Mr Aurisch wrote to Mr Patterson advising that he had a new registered tax agent. He advised that no further lodgements are to be made by BP on his behalf. He also requested  "Historical returns plus associated Group Certificates are to be provided for my information to demonstrate taxation compliance” and return of any source documentation for all his entities, including bank statements, cheque book stubs, invoice data, etc, he had to provide to BP.  This letter will be referred to as the cease-and-desist letter.

26.     On 2 August 2002 the ATO sent Mr Aurisch's next tax agent, Mr Mark Chiswell and Associates, a list of outstanding tax returns, T22. These are Mechanical Project Engineering, years outstanding 1998, 1999, 2000 and 2001;  Petrochem, years outstanding 1998, 1999, 2000 and 2001; Aurisch Family Trust, no lodgement history at all;  Superannuation Fund, years outstanding 1998, 1999, 2000 and 2001; Simon Aurisch, years outstanding, 2001. At the time that Mr Patterson was terminated he had failed to lodge income tax returns as set out above.

Documentary material relating to the 30 May meeting and later on

27.     The covering letter Mr Patterson gave to Mr Aurisch on his doorstep on 30 May 2004 was dated 26 May 2004, page 97 of Exhibit R1. That is the day he was supposed to have provided to the CPA Appeals Committee a letter of confirmation from Mr Aurisch. In this letter Mr Patterson set out his recent poor health, an acknowledgment that Mr Aurisch should not be out of pocket for costs incurred for which he was not responsible,  that the unfortunate situation has revolved around the inability to locate our files,  a summary of a report on Mr Aurisch's financial situation, including that a particular tax liability was minimal, that there will be a refund, and that his tax benefit is "considerable”  and “conservatively estimated at some $405,600".

28.     It was also said:

"We ask that you consider the above in the context of our sincere desire to effect an adjustment as to matters that unintentionally has resulted in the above situation, but also in the context of what we believe to have been a substantial and very effective financial and taxation service delivered to you since 1989, which has resulted in a very effective and beneficial outcome of the aforementioned savings."

29.     It goes on to raise Mr Patterson's concern about his professional reputation and that he had legal advice that Mr Aurisch had defamed him in his complaints to the Board and the CPA.  Mr Patterson considered that Mr Aurisch has "a severe lack of understanding" of his own business structure. It states that as part of the settlement of the matter the complaints to the Board and CPA must be "unconditionally and irrevocably withdrawn".

30.     In a letter dated 31 May 2004, Mr Patterson set out terms of settlement that he said had been reached at the meeting on 30 May 2004, which included the reduction in the costs to $50,000 to be paid progressively on condition that Mr Aurisch withdraws his complaints to the CPA and the Board and that the evidence of that withdrawal be received by 3 pm on 2 June 2004, the date of the resumed hearing, Exhibit R1.

31.     He sent a letter to Mr Cheshire, Mr Aurisch's new accountant, on 1 June 2004 acknowledging a conversation on that day at 3.45 pm. He noted that Mr Aurisch had changed his position on the agreement reached on 30 May and would not withdraw the complaints. Mr Patterson said he was withdrawing his offer.

The Evidence of Mr Patterson 

32.     Mr Patterson gave evidence before me. A statement was also in evidence, (Exhibit A1). His oral evidence at the hearing before me about the attempted delivery of the documents to Mr Aurisch on 6 May 2004 accords with what is set out above. In his statement he explained that because time was short he had told his wife to drop the documents off after she had taken him and his solicitor, Mr Capsanis, to the hearing.  He also said that during that journey he said to his wife, "I am now happy.  I will be able to tell the society this material has been given to Simon. You will have dropped the documents off before the meeting commences" to which Christina said, "Of course, it's just in Surry Hills". 

33.     Before me, he said that when he was at the CPA Appeals Committee hearing on 6 May 2004, he had believed that the documents had been dropped off about 10 minutes after his wife had dropped him off. He denied that his evidence before the CPA Appeals Committee had been misleading and untruthful.

34.     Mr Patterson gave no oral evidence-in-chief about why Mr Aurisch's affairs were handled as they were, and expressed no contrition or regret. In his statement he denied the "adverse allegations by or on behalf of Mr Aurisch, including the allegations that since 1996 his affairs had been handled in a manner which best can be described as negligent". There was also no expression of regret or contrition in the statement itself. He did state his belief that since he had been representing Mr Aurisch he has carried out his brief to the highest standard, which has involved considerable effort.

35.     He gave the following evidence in cross-examination. He accepted that he had failed to provide invoices despite requests to do so. He had to be pressed before he conceded that in response to the October 1996 request for a bill, it was finally delivered "around" April 2004. He conceded that he had never responded in writing to the CPA’s September 2002 request for his comments on Mr Aurisch's complaint, but later said that the running of that matter was in his solicitor's hands and that there was a misunderstanding.

36.     He also proceeded to list the reasons for the three extensions of the time sought from the CPA stating they were all supported by medical certificates. He conceded that a meeting that had been arranged with Mr Aurisch in October 2002 did not happen because he said a client, who was a family friend, had died. He acknowledged that Mr Aurisch was dismayed that it had not taken place.

37.     When asked whether Mr Aurisch had received his original records - that is, the source documents - he said, "No, they have been ready and waiting at our office."  There were some lengthy exchanges during the evidence in which Mr Patterson sought to place the responsibility on Mr Aurisch's accountant for the non‑collection.  A request for the documents had been made by Mr Aurisch's solicitor in a letter dated 25 July 2002. Before the first CPA hearing in January 2004 Mr Patterson had asserted that he held a lien over those documents. He said in evidence before me that following the 2 June 2004 hearing, he understood that he did not have a lien.

38.     In response to the question about Supreme Court proceedings in respect of the findings of the CPA Committee, flagged in a letter to the Board dated 10 June 2004 (T44), that is after their findings had been given, Mr Patterson said that those proceedings were on hold, although they had not been commenced.

39.     He explained that a debt recovery action against Mr Aurisch which started on 30 June 2004 was not related to a lien. The reason it was struck out was the pressure of work, but that he intended to continue at a later date to pursue Mr Aurisch and his companies’ for debt.

The Evidence of Mr Patterson's attitude towards Mr Aurisch and his Affairs 

40.     Following is a summary of other evidence of Mr Patterson's attitude towards Mr Aurisch and his affairs. In evidence he said that Mr Aurisch's memory was selective and that if "Mr Aurisch wanted a bookkeeper, number cruncher, he came to the wrong practice." In cross-examination he accepted that there were some minor hiccups in the handling of Mr Aurisch's affairs. He argued that his failure to render an account was a minor matter, given the last payment made in 1993, he said, of $4,500 and the amount of the work done before and after that. When asked why it took until April 2004 to give him a bill, he responded, "Quite simple, really". He went on to refer to a number of matters. He was looking after the "big ticket" items in Mr Aurisch's affairs. He provided a business structure to limit his tax liability. Mr Aurisch's income fluctuated and so he used certain techniques to deal with that. He said that he had the authority to raise account fees in different sizes in interim accounts when it was of most benefit to Mr Aurisch from a tax point of view. They were subject to a final account.

41.     He had to review the overall tax position and he could not put a number on the table. He had clients "with real needs" in the time Mr Aurisch was becoming unhappy with BP. He gave examples of clients being seriously ill and dying in 2002. He referred to legislation in 1998 and 1999 and the Ralph Report which he said affected Mr Aurisch's affairs. He saved the business structure $400,000. He emphasised that he had helped Mr Aurisch purchase properties and lack of some documents also hampered him.

42.     He rejected the notion that he had tried to bully Mr Aurisch into submission.  He said that the chance meeting in 2003 resulted in their shaking hands and his saying that he would return the material to Mr Aurisch, but it didn't pan out because of his health. He thought Mr Aurisch was happy when he quantified the savings that he had made for him. He gave a history of various health conditions he apparently suffered around 2003, 2002, and the deteriorating health of his mother and her subsequent death.

43.     He asserted that he and Mr Aurisch had reached an agreement on 30 May 2004, although he thought he had given too much away. He also told the CPA Appeals Committee on 2 June 2004 that he reserved the right in relation to defamation and debt proceedings.(Exhibit R2,  p 49).

44.     He told the CPA Appeals Committee on 2 June that he would go to the High Court about the lien and not give over the documents (Exhibit R2, p 58) He later said that if "they" were right, there was no lien. He did not want to surrender the right on the say of another accountant, but if the lien did not exist he could hand over the documents tomorrow.

45.     He acknowledged that he had never responded in writing to the Board's requests of 10 October 2002 and 12 September 2002. Towards the end of his cross-examination Mr Patterson's explanations for the delay in billing included  that he did not have the time to personally review Mr Aurisch's files as he had not done the work, that he had misread the situation, which I infer to mean that he did not understand how important getting the bill was for Mr Aurisch,  it had to be put in the context of the pressure he was under at the time, that 2001, 2002 and 2003 was a disastrous time in the office and that the files were misplaced, which was an isolated case. He continued to emphasise that he was carrying out his "main brief" for Mr Aurisch.

46.     He did not think there was a dispute in May 2002, only that it was a matter of his having to review the documents. He explained that he did work after the cease-and-desist letter because the time for lodging appeals was running out and he notified the ATO of errors and omissions and to protect the client, but did not lodge any further returns.

47.     Other evidence of Mr Patterson's attitude to Mr Aurisch and his work are found in the transcript of 14 January 2004 at pages 25, 30, and 45; the transcript of 6 May 2004, page 36; and the transcript of 2 June 2004, pages 54, 57 and 65. They include comments critical of Mr Aurisch such as he was "a fairly anal sort of person and nitpicking". He emphasised no tax liability was associated with the affairs and the advantage that had accrued to Mr Aurisch financially through Mr Patterson's activities.

48.     In terms of the references in the transcript of the proceedings before the CPA  to comments about "it was all a storm in a teacup” or “it would implode”,, the references are on 14 January 2004, page 30, line 53;  page 35 at line 40; page 37 at line 4;  page 45 at line 16; and on 2 June 2004, page 52 at line 51;  page 54 at line 7, and page 63 at line 29.

49.     Other relevant comments that reflect Mr Patterson's attitude to others and himself are that he took issue with the CPA being his peers regarding tax advice in his oral evidence before me and also directly with the CPA at the hearing on 6 May 2004 (Exhibit R2, p19). It is also relevant that in cross-examination he said that he considers himself a humble person.

Evidence of Christina Patterson

50.     Christina Patterson is Mr Patterson's wife and the practice manager in the accountancy and taxation firms that he runs. She gave oral evidence and a statement was tendered (Exhibit A2). Her evidence in her statement and orally about the unsuccessful delivery of documents on 6 May 2004 was consistent with that I have set out earlier as not being in dispute.

51.     In her statement, she also said that as Mr Aurisch was not home she did not want to leave the documents behind. She said that she did not report to Mr Patterson that she had not delivered the box of documents as she was more concerned with the result of the meeting that Mr Patterson had had with the Appeals Committee.

52.     In cross-examination she said that on 6 May 2004 the photocopying of the documents was going on until shortly before they left to go the city for the CPA Appeals Committee hearing. She said that she was aware that the delivery of the documents was of high priority, so that Mr Patterson could tell the CPA Appeals Committee that they had been delivered. She did not ring Mr Aurisch because there was usually someone at home.

53.     She acknowledged that she was aware of numerous requests for a bill from Mr Aurisch from 1996. When asked what she had done about that she said she could not answer the question. She also said that the source documents were awaiting collection and that she would have told Mr Cheshire, Mr Aurisch's new accountant, that those documents were available for collection when she rang him to check that he had received the other documents. He had not been in the office and someone else had signed for them. She had apparently delivered the documents that Mr Patterson had taken to Mr Aurisch's home on 30 May 2004 either on the Monday or Tuesday following.

54.     She also said that the new accountant had wanted tax returns and accounts.  I infer that to suggest that they had not asked for the source documents. She said all they had to do was to ring and come up and pick them up. After being pressed considerably on the question of whether she was aware of the lien issue, she said that she did not think there was one and that is why she would have told Mr Cheshire he could pick them up. She conceded that she would have had to ask Mr Patterson before releasing documents. She did not know what Mr Patterson would say about the existence of the lien.

55.     Her explanation for there being no reply to the April 2002 professional appointment letter from Mr Aurisch's new accountant was that they had a lot of personal things going on, including the poor health of Mr Patterson's mother. She said the office was run as best it could be, with all the outside factors, which included the poor health of her husband and his mother, and his having responsibility for his aunts. She conceded that the standard of service during the period was not as it had been before. In re-examination she described the service Mr Patterson provided to certain clients and how he helped them unbelievably and went above and beyond his duty.

Time delay in dealing with the Board

56.     Following some correspondence with Mr Aurisch on 8 August 2002, the Board sent Mr Patterson a copy of the complaint from Mr Aurisch and asked for a comment from Mr Patterson. (T16).  On 15 August 2002 Mr Patterson informed the Board that he had been unable to respond as a client of his had died and he must finalise his affairs. Mr Patterson requested an extension of time until 29 August 2002 (T17).

57.     On 2 September 2002 the Board wrote to Mr Patterson informing him that he has a duty to the Board to respond promptly to its correspondence (T18). On 4 September 2002 Mr Patterson responded to that letter requesting a suspension of any action until he finalised the financial affairs of another dead client (T19).

58.     On 11 September 2002 Mr Patterson informed the Board that he had spoken to Mr Aurisch about a review of his files (T20).  On 9 October 2002 Mr Aurisch sends a copy of the letter to the Board, which is also sent to Mr Patterson (T24).  In it he expresses his dismay at Mr Patterson's failure to attend a meeting that had been arranged. It also reiterated that his services had been terminated by the letter of 21 May 2002 and that no further work was to be done and that all source documents were to be returned.

59.     On 10 October 2002 the Board requested that Mr Patterson show cause why he should not have his registration cancelled or suspended (T26). On 22 October 2002 the Board attempted to gain access to Mr Patterson's premises, but failed to locate him or the premises (T25). On 6 November 2002 another extension was sought by Mr Patterson due to his ill health, which is why he was unable to respond to the letter from the Board of 10 October 2002.

60.     On 12 November 2002 he once again sought an extension of time as he had a tentative appointment with Mr Aurisch on 20 November 2002 (T27). Mr Patterson also included two medical certificates (T27). On 26 November 2002 the Board is informed by Mr Patterson that he had a meeting with Mr Aurisch on 30 November 2002 (T30). .

61.     On 12 December 2002 the Board informed Mr Patterson that he has not shown cause as to why his resignation should be suspended or cancelled, but he has only informed them of meetings with Mr Aurisch in an attempt to solve the issues (T32). This letter requested he show cause as to why he should not be deregistered by 16 January 2003.

62.     Mr Patterson does not comply with the Board's request, but instead, on 16 January 2003 informed the Board that he was unable to comply with the deadline, (T33).  At T34, on 29 January 2003 he stated that he will have provided submissions to the Board by Monday so that the matter can be dealt with in conjunction with all the other matters that are before the Board.

63.     On 4 March 2003 Mr Patterson provided a copy letter from CPA Australia concerning an adjournment application of the disciplinary committee based on his illness. On 20 March 2003 the Board advised Mr Aurisch and Mr Patterson that its consideration of the matter was deferred until CPA Australia finalised its consideration of a separate complaint (T41).

Consideration 

64.     As well as the above evidence, the transcript of the hearings on 14 January 2004 before the Disciplinary Committee of CPA, and the transcript of the hearings on 6 May and 2 June 2004 before the CPA Appeals Committee were in evidence (Exhibit R2).

65.     My task is to determine whether I am satisfied that Mr Patterson is of good fame, integrity and character. Mr Patterson's evidence was self-serving. His answers were unresponsive and obfuscatory, as they were in the hearing before the CPA Appeals Committee.

66.     I have concluded that Mr Patterson continues to show no contrition or regret for the service he provided to Mr Aurisch. Mr Patterson believes the service he provided was of a high standard because he saved his client money overall. He has no insight into the seriously deficient service he provided. He has, and had, no understanding of Mr Aurisch's genuine and valid concerns about billing and lodging returns.

67.     Mr Patterson concerned himself with the "big ticket" matters in his practice and ignored the nuts-and-bolts obligations as a registered tax agent and accountant.  Mr Patterson's conduct has been arrogant and self-righteous. He has done what he wants to do and disregards those matters he considers are unimportant, such as lodging tax returns, issuing regular invoices, responding to correspondence from Mr Aurisch's new accountant, the CPA, and in particular with the Board.

68.     A flagrant example is his conduct after the hearing on 6 May 2004. Having thought the documents had been delivered he did nothing until he prepared the letter, including his offer of settlement, on 26 June 2004, that is the day the CPA Appeals Committee had requested a letter of confirmation that the documents and invoice had been delivered to Mr Aurisch.

69.     I consider that his treatment of Mr Aurisch overall, and particularly when Mr Patterson arrived unannounced on his doorstep on 30 May 2004, was bullying. On that day Mr Patterson was intent on having Mr Aurisch withdraw the complaints. He rendered a very large bill, which he knew Mr Aurisch could not pay, to intimidate Mr Aurisch so that he would withdraw the complaints in return for a reduced bill. I find that Mr Aurisch did feel intimidated and did not agree to anything on that day. Such behaviour in the conduct of the business of a registered tax agent is unacceptable.

70.     The source documents have still not been returned. Mr Patterson is keeping his options open. He may renew legal proceedings for the alleged debt of Mr Aurisch. I do not know whether he still really believes he has a lien.  The threat over Mr Aurisch, however, remains. Mr Patterson was not forthright about what was happening about the delivery of documents on 6 May 2004 when he was before the CPA Appeals Committee. He did not know that they had been delivered. He had not ensured that anyone would be there to receive them.

71.     His comment that the CPA are not his peers is telling. I accept that there were external demands on Mr Patterson in 2002 and 2003. However, it was a matter of Mr Patterson's determining priorities. He chose to service his other clients rather than answer the requests of Mr Aurisch, or to comply with the 2002 requests and requests thereafter for a response to those complaints from the CPA and from the Board.

72.     I do not accept that he did not have the time to answer the CPA’s request before the hearing on 14 January 2004, or the Board's request before its decision on 26 August 2004. I note that there has been nothing put forward to excuse the conduct before 2002.

73.     I take into account that there was no evidence before me of any other complaints against Mr Patterson and that he has been practising as a tax agent for 25 years. I also note that there were no references tendered on his behalf.

74.     On the totality of the evidence, the conduct Mr Patterson has displayed, as discussed above, leads me to conclude that I am not satisfied that he is a person of good fame, integrity and character. 

Decision

75.     Accordingly, I affirm the decision not to re‑register each of the applicant companies as a tax agent.

I certify that the 75 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member, Mrs Josephine Kelly

Signed: Miss Sacha Keady
  Associate

Date/s of Hearing  22 and 23 November 2005
Date of Decision  25 November 2005
Date of Written Reasons          12 December 2005
Counsel for the Applicant         Mr D. Bernie
Solicitor for the Applicant          J.P. Capsanis & Co
Counsel for the Respondent     Mr B. Skinner
Solicitor for the Respondent     Australian Government Solicitor