Bouffiere and Tax Agents' Board of NSW

[2007] AATA 1978

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1978

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2006/1112

GENERAL ADMINISTRATIVE DIVISION		)
Re		BRIAN LESLIE JOSEPH BOUFFIERE

Applicant

And TAX AGENTS' BOARD OF NSW

Respondent

DECISION

Tribunal Senior Member M D Allen

Date22 November 2007

PlaceSydney

Decision The decision under review is affirmed.

.................[sgd].......................

M D Allen
  Senior Member

CATCHWORDS

TAX AGENTS – application for review of decision by tax agents’ board of nsw rejecting application for reinstatement as tax agent – demonstrate fit and proper to prepare taxation returns – of good fame, integrity and character – decision under review affirmed.

LEGISLATION:

Income Tax Assessment Act 1936 sections 251BC, 251JA, 251JC and 251K(3C).

CASE LAW

Davies v Australian Securities Commission (1995) 59 FCR 221

Albarran v Members of the Companies Auditors and Liquidators Disciplinary Board & Anor (2007) 234 ALR 618

Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321

Minister for Immigration and Multicultural Affairs v SRT (1999) 91 FCR 234

REASONS FOR DECISION

22 November 2007 Senior Member M D Allen

1.      By application made the 22^nd of August 2006, the Applicant sought review of a decision by the Respondent made on 20 July 2006 not to grant his application to be registered as a tax agent.

2.      The Respondent based its decision upon the basis that the Applicant had failed to demonstrate that he was a fit and proper person to prepare taxation returns in that he was not a person of good fame, integrity and character.

3. Section 251JA of the Income Tax Assessment Act 1936 states inter alia that the Board shall register a person as a tax agent if satisfied that he or she is a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters. Subsection 251BC(1) of the Act provides that a person is not a fit and proper person for the purposes of s251JA if the person is not of good fame and character.

4. I note that the Respondent in its letter advising the Applicant of its decision refers to s251JA of the Act. To my mind, the correct reference should be to s251JC of the Act as the Applicant (albeit under another name) had previously been registered as a tax agent, his first registration being in 1980. To my mind however, nothing turns upon this, as the requirements under s251JA and s254JC are identical.

5.      The term “fit and proper person” was explained by Hill J in Davies v Australian Securities Commission (1995) 59 FCR 221 at 233. In that case, which was referred to with approval by the High Court in Albarran v Members of the Companies Auditors and Liquidators Disciplinary Board & Anor (2007) 234 ALR 618 at 624, His Honour said:

…

The phrase fit and proper person is a familiar one in the context of qualifications for offices or vocations.  Discussing the phrase in a context of licenses to use vehicles for the purposes of inter-state trade, Dixon CJ, McTiernan and Webb JJ said in Hughes and Vale Pty Ltd v The State of New South Wales (No 2) (1995) 93 CLR 172 at 156-7:

But their very purpose is to give the widest scope for judgment and indeed for rejection.  Fit (or idoneus) with respect to an office, is said to involve three things, honesty, knowledge and ability: honesty to execute it truly, without malice, affection or partiality; knowledge to know what he ought duly to do; and ability as well in estate as in body, that he may intend and execute his office, when need is, diligently, and not for impotency or poverty neglect it – Coke.  When the question was whether a man was a fit and proper person to hold a license for the sale of liquor it was considered that it ought not be confined to an inquiry into his character and that it would be unwise to attempt any definition of the matters which may legitimately be inquired into: each case must depend upon its own circumstances …

As I observed in Stasos v Tax Agents’ Board of NSW (1990) 90 ATC 4950 at 4959, the content of what is necessary to constitute a person a fit and proper person to occupy a particular office or pursue a particular vocation will vary having regard to the office or vocation under consideration. Thus the characteristics required to show fitness as a tax agent were expressed by Davies J in Re Su and Tax Agents’ Board of South Australia (1982) 82 ATC 4284 at 4286 as requiring that person to be:

…

A person of good reputation, has a proper knowledge of taxation laws, is able to prepare income tax returns competently and is able to deal competently with any queries which may be raised by officers of the taxation department.  He should be a person of such competence and integrity that others may entrust their taxation affairs to his care.  He should be a person of such reputation and ability that officers of the taxation department may proceed upon the footing that the taxation returns lodged by the agent have been prepared by him honestly and competently.

…

6.      Likewise, in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 380, Toohey and Gordron JJ said:

…

The expression fit and proper person standing alone, carries no precise meaning.  It takes its meaning from its context, from the activities in which the person is or will be engaged and the ends to be served by those activities.  The concept of fit and proper cannot be entirely divorced from the conduct of the person who is or will be engaging in those activities.  However, depending on the nature of the activities, the question may be whether improper conduct has occurred, whether it is likely to occur, whether it can be assumed but it will not occur, or whether the general community will have confidence that it will not occur.  The list is not exhaustive but it does indicate that, in certain contexts, character (because it provides indication of likely future conduct) or reputation (because it provides indication of public perception as to likely future conduct) may be sufficient to ground a finding that a person is not fit and proper to undertake the activities in question.

…

7. The Applicant was first registered as a tax agent in the state of New South Wales on 29 July 1980 under the name of Brian Leslie Joseph Buffier. His registration was cancelled on 13 April 2000 pursuant to ss251K(3C) of the Act as a result of his becoming an undischarged bankrupt. The Applicant was made bankrupt as a result of a sequestration order on 28 February 2000.

8.      In its Statement of Facts and Contentions the Respondent pointed to 10 events that, in its submissions, led to the inevitable conclusion that the Applicant was not a fit and proper person.  Sequentially, the events were:

(a)1994: three disciplinary breaches of by-laws of the Australian Society of Certified Practising Accountants for which he was admonished respecting two and censured for one by the Disciplinary Committee of the ASCPA.

(b)1988: the Disciplinary Committee of the ASCPA cancelled the Applicant’s membership of the ASCPA following his failing to abide by trust account standards in dealing with trust account moneys and his contumelious attitude to ASCPA’s investigation.

(c)On 27 January 1999, the Australian Securities and Investments Commission made an order prohibiting the Applicant acting as the director of a company for the period of five years.

(d)On 28 February 2000, the Applicant was declared a bankrupt and informed that as a result he was disqualified from managing a corporation as a result of the bankruptcy.

(e)On 18 August 2005, the Applicant was convicted at the Downing Centre Local Court on five counts, namely:

(i)One conviction for “doing an act forbidden by provision contrary to s1311(1)(a) Corporations Law 2001, relating to the management whilst disqualified of a company”;

(ii)Two convictions for “being a disqualified person exercising the capacity to affect the financial standing of the company contrary to s206A(1)(b) Corporations Law 2001”; and

(iii)Two convictions for “making a false or misleading statement through content or omission contrary to ss1308(2) and 1311(1)(a) of Corporations Law 2001", arising from falsely stating his address.

The Applicant was fined a total of $10,000 on all counts.

(f)The Applicant changing his name in order to evade the consequences of both the banning order and bankruptcy.

(g)Managing a company whilst disqualified, namely acting as a director of James Court & Associates Pty Ltd between about March or April 2001 and 31 October 2002.

(h)Forgery of his son’s signature on more than one occasion.

(i)Extension of the Applicant’s bankruptcy as a result of his non-cooperation with his trustee in bankruptcy.

(j)Failing to disclose convictions upon application for re-registration as a tax agent.

9.      It is not my intention in these reasons to traverse every allegation made against the Applicant.  Suffice it to say that in cross-examination he conceded the accuracy of the allegations of wrongdoing made against him by the Respondent.

10.     In his evidence to the Tribunal the Applicant sought to make the case that his management of the companies and his stratagem of appointing his then 18 year-old son as a director were born out of necessity.  I do not accept this explanation and I am satisfied that the Applicant knew that the actions embarked upon by him were designed to subvert both the substance and the spirit of the law.

11.     The Applicant in cross-examination conceded that he understood that the purpose of the banning order by ASIC was to stop him acting as a company director.  Nevertheless, he became a director of a company, namely James Court.  At paragraph 49 of his affidavit he states: “At the time it felt like it was the only way I was going to be able to regain any financial stability”.  To me this clearly shows that the Applicant made a deliberate decision when he knew that he was banned.  Indeed, in cross-examination he conceded, “I purposely breached the companies code”.

12.     More egregious to my mind is the Applicant’s change of name and his reasons for it.  In his affidavit, the Applicant admitted that he changed his name and lodged ASIC documents giving an address of a friend’s house in Canberra due to increasing pressure from ASIC and the Insolvency and Trustee Service Australia, and to throw ITSA off his trail, plus to obtain a new passport.

13.     Paragraph 51 of his affidavit reads:

…

Using the name Bouffiere I obtained a new passport as my previous passport in the name of Buffier had been impounded by the Official Trustee in Bankruptcy.  I was able to continue my trips to Europe for both the opera and skiing under the name of Bouffiere.

…

14.     As I understood the Applicant’s evidence, the friend whose home he used for an address in the ASIC documents was unaware that his address was being used by the Applicant.

15. As to the Applicant’s attitude to the Corporations Law and his obligations as a bankrupt, the following passages occur in the transcript of his cross-examination at the Local Court:

…

Q        Why is it that you chose to put the 105 Endeavour Street address on there?

AWhy else, probably because its server’s unlikely to check and find out where others.

QWas it also because you didn’t want ASIC to find out

ANot particularly

QBut you were involved in a company, in this company?

ANo, because I already signed in my own name

QNo, you've signed in the name of Bouffiere.  They didn’t know that your name was Bouffiere?

ANo, if you say so.

QDid you tell them that your name was Bouffiere?

AOf course not

…

QSo Mr Bouffiere, you thought that because you changed your name to Bouffiere in June 2000 that it was ok for you to register as a director of another company?

ACorrect

QWhat?  You considered your change of name wiped the slate clean?

AI didn’t consider it at all.

…

16.     These passages speak for themselves and indicate the Applicant’s attitude to authority.

17.     It is perhaps pertinent to set out the findings of the Magistrate in the criminal proceedings.  At page 10 of his judgment he states:

…

The evidence, much of which was ultimately either agreed or not disputed, clearly shows the accused playing fast and lose with legal formalities and indeed the truth.  Even after he had formally changed his name, the name he used varied to suit his view of the circumstances and his objectives.  The accused also used his previous name and did not disclose his new name on documents lodged with the Insolvency and Trustee Service of Australia (ITSA).  He filed in numerous forms, including tax returns, with incorrect or misleading information, altered documents in misleading manner, and indicated on documents that he was a director of Eltransco after becoming aware of his disqualification.  His misled the St George Bank by entering into a personal guarantee when he was undischarged bankrupt.  He signed an annual return in Andrew Bouffiere’s name.  He became a director of James Court & Associates despite his disqualification and under his new name without disclosing his former name.

The accused also asserted in evidence that he believed that this was acceptable and permissible to use his new name and an ACT address to become a director of James Court & Associates despite his disqualification.  This is an extraordinary suggestion to be made by any person, let alone a clearly intelligent and capable person who has been a practising accountant for many years.  It is an extraordinary proposition to put to the court on oath.

…

18.     The findings of the Magistrate cannot be incorporated in these proceedings as the findings of the Tribunal as to the facts, but they are evidence of the findings of a court as to the Applicant’s probity and are admissible as such.  The fact of the convictions must be accepted by this Tribunal and the Tribunal is not permitted to impugn the convictions nor the facts necessary to sustain them (see Minister for Immigration and Multicultural Affairs v SRT (1999) 91 FCR 234).

19.     On 28 November 2005, the Applicant made an original application for registration as a tax agent under the name of Brian Leslie Joseph Bouffiere.  On 4 January 2006, the Respondent wrote to the Applicant stating inter alia:

Dear Mr Bouffiere

Please address the following issues:

1.…

2.…

3.Please answer question 12 and sign near the alteration.

4.…

20.     Question 12 of the application form reads:

…

Have you been convicted of any offence or been placed under any sentence for any offence (including any offences under any act administered by the Commissioner of Taxation, e.g., failure to lodge an income tax return) against the laws of Australia, a state, territory or any other country?

…

21.     In a re-lodged application, the Applicant marked the box stating “No” to that question.

22.     In evidence the Applicant stated that he thought that answering question 12 would prejudice his application but on further consideration, he thought it only applied to offences against taxation law.  I do not for one moment accept the Applicant’s evidence on this point.  A careful perusal of the question makes it clear that all convictions are required to be notified.  Even if the Applicant was genuinely unsure of the purport of the question, to demonstrate the probity required of a tax agent, further and better enquiries should have been made with the Respondent.

23.     At all stages of his career, the Applicant has been contemptuous of authority and I find that where the law acts to his disadvantage, he is willing to circumvent it.  As an example of his attitudes, his letter to ASCPA when he was being investigated for trust account breaches in 1998 can be quoted, namely:

…

I refer to your various correspondences of August 1997 to May 1998 containing allegation [sic] of infringements of certain society bi-laws.

Mr Droder, your pedantic nonsense does not interest me in the slightest.  It is all about form and contains no substance.  If you and the other society boffins wish to occupy your time (at the members’ expense) in an attempt to justify your existence on this futile pursuit that is your business.

As you are well aware the trust account is run on professional lines.  No client has suffered nor will suffer any loss and the imprest system is correct 99.9% of the time.

At the moment the practise energies are directed towards controlling the Australian Tax Office in its attempts to destroy the accounting profession (by de-facto nationalisation).  The society’s reaction to these moves has been to roll over and lie doggo.  …

If you continue with this exercise I will have no choice but to sue you personally for undue harassment and the society for breach of duty of care to its members in relation to the ATO persecutions.

I recall the last attendance at one of your Kangaroo courts.  I will not participate in this and TOM FOOLERY again.

…

24.     The Applicant's case before me was really quite simple.  He has admitted his past transgression and points out, correctly, that he has been punished for them.  Due to circumstances not of his making entirely, he has lost considerable amounts of money and worse still, his home.  His only means of income is his practice as an accountant, which due to the existence of banning orders, must be carried on as an individual and not as a corporate entity.

25.     Currently he is preparing tax returns for clients, but must use the services of a tax agent to lodge them.  This involves that tax agent checking the returns and this costs the Applicant approximately $19,000 per annum grossly reducing his income from this type of work.  He further adds that given his position he would be more than cautious respecting any impropriety relating to tax matters.

26.     Again the Applicant correctly points out that at no time has he ever transgressed against taxation law.

27.     The ultimate test is to ask, as pointed out by Hill J in Davies supra, whether the Commissioner of Taxation could regard the Applicant as a person of such standing that the Commissioner and the public can have confidence in him as to his honesty, integrity and competence.

28.     In the Applicant’s case, his competence has not been called into question.  However, his behaviour since 1994 and as detailed above, only indicates that having regard to that history, his character as exemplified by that history and indeed his reputation as a result, for the Commissioner of Taxation or any other person to have any confidence in his honesty and integrity would be entirely misplaced.

29.     The decision under review is affirmed.

I certify that the 29 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member M D Allen

Signed:   ........[sgd]..................
               Mwela Kapapa, Associate

Date/s of Hearing:  29 October 2007
Date of Decision:  22 November 2007
Solicitor for the Applicant:                  McLachlan Chilton Solicitors
Solicitor for the Respondent:             Australian Government Solicitor
Counsel for the Respondent             Jacqueline Gleeson