Council of the New South Wales Bar Association v Archer (No 12)

[2009] NSWADT 283

CITATION:	Council of the New South Wales Bar Association v Archer (No 12) [2009] NSWADT 283
DIVISION:	Legal Services Division
PARTIES:	APPLICANT Council of the New South Wales Bar Association RESPONDENT Stephen John Archer
FILE NUMBER:	032019
HEARING DATES:	5 – 7 May, 14 May, 29 and 30 June 2009
SUBMISSIONS CLOSED:	14 September 2009
DATE OF DECISION:	13 November 2009
BEFORE:	Chesterman M - Deputy President; Norton S, SC - Judicial Member; Bennett C - Non-Judicial Member
CATCHWORDS:	Professional misconduct – failure to discharge legal and civic obligation to pay tax adequately– failure to make any or adequate provision to pay tax – bankruptcy
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Bankruptcy Act 1966 (Cth) Evidence Act 1995 Family Law Act 1975 (Cth) Income Tax Assessment Act 1936 (Cth) Legal Profession Act 1987 Legal Profession Act 2004 Taxation Administration Act 1953 (Cth)
CASES CITED:	Allinson v General Council of Medical Education and Registration [1894] 1 QB 750 ASIC v Rich (2005) 53 ACSR 110 ASIC v Rich [2005] NSWSC 650 Bannister v Walton (1993) 30 NSWLR 699 Briginshaw v Briginshaw (1938) 60 CLR 336 Browne v Dunn (1893) 6 R 67 Butera v Director of Public Prosecutions (Vic) (1987) 164 CLR 180 Campbell v Hamlet [2005] 3 All ER 1116; [2005] UKPC 19 Council of the New South Wales Bar Association v Archer (No 2) [2004] NSWADT 78 Council of the New South Wales Bar Association v Archer (No 11) [2008] NSWADT 311 Council of the New South Wales Bar Association v Davison [2005] NSWADT 252 Council of the New South Wales Bar Association v Einfeld [2009] NSWCA 255 Council of the New South Wales Bar Association v Power (2008) 71 NSWLR 451; [2008] NSWCA 135 In re Davis (1947) 75 CLR 409 Davison v Council of the New South Wales Bar Association [2007] NSWCA 227 Health Care Complaints Commission v Litchfield (1997) 41 NSWLR 630 New South Wales Bar Association v Archer [2004] NSWADT 38 New South Wales Bar Association v Cummins (2001) 52 NSWLR 279; [2001] NSWCA 284 New South Wales Bar Association v Hamman [1999] NSWCA 404 New South Wales Bar Association v Maddocks, unreported, Court of Appeal, New South Wales, 23 August 1998 (BC8801576) New South Wales Bar Association v Murphy (2002) 55 NSWLR 23; [2002] NSWCA 138 New South Wales Bar Association v Somosi [2001] NSWCA 285 New South Wales Bar Association v Stevens [2003] NSWCA 261 New South Wales Bar Association v Young [2003] NSWCA 228 Prothonotary v Del Castillo [2001] NSWCA 75 Rejfek v McElroy (1965) 112 CLR 517 A Solicitor v Council of the Law Society of New South Wales (2004) 216 CLR 253; [2004] HCA 1 Walsh v Law Society of New South Wales (1999) 198 CLR 73 Wardell v New South Wales Bar Association [2002] NSWSC 548 Ziems v Prothonotary of the Supreme Court of NSW (1957) 97 CLR 279
REPRESENTATION:	APPLICANT C Adamson SC and M Lynch, barrister RESPONDENT In person
ORDERS:	1. The Respondent is found guilty of professional misconduct 2. The proceedings are set down for further directions at 9.30 a.m. on 19 November 2009.

REASONS FOR DECISION

Summary of this decision

1 In this case, the Council of the Bar Association of New South Wales (‘the Bar Association’) claimed that Mr Stephen Archer (‘the Respondent’), who was formerly a barrister practising in New South Wales, had been guilty of professional misconduct by virtue of avoiding the payment of substantial amounts of income tax that he owed. It alleged that, despite having earned substantial amounts of income from his practice as a barrister, he had failed over a period of some fifteen years to provide adequately for the discharge of his tax liabilities. He had chosen to pay other debts for the benefit of himself and his family and ‘associates’ in preference to his tax liabilities.

2 In bringing forward these allegations, the Bar Association relied on the fact that on three occasions the Respondent had become bankrupt, with the Deputy Commissioner as his sole or most substantial creditor.

3 The Bar Association claimed that the Tribunal should find that the Respondent was guilty of professional misconduct on account of the matters alleged against him and should make an order removing his name from the Roll of legal practitioners.

4 After dealing with a number of preliminary matters during a period of some years, the Tribunal conducted a hearing into these allegations over six days in May and June 2009. In September, it received written submissions from both parties relating to the evidence and the applicable law. It determined that initially it should decide only the first issue put before it, namely, whether the Respondent had been guilty of professional misconduct.

5 In the ensuing paragraphs of this lengthy judgment, we set out our conclusion on this matter, together with our reasons.

6 Our principal findings on the matters alleged are as follows. The Respondent deliberately chose, during a significant number of years, to incur and pay debts in respect of goods, services and other items for his own benefit (direct or indirect) and that of his family, but not to pay tax debts. He engaged in this conduct even though substantial amounts of disposable income that was available to him rendered it practicable for him to pay and provide for his tax liabilities in addition to meeting his living expenses and his other financial commitments. He knew that his failure to discharge his tax liabilities was likely to result in his bankruptcy and that if he became bankrupt the assets owned by him that might be realised in order to pay his debts were of limited value. He became bankrupt three times, owing on each occasion a very substantial sum on account of income tax. The outcome was that he inflicted a very substantial loss on the revenue.

7 On the basis of these findings, we have concluded that the Respondent was guilty of professional misconduct.

8 The question whether the Respondent should be struck off the Roll, as claimed by the Bar Association, or whether some other order or orders should be made by way of ‘penalty’, is not decided in this judgment. This question, together with the question of costs, requires a further hearing, at which the parties will have the opportunity to tender further evidence and make further submissions.

The Information filed in these proceedings

9 On 9 October 2003, the Bar Association filed in the Tribunal an Information under Part 10 of the Legal Profession Act 1987 (‘the LP Act’) against Stephen John Archer, the Respondent.

10 Because this date of filing precedes the commencement of the Legal Profession Act 2004, this case falls wholly to be determined wholly under the LP Act even though it has been repealed: see Legal Profession Act 2004, Schedule 9, clause 15.

11 Although, strictly speaking, the Informant in these proceedings is the Council of the New South Wales Bar Association, it will be referred from now on as ‘the Bar Association’. The term ‘Bar Council’ will be used where its existence as an entity distinct from the Bar Association is of significance.

12 The Bar Association alleged in the Information that the Respondent, a legal practitioner within the meaning of section 128 of the LP Act, has been guilty of professional misconduct. In the Second Schedule to the Information, it requested the Tribunal (a) to find to this effect; (b) to find also that he is not a fit and proper person to remain on the Roll of Legal Practitioners; (c) to order that his name be removed from the Roll or, in the alternative, to make an order in terms of any one or more of sub-paragraphs (b), (c), (d), (e) or (f) of sub-section 171C(1) of the LP Act; (d) to order that its decision be published; and (e) to order that the Respondent pay its costs of these proceedings.

13 The two grounds on which the Informant sought a finding of professional misconduct were set out, with accompanying particulars, in the following terms in the First Schedule to the Information:-

Ground 1

1. Stephen John Archer failed to discharge his legal and civic obligation to pay income tax for the years ended 30 June 1988 to 30 June 2002, adequately or at all.

Particulars


(a) A sequestration order was made on 18 December 1991 against the estate of Stephen John Archer following the presentation of a creditor’s petition by the Deputy Commissioner of Taxation.

(b) Stephen John Archer was made bankrupt on his own petition, which was filed on 7 April 1997. The Deputy Commissioner of Taxation was his most substantial creditor.

(c) A sequestration order was made on 21 March 2002 against the estate of Stephen John Archer following the presentation of a creditor’s petition by the Deputy Commissioner of Taxation.


Ground 2

2. Stephen John Archer failed to make provision, or any adequate provision from income he had received, for the payment of income tax for the years ended 30 June 1988 to 30 June 2002.

Particulars


(a) Stephen John Archer, having entered into an agreement with his wife on 29 March 1988 which was registered under the Family Law Act 1975 (“the Agreement”), chose to make payments to his wife in purported performance of the Agreement, in circumstances where, had he approached the Family Court for an order to vary the Agreement, the Agreement would have been varied such that he could have, had he chose to do so, met his obligations under the Agreement and discharged his legal and civic obligations to pay tax.

(b) Stephen John Archer chose not to approach the Family Court to vary the Agreement, although he knew that he could not, or that it was unlikely that he would be able to, comply both with the Agreement and with his legal and civic obligation to pay tax.

(c) Stephen John Archer chose to incur debts in respect of goods and services and other items for his own benefit and that of his family and associates and to discharge those debts in preference to the debt which arose in favour of the Australian Taxation Office by reason of assessments issued to him from time to time, following filing of income tax returns by him.

(d) Stephen John Archer preferred to pay debts other than tax debts in circumstances where he knew that, irrespective of whether he paid his tax debt, he would continue to enjoy the benefits available to the public as a result of the expenditure of public funds, whereas if he were not to pay other debts, his standard of living would be adversely affected.

14 At the hearing, Ms Adamson SC, counsel for the Bar Association, indicated that the Association did not press the final three words of Ground 1.

The Reply filed by the Respondent

15 In his Reply to the Information, filed on 30 October 2003, the Respondent admitted in relation to Ground 1 that in some of the years between 30 June 1988 and 30 June 2001 (not 30 June 2002, the date contained in the Information) he did not pay all the income tax that he was assessed to be liable to pay. He also admitted the making of the two sequestration orders and his being made bankrupt on his own petition.

16 In relation to Ground 2, he admitted that in some of the years between 30 June 1988 and 30 June 2001 he did not make adequate provision for the payment of income tax. He also admitted that he entered into the Agreement referred to in the Particulars, that he did not approach the Family Court to vary the Agreement and that from time to time he both incurred debts in respect of goods and services and paid debts other than tax debts.

17 In relation to both Grounds, he denied the other matters alleged and claimed that none of the matters alleged was capable in law of constituting professional misconduct within the meaning of s 127 of the LP Act.

Background matters

18 The Respondent was admitted as a Solicitor of the Supreme Court on 4 June 1971. At his own request, his name was removed from the roll of solicitors on 5 September 1980 and he was admitted as a Barrister of the Supreme Court.

19 The Respondent’s marriage to Sarah Anne Archer occurred in August 1972. They are still married to each other. They have two daughters, who were born in December 1976 and January 1980 respectively.

20 As a result of being briefed in a number of matters in Western Australia, the Respondent moved to Perth in December 1986 with his wife and daughters. He retained chambers in Sydney as well as Perth, but the scale of his practice in New South Wales was very limited.

21 On 29 March 1988, during a period of disharmony between the Respondent and his wife, they executed a deed under section 86 of the Family Law Act 1975 (Cth) (‘the Agreement’). In it he agreed to make ‘permanent provision’ for her and for their two children by a number of means, including paying periodical maintenance and assigning a number of items of property to her. The Agreement was registered in the Family Court of Western Australia on 2 May 1988. Further aspects of it are outlined below.

22 For a number of periods of time during 1983 and 1984 and for a period of several months in 1988, the Respondent and his wife were separated. At all other relevant times since their marriage they have lived together.

23 In or about 1990, the Respondent arranged for a company, Adbaston Pty Ltd (‘Adbaston’) to be formed. It acted until 1995 as a service company for him, leasing premises, furniture and equipment for his practice and employing staff such as a secretary and library assistants. It charged him a monthly fee, which varied from time to time, for these services. The beneficial owners of the shares in this company were his wife and two daughters and the directors were his wife and a friend of the family.

24 On 19 December 1991, the Respondent was made bankrupt on the petition of the Deputy Commissioner of Taxation (‘the first bankruptcy’). This event was prominently reported in a Perth newspaper early in 1992. The trustee of his bankrupt estate was Insolvency Trustee Service Australia (‘ITSA’). He was discharged from this bankruptcy on 29 January 2000.

25 In October 1995 the Respondent returned to Sydney and recommenced his practice there. In January 1996, Mrs Archer and their two daughters joined him there. They resided in a house in Paddington owned by Mrs Archer. She sold this house in January 2002 and they moved to a house in Nelson Bay.

26 On 7 April 1997, the Respondent was made bankrupt on his own petition (‘the second bankruptcy’). The most substantial creditor was the Deputy Commissioner of Taxation. The trustee of his bankrupt estate was again ITSA. He was discharged from this bankruptcy on 9 March 2001.

27 Between August 1998 and June 1999, the Respondent, pursuant to a substantial retainer received from a client in Perth, spent a great deal of time in that city while also maintaining his practice in Sydney.

28 On 26 February 2001, the Sydney Morning Herald published a number of articles (‘the Herald articles’) alleging that six barristers practising in New South Wales, including the Respondent, had failed over a number of years to pay tax that they should have paid. Copies of these articles were admitted into evidence. They attracted a great detail of public attention, both immediately and during the ensuing months.

29 On 23 September 2001, the Respondent requested the Bar Council to cancel his practising certificate as from 30 September 2001, since he had ceased to practise as a barrister in New South Wales.

30 On 23 October 2001, the Bar Council resolved that the Respondent’s practising certificate should be cancelled for reasons set out in a report by a Professional Conduct Committee dated 5 October 2001.

31 On 21 March 2002, the Respondent was made bankrupt on the petition of the Deputy Commissioner of Taxation (‘the third bankruptcy’). The trustee of his bankrupt estate was Ferrier Hodgson. He was discharged from this bankruptcy on 16 April 2005.

32 On 29 August 2002, the complaint from which these proceedings stem was made by resolution of the Bar Council.

33 On 23 December 2002, the Bar Council resolved under section 137(2) of the LP Act that it was just and fair to deal with its complaint in so far as the complaint related to alleged conduct occurring more than three years before the complaint was made.

34 On 31 July 2003, the Bar Council resolved under section 155(2) of the LP Act that these proceedings should be instituted.

35 Since the commencement of these proceedings, we have delivered a number of interlocutory decisions. This has been the principal cause of the delay in bringing these proceedings to fruition.

36 The substantive hearing of this matter was spread over six days during May and June 2009. All the evidence, written and oral, was put before us. Pursuant to directions given at the hearing, the Bar Association filed written submissions. On 14 September 2009, the day fixed for oral addresses, the Respondent was unable to attend due to illness. He indicated to us by letter that he did not wish to add (save in one minor respect) to what he had already written and suggested that we consider our decision in the case without receiving oral submissions. The Bar Association expressed agreement with this suggestion.

37 The basis on which we adopt this course of action is that in the present decision we will deal only with the question whether the Bar Association has made good its claim that the Respondent has committed professional misconduct as alleged in the Information. This is the case even though some parts of the Association’s submissions relate to a further question that will only arise if we make a finding of professional misconduct, namely, what consequential order or orders (if any) we should make under section 171C(1) of the LP Act.

The nature of the evidence admitted at the hearing

38 The principal items of evidence tendered by the Bar Association at the substantive hearing were affidavits by the following deponents on the dates indicated: Mr Philip Selth, Executive Director of the Association (13 February 2007); Mr Alan Blanch, the solicitor for the Association in these proceedings (31 March 2006); and Mr Denis Robertson, a chartered accountant engaged by the Association (29 April 2009). Annexed to Mr Robertson’s affidavit were a number of schedules prepared by him. Copies of a substantial number of documents were exhibited to each of these affidavits. Mr Blanch and Mr Robertson were cross-examined.

39 When considering evidence tendered at the hearing, we were required by section 168 of the LP Act to observe the rules of law governing the admission of evidence contained in the Evidence Act 1995 and the associated common law.

40 The Respondent objected to the admission of Mr Robertson’s affidavit and exhibited material. Having heard argument from him and from Ms Adamson, we overruled the objection. Our reasons, which we did not furnish at the time of our ruling, were as follows.

41 We accepted Ms Adamson’s characterisation of Mr Robertson’s affidavit and annexed schedules as an analysis prepared by an appropriately qualified person of facts observed by him, as distinct from evidence by an expert setting out his opinions on factual matters put before him. The ‘observed facts’ analysed by Mr Robertson were a number of financial statements relating to the Respondent’s affairs, which were contained in the material exhibited to Mr Robertson’s affidavit and were themselves admissible as business records under section 69 of the Evidence Act. Accordingly, the Respondent’s submission that Mr Robertson’s affidavit and annexed schedules failed in a number of respects to comply with the requirements governing the admission of opinion evidence put forward by an expert under section 79 was not relevant to the question of their admissibility.

42 In her submissions on this matter, Ms Adamson relied on passages in two Supreme Court judgments: ASIC v Rich (2005) 53 ACSR 110 at [272] and ASIC v Rich [2005] NSWSC 650 at [9 – 10]. The latter passage, which we found particularly helpful, reads as follows:-

9 The third matter requiring general comment relates to a frequently repeated submission by the defendants that in extracting and tabulating financial information in his Report, Mr Carter was not using his specialised expertise, and that the process in which he engaged was one that could have been undertaken by counsel in submissions. In my opinion the principles to be applied here are reasonably clear, but their application requires judgment and involves matters of degree. One aspect of the principles was enunciated by members of the High Court in Butera v Director of Public Prosecutions (Vic) (1987) 164 CLR 180. Just as it is appropriate for the court to receive a transcript as a means of assisting in the perception and understanding of the evidence in a tape recording (at 187 per Mason CJ, Brennan and Deane JJ), so it is appropriate to receive abstracts, schedules, tables or charts prepared by suitably qualified persons which explain complicated business transactions (at 190; see also at 195 per Dawson J). Another aspect of the principles is that an expert whose specialised knowledge extends to the interpretation and analysis of complex financial information, relating to the assessment of the financial health of a business enterprise, is permitted to give evidence assisting the court to understand the financial information before it, even though the evidence partly involves selecting and assembling information from documents which are in evidence before the court… and an accounting expert may also give direct evidence of mathematical calculations… Further, an accounting expert can give evidence summarising books and records of the business enterprise without having to spell out every link between his or her opinions and specialised knowledge…

10 In combination, these principles mean that the court should assess questions of admissibility and discretionary exclusion of forensic accounting evidence in a complex case pragmatically, taking into account (inter alia) whether the evidence will assist the court to make findings of fact. A forensic accountant may give the admissible evidence which involves extracting and distilling, from a mass of documents, information that he or she regards as significant, even where the documents are in evidence and theoretically, counsel and the court might be able to extract the same information without the expert's assistance. Such evidence is to be distinguished from evidence which is no more than the reproduction of information readily accessible in documents that can speak for themselves (with explication by counsel in submissions).

43 Since we agreed with this line of argument advanced by Ms Adamson, we did not need to determine whether Mr Robertson’s affidavit and accompanying documents would also be admissible under section 50 of the Evidence Act.

44 In addition to this general objection to Mr Roberton’s evidence, the Respondent made a number of objections to specific passages in these affidavits and in the accompanying documents. We upheld some of these or limited the use to which the relevant passages could be put, and Ms Adamson indicated that some other passages were not pressed.

45 The Respondent tendered copies of a number of drafts of Mr Robertson’s affidavit and accompanying schedules and of correspondence passing between him and Mr Blanch while he was preparing his report. We admitted these documents, which had been produced to the Tribunal under summonses initiated by the Respondent.

46 The Respondent cross-examined Mr Robertson and Mr Blanch on a number of aspects of this material. He foreshadowed a contention that we should not treat Mr Robertson’s analysis of the financial statements as reliable, on the ground that in preparing it he had demonstrated an undue willingness to seek to substantiate the matters alleged in clauses (a) and (b) of the Particulars to Ground 2 of the Information. The Respondent argued that Mr Robertson had failed to fulfil his obligation as an expert witness to consider the financial statements objectively and exercise independent professional judgment.

47 In his submissions filed after the hearing, however, the Respondent did not press this contention. His reason was that, as he understood Ms Adamson’s submissions in chief, the Bar Association had acknowledged that it could not prove the matters alleged in these clauses of the Particulars.

48 The Respondent also tendered an affidavit sworn on 29 June 2009. This was admitted subject to the deletion of some passages which were not pressed following objections by Ms Adamson. The Respondent was cross-examined.

The Respondent’s record with regard to paying, and providing for the payment of, income tax

49 The Respondent’s attitude when asked to assist in obtaining evidence of his taxation affairs. Ms Adamson acknowledged that the Bar Association’s evidence might not disclose the full extent to which the Respondent paid the income tax for which he was assessed during the period covered by the Information (i.e. the tax years from 1988 to 2002 inclusive – hereafter ‘the relevant period’). But she pointed out that this was because section 16 of the Income Tax Assessment Act 1936 (Cth) prohibited officers of the Australian Tax Office (‘the ATO’) from revealing this information to the Association unless the Respondent authorised such disclosure, and the Respondent had indicated more than once that he was not prepared to grant any such authorisation.

50 She referred in this context to passages in two letters written by the Respondent to the Bar Association during the period when it was investigating the complaint that it had made against him. These passages, and the dates of the letters, are as follows:-

I acknowledge that in the years 1988 to 2001, I did not pay all the income tax that I was liable to pay. I paid substantial income tax but I have no intention of disclosing to the Bar Council what I paid and what I did not pay (19 November 2002).

How is this complaint to be proved, that is, by admissible evidence? Only the ATO and I know the true facts of my taxation affairs. The ATO is unable to provide you with information. You may be assured that I will do nothing to help you to prove any of the allegations made in the draft report [i.e. the draft report to be submitted to the Bar Council recommending the institution of these proceedings] (5 July 2003).

51 Ms Adamson also reminded us that during one of the first interlocutory hearings, the solicitor then appearing for the Respondent had acknowledged that the factual matters to be determined in these proceedings included the amount of income tax that the Respondent had paid. This is noted in our decision following the hearing (New South Wales Bar Association v Archer [2004] NSWADT 38 at [22]).

52 A further matter to which Ms Adamson referred was the absence of any reply from the Respondent to two letters, dated 5 April 2006 and 29 May 2006 respectively, from the Bar Association’s solicitor, Mr Blanch. In each of them, Mr Blanch had asked the Respondent to authorise the ATO to provide details of his taxable income, the tax assessed against him and the tax that he had paid.

53 Ms Adamson submitted that this failure by the Respondent to permit relevant information to be placed before us should be the subject of criticism by us, on the ground of ‘lack of candour’. But for the purposes of the present decision, we take account only of her contention, in her submissions in reply, that the Bar Association’s evidence of the amount of tax that he had should ‘more readily be accepted’. She argued that if this evidence was incorrect in any respect, ‘one would expect that [the Respondent] would correct it, by reference to documents that were in his exclusive provenance to procure’.

54 In support of these propositions, she relied on the following passage in the Court of Appeal’s judgment involving the Court’s inherent jurisdiction to order the removal of a barrister from the Roll (Council of the New South Wales Bar Association v Einfeld [2009] NSWCA 255 at [23]):-

The defendant did not come forward with evidence on these matters which were peculiarly within his knowledge. In examining the conclusions which can be drawn from the fact that the defendant has not come forward in evidence, we refer to what Hodgson JA said in [ Council of the New South Wales Bar Association v Power (2008) 71 NSWLR 451; [2008] NSWCA 135] at 459-467 [9]-[29]. The fundamental common law right to the privilege against self incrimination must be recognised. However, if the defendant chooses not to come forward to assist with the disciplinary proceeding the failure to provide an exculpatory statement or explanation means that inferences from proved facts can be drawn more safely because the defendant failed to give any explanation of matters peculiarly within his knowledge. This kind of inference is available even in a criminal trial…

55 The Respondent’s reply to these submissions focused to a significant extent on her claim that he was open to criticism for having shown a ‘lack of candour’. But he claimed also that (a) nothing in the law required him to authorise the Bar Association, which bore the onus of proof ‘at a high level of conviction on all issue’, to obtain documents that it could not otherwise obtain and (b) because the Association had only mentioned this matter on a few occasions during the long period between the commencement of its investigation of the complaint against him and the present hearing, its giving prominence to the matter now was simply a ‘red herring’.

56 These submissions by the Respondent do not, in our opinion, undermine the relevance of what the Court of Appeal said in Einfeld. The Respondent’s decision not to authorise the ATO to disclose relevant information about his taxation affairs enables us to draw inferences ‘more safely’ from facts that we find to be proved by the Bar Association’s evidence.

57 The Respondent’s tax liabilities and the extent to which they were met. Near the commencement of his cross-examination, the Respondent conceded that he was not in a position to contest the figures put forward by the Bar Association for his income tax liabilities during the relevant period or for the amounts that the Australian Tax Office (‘the ATO’) received in discharge of these liabilities, whether through payments made by him or on his behalf, or through dividends declared in his three bankruptcies.

58 As shown in a schedule annexed to Mr Robertson’s affidavit, the aggregate of the Respondent’s primary income tax liabilities during the relevant period – i.e., excluding penalties and interest - was $2,516,240.

59 At most, however, the total amount received by the ATO (as shown in a list of payments to it prepared by Ferrier Hodgson) in discharge of these liabilities was $428,406.23. (A figure of $428,623.00, contained in a schedule prepared for the hearing by the Bar Association and also in its submissions, appears to be an incorrect version of the amount shown in Ferrier Hodgson’s document.) It is possible that this total should be less than $428,406.23 because not all the payments listed in Ferrier Hodgson’s document were confirmed and a few may have been double counted.

60 The ratio of the amount of tax received by the ATO to the amount of tax assessed against the Respondent was accordingly no more than 17%. The amount of tax lost to the revenue because the ATO received only this proportion of the tax to which he was assessed was at least $2,087,834. The average annual amount of this shortfall over the fifteen relevant years (1988 – 2002) was at least $139,189.

61 Of the total amount of $428,406.23 apparently received by the ATO, $89,830.63 represented dividends from the Respondent’s second bankruptcy out of contributions made by him. The balance of $338,575.60 must be taken to have represented payments made by him or on his behalf.

62 Further evidence on these and related matters is contained in the Statements of Affairs that the Respondent signed with respect to each of his three bankruptcies. These included the following information recorded by him:-

1. In respect of his first bankruptcy, the total amount that he believed to be owing to his creditors was $2,237,076, including an amount of $158,675 owed to secured creditors under leases. He attributed $1.6m of this debt to the ATO. His assets as at the date of the statement were $500 in cash, $314 in a joint bank account and a stamp collection, which he estimated to be worth $120,000.

2. In respect of his second bankruptcy, the total amount initially declared by the Respondent to be owing to his creditors was $914,865, of which $640,276 was attributable to his debt to the ATO over the period from 1991 to 1997. Ten days after signing this Statement of Affairs, however, the Respondent indicated in a letter to ITSA that a further sum of $100,368, owed to ITSA, should have been included. This sum represented contributions to his first bankruptcy which he had been assessed to pay but had not paid. He declared the value of his assets at the date of this Statement to be $120.

3. In respect of his third bankruptcy, he estimated the total amount owing to his creditors to be ‘at least $532,568’. All of it was owed to the ATO. He declared the value of his assets at the date of the statement to be $1,085.

63 In these three Statements of Affairs, the Respondent accordingly admitted that he had failed to pay an amount of $2,772,844 to the ATO over the period covered by the Statements. Ms Adamson argued that he had in fact failed to pay more than this, for the following reasons. The figure in his first Statement ($1.6m) was significantly lower than the amount ($2,536,537) for which the ATO lodged a proof of debt. According to calculations made by the Bar Association and put to him in cross-examination, $1,908,963 out of this amount of $2,536,537 was attributable to tax assessed during the relevant period. In cross-examination, the Respondent that such a calculation could be made, and he did not dispute the amount in his written submissions.

64 According to these figures, the total amount that the Respondent should have paid to the ATO in respect of the tax years 1988 – 2002 was as much as $3,081,807. The difference between this figure and the figure quoted above ($2,516,240) for his primary tax liabilities is attributable, it would seem, to penalties and interest.

65 The stamp collection declared in the first bankruptcy was ultimately sold for $26,068, a considerably smaller sum than the amount of $120,000 indicated in the Statement of Affairs.

66 A significant reason why the Respondent owned very little property at the time of commencement of the first bankruptcy was that when he and his family moved to Perth in 1986 he assigned to Mrs Archer his share of the proceeds of sale of the house that they jointly owned in Mosman, thereby enabling her to purchase in her name the house in which they resided in Perth. In the course of his examination on 19 February 2003 by counsel for his trustee during his third bankruptcy (‘the 2003 bankruptcy examination’), he said that she would not have accompanied him to Perth if the house there had not been put into her name.

67 A further reason why he owned very few assets was that in 1988 he assigned a substantial amount of property to Mrs Archer. He did this pursuant to the Agreement (i.e., the deed described above at [21]). The assigned property included all furniture, equipment, paintings, books, wine and carpets in her house in Perth, to the extent that he had any interest in these items, and also all the books, furniture, equipment and other property used by him in his practice (other than those leased by him). Although as just stated his stamp collection was treated as an asset of his bankrupt estate, it was in fact said to be assigned to her under the Agreement, subject to the condition that she would not dispose of any part of it without his consent before 10 January 1998. Indeed, during the 2003 bankruptcy examination, he stated that all the property that he owned, except for debts owed to him, fell within the scope of the Agreement.

68 At the time of commencement of both the second and the third bankruptcies, the house in which the couple lived was likewise owned by Mrs Archer. In addition, he had seemingly done nothing by way of taking back ownership of the goods that he had assigned to her under the Agreement.

69 Payment of tax on income earned while bankrupt. In 1989, the Respondent’s gross income was $1,727,563, of which about $1.3m was referable to a retainer that he had received from Mr Laurie Connell, a Perth businessman. The whole amount of the retainer was received before 30 June 1989. His net income from practice for the 1989 tax year was $1,444,167 and the tax assessed on this income was $717,706. In the ATO’s proof of debt in the first bankruptcy, this same amount was shown as the tax due and unpaid for this tax year. Although in cross-examination the Respondent was not prepared to agree with the proposition, based on this documentary evidence, that he did not apply any of this 1989 income towards paying the tax assessed on that income, this would appear to have been the case.

70 One of the questions put to the Respondent by the Bar Association in a letter dated 10 May 2001 was whether he paid any income tax on the taxable income that he earned during the period of his first bankruptcy. The letter did not indicate, however, whether the period referred to was the duration of this bankruptcy (19 December 1991 to 29 January 2000) or the period between the commencement of this bankruptcy and the commencement of his second bankruptcy (19 December 1991 to 7 April 1997). In a reply dated 30 May 2001, he said that he believed that he did pay some tax on this income, adding that he was trying to locate the relevant records. In a further letter dated 25 August 2001, he wrote: ‘It seems the answer is no.’ In the same paragraph of this letter, he referred to his obligation to pay contributions to his bankruptcy and to his obligations to his wife under the Agreement.

71 In his affidavit sworn in these proceedings, however, he stated as follows:-

To the best of my recollection, I paid from my 1994 and 1995 income my tax liabilities for the balance of the 1992 year after my bankruptcy and the 1993 year and, I believe, part of my 1994 tax liability. However, during 1995, before I moved to Sydney, I had fallen behind in my payments to the Australian Taxation Office (“ATO”) and it proved impossible for me to catch up.

72 The Respondent was asked in cross-examination to explain the apparent discrepancy between this passage in his affidavit and the answer that he gave in the letter of 25 August 2001. He replied that he could not now say why he had given the earlier answer, since what he actually believed at that time was what he subsequently wrote in the affidavit. When asked whether his recollection might be ‘entirely fallacious’, he said that it could be and that that was his reason for qualifying his answer by the phrase ‘to the best of my recollection’. When it was then put to him that he could not ‘seriously suggest’ that the Tribunal should believe this part of his affidavit, he reiterated that it accorded with his recollection. When it was also put to him that he had deliberately failed to approach the ATO to check whether this recollection was correct, he denied this.

73 Ms Adamson submitted we should not accept this ‘recollection’ by the Respondent because it was not supported by any documents and he had ‘deliberately failed’ to obtain the relevant documents. One item of the documentary evidence that she did not put before him was, however, a statement in a letter dated 7 March 1996 to him from ITSA, to the effect that ITSA ‘understood’ him not to have paid any tax on his income earned for the tax years 1993, 1994 and 1995.

74 In response, the Respondent argued that her ‘tepid’ cross-examination of him regarding his recollection had manifestly failed to satisfy the rule in Browne v Dunn (1893) 6 R 67. He argued also that she had been prepared in her submissions to ‘misrepresent the position about the ATO’s records in a reprehensible manner’.

75 We reject both of these arguments. We would not view the relevant part of Ms Adamson’s cross-examination of the Respondent as ‘tepid’, since it included, though was not limited to, the questions and answers summarised above. We note here that in a footnote to this part of his written submissions, the Respondent cited one segment of the cross-examination on this matter (Transcript, 30 June 2009, page 37, lines 7 to 31), but omitted to mention a later segment (page 37, line 49 to page 38, line 44) that included these questions and answers. We do not understand how her imputation that he ‘deliberately failed’ to check the matter with the ATO can be viewed as ‘reprehensible’.

76 Our conclusion on this matter is that, following the approach outlined by the Court of Appeal in Council of the New South Wales Bar Association v Einfeld [2009] NSWCA 255 at [23] (see [54] above), we should not treat as reliable this ‘exculpatory statement’ made by the Respondent in his affidavit. His earlier answer on the matter should be given credence in preference to his later ‘recollection’ because (a) it accords with what ITSA believed, as indicated in its letter to him dated 7 March 1996, (b) he did not consult the ATO on the matter despite being able (unlike the Bar Association) to do so and (c) his earlier answer was given at a time closer to the tax years in question,

77 Ms Adamson submitted that the sum of $640,276 that the Respondent declared as his debt to the ATO in his Statement of Affairs for the second bankruptcy accordingly represented all the income tax to which he was assessed, but did not pay, during the years 1991 to 1997. This figure significantly exceeds the figure of $418,673 given in the schedule to Mr Robertson’s affidavit for his primary tax liabilities in those years. The discrepancy may be attributable to interest and penalties being also payable to the ATO.

78 To complete the evidence on this matter, the list of payments received by the ATO that Ferrier Hodgson prepared (see [59] above) shows three payments, totalling $6,480 and made by Mr Archer or on his behalf, within the period between the commencement of the first and the second bankruptcies (19 December 1991 to 7 April 1997). They occurred in the period from May to August 1995. None of them is confirmed. The remaining payments to the ATO made by him or on his behalf, totalling $422,143 (at most), were made between 11 September 1997 and 28 March 2002.

79 The Respondent’s contributions to his bankruptcies. As mentioned earlier, the Respondent was assessed to pay contributions totalling $100,368 during the period between the commencement of his first and second bankruptcies, but paid nothing on this account. In consequence, he acknowledged this as a debt to ITSA in his second bankruptcy.

80 The National Personal Insolvency Index maintained by ITSA records that the first bankruptcy was prolonged until January 2000, resulting in a period of concurrent bankruptcies, on the ground that the Respondent failed to pay these contributions.

81 In his second bankruptcy, the Respondent was assessed as liable to pay contributions totalling $200,952.79. He did not meet this obligation, with the result that on 5 April 2000 ITSA objected to his discharge. Following negotiations, a lower figure was agreed, the objection was withdrawn and he was discharged on 9 March 2001. The total of his payments of contributions, which were made within the period from 16 May 2000 to 26 February 2001, was $146,480.03.

82 The Respondent was not assessed to pay any contributions to his third bankruptcy and did not pay any.

The Respondent’s income and expenditure

83 Income. According to calculations made by Mr Robertson and set out in a schedule to his affidavit, the total amount of the Respondent’s gross income from his practice during the relevant period was $8,858,411. His income from other sources appeared to be ‘relatively minor’. After deduction of practice expenses totalling $3,455,434, his net income from practice was $5,402,977.

84 After the addition of $14,333 for interest and a further deduction of $20,915 for ‘other expenses’, the Respondent’s total taxable income during the relevant period was $5,395,075. Accordingly, the ratio of the total amount received by the ATO ($428,406.23 at most) to the taxable income earned by the Respondent was no more than 8%.

85 There were large fluctuations in the gross income earned by the Respondent during the relevant years. In the year of his first bankruptcy and the two preceding years, his gross income was as follows: 1989, $1,727,563; 1990, $847,580; 1991, $582,085. In the equivalent period for his second bankruptcy, the figures are: 1995, $621,530; 1996, $118,200; 1997, $161,100. In the equivalent period for his third bankruptcy, the figures are: 2000, $498,070; 2001, $488,479; 2002, $130,200. (It should be noted, however, that in the last of these years, he was only in practice for some three months.)

86 The same schedule to Mr Robertson’s affidavit showed what he labelled the Respondent’s ‘after tax cash’ for each tax year during the relevant period. This was calculated this by deducting the tax assessed from the taxable income.

87 As stated earlier, the Respondent’s total taxable income during the relevant period was $5,395,075. The tax to which he was assessed was $2,516,240. The total of the ‘after tax cash’ was accordingly $2,878,835 and the yearly average over the 15 tax years was $191,922.33. On average, the latter amount is the amount that would have remained available for him to spend each year if he had paid all of the tax that he was assessed to pay.

88 The individual amounts for ‘after tax cash’ in any given year do not give a wholly reliable guide as to how much disposable income was available to the Respondent at the time. This is because the receipt of an item of income from his practice and the assessment of tax (provisional or final) due on that income would not have occurred within the same year. But we consider it worth recording that the lowest of these individual amounts on Mr Robertson’s schedule was $47,261 (for 1996) and the highest was $716,809 (for 1989).

89 There were similar fluctuations in the individual figures for the Respondent’s taxable income. The lowest was $73,520 (again in 1996) and the highest was $1,426,452 (again in 1989).

90 Expenditure. The evidence regarding the Respondent’s expenditure over the relevant years, both on matters relating to his practice and on other matters, was far from complete. To illustrate this, his tax returns gave relatively detailed breakdowns of his practice expenses for each year in the periods from 1988 to 1991 and for 1995 and 1996, but not for the other years. Documents relating to a cheque account held by him at the St George Bank contained details of withdrawals from this account between 1 July 1997 and 30 June 2001. An analysis of these is one of the schedules (for which the heading erroneously gives 1 July 1998 as the commencement date) attached to Mr Robertson’s affidavit. No comparable information was, however, available for any other period within the relevant years.

91 One reason for the relative scarcity of material of this nature was that, according to the Respondent’s own evidence, he did not have any overseas bank accounts or credit cards during all or most of the relevant years and he paid most of his bills in cash.

92 As indicated above (see [85]), the Respondent’s gross income for the 1989 tax year ($1,727,563) included an amount of $1.3 million received by way of retainer from a Perth businessman. His net income from practice for that year was $1,444,167, the tax assessed on this income was $717,706 and by the time of his first bankruptcy he appeared not to have paid any of this tax. When asked in cross-examination what he did with this payment of a substantial retainer, he said that he used it to pay his practice expenses and his living expenses for the next two years. While his practice expenses for 1990 and 1991 were substantial ($404,356 and $487,870 respectively), they were considerably exceeded by his gross income ($847,580 and $582,065).

93 In his evidence, the Respondent referred to having paid significant sums to his wife from time to time in fulfilment of his obligations under the Agreement. These obligations included the following: (a) to pay maintenance to her and to their daughters at an indexed monthly rate of $5,500 (reducible as and when each daughter ceased to be dependent on her); (b) to pay various other amounts of additional maintenance (for example, a lump sum of $40,000 not later than 30 June 1988); (c) to provide her with a motor car, replaceable every five years, ‘of a standard not less than that of a Mercedes Benz 280 SE sedan’; and (d) to reimburse her for amounts paid by her for domestic telephone charges, the maintenance of her car, school fees and the expenses of holidays for her and their daughters. According to the Respondent, the annual amount normally payable to her under the Agreement was about $91,000.

94 Mr Robertson’s analysis of the withdrawals made by the Respondent from the St George Bank account during the tax years from 1998 to 2001 showed, however, that he paid a total of $828,635.40 (i.e. an average annual amount of about $207,140) to Mrs Archer and that this total represented about one-third of all the withdrawals.

95 The Respondent was cross-examined regarding the particularly large amount of $441,000 that he paid to her during 1999. This was a year in which his taxable income was the particularly large sum of $834,493. His answers were to the following effect: (a) about $100,000 of this amount was paid to Mrs Archer as a loan, which enabled her to renovate the house where they both lived in Paddington, and which she then repaid through making a payment of about $132,000 to the ATO on his behalf in discharge of his tax liabilities; (b) $90,000 was used to buy a new car for her, as required by the Agreement; (c) $91,000 was his normal annual payment under the Agreement; and (d) the balance represented accrued arrears of maintenance owing from 1995-1998. He could not produce any documents to support this claim that he needed to ‘catch up’ on his payments under the Agreement. Mr Robertson’s analysis did indicate, however, that the payments identified as having been made to her in 1998 amounted to only $54,000.

96 In his Statement of Affairs, dated 4 April 1997, for his second bankruptcy, the Respondent listed Mrs Archer as an unsecured creditor for $94,300. He alleged that this was in respect of ‘maintenance and rentals’ and was incurred in the period from 1965 to 1967 (sic).

97 It is convenient to note here that there have been acknowledgments by the Respondent that his wife provided various benefits to him. In his 2003 bankruptcy examination, for instance, he said that for as long as he could remember she had paid the fees for his membership of a medical fund. In cross-examination in these proceedings, he said that since the Agreement was signed he had lived in a house owned by her, except during their period of separation during 1988.

98 It is also convenient to note here that according to Mr Robertson’s analysis of the various financial records available to him, the terms of the Agreement were not so onerous as to make it impossible for the Respondent to discharge both his liabilities to Mrs Archer and his tax liabilities.

99 With reference specifically to the tax year 1988, the Respondent made the same claim during his 2003 bankruptcy examination. The relevant passage in the transcript reads:-

Q. What I want to suggest to you is that you had no means of paying your tax for the year ended 30 June 1988 when it became due and payable as a consequence of the obligations which you entered into pursuant to [the Agreement]?
A. That’s a ridiculous proposition.

100 Mr Robertson’s outline of the Respondent’s withdrawals from his account at the St George Bank during the tax years 1998 to 2001 included a significant figure each year as ‘unallocated’ withdrawals. The total over the four years was $475, 334.49, giving an average of about $119,000 per year. The largest unallocated amount – $210,115.15 – was in 1999.

101 The total that Mr Robertson identified as ‘cash withdrawals’ was also substantial – $457,220. This represents an average annual amount of $114,305. In 1999, the figure was $113,000.

102 Also shown in Mr Robertson’s analysis was a total expenditure of $54,522.82 on ‘wines’, giving an annual average of $13,631.

103 A further noteworthy aspect of the available data regarding the Respondent’s expenditure was the scale of the service fees charged by Adbaston and paid by him to Adbaston. His tax returns state that he paid $254,400 to Adbaston for the tax year 1991. In his Statement of Affairs, dated 22 January 1992, for his first bankruptcy, he listed Adbaston as an unsecured creditor in an amount of $57,469. Furthermore, in the tax years from 1992 to 1995, Adbaston rendered invoices to him totalling $1,087,535.84 and received payments from him totalling $880,424.08. According to his tax return, he paid $271,301 to Adbaston for the tax year 1995. In his Statement of Affairs for his second bankruptcy, the Respondent listed Adbaston as an unsecured creditor for $175,015.

The Respondent’s attitude to taxation and the taxation authorities

104 Most of this section of our judgment is drawn from the Respondent’s affidavit.

105 The Respondent stated that in the period from 1974 to 1980, while he was a partner in the firm of Simons and Baffsky, solicitors, he conducted litigation against the Deputy Commissioner of Taxation (‘the Commissioner’) on behalf of clients who had established tax minimisation schemes (notably so-called ‘Curran’ schemes) involving the generation of tax losses. In addition, he participated in these schemes himself in order to reduce his liability to tax. These schemes were legal at the time, though some of them were curtailed by retrospective legislation. In some of the litigation for which he was retained, he was successful against the Commissioner. He formed the view that these successes ‘appeared to harden the attitude’ of ATO officers towards him.

106 When the Respondent went to the Bar in September 1980, the Commissioner, to the best of his recollection, had not dealt with objections that he had made to his tax assessments for the tax years from 1975 to 1979. As at 30 June 1980, he believed that he was entitled to bring forward tax losses amounting to about $550,000. Having notified the Commissioner that he considered himself to have been ‘imposed upon’, he refrained from filing his tax returns for the years 1981 to 1985. He was convicted on ten counts for these breaches of tax law. There then ensued litigation between him and the Commissioner, ending in a settlement of their dispute during 1988. Under this settlement, he lodged tax returns for the years 1981 to 1987 and a schedule whereby he paid six instalments of tax during the period from 30 November 1988 to 31 December 1989 was agreed upon. In August 1989, the Commissioner granted his request to vary this schedule.

107 In early 1990, the Respondent retained accountants for the first time to negotiate a further variation of his agreement with the Commissioner. They were unsuccessful, and the Commissioner demanded immediate payment of the whole balance outstanding. This included a large amount for income tax for 1989 – in which year, as outlined above, he earned a particularly large amount due to the retainer from Mr Connell – and for provisional tax for 1990 calculated by reference to his 1989 income.

108 During 1991, he realised that he could not comply with the Commissioner’s demand. He requested more time in which to pay, but found, to use the terms in his affidavit, that the attitude of the Commissioner’s officers was ‘obdurate’, ‘inflexible’ and ‘antagonistic’. Soon afterwards, the Commissioner issued a bankruptcy petition against him, which was the basis of the first bankruptcy in December 1991.

109 With reference to this period of negotiations leading up to the first bankruptcy, the Respondent stated as follows in his affidavit: ‘Although the Commissioner might not have then agreed, I wanted to meet my outstanding liabilities.’ In cross-examination he was asked how this statement could be reconciled with the fact that the Commissioner proved for a debt of some $2.5 million in this bankruptcy. The relevant passage in the transcript reads as follows (30 June 2009, p 26, line 45 to p 27, line 16):-

Q. But looking at this Proof of Debt there’s no indication is there that your desire to meet those outstanding liabilities was actually reflected in any action on your part?
A. That’s not true.

Q. Well, how do you say it was reflected on action on your part?
A. It was necessary for me to reach an agreement with the Commissioner to pay the money and to adhere to the agreement, if I couldn’t reach the agreement with him it didn’t matter what I paid by way of parts of it he, there was still a likelihood that he would make me bankrupt. It was a matter of commercial negotiation but I had to reach a complete agreement about all the outstanding tax and that is what I was not able to do from the end of 1990 until the end of 1991.

Q. So you took the approach did you that unless you got a compromise to which you could adhere you might as well pay nothing and go bankrupt for as much as you possibly could to the Deputy [Commissioner]?
A. No, I didn’t, I didn’t.

Q. Well, I suggest to you that your conduct up until the time of your first bankruptcy reflected precisely that approach?
A. I utterly reject that suggestion.

110 Near the beginning of 1996, the Respondent received a tax assessment which he was unable to discharge. He tried again to negotiate with the ATO. An insolvency accountant whom he engaged to assist with these negotiations reported to him that the ‘inflexibility’ displayed by the ATO was unprecedented in the accountant’s experience. The Respondent decided soon afterwards to file a debtor’s petition, which led to the second bankruptcy in April 1997. In his Statement of Affairs for this bankruptcy, one of the reasons that he gave for the bankruptcy was ‘incompetence of ATO’.

111 In March 2001, following the publication of the Herald articles, the Respondent tried to advance further some negotiations already in train with the ATO regarding the payment of outstanding tax. He said in his affidavit that once again he encountered an inflexible attitude.

112 During cross-examination in these proceedings, he was questioned about the implications of his failure to pay tax. The following exchange occurred (Transcript, 30 June 2009, page 60, lines 18 to 46):-

Q. Now would you agree that in the period covered by the information you took advantage of the full range of public services made available by taxation?
A. I don’t know what that means so I can’t agree with it.

Q. Do you agree that during that period you were a practising barrister appearing in courts and tribunals both in Western Australia and New South Wales?
A. Yes.

Q. And you understand that those courts and tribunal are paid by the public purse?
A. Yes.

Q. And they are paid in the main from monies obtained from people who pay their tax?
A. No, they’re paid by the State Government in most cases.

Q. All right. And you know that the State Government receives grants from the Federal Government to pay for the courts?
A. I know that, I know the State Government receives money from the Federal Government, of course I know that.

Q. And from time to time you appeared in the Federal Court didn’t you?
A. Yes, paid, which is paid for by the Federal Government.

Q. All right. And it’s paid for because people pay income tax under the Income Tax Assessment Act, correct?
A. And a lot of other things really.

The reasons put forward by the Respondent for his tax defaults

113 In addition to claiming, as just outlined, that the taxation authorities displayed inflexibility, if not also antagonism, towards him, the Respondent has at different times offered explanations as follows for his defaults in the payment of tax owed by him.

114 One of these was based on a phenomenon already noted, namely, that his gross income from practice fluctuated greatly. The figures given above at [85] to illustrate this show in fact that in the tax year in which his first bankruptcy and his third bankruptcy occurred, his income was substantially less than it had been in the preceding year. The same does not apply to his second bankruptcy, but his income both in the tax year when that occurred (1997) and in the preceding year (1996) was distinctly smaller than it had been one year earlier (i.e. in 1995).

115 In the explanation that he offered for his first bankruptcy (in December 1991), the Respondent placed significant emphasis on the fact that his retainer of $1.3 million from Mr Connell in 1989 both increased his liability to tax and had no equivalent in 1990 or 1991. With regard to the second bankruptcy (in April 1997), he said that his decision to leave his practice in Perth and resume practice in Sydney as from October 1995 was a major reason for the decrease in his income during 1996 and 1997. The third bankruptcy became unavoidable, he said, because the publication of the Herald articles in March 2001 left him with no choice but to cease practising, which he did as from the end of September 2001.

116 The Respondent’s Statement of Affairs for his second bankruptcy contains a summary by him of the chief factors that in his opinion contributed to this bankruptcy. These were as follows:-

Declining legal practice, poor financial management, excessive expenditure and incompetence of ATO.

117 In the course of his 2003 bankruptcy examination, occurring during his third bankruptcy, he said in relation to the period after September 1999: ‘I obviously didn’t make sufficient provision to pay the tax.’ He agreed that the amount left when he had paid his other expenses was ‘certainly insufficient’ to meet his tax liabilities and he agreed with the proposition that he ‘didn’t put any money aside to pay the Deputy Commissioner of Taxation’.

118 The Respondent said also that during this period he paid all his business expenses, with the result that none of his business creditors lodged a proof of debt in his third bankruptcy. The following exchange occurred during his 2003 bankruptcy examination:

Q. If I may return to my original proposition, the case is that the payment of tax became priority last in the manner in which you met your business overheads and your personal expenses.
A. That is the way it turned out.

119 During cross-examination in these proceedings, it was pointed out to the Respondent by a member of the Tribunal Panel that since during the tax year 1999 he earned an unusually sum he would have realised that the provisional tax that he was then paying would be insufficient to meet his tax liability for the year. He replied in the following terms (Transcript, 30 June 2009, p 53, lines 19 to 22):

Yeah, and I haven’t denied for one moment that what I should’ve done was set aside part of that all the time to cover the 1999 obligation when it arose in 2000. And it’s my carelessness in not doing so which is, well, in part has brought us here.

The Respondent’s relations with members of the legal profession

120 The Respondent stated in his affidavit that neither the publicity given to his first bankruptcy early in 1992 nor the publication of the Herald articles in March 2001 impaired his cordial and friendly relations with judges, barristers and solicitors. He believed in fact that following the latter event a number of such people went out of their way to express sympathy for his predicament. This was the case even though he himself felt ashamed and distressed about both these events. These statements in his affidavit were not challenged in cross-examination.

121 Having completed our outline of relevant parts of the evidence, we now turn to the arguments put to us on the question whether we should find professional misconduct as alleged.

The Respondent’s claim that the proceedings should never have been brought

122 Near the commencement of his written submissions, the Respondent advanced an argument to the effect that these proceedings should never have been brought. He referred to a previous occasion, during the hearing of an interlocutory application, in which he had claimed that they had been instituted for an improper purpose. This purpose, as outlined in our decision on the application (Council of the New South Wales Bar Association v Archer (No 11) [2008] NSWADT 311 at [61]) was that of honouring an alleged agreement or arrangement concluded in 2001 between the then President and the then Attorney General following publication of allegations in the Sydney Morning Herald on 26 February 2001 regarding the failure of six barristers (including the Respondent) to pay tax. The aim of the alleged agreement was to demonstrate to the public that the Government was ‘doing something’ about the barristers named in the article.

123 The grounds on which he based the present submission differed somewhat from those put forward on the previous occasion. In summary, they were as follows:-

1. The Information relates to matters allegedly occurring between 1 July 1987 and 30 June 2002. But the Respondent, to the knowledge of the Bar Association, practised almost exclusively in Western Australia between December 1986 and a date in late 1995. At the end of August 2001 he requested that the Bar Council cancel his practising certificate. It followed that the only period of his professional conduct with which the Bar Association was entitled to concern itself was between late 1995 and the end of August 2001.

2. It was at least arguable, having regard to the Court of Appeal’s decision in New South Wales Bar Association v Murphy (2002) 55 NSWLR 23; [2002] NSWCA 138 (this case is discussed below), that the Bar Council’s subsequent cancellation of his practising certificate on 23 October 2001 was invalid.

3. It was ‘apparently common ground’ between the parties that the ‘sensational’ publicity given by the Herald articles had prompted amendments to the LP Act and regulations made under it requiring practitioners to disclose to the Bar Council any bankruptcy proceedings against them and any convictions for tax offences, and had also prompted the initiation of proceedings against a number of barristers.

4. The Respondent was the principal subject of this publicity. Steps taken by the Bar Association against the five other barristers mentioned had led to removal of three of them from the Roll and the cancellation of the practising certificates of the remaining two.

5. Out of these five barristers, four had made it clear that they wished to continue practising. By contrast, the Respondent asked for his practising certificate to be cancelled. Yet the Bar Association embarked on the present ‘wasteful’ and ‘extravagant’ proceedings against him in October 2003, more than two years later. While the Respondent acknowledged that he was partly responsible for these proceedings being unduly protracted, a number of the interlocutory steps that have caused delays were taken by the Bar Association.

6. The Association commenced these proceedings even though there were at least two other options open to it: (a) to seek to have him struck off by the Court of Appeal in its inherent jurisdiction or (b) to reject any subsequent application by him for a practising certificate.

7. The only inference that could be drawn from these matters was that the Bar Association had not seriously believed that the Respondent had committed professional misconduct.

124 In submissions in reply, Ms Adamson rejected the suggestion that the Bar Association did not believe that the Respondent had committed professional misconduct. She also put forward the following four propositions:-

(a) Because there is no ‘territorial limitation’ in the definition of professional misconduct in the LP Act, the Respondent’s failure to pay tax on income earned in Western Australia could be taken into account in determining whether he had committed misconduct.

(b) In a number of cases, notably in the recent decision in Council of the New South Wales Bar Association v Einfeld [2009] NSWCA 255, the Court of Appeal has insisted that comprehensive findings be made about the conduct of a legal practitioner on which it has based an order removing him or her from the Roll, even though the practitioner has ceased to practise and has undertaken not to re-apply for admission to practice.

(c) The reason given by the Court of Appeal for so insisting is that when a member of the legal profession has behaved so as to bring the profession into disrepute, a full opportunity must be afforded for the public examination of such behaviour, thereby ensuring full accountability of the profession as a whole and of people involved in the administration of justice.

(d) Where, as in the present instance, it appears likely that significant factual issues will require determination, the Court of Appeal has stated more than once – for example, in New South Wales Bar Association v Maddocks , unreported, 23 August 1998, (BC8801576) at 39 – that it is not an appropriate forum in which to institute proceedings.

125 We see no reason to doubt these four propositions put by Ms Adamson. Furthermore, if the Bar Council believed, on the date (31 July 2003) on which it resolved under section 155(2) of the LP Act to bring these proceedings, that there was a reasonable likelihood that the Tribunal would make a finding of professional misconduct, it was in duty bound to resolve accordingly. Only if it did not in fact have this belief, or if such a belief was manifestly unreasonable, could it be said that it should not have brought these proceedings. There is no evidence of any ‘agreement or arrangement’ such as the Respondent alleged at the interlocutory hearing and no other evidence to substantiate the first of these alternatives. The second of them is contradicted by the conclusions that we reach in this decision.

126 For these reasons, this contention by the Respondent is rejected.

The Respondent’s claim that the matters alleged in the Information could not amount to professional misconduct

127 Our interlocutory decision on the Grounds stated in the Information. A major component of the Respondent’s case in these proceedings was based on the fact that the Grounds stated in the Information did not allege that his failure to pay income tax owed by him involved either criminal conduct or dishonesty on his part. He maintained that since neither of these forms of culpability was alleged against him, the claim that he committed professional misconduct must fail as a matter of law. He described the following proposition as a ‘flawed contention’ that lay ‘at the heart of the Informant’s case’: ‘A barrister who without more fails to pay all his creditors is necessarily guilty of professional misconduct.’

128 In so arguing, the Respondent challenged a decision that we made in these proceedings in April 2004, following an interlocutory application by him in which he put forward much the same argument. In that application, he sought a declaration that the matters set out in the Information were incapable in law of constituting professional misconduct within the meaning of section 127 of the LP Act.

129 So far as relevant, section 127 states as follows:-

127 Professional misconduct and unsatisfactory professional conduct

(1) For the purposes of this Part, professional misconduct includes:


(a) unsatisfactory professional conduct, where the conduct is such that it involves a substantial or consistent failure to reach reasonable standards of competence and diligence, or

(b) conduct (whether consisting of an act or omission) occurring otherwise than in connection with the practice of law which, if established, would justify a finding that a legal practitioner is not of good fame and character or is not a fit and proper person to remain on the roll of legal practitioners, or…

(c) conduct that is declared to be professional misconduct by any provision of this Act, or

(d) a contravention of a provision of this Act or the regulations, being a contravention that is declared by the regulations to be professional misconduct….

(4) For the avoidance of doubt, conduct:


(a) involving an act or acts of bankruptcy, or

(b) that gave rise to a finding of guilt of the commission of an indictable offence or a tax offence, whether occurring before, on or after the commencement of this subsection,

is professional misconduct if the conduct would justify a finding that the legal practitioner is not of good fame and character or is not a fit and proper person to remain on the roll of legal practitioners.

130 In our decision (Council of the New South Wales Bar Association v Archer (No 2) [2004] NSWADT 78 – hereafter ‘Archer (No 2)’), we rejected this application by the Respondent.

131 Our reasons contained (at [10]) an outline of the assumptions that we made in determining the application:-

… we should assume that the factual allegations made in each of the two grounds had been established in extreme form. In considering Ground 1, for instance, we should assume that the Respondent made no payment whatsoever of income tax during the specified period. In considering Ground 2, we should assume that he made no provision whatsoever for the payment of income tax. In considering both grounds, we should assume that the amounts of tax not paid or provided for were substantial. As a final example, we should assume, in considering paragraphs (c) of the Particulars to Ground 2, that the debts that he chose to incur and to discharge, in preference to his tax debts, for the benefit of himself, his family and his associates were for substantial sums.

132 We dealt with a submission by the Respondent founded principally on a passage in the judgment of McHugh, Kirby and Callinan JJ in Walsh v Law Society of New South Wales (1999) 198 CLR 73 at 94-95. This passage refers to various provisions of the LP Act that govern Tribunal proceedings in which professional misconduct is alleged. It is as follows:-

Proceedings may only be instituted “with respect to a complaint” by “an information laid by the appropriate Council or the Commissioner” in accordance with Pt 10 of the Act (s 167(1)). The function of the Tribunal is confined to that of conducting a hearing “into each allegation particularised in the information” (s 167(2)). The Tribunal has certain powers of amendment to vary the information laid against the legal practitioner, for example, to permit the inclusion of additional allegations where that is justified (s 167A). For the purpose of a hearing into a question of professional misconduct, the Tribunal “is to observe the rules of law governing the admission of evidence” (s 168(1)). In other hearings, the Tribunal is not so bound but may inform itself in such manner as it thinks fit (s 168(2)).

133 At [21], we expressed our agreement with this submission of the Respondent:-

As we read the Information, each of the two ‘Grounds’ in it constitutes a ‘complaint’ for the purposes of Part 10 of the Act. Our role in the present case is confined to conducting a hearing into each of the allegations particularised in each of these Grounds and after so doing to determine under s 171C(1) whether such allegations as are proved in relation to each complaint amount to professional misconduct on the part of the Respondent. It follows, as we see it, that if the allegations made against the Respondent in either of the Grounds, as particularised, could not as a matter of law amount to professional misconduct even when taken ‘at their highest’ (see [10] above), there would be no basis on which we could find under s 171C(1), with respect to that Ground, that the Respondent had been guilty of professional misconduct. Subject only to the power of amendment conferred by s 167A, we could not go beyond what was alleged against the Respondent in the relevant Ground.

134 On revisiting this question now, we are inclined to doubt any implied requirement that each Ground must be considered in isolation when determining whether professional misconduct has been sufficiently alleged.

135 In Archer (No 2) at [40 – 87], we reviewed the judgments in four cases that were, as we put it, ‘highlighted’ in the parties’ submissions. These cases were New South Wales Bar Association v Cummins (2001) 52 NSWLR 279; [2001] NSWCA 284, New South Wales Bar Association v Stevens [2003] NSWCA 261, New South Wales Bar Association v Murphy (2002) 55 NSWLR 23; [2002] NSWCA 138 and Wardell v New South Wales Bar Association [2002] NSWSC 548. We revisit these cases below, along with others that bear upon the issues raised in them.

136 We stated our conclusions at [89 – 94]:-

89 When the terms of the Information laid by the Applicant are considered in the light of the authorities that we have just reviewed, the particular significance of some of its phraseology for our determination becomes apparent. In Ground 1, the significant element is the inclusion of the Respondent’s ‘civic obligation to pay income tax’ as an obligation allegedly breached by him. In each paragraph of the Particulars to Ground 2, which complains of a failure ‘to make provision, or any adequate provision… for the payment of income tax’, it is the allegation that the Respondent ‘chose’ a specified course of action, such as incurring and discharging debts for his own benefit and that of his family and associates in preference to his debts to the ATO (paragraph (c)).

90 In our judgment, the presence of these terms within the Information is sufficient to dispose of the Respondent’s argument that the Information is defective because it contains no allegation of impropriety. The judgments in Cummins and Stevens , as we read them, convey the message that a sustained failure to discharge the ‘civic’, as opposed to the ‘legal’, obligation to pay income tax necessarily involves impropriety, having regard to the standards to be expected of members of the legal profession.

91 Implicit in our conclusion is our understanding that taxpayers who do not pay their tax debts or make provision for the payment of such debts would not be considered to have breached their ‘civic obligations’ if their failure resulted from circumstances entirely beyond their control, such as being found liable for a huge and wholly unforeseeable debt to some third party. The language of the judgments in Cummins and Stevens implies that moral and ethical considerations underlie the notion of a citizen’s ‘civic obligation’ to pay tax. If no moral or ethical obligation in this regard is breached, there is no breach of the ‘civic obligation’.

92 Similarly, the word ‘chose’ in each paragraph of the Particulars to Ground 2 implies that the conduct alleged against the Respondent was in each case deliberate. The case alleged against him is that in a number of situations in which he could have made provision for the payment of tax debts, he intentionally ‘chose’ to take other steps, such as incurring and discharging debts for his own benefit, with the result that, as he knew or should have known, he was failing to provide adequately or at all for payment of the tax debts. Once again, when the principles stated in the cases that we have reviewed (including Murphy and Wardell as well as Cummins and Stevens ) are taken into consideration, the conclusion is that a relevant form of impropriety is sufficiently alleged. We do not think, despite the Respondent’s submission to the contrary (see [87] above), that it was necessary also to allege an absence of ‘exculpating features’.

93 We have reached these conclusions after taking fully into account the High Court’s insistence in Walsh v Law Society of New South Wales (1999) 198 CLR 73 on the observance of proper safeguards for the practitioner against whom an information is laid. While the Information in this case could evidently have spelled out more clearly the elements of impropriety that we have identified, we consider that, on a proper reading, they were implicitly alleged.

94 When these implicit allegations of impropriety (of the type that we have identified) are taken into account in conjunction with the express allegations concerning the Respondent’s failure to discharge, or provide for the discharge of, his tax debts, we are satisfied that all the matters alleged against him in each complaint, taken at their highest, could not be held incapable at law of constituting professional misconduct.

208 The references to ‘financial and civic irresponsibility’ in Stevens. Our final observation on the Respondent’s submissions challenging the correctness of our decision in Archer (No 2) is that we continue to regard as relevant comments by Sheller JA in Stevens to which we drew attention in our reasons in Archer (No 2). These were to the effect that specific aspects of the opponent’s conduct in Stevens involved a high level of ‘financial and civic irresponsibility’.

209 As is shown in the extended quotation from Sheller JA’s judgment at [162] above, his Honour based this assessment on the fact that at the relevant times Mr Stevens knew that his taxation affairs were not in order (see the judgment at [23] and [30]). His Honour clearly regarded Mr Stevens’ decisions to commit substantial sums to new investments when he owed a great deal in unpaid tax as relevant to the Court’s decision regarding his fitness to remain on the Roll. The phrase ‘financial and civic irresponsibility’ was not just a casual epithet having no relevance to what the Court had to decide.

210 The implications of our reaffirmation of Archer (No 2). Our decision in Archer (No 2) went no further than a determination that the matters alleged and particularised in the Information were capable of constituting professional misconduct. Whether or not the evidence outlined earlier in this judgment sufficiently proves conduct by the Respondent that both (a) falls within the parameters of what the Information alleges and (b) meets the criteria established at common law and/or under the LP Act for identifying professional misconduct is a different question.

211 In reaffirming this earlier decision, we have again taken account of the principles laid down by the High Court in Walsh v Law Society of New South Wales (1999) 198 CLR 73 at 94-95 (see [132] above). Referring to subsections (1) and (2) of section 167 of the LP Act, the Court pointed out that proceedings such as these may only be instituted ‘with respect to a complaint’ and that the Tribunal’s function is confined conducting a hearing ‘into each allegation particularised in the information’.

212 In contrast to what we said in Archer (No 2) at [21], however, we do not believe it to be correct to treat each of the two Grounds in the Information as a ‘complaint’. We now consider that in section 167(1), the term ‘complaint’ refers to a complaint under section 134. In the present proceedings, it was the complaint made by the Bar Council against the Respondent on 29 August 2002.

213 Accordingly we conclude that it is not necessary for us to consider each Ground in isolation when determining whether professional misconduct has been established.

214 We recognise that this conclusion may appear at odds with the use of the term ‘complaint’ in passages in the judgments of McHugh, Kirby and Callinan JJ and of Gummow J in Walsh (see (1999) 198 CLR 73 at 94-97, 107-109). The reasoning of their Honours placed significant emphasis on the use of the phrase ‘the Tribunal’s determination of a complaint’ in section 171F(1) of the LP Act. But as the former judgment noted (in footnote 79 on page 95), this subsection has been changed. The phrase in question no longer appears in it.

215 Our consideration of the evidence will take place in two stages. First, we will determine the extent to which the factual matters alleged have been established by the evidence that we have outlined above. Secondly, we will determine whether the matters that have been both alleged and proved are sufficient to support a finding of professional misconduct.

To what extent have the matters alleged been proved?

216 The standard of proof. A preliminary question to be addressed first is that of the standard of proof required of the Bar Association, which of course bears the onus of proof. The Respondent acknowledged that we would feel bound to apply the principles enunciated by the High Court in Briginshaw v Briginshaw (1938) 60 CLR 336. These call for the application of the civil standard of proof, ‘on the balance of probabilities’, accompanied by a recognition that ‘the seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal’ (see the judgment of Dixon J at 362). A phrase often used to describe the standard in disciplinary proceedings is proof to the ‘comfortable satisfaction’ of the court or tribunal.

217 The Respondent argued, however, that the standard of proof in professional misconduct cases that might lead to an order of removal from the Roll should be taken to be the criminal standard, beyond reasonable doubt. The grounds of this submission were the need for comity with other British Commonwealth countries and the proposition that New South Wales courts and tribunals should follow decisions of the Privy Council, unless required to do otherwise by a High Court decision. We should therefore, he said, follow the recent case of Campbell v Hamlet [2005] 3 All ER 1116; [2005] UKPC 19. Here the Privy Council, hearing an appeal from the Court of Appeal of Trinidad and Tobago, held that the criminal standard should be applied in all disciplinary proceedings concerning the legal profession.

218 In opposing this contention, Ms Adamson cited three authorities for the proposition that in Australia the standard of proof in disciplinary proceedings is the Briginshaw standard. These were Rejfek v McElroy (1965) 112 CLR 517, Bannister v Walton (1993) 30 NSWLR 699 and Health Care Complaints Commission v Litchfield (1997) 41 NSWLR 630. In the first of these cases, which did not involve disciplinary proceedings, the High Court held that the civil standard of proof, applied with regard to the considerations outlined by Dixon J in Briginshaw, was applicable to civil proceedings involving facts that amounted to the commission of a crime. In the second and the third cases, the Court of Appeal applied this ruling to disciplinary proceedings brought against medical practitioners. In so doing in Bannister v Walton, Mahoney JA (at 712) expressly took account of decisions in England applying the criminal standard in disciplinary proceedings against a solicitor. He did not suggest, however, that they should be followed in New South Wales in the particular context of disciplinary proceedings against legal practitioners.

219 On our understanding of the case law in Australia, the position advocated by Ms Adamson is correct. Indeed, the Respondent acknowledged that we were likely to reach this conclusion.

220 Factual matters that were admitted. A significant number of purely factual matters alleged in the Information were admitted by the Respondent, in his Reply and/or in his submissions.

221 The Respondent admitted ‘substantially’ the matters alleged in Ground 1 and the Particulars to this Ground, except for the allegation that he ‘failed to discharge his legal and civic obligation to pay income tax… adequately’. He argued that this allegation was ‘incapable of proof’.

222 We held above at [195], however, that the term ‘legal obligation’ in the Information is to be interpreted as referring to the Respondent’s civil liability to pay his tax debts. In the light of this ruling, his ‘substantial’ admission regarding the facts alleged and particularised in Ground 1 must be taken to include an admission that he ‘failed to discharge his legal… obligation to pay income tax… adequately’.

223 On the other hand, we agree, up to a point, with the Respondent’s submission in relation to the allegation that he failed to discharge his ‘civic’ obligation to pay tax. Determining whether this allegation is made out calls for a value judgment, which is not susceptible of proof. But the matters to be taken into account in making this judgment include a number of matters of fact, which are open to proof.

224 With regard to Ground 2, the Respondent admitted in his submissions what he called ‘the substance of’ the Ground. He did not deny that ‘in some years, he did not make adequate provision for the payment of income tax’. He made no admissions in relation to the Particulars to Ground 2.

225 Allegations that appear to have been withdrawn. A factual allegation underlying clause (a) of the Particulars to Ground 2 is that at some unspecified time or times during the relevant years the Respondent could not discharge both his legal obligation to pay tax and his obligations under the Agreement. A factual allegation expressly made in clause (b) is that ‘he knew that he could not, or that it was unlikely that he would be able to, comply both with the Agreement and with his legal… obligation to pay tax’.

226 In Ms Adamson’s submissions in chief, however, the following passages may be found:-

The evidence of [the Respondent’s] income and how much he did, in fact, pay Mrs Archer does not indicate that there was a deficiency in the amount of his taxable income (being gross income less business expenses) which meant that it was insufficient both to meet his obligations under the section 86 Deed and his tax obligations. On the face of it, Mr Robertson’s analysis of the records indicates that there were sufficient funds for both his liability to the ATO and his liability to his wife under the Deed. Indeed, Mr Archer wholly eschews the proposition that he could not meet his tax obligations, at least for the year ended 30 June 1988 as a consequence of the obligations he had undertaken pursuant to the Deed…

The evidence establishes, at least to a prima facie level, that Mr Archer did not need to ‘choose’ between his obligations to his wife under the section 86 Deed and his obligations to pay tax on his taxable income, since there was sufficient money to fulfil both obligations, had he chosen to do so.

227 Although Ms Adamson did not formally withdraw the allegations contained in these two clauses of the Particulars to Ground 2, these passages appear to us to indicate an acknowledgment by the Bar Association that it cannot make good these allegations. It follows that the Association’s case, in so far as it relies on these two clauses, has not been made out.

228 The Respondent’s alleged failure to discharge his ‘civic’ obligation to pay tax. As we have just said, determining whether this allegation of breach of a ‘civic’ obligation is made out calls for a value judgment. As explained above at [190 – 192], that judgment must be made with regard to ethical and moral principles that determine the nature and scope of a taxpayer’s civic obligations. In deciding how the relevant conduct of the Respondent should be assessed in the light of those ethical and moral principles, we must take account of a significant range of factual matters.

229 As we understand the law derived from the authorities discussed earlier, these matters are, or at least include, the following: (a) the extent (in financial terms) to which the Respondent failed to discharge his legal obligation to pay tax; (b) the period of time over which such failure occurred; (c) the resources that were available to him for discharge of these obligations; (d) the nature of the debts, other than tax debts, that he incurred and discharged, using these resources; and (e) the nature and degree of any culpability on his part in relation to his failure to discharge his legal obligation to pay tax – i.e., whether, if he was at all to blame, this failure was attributable to a deliberate intention to avoid paying tax, to reckless indifference on the matter, to negligence in the management of his financial affairs, to inattention, to mere ‘inadvertence’, or to a combination of any or all of these.

230 We will now examine the evidence bearing upon each of these five matters. In doing this, we will indicate, with respect to any significant finding that the Bar Association invited us to make, whether the Respondent objected to it on the ground that it was not alleged in the Information, and we will state our decision on this question.

231 The extent of the Respondent’s default. As the Respondent conceded, there is little, if any dispute, as to the extent to which he failed to discharge his legal obligation to pay tax. It is sufficient here merely to recapitulate some of the major indicators contained in the evidence adduced by the Bar Association and outlined above at [58 – 60]:-

1. The aggregate of the Respondent’s primary income tax liabilities during the relevant period was $2,516,240. (This figure excludes penalties and interest, since we consider, in line with a submission by him, that the phrase ‘income tax’ in the Information might not include these extra charges.)

2. At most, the total amount received by the ATO in discharge of these liabilities was $428,406.23. This figure was made up of payments made by him or on his behalf and dividends declared from his second bankruptcy out of contributions made by him.

3. The ratio of the amount of tax received by the ATO to the amount of tax assessed against the Respondent was therefore 17% at most.

4. The amount of tax lost to the revenue because the ATO received only this proportion of the tax to which the Respondent was assessed was at least $2,087,834.

5. The average annual amount of this shortfall over the fifteen relevant years (1988 – 2002) was at least $139,189.

232 On any view, the scale of this tax default was very substantial. While crude comparisons of money amounts carry little weight in a context such as this, it may be noted that the total amount of tax lost to the revenue significantly exceeds the amount ($1,676,222.98) that Mr Stevens owed in unpaid tax shortly before the proceedings against him were commenced (see Stevens at [4]).

233 The period over which default occurred. Ground 1 alleges failure by the Respondent to discharge his legal obligation to pay income tax ‘for the years ended 30 June 1988 to 30 June 2002’. Although the period over which his liabilities to pay this tax accrued is a later period, because tax does not become payable as soon as the year to which it relates comes to an end, it can be assumed that the period covered by Ground 1 is about 15 years. For reasons set out earlier (see [124 – 125]), we reject the Respondent’s submission that the periods, totalling about ten years, during which he did not practise in New South Wales should be left out of account.

234 The epithet ‘very substantial’ is apposite once more. This period of about 15 years, although a great deal shorter than the period of 38 years during which Mr Cummins did not file any tax returns, is comparable to the relevant periods of tax default noted by the Court of Appeal in Somosi, Young and Stevens.

235 The resources that were available to the Respondent. The evidence outlined above (at [86 – 89]) included figures from Mr Robertson’s analysis of what he called the Respondent’s ‘after tax cash’. He meant by this the funds that would have remained available to the Respondent after payment of (a) his practice expenses, to the extent that they were allowed as taxable deductions and (b) the tax assessed on his taxable income.

236 The data thus developed by Mr Robertson included the following:-

1. During the relevant years, the Respondent’s taxable income, which approximated to the net income from his practice, amounted to $5,395,075. The tax to which he was assessed was $2,516,240.

2. The total of the ‘after tax cash’ available to him over the 15 relevant tax years was accordingly $2,878,835.

3. The average annual amount of ‘after tax cash’ for each of these years was $191,922.33.

4. The lowest of these annual amounts on Mr Robertson’s schedule was $47,261 (for 1996) and the highest was $716,809 (for 1989).

237 There was no suggestion in the evidence that the figures calculated by Mr Robertson for ‘after tax cash’ were too large by virtue of the Respondent’s practice expenses being under-estimated. As far as one can tell, the very substantial sums that he paid to Adbaston (see above at [103]) were deducted in full from his gross income in the course of calculating his taxable income. It is relevant too that in the period between September 1999 and March 2002 he paid all his business expenses, with the result that none of his business creditors lodged a proof of debt in his third bankruptcy (see [118] above).

238 As pointed out above, the individual amounts for ‘after tax cash’ in any given tax year do not give a wholly reliable guide as to how much disposable income was available to the Respondent at the time when payment of the tax relating to that year was required. The Respondent’s own testimony included claims that in periods when his income for a particular year was unusually high, but then declined during the next year or two, he experienced financial problems. The reason for this was that the amount of his tax referable to the first year in any of these sequences of years was unusually large and the income received by him during the year when this tax became payable was relatively small. As we pointed out above at [114], each of his three bankruptcies did in fact occur at or near the end of sequences of three years falling within this pattern.

239 The Respondent acknowledged, however, that in the lead-up to his second and third bankruptcies (which occurred in April 1997 and March 2002 respectively) his failures to make provision for his deferred liability for substantial amounts of income tax was a factor contributing to the bankruptcies (see [116 – 119] above). He ascribed these failures to ‘incompetent financial management’ and ‘carelessness’ on his part. He did not maintain that it would have proved impossible, even if he had managed his financial affairs competently, to make sufficient provision for payment of his tax debts.

240 On our view of the figures in the evidence, such provision was indeed practicable, and we so find.

241 Having regard to the particularly large sum that he earned in the tax year 1989 – his net income from practice was $1,426,452 – we make the same finding with regard to the years leading up to the first bankruptcy, which occurred in December 1991. It was practicable for him to make provision out of his income during the year 1989 for the payment of tax assessable on it, as well as for the tax assessed for the two succeeding years, even though his net income declined to $452,177 for 1990 and $93,995 for 1991.

242 By contrast to his situation with regard to income, the resources in terms of property owned by him that would or might have been available to meet his taxation liabilities were very limited indeed. As outlined above at [62] and [65], the total values of the assets that he listed in his three Statements of Affairs were as follows: first bankruptcy, $26,882; second bankruptcy, $120; third bankruptcy, $1,085.

243 Two factors contributing to this dearth of realisable assets were these. First, when he moved to Perth with his family in 1986 he assigned to Mrs Archer his share of the proceeds of their jointly owned home in Mosman. Accordingly, the two houses in which they lived together after their return to New South Wales (first in Paddington, then in Nelson Bay) were also in her name. Secondly, under the Agreement, which they executed on 29 March 1988, the range of assets that he assigned to her (described above at [67]) was very wide indeed. It seemingly embraced virtually all the items of personal property that were owned by him and situated within their home or in his chambers.

244 Accordingly, the position with regard to provision for tax liabilities (present and anticipated) at which the Respondent arrived on executing the Agreement was as follows. To the extent that any such provision made by him out of his current income was insufficient, he was unlikely to be able to discharge those liabilities.

245 The nature of the Respondent’s expenditures, other than on tax or the conduct of his practice. As indicated above (see [90 – 103]), the evidence regarding the nature of the debts, other than tax debts and debts associated with the conduct of his practice, that the Respondent incurred and paid during the relevant period was incomplete.

246 Amongst the few items of evidence on specific aspects of this expenditure are the following: in the tax years from 1998 to 2001, he paid an average annual amount of $207,140 to Mrs Archer, he made cash withdrawals averaging $114,305, he spent amounts averaging $13,631 on ‘wines’ and there were ‘unallocated’ withdrawals averaging about $119,000.

247 It is significant here to take account also of the evidence showing that Mrs Archer (with whom he lived during virtually all of the relevant years) made provision for a number of his personal requirements. In particular, she owned the various houses in which they resided and on at least one occasion she paid for the house in Paddington to be renovated (see [95] above).

248 Ms Adamson’s submissions included a contention, which the Respondent denied, that he had indulged in ‘grossly excessive personal expenditure’. This contention receives direct support from an admission made by the Respondent in his Statement of Affairs for his second bankruptcy. One of the reasons that he gave for having become bankrupt was ‘excessive expenditure’.

249 In her submissions in reply, however, Ms Adamson withdrew a claim made in her opening address that he had enjoyed a ‘lavish lifestyle’. She did so because no such claim had been made in the Information.

250 For this reason, and because there are many gaps in the evidence, we make no finding that he indulged in grossly excessive personal expenditure or enjoyed a lavish lifestyle. We reach this conclusion even though there are suggestions in the evidence that at times he may well have spent a great deal of money on benefits of a personal nature for himself and his family.

251 The fact remains, however, that during significant periods within the relevant years – notably in the three-year periods leading up to the first and second bankruptcies – the modes of expenditure of very large amounts of his net income from practice are unexplained. The Respondent did not put forward any evidence showing, or even merely suggesting, that he had financial commitments other than to his wife and his two daughters – commitments, for example, to business ventures or to the financial support of other relatives – for which these funds were required. Except for day-to-day living expenses, his expenditure of this disposable income was, to quote a phrase employed by Ms Adamson in her submissions, ‘discretionary expenditure’. It must be inferred that he applied it to purposes that he deemed beneficial, in some sense. Giving a broad construction to the term ‘benefit’, so as to include both direct and indirect benefits, we find that these funds were used to pay debts that he had incurred for ‘goods and services and other items for his own benefit and that of his family’, as alleged in clause (c) of the Particulars to Ground 2.

252 These considerations support a further finding, which we make, that during the relevant years he was not subject to any financial constraint that would have prevented him, if he so wished, from making sufficient provision from his disposable income for the payment of his current and anticipated taxation liabilities.

253 The question of culpability. As we have said, the Respondent, in his Statement of Affairs for his second bankruptcy and in his affidavit sworn in these proceedings, put forward ‘poor financial management’ and ‘carelessness’ as factors contributing respectively to his second and third bankruptcies.

254 Ms Adamson submitted, however, that his failures to discharge his tax obligations were deliberate and intentional, because he regarded the payment of tax as ‘optional’. In the alternative, she maintained that what he called ‘carelessness’ in fact amounted to ‘reckless disregard of his tax obligations’.

255 In support of these contentions, the principal direct evidence on which she relied took the form of statements made by him during the 2003 bankruptcy examination (see [117 – 118] above). These were to the effect that he ‘didn’t put any money aside to pay the Deputy Commissioner of Taxation’ and that ‘the payment of tax became priority last’ in the manner in which he met his business overheads and his personal expenses.

256 Ms Adamson referred in addition to a passage in cross-examination concerning the Respondent’s negotiations with the Commissioner during 1990 and 1991 to achieve a compromise of the dispute between them over the extent of his tax liabilities. In this passage, which is quoted above at [109], he said that if they could not reach an agreement the amount of any part payment that he made ‘didn’t matter’ because there was ‘still a likelihood’ that the Commissioner would make him bankrupt.

257 She also argued that the length of time during which he failed to discharge his tax liabilities led to the ‘inescapable’ inference that this failure was deliberate. In this connection, she cited the following passage from the judgment of Spigelman CJ in Somosi at [78]:-

The determinative consideration for these proceedings is that he avoided tax for seventeen years. In the absence of any suggestion to the contrary in his own evidence, I find no difficulty in drawing the obvious inference that his failure to comply with his obligations over that period of time was deliberate and that he intended to avoid taxation…

258 Further matters relied on by Ms Adamson were these: (a) that the Respondent paid no tax for the years 1989, 1990 and 1991 despite having earned a very large amount of income in 1989; (b) that even though the commencement of his first bankruptcy alerted him to his responsibilities as a taxpayer, he did not pay any tax on the income that he earned in the ensuing years, at least until the commencement of his second bankruptcy more than six years later; and (c) that his record with regard to paying contributions to his bankruptcies was a poor one.

259 The Respondent argued that the evidence supporting this claim that he acted deliberately fell far short of what was needed, having regard to the requirement that it was a very serious allegation calling for a high standard of proof.

260 The Respondent submitted also that it was not open to us to find that his failure was deliberate, because this was not alleged in the Information.

261 In our opinion, however, an allegation to this effect is clearly made in clause (c) of the Particulars to Ground 2. So far as relevant here, that clause reads: ‘Stephen John Archer chose to incur debts in respect of goods and services and other items for his own benefit and that of his family and associates and to discharge those debts in preference to the debt which arose in favour of the Australian Taxation Office…’

262 The Respondent also submitted, relying on Browne v Dunn (1893) 6 R 67, that it was not open to us to make a finding of deliberate intent because an allegation to this effect was never put to him in cross-examination. We agree with Ms Adamson, however, that this is not the case. She argued that it was put to him on a number of occasions, including the following exchange relating to the substantial sum earned by him in 1989 (Transcript 30 June 2009, page 18, line 48 to page 19, line 6):-

Q…. So if we take out the practice expenses which I think you’ve agreed are deductible and therefore would be reflected in your tax returns there’s a very considerable sum of money which would’ve been available to you to pay your tax liability, would you agree with me, for the year ended--
A. There would’ve been a very considerable sum of money available to me.

Q. All right. And I suggest to you that you chose not to use any part of that to fulfil your legal obligation to pay tax did you?
A. I don’t accept that.

263 We would refer also to the following passage in cross-examination, relating to his discharge of his obligations under the Agreement and his tax liabilities (Transcript 30 June 2009, page 52, lines 36 to 43):-

Q. Now I suggest to you that you from time to time chose to pay money to your wife and from time to time you chose money, you chose to pay money to the Tax Commissioner?
A. Logically that’s right, yes.

Q. All right. And that was just something you reserved to your own decision-making process at any given time?
A. No.

264 In determining this issue of culpability, we consider that in addition to the matters raised by Ms Adamson, the Respondent’s own evidence regarding his professional experience of tax disputes and his dealings with the ATO is relevant. This evidence is summarised above at [105 – 111].

265 What this evidence shows is that, during the relevant years, the Respondent was aware of the law and practice relating to taxation, alert to issues of tax liability, notably the extent of his own liability, and inclined to insist that he should not be required to pay any more tax than he believed himself to be legally liable to pay. It precludes any finding that his failures to pay tax occurred simply because he was not concerned, and did not want to be concerned, with the phenomenon of taxation. It operates as a barrier to any acceptance of the Respondent’s claim that these failures were attributable to ‘carelessness’, in so far as this term connotes inattentiveness. It also detracts from the likelihood that he was merely negligent, in the different sense of being incompetent, though in his Statement of Affairs for his second bankruptcy this is what he in fact claimed.

266 Our principal conclusion on this important matter of culpability is as follows. Having regard to the reasons advanced by Ms Adamson, supplemented by the considerations that we have just outlined, we are comfortably satisfied that the Respondent’s failure to discharge his tax liabilities was the outcome of deliberate conduct on his part. During periods of time when he had ample income to meet the expenses incurred in his practice, his obligations under the Agreement and his own living expenses, he deliberately committed the balance of this income to discretionary expenditure, instead of paying, or making appropriate provision for, the debts that he owed to the ATO. As alleged in clause (c) of the Particulars to Ground 2, he ‘chose’ deliberately to ‘incur debts in respect of goods and services and other items for his own benefit and that of his family’ and ‘to discharge those debts in preference to’ his legal obligation to pay tax. He maintained this pattern of behaviour even though he knew (a) that his failure to discharge his tax liabilities was likely to result in his bankruptcy and (b) that if he became bankrupt, the assets owned by him that might be realised in order to pay his debts were of limited value.

267 Clause (d) of the Particulars to Ground 2 alleged a further matter falling generally under the head of ‘culpability’. This was that during the relevant years the Respondent ‘knew that, irrespective of whether he paid his tax debt, he would continue to enjoy the benefits available to the public as a result of the expenditure of public funds, whereas if he were not to pay other debts, his standard of living would be adversely affected’.

268 This matter was addressed in the passage in the Respondent’s cross-examination quoted above at [112]. The Respondent here appeared to acknowledge the role played by taxation of income in enabling the Commonwealth Government to fund the operations of the federal courts, in which he practised. Irrespective of this evidence, however, we are comfortably satisfied that the Respondent, by virtue particularly of his involvement in taxation matters, would have appreciated that his enjoyment of public benefits would continue irrespective of whether he paid the income tax to which he was assessed.

269 The claim in this clause that any failure by him to pay ‘other debts’ would have impaired his standard of living is self-evident, given that the phrase ‘other debts’ must be implicitly taken to refer to debts for goods and services of relevance to his standard of living.

270 For these reasons, we are satisfied that the matter alleged in clause (d) of the Particulars to Ground 2 has been established.

Do the matters that have been alleged and proved amount to professional misconduct?

271 The principal findings set out in the previous section may be summarised as follows. The Respondent deliberately chose, during a significant number of years, to incur and pay debts in respect of goods, services and other items for his own benefit (directly or indirectly) and that of his family, but not to pay tax debts. He engaged in this conduct even though substantial amounts of disposable income that was available to him rendered it practicable for him to pay and provide for his tax liabilities in addition to meeting his living expenses and his other financial commitments. He knew that his failure to discharge his tax liabilities was likely to result in his bankruptcy and that if he became bankrupt, the assets owned by him that might be realised in order to pay his debts were of limited value. He became bankrupt three times, owing on each occasion a very substantial sum on account of income tax. The outcome was that he inflicted a very substantial loss on the revenue.

272 The question whether a finding of professional misconduct should follow calls for an assessment of whether this conduct would ‘reasonably be regarded as disgraceful and dishonourable by professional brethren of good repute and competency’ (to quote again the common law test derived from Allinson v General Council of Medical Education and Registration [1894] 1 QB 750) or that otherwise falls within the definition of professional misconduct in section 127 of the LP Act.

273 In her submissions in chief, Ms Adamson submitted that the line of authority commencing with New South Wales Bar Association v Cummins (2001) 52 NSWLR 279; [2001] NSWCA 284, notably Davison v Council of the New South Wales Bar Association [2007] NSWCA 227, showed that the conduct alleged and proved against the Respondent manifestly satisfied both the common law criterion and the statutory definition.

274 The Respondent submitted that we could not hold that the common law criterion, referring as it did to the opinions of ‘professional brethren of good repute and competency’, was satisfied, for two reasons in addition to those that he had advanced in maintaining that the matters alleged in the Information were incapable of amounting to professional misconduct.

275 The first of these additional reasons was that no challenge had been made to his affidavit evidence (see [120] above) to the effect that neither the publicity given to his first bankruptcy early in 1992 nor the publication of the Herald articles in March 2001 had impaired his cordial and friendly relations with judges, barristers and solicitors. It followed that the evidence as to how he was regarded by professional colleagues was ‘all one way’.

276 The second reason was that since only one member (Ms Norton SC) of the Tribunal Panel hearing these proceedings was or ever had been a practising barrister, the Panel could not reach such a conclusion. The other two members could not be permitted simply to trust their ‘own intuition’ or to ‘abrogate’ their judgment on this issue to the third.

277 In her submissions in reply, Ms Adamson argued as follows: (a) that because the Tribunal and the Court of Appeal had held that the disregard of legal and civic obligations to pay tax could fall within the common law criterion, evidence as to what individual judges and practitioners thought about such behaviour (or indeed about the Respondent) was irrelevant; and (b) that since Parliament had provided that a Tribunal Panel constituted in the manner of the present Panel was an appropriate expert tribunal to hear and determine these proceedings, it was not open to the Respondent to claim that the present Panel lacked the necessary qualifications.

278 In our judgment, these responses by Ms Adamson are sufficient to dispose of the Respondent’s two contentions.

279 A matter not expressly raised in the submissions but requiring consideration here is whether the relevant conduct of the Respondent can be characterised as professional misconduct even though it was not committed in the course of his practice. Section 127(1)(b) of the LP Act (see [129] above) provides statutory grounds for ruling that it can be so characterised, provided the conditions there set out are satisfied. But since the Respondent derived virtually all his taxable income from his practice (see [83] above), the following statement of Spigelman CJ in New South Wales Bar Association v Cummins (2001) 52 NSWLR 279; [2001] NSWCA 284 at [66] establishes the requisite connection at common law:-

The preparation and filing of tax returns is closely related to the earning of income, including professional income. The link is sufficiently close to justify a finding of professional misconduct on the basis of Mr Cummins’ failure to lodge tax returns for 38 years.

280 In our judgment, the findings summarised above at [271] amply warrant the conclusion that the Respondent failed in very large measure to discharge his civic, as well as his legal, obligations with regard to the payment of tax that was assessed almost entirely on income earned in practice. This conduct would ‘reasonably be regarded as disgraceful and dishonourable by professional brethren of good repute and competency’. It accordingly amounted to professional misconduct at common law and within the statutory definition in section 127 of the LP Act.

281 Having so determined, we are required to consider the making of one or more consequential orders by way of penalty under section 171C(1) of the LP Act. We must also consider the question of costs.

282 The matter is set down for further directions at 9.30 a.m. on 19 November 2009.