Christou v The Tax Agents' Board of Western Australia

[2008] FCA 1625

FEDERAL COURT OF AUSTRALIA

Christou v The Tax Agents' Board of Western Australia [2008] FCA 1625

PRACTICE AND PROCEDURE - Extension of time to file and serve notice of appeal - applicant had been convicted of serious tax offence - Tax Board and Tribunal exercised discretion under s 251K(2) of the Income Tax Administration Act and s 43(1) Administration Appeals Tribunal Act to cancel applicant’s registration as he was an unfit and improper person to be registered - Tribunal had considered reasons complained of by the applicant - additional circumstances that he failed to lodge tax returns aggravated the decision - finding that the applicant was an unfit and improper person sufficient basis to exercise its discretion - no mitigating circumstances – no prospect of success.

Administrative Appeals Tribunal Act 1975 (Cth), ss 44(1), 44(2A), 43(1)
Administrative Decisions (Judicial Review) Act 1977 (Cth), s 11
Federal Court Rules 1976 (Cth), O 53 r 7
Income Tax Assessment Act 1936 (Cth), ss 161, 251K, 251BC(1)(e), 165A, 166, 170, 175A
Taxation Administration Act 1953 (Cth), Part IVC

Birdseye v Australian Securities and Investments Commission (2003) 76 ALD 321 cited
BTR plc v Westinghouse Brake and Signal Co (Aust) Ltd (1992) 34 FCR 246 cited
Comcare v Etheridge (2006) 149 FCR 522 cited
Dent v Australian Electoral Commissioner [2008] FCAFC 111 cited
Gallo v Dawson (1990) 64 ALJR 458 cited
HBF Health Funds Inc v Minister for Health and Aging (2006) 149 FCR 291 cited
Hill v Repatriation Commission (2005) 218 ALR 251 cited
Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 cited
Peczalski v Comcare (1999) 58 ALD 697 cited
Price Street Professional Centre Pty Ltd v Commissioner of Taxation (2007) 97ALD 593 cited
TelePacific Pty Ltd v Commissioner of Taxation (2005) 218 ALR 85 cited

NICK CHRISTOU v THE TAX AGENTS' BOARD OF WESTERN AUSTRALIA

WAD 156 OF 2008

GILMOUR J
4 NOVEMBER 2008
PERTH

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAD 156 OF 2008

BETWEEN:	NICK CHRISTOU Applicant
AND:	THE TAX AGENTS' BOARD OF WESTERN AUSTRALIA Respondent

JUDGE:	GILMOUR J
DATE OF ORDER:	4 NOVEMBER 2008
WHERE MADE:	PERTH

THE COURT ORDERS THAT:

1.The application be dismissed.

2.The applicant pay the respondent’s costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAD 156 OF 2008

BETWEEN:	NICK CHRISTOU Applicant
AND:	THE TAX AGENTS' BOARD OF WESTERN AUSTRALIA Respondent

JUDGE:	GILMOUR J
DATE:	4 NOVEMBER 2008
PLACE:	PERTH

REASONS FOR JUDGMENT

1. The applicant seeks an extension of time for filing and serving a notice of appeal from a decision of the Administrative Appeals Tribunal (“AAT”) delivered on 30 November 2007 in which the AAT affirmed the decision of the respondent, the Tax Agents’ Board of Western Australia, of 11 December 2006, to cancel the applicant’s registration as a tax agent.

2. The application is supported by an affidavit of the applicant sworn 16 July 2008 and one by his solicitor Mr Alan Rumsley sworn 18 July 2008.  The respondent relies upon an affidavit of Mr Timothy Burrows sworn on 19 August 2007.  

3. An appeal lies to the Court on a question of law: Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act), s 44(1).

4. By s 44(2A) of the AAT Act the applicant was required to institute an appeal not later than the twenty-eighth day after the day on which he was given a document setting out the terms of the decision of the Tribunal, or within such further time as the Federal Court may allow. The applicant seeks an extension of time under s 44(2A) and Order 53 rule 7 of the Federal Court Rules 1976 (Cth).

5. The Court has a discretion to extend time.  That discretion is given for the sole purpose of enabling the court to do justice between the parties: Gallo v Dawson (1990) 64 ALJR 458 at 459.

6. The discretion to extend time to institute an appeal is not expressly confined.  Some relevant considerations are to be found in Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 (in respect of applications for extension of time under s 11 of the Administrative Decisions (Judicial Review) Act 1977 (Cth)). These have been applied to applications under s 44: Peczalski v Comcare (1999) 58 ALD 697 at [19]; Dent v Australian Electoral Commissioner [2008] FCAFC 111 at [48]. They include relevantly for present purposes the following:

   (a)The application should not be granted unless the Court is satisfied that it is proper so to do.  The prescribed period is not to be ignored: Ralkon Agricultural Co Pty Ltd v Aboriginal Development Commission (1982) 43 ALR 535 at 550. Although it is not an essential pre condition for a favourable exercise of the discretion that the applicant show an acceptable explanation for the delay, it is to be expected that such an explanation will normally be given: Comcover v A'Hearn (1993) 45 FCR 441.

   (b)The merits of the substantial application are properly to be taken into account, considering whether an extension of time should be granted.

   THE MERITS

7. The draft notice of appeal contains the following questions of law:

   2.1Whether the time set by s 170 of the Income Tax Assessment Act 1936 was 4 years.

   2.2Whether the applicant, as a tax agent under the Income Tax Assessment Act 1936, was obliged not to file any return in which the applicant was aware that the information required to prepare the return was not true and correct.

   2.3Whether the Tribunal breached the rules of natural justice in considering the application of ss 166 and 170 of the Tax Assessment Act 1936 without affording the applicant notice of its intention to do so, or an opportunity to be heard on the issue.

   2.4Whether ss 166 and 170 of the Tax Assessment Act 1936 were relevant to the determination of the issues before the Tribunal.

8. The Court’s jurisdiction under s 44(1) is limited to pure questions of law: Birdseye v Australian Securities and Investments Commission (2003) 76 ALD 321, at [11]-[16]; Price Street Professional Centre Pty Ltd v Commissioner of Taxation (2007) 97ALD 593 at [35].

9. The grounds are formulated as four separate questions concerning matters of law.  However, the competency of the appeal depends on the identification of questions which are properly characterised as questions of law, as the subject of the appeal: Price Street Professional Centre, at [22]; Comcare v Etheridge (2006) 149 FCR 522 at [14].

10. Whether a decision gives rise to a question of law that will support an appeal under s 44(1) requires consideration of how the decision was arrived at and the point that the appellant seeks to raise: Price Street Professional Centre at [25]. The Court must consider the question sought to be raised and the grounds relied upon: see Birdseye at [18]; Price Street Professional Centre at [40]. The grounds required to be specified in the notice of appeal “are the grounds upon which the appellant will argue that the answers for which it contends to the questions of law entitle it to the relief which it seeks”: HBF Health Funds Inc v Minister for Health and Aging (2006) 149 FCR 291 at [6].

11. Any questions of law identified by the applicant must relate to the decision under appeal in such a way that a favourable answer to the question will disclose an error affecting the Tribunal’s decision: Birdseye at [23] and [28].

12. During argument counsel for the applicant effectively abandoned the stated questions of law and said that the error of law relied upon was the failure of the Tribunal to take into account the applicant’s explanation for failing to comply with his obligations under s 161 of the Income Tax Assessment Act 1936 (Cth) (“the ITAA Act”) as relevant to the exercise of the discretion under s 251K, whether to cancel the applicant’s registration as a tax agent.

    THE TRIBUNAL DECISION AND THE PROPOSED APPEAL

13. The two issues for the Tribunal were:

    (a)whether the applicant had been convicted of serious taxation offences, so that the applicant is not a fit and proper person in the relevant sense; and

    (b)whether the registration of the applicant as a tax agent should be cancelled under s 251K(2) of the ITAA Act because of those offences, the applicant’s history of non-compliance of income tax returns, including his non-lodgement of income tax returns since 2000.

14. The applicant’s convictions are not in dispute before this Court. Nor does he challenge the findings of the Tribunal that the offences of which he was convicted were serious taxation offences or that for that reason and by virtue of s 251BC(1)(e) of the ITAA Act he is not a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers. The only issue in this appeal is whether by reason of errors of law, the exercise by the Tribunal of its discretion under s 251K(2) of the ITAA Act and s 43(1) of the AAT Act to cancel the applicant’s registration miscarried.

15. In considering the proper exercise of its discretion the Tribunal:

    (a)accepted that the overriding concern in considering whether registration of a tax agent should continue is the public interest: Re: Chapman and Tax Agents’ Board of South Australia (1984) 15 ATR 691 at page 702 ;

    (b)accepted that a failure by a tax agent to comply with the requirements for lodgement of his own returns is a serious dereliction of duty.

16. Further, at [31] the Tribunal referred to the following matters as informing the exercise of its discretion:

    (a)the convictions for serious tax offences;

    (b)the history of non compliance; and

    (c)the failure to lodge returns for the years of income 2001-2005.

17. The Tribunal in fact did consider the applicant’s explanation for his failure to lodge his own income tax returns and Business Activity Statements, namely, that he has been involved in litigation with his former partners and unable to obtain necessary information. The Tribunal held that it was not an acceptable explanation. In considering the applicant’s explanation, the Tribunal referred to the general context of taxation legislation of which the applicant, as a tax agent, should have been aware. These included the obligation to lodge annual income tax returns (ITAA Act, ss 161 and 163A), the making of assessments (ITAA Act, s 166), the power to amend assessments after they have been made (ITAA Act, s 170), and the right to object to an assessment (s 175A of the ITAA Act and Part IVC of the Taxation Administration Act 1953 (Cth)).

18. All of these matters were raised in the submissions of the respondent at the hearing.  More generally, the option for the applicant of lodging returns based on the information currently available and, if necessary, lodging an amendment was raised on the Section 37 Documents before the Tribunal, including the minutes of the respondent (T13 and 15), and minutes of an interview between the applicant and the respondent on 13 November 2006 (T14). 

19. The starting point for the exercise of the discretion under s 251K(2)(d) of the ITAA Act in this case, is that the applicant was not a fit and proper person to prepare income tax returns and transact business on behalf of the taxpayers in income tax matters. This unchallenged finding follows as a matter of law by reason of his conviction of serious taxation offences during the previous five years prior: s 251BC(1)(e) of the ITAA Act: Tribunal’s reasons [22].

20. The finding that he was not a fit and proper person is of itself a sufficient basis to exercise the discretion under s 251K(2)(d) of the ITAA Act to cancel the applicant’s registration as a tax agent.

21. Ordinarily, absent mitigating circumstances, I would expect that in such circumstances a tax agent’s registration would be cancelled.  The discretion permits an amelioration of this result.  There is no guidance as to what factors might influence the exercise of the discretion not to cancel a registration.  It seems to me however that there would need to be evidence of matters which mitigate the finding that the agent is not a fit and proper person.

22. In this case, the circumstances, additional to the finding that the applicant was not a fit and proper person, were aggravating rather than mitigating in nature.  The Tribunal set these out at [26]:

    [26]      In the Tribunal’s opinion, the applicant’s explanation for his failure to lodge his own personal taxation returns and Business Activity Statements within the required time, namely, that he has been involved in litigation with his former partners and has been unable to obtain the necessary information is not acceptable.  The applicant was late in lodging his income tax returns for the years ended 30 June 1988, 1989, 1990, 1991, 1992, 1993, 1994, 1995, 1996, 1997, 1999, 2001, 2002, 2003 and 2004 and the Australian Taxation Office demanded the lodgement of the returns in those years. Income tax returns for the years ended 2001, 2002, 2003, 2004, 2005 and 2006 are still outstanding.  As noted above, the applicant was convicted on 26 June 2006 for failing to lodge Business Activity Statements (BAS) for the quarters ending September 2002, December 2002, March 2003, June 2003, September 2003, December 2003, March 2004, June 2004 and September 2004.  The evidence also shows that a number of companies with which the applicant is associated have failed to file income tax returns since 2001.

23. Even if there were substance in the applicant’s complaints concerning the treatment afforded by the Tribunal to his explanations as to why he did not lodge tax returns for the years ended 30 June 2001-2005 (inclusive) this would merely remove one set of circumstances of aggravation.  It does nothing to detract from the force of the other circumstances of aggravation.  In any event, as I have said, the finding that he was not a fit and proper person, absent mitigating circumstances, would of itself be sufficient grounds for the Tribunal to exercise its discretion by cancelling the applicant’s registration.

24. For these reasons, in my opinion, the proposed appeal has no prospect of success.  Given that conclusion, it is unnecessary to consider the reasons for the applicant’s delay in seeking to appeal from the Tribunal’s decision.

25. The application should be dismissed and the applicant should pay the respondent’s costs.

I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour.

Associate:

Dated:        4 November 2008

Counsel for the Applicant:	Mr A Rumsley
Solicitor for the Applicant:	Alan Rumsley
Counsel for the Respondent:	Mr J Allanson SC
Solicitor for the Respondent:	Australian Government Solicitor

Date of Hearing:	16 October 2008
Date of Judgment:	4 November 2008