Council of the New South Wales Bar Association v Archer (No 2)

[2004] NSWADT 78

CITATION:	Council of the New South Wales Bar Association v Archer (No 2) [2004] NSWADT 78
DIVISION:	Legal Services Division
PARTIES:	APPLICANT Council of the New South Wales Bar Association RESPONDENT Stephen John Archer
FILE NUMBER:	032019
HEARING DATES:	25/03/2004-26/03/2004
SUBMISSIONS CLOSED:	03/26/2004
DATE OF DECISION:	04/21/2004
BEFORE:	Chesterman M - ADCJ (Deputy President); Norton S SC - Judicial Member; Bennett C - Non Judicial Member
APPLICATION:	Professional Misconduct - conduct capable of constituting professional misconduct
MATTER FOR DECISION:	Preliminary matter
LEGISLATION CITED:	Legal Profession Act 1987 Administrative Decisions Tribunal Act 1997 Legal Practitioners Act 1898
CASES CITED:	Allinson v General Council of Medical Education and Registration [1894] 1 QB 750 Bryson v New South Wales Bar Association [2003] NSWADTAP 29 Myers v Elman [1940] AC 282 New South Wales Bar Association v Bryson [2003] NSWADT 19 New South Wales Bar Association v Cummins [2001] NSWCA 284 New South Wales Bar Association v Murphy [2002] NSWCA 138 New South Wales Bar Association v Stevens [2003] NSWCA 261 Prothonotary of the Supreme Court of New South Wales v Costello [1984] 3 NSWLR 201 A Solicitor v Council of the Law Society of New South Wales [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
REPRESENTATION:	APPLICANT I McCulloch, barrister RESPONDENT In person
ORDERS:	1. Application dismissed; 2. Costs of the application reserved

1 On 9 October 2003, the Council of the Bar Association of New South Wales (the Applicant) filed in the Tribunal an Information stating that as a result of its investigation of two complaints made by it under Part 10 of the Legal Profession Act 1987 (‘the Act’) against Stephen John Archer (the Respondent) it claimed that the Respondent, being a legal practitioner within the meaning of s 128 of the Act, was guilty of professional misconduct on the grounds set out, with accompanying particulars, in the First Schedule.

2 In the Second Schedule to the Information, the Applicant requested the Tribunal (a) to find to this effect; (b) to find also that he was not a fit and proper person to remain on the Roll of Legal Practitioners; and (c) to order that his name be removed from the Roll or, in the alternative, to make an order under any one or more of sub-paragraphs (b), (c), (d), (e) or (f) of sub-section 171C(1) of the Act.

3 The terms of s 171C(1) are as follows:-

171C Determinations of Tribunal

(1) If, after it has completed a hearing relating to a complaint against a legal practitioner, the Tribunal is satisfied that the legal practitioner is guilty of professional misconduct or unsatisfactory professional conduct, the Tribunal may do any one or more of the following:

(a) order that the name of the legal practitioner be removed from the roll of legal practitioners if the legal practitioner is guilty of professional misconduct,

(a1) order that the name of the interstate legal practitioner be removed by the appropriate regulatory authority of another State or a Territory from the roll of that State or Territory that corresponds to the roll of legal practitioners if the interstate legal practitioner is guilty of professional misconduct,

(b) order that the legal practitioner’s practising certificate be cancelled,

(c) order that a practising certificate not be issued to the legal practitioner until the end of the period specified in the order,

(c1) order that the appropriate regulatory authority of another State or a Territory cancel the interstate legal practitioner’s practising certificate or order that an interstate practising certificate not be issued to the interstate legal practitioner until the end of the period specified in the order,

(d) order that the legal practitioner pay a fine specified in the order, not exceeding $50,000 if the legal practitioner is guilty of professional misconduct or not exceeding $5,000 if the legal practitioner is guilty of unsatisfactory professional conduct,

(e) publicly reprimand the legal practitioner or, if there are special circumstances, privately reprimand the legal practitioner,

(f) order that the legal practitioner undertake and complete a course of further legal education specified in the order,

(f1) in the case of a barrister who is a public notary, order that the barrister cease to accept instructions in relation to notarial services,

(g) in the case of a solicitor, make any one or more of the orders referred to in subsection (2),

(g1) in the case of a locally registered foreign lawyer, order that the registration of the foreign lawyer under Part 3C be cancelled,

Note. This section applies to locally registered foreign lawyers. See section 48ZV.

(h) if applicable, make a compensation order,

(i) make ancillary orders.

4 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.

5 In his Reply, 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 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.

6 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, 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.

7 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 Act.

The present application

8 At a directions hearing, the Respondent applied for the separate determination of a preliminary question. He sought a declaration that the matters set out in the Information were incapable in law of constituting professional misconduct within the meaning of s 127 of the Act. Acting Judge Nader, Deputy President, directed that this question should be determined at the substantive hearing of the Information.

9 At the hearing before us, the Applicant claimed that we should not make a preliminary determination of this nature. But after hearing argument on both sides, we ruled, in an ex tempore judgment, that the Tribunal had power to make such a determination and that in the circumstances of the case it was appropriate that it should adopt this procedure.

10 We indicated in making this ruling that, in so determining, we should take the case against the Respondent at its highest. This meant, we said, that 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.

The role played by the Information and supporting particulars

11 It is convenient to begin by considering the precise significance of the particular terms in which informations are laid under Part 10 of the Act by an appropriate authority, such as the Applicant in these proceedings.

12 Under s 155(2), the authority ‘must’ institute proceedings with respect to a complaint against a legal practitioner if, after having completed an investigation into the complaint pursuant to ss 147A - 154, it is ‘satisfied that there is a reasonable likelihood’ that the Tribunal will find the practitioner guilty of professional misconduct or unsatisfactory professional conduct.

13 In Walsh v Law Society of New South Wales (1999) 198 CLR 73 at 94-95, McHugh, Kirby and Callinan JJ described in the following terms what they referred to as ‘a number of protections’ for any practitioner against whom such proceedings were instituted (in the following extract, footnoted provisions of the Act are included in the text):-

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)).

14 Their Honours then observed (at 95) that in view of the scheme of the legislation and the introduction of new statutory bodies to regulate legal practitioners ‘the requirements of particularity contained in the Act (and the safeguards thereby introduced for the practitioner concerned) would not be narrowly construed’.

15 They stated further (at 95) as follows: (a) it was only after the Tribunal had completed a hearing ‘relating to a complaint against a legal practitioner’ (they cited here s 171C(1), which is reproduced above at [3]) that it could determine whether it was satisfied that the practitioner was guilty of professional misconduct or unsatisfactory professional conduct; (b) only if it was so satisfied could it make any of the orders listed in s 171C(1); and (c) that the ‘scheme of specificity’ continued into the provisions in s 171F for appeals by any party to the Supreme Court ‘against the Tribunal’s determination of a complaint’.

16 Finally, their Honours emphasised again, at 96, that

The provisions of the Act must be complied with. The focus of its attention is the “complaint against a legal practitioner” expressed in the “information laid by the appropriate Council or the Commissioner” in accordance with the Act (s 167).

17 A basic aspect of the High Court’s decision in Walsh (see the judgment at 97) was in fact that the Court of Appeal, through incorrectly believing that a repealed subsection of s 171F was still in force, had ‘consciously’ gone beyond the scope of the complaints ‘as formulated and particularised’.

18 Relying on these authoritative statements as to the operation of Part 10 of the Act, the Respondent in the present proceedings maintained with respect to each of the two Grounds in the Information, ‘as formulated and particularised’, that if the matters specifically alleged in it were not capable of constituting professional misconduct, the Tribunal was bound to dismiss it. This followed, he claimed, from the limitations that the High Court, interpreting the relevant provisions of Part 10, placed in Walsh upon the powers of the Tribunal.

19 The Respondent acknowledged, as the High Court did, that s 167A conferred power on the Tribunal to amend an Information. But he claimed that any such power could not be invoked so as to effect a major amendment without offending procedural fairness.

20 Mr McCulloch, counsel for the Applicant, indicated that in the present context the Applicant would not seek to rely significantly on the argument that any defects in the formulation of the complaints or the supporting particulars were capable of rectification under s 167A.

21 In our judgment, the position advocated by the Respondent on this aspect of the proceedings is substantially correct. 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.

22 The alternative finding that s 171C(1) provides for – that of unsatisfactory professional conduct – has not been alleged by the Applicant. We do not need to consider whether this of itself would preclude our making such a finding because the matters alleged in each of the Grounds clearly do not fall within this category. This is clear from the terms of s 127(2) of the Act, which set out a definition of unsatisfactory professional conduct, and from the case-law applying this definition.

Professional misconduct

23 We turn now to consideration of the crucial concept of professional misconduct, in its various manifestations at common law and under statute.

24 The definition of professional misconduct that we must apply is one that was developed within the common law and within certain prior statutory contexts and was then modified by the enactment of s 127 of the Act in 1987.

25 The starting-point is the definition of professional misconduct that came to be applied by the Supreme Court in its inherent jurisdiction to regulate practitioners and by the Solicitors’ Statutory Committee in the exercise of its power to regulate solicitors under the Legal Practitioners Act 1898. Through a process of development explained by Spigelman CJ in New South Wales Bar Association v Cummins [2001] NSWCA 284 at [36 – 41] and Giles JA in New South Wales Bar Association v Murphy [2002] NSWCA 138 at [41 – 44], professional misconduct came to be defined as conduct which ‘would reasonably be regarded as disgraceful or dishonourable by legal practitioners of good repute and competency’ (Murphy, per Giles JA at [44]). This phrase repeats, with ‘legal practitioners’ substituted for ‘his professional brethren’ and ‘solicitors’ respectively, formulations stated by Lopes LJ in Allinson v General Council of Medical Education and Registration [1894] 1 QB 750 at 763, and by Viscount Maugham in Myersv Elman [1940] AC 282 at 288-289.

26 In New South Wales Bar Association v Cummins [2001] NSWCA 284 at [56], a case arising within the inherent jurisdiction, Spigelman CJ stated that professional misconduct is not confined to conduct ‘occurring directly in the course of professional practice’, but may extend also to acts which are ‘sufficiently closely connected with actual practice, albeit not occurring in the course of such practice’. At [57 – 65], he cited a number of authorities illustrating this proposition.

27 In A Solicitor v Council of the Law Society of New South Wales [2004] HCA 1 (also a case arising within the inherent jurisdiction), the joint judgment of Gleeson CJ, McHugh, Gummow, Kirby and Callinan JJ in the High Court contained the following passage at [20]:-

The dividing line between personal misconduct and professional misconduct is not clear. Professional misconduct does not simply mean misconduct by a professional person. At the same time, even though such conduct is not engaged in directly in the course of professional practice, it may be so connected to such practice as to amount to professional misconduct.

28 A footnote to this passage refers to the judgment of Spigelman CJ in Cummins.

29 Section 127 of the Act makes modifications to this definition that had been developed within the inherent jurisdiction and the earlier statutory contexts. It does not purport to supersede this earlier definition. The relevant parts of the section are 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

(b1) (Repealed)

(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.

(2)…

(3)…

(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.

30 Section 127(1)(b) may appear to imply that conduct ‘otherwise than in connection with the practice of law’ cannot be professional misconduct unless it shows the practitioner to be not of good fame and repute or not fit to remain on the roll of practitioners and that therefore the only possible order open to the Tribunal, if it makes a finding under s 127(1)(b), is that the practitioner must be struck off the roll. But this line of reasoning was rejected by the Tribunal in New South Wales Bar Association v Bryson [2003] NSWADT 19 at [53 – 58]. On appeal, the Appeal Panel did not consider that the case provided an appropriate context for resolution of this issue (Bryson v New South Wales Bar Association [2003] NSWADTAP 29 at [10]). For reasons set out below, the issue need not, we think, be resolved in the present case either.

31 The opening words of s 127(4) suggest that the subsection adds nothing to the pre-existing definition of professional misconduct. But in New South Wales Bar Association v Murphy [2002] NSWCA 138, Spigelman CJ said at [3] that it ‘extended’ the definition.

32 It is clear that a finding of professional misconduct, whether made in the inherent jurisdiction or under statute, does not necessarily lead to the conclusion that the practitioner concerned is not a fit and proper person to practise and must therefore be removed from the roll of practitioners. This is stated, for instance, in the High Court’s judgment in A Solicitor v Council of the Law Society of New South Wales at [21] and by Giles JA in Murphy at [43]. It was exemplified in the inherent jurisdiction by the Court of Appeal’s decision in Prothonotary of the Supreme Court of New South Wales v Costello [1984] 3 NSWLR 201 that the barrister concerned had been guilty of professional misconduct but was not unfit to be a barrister and should therefore not be struck off. The authorities relating to the inherent jurisdiction consistently maintain the principle that removal from the roll of practitioners is dependent on a finding of present unfitness to practise, not on a finding of professional misconduct.

33 In the particular statutory context with which we are concerned, this principle appears implicitly to follow from the wording of s 171C(1) of the Act. This provision authorises the Tribunal to make one or more of a number of orders, ranging in severity from striking off the roll to a reprimand, if it has found a practitioner to have been guilty of professional misconduct or of unsatisfactory professional conduct. Nothing in the section indicates expressly or by implication that the most severe measure – striking off – must inevitably be employed where professional misconduct is found and that the remaining measures are reserved solely for cases of unsatisfactory professional conduct. The Tribunal made an observation to this effect in New South Wales Bar Association v Bryson [2003] NSWADT 19 at [57].

Whether default in paying or providing for income tax can amount to professional misconduct

34 A major component of the argument advanced by the Respondent in this application was the proposition that neither a failure to discharge ‘legal and civic obligations’ to pay income tax, nor a failure to ‘make provision, or any adequate provision’ for the payment of income tax could, without more, amount to professional misconduct.

35 In putting forward this proposition, the Respondent claimed that in none of the leading decisions in disciplinary proceedings concerned with tax default by legal practitioners has it been held that either of these types of conduct, standing alone, amounted to professional misconduct. Present in all the cases in which a practitioner had been struck off the roll was, he said, the commission of one or more offences under tax legislation, such as a failure to file tax returns. It followed, he argued, that professional misconduct could not be established unless the practitioner had been proved to have defaulted in tax obligations through conduct that was illegal or at least fraudulent or dishonest or in some other way improper. But no conduct of this nature was put forward in the allegations against him.

36 The Respondent argued further that despite some apparently contrary statements within these decisions, there was no reason to treat tax obligations (as compared, for instance, with ordinary commercial obligations) as having any special significance when determining whether defaults in payment might constitute professional misconduct. He also claimed that, in so far as recent authorities dealing with the cancellation of practising certificates under Part 3 of the Act contained statements of principle apparently conflicting with his line of argument, they should be put to one side, because quite different considerations applied in that context.

37 In opposing these arguments, Mr McCulloch’s principal submission was that the decisions dealing with tax default by practitioners clearly implied that continued failures to pay tax, even if no illegality was involved, could constitute professional misconduct. He referred to statements, for instance, indicating that if the failure to pay tax resulted from ‘financial and civic irresponsibility’, this was a relevant consideration. He relied also on s 127(4) of the Act, claiming that it provided a ‘complete answer’ to the Respondent’s application. He argued also that the authorities dealing with the cancellation of practising certificates provided important guidance on the issue before us and should certainly not be ignored. For these reason, he said, the matters alleged against the Respondent, taken at their highest, were clearly capable of amounting to professional misconduct.

38 Having briefly sketched out the main lines of argument on each side, we will now examine relevant leading cases in which conduct by a legal practitioner of the broad type alleged against the Respondent – namely, breaches of the obligation to pay tax – was considered in the context of disciplinary proceedings.

39 Four such cases on this matter were highlighted in the parties’ submissions. These are New South Wales Bar Association v Cummins [2001] NSWCA 284, New South Wales Bar Association v Stevens [2003] NSWCA 261, New South Wales Bar Association v Murphy [2002] NSWCA 138 and Wardell v New South Wales Bar Association [2002] NSWSC 548. The first two of these arose in the Supreme Court’s inherent jurisdiction. The latter two concerned the cancellation of practising certificates. We will discuss them in turn.

New South Wales Bar Association v Cummins

40 In these proceedings, brought in the inherent jurisdiction of the Supreme Court, the Bar Association sought declarations that the respondent barrister was not a fit and proper person to remain on the roll of legal practitioners and that his conduct whilst not occurring directly in the course of his professional practice amounted to professional misconduct. The Court of Appeal granted both declarations.

41 The case was decided on agreed facts, which are set out in the judgment at [15]. The gist of them was that the barrister had practised for 38 years without ever lodging a tax return. The Australian Taxation Office (‘ATO’) commenced proceedings against him and obtained a judgment in the sum of approximately $1,000,000. He then became bankrupt on his own petition. The total amount owing to creditors other than the ATO was only about $20,000. Prior to the Supreme Court proceedings, the barrister retired from practice on medical grounds.

42 Spigelman CJ delivered the leading judgment, with which Mason P and Handley JA agreed. He observed as follows at [16]:-

These agreed facts make it clear that over about four decades of practice as a barrister, Mr Cummins was perfectly capable of conducting his personal and financial affairs – as a practitioner, director, investor, manager – save in one respect. He never performed his duties as a citizen and a taxpayer.

43 We note that the Chief Justice referred here to the duties of a ‘taxpayer’, not to the duty under tax legislation to lodge tax returns.

44 At [17 – 18], Spigelman CJ referred to the Court of Appeal’s decision in New South Wales Bar Association v Hamman [1999] NSWCA 404. The respondent barrister in this case engaged in what the Chief Justice called ‘a course of tax evasion’, carried out though not declaring a number of unpresented cheques in his tax return. This was, it should be noted, a case in which default in paying tax occurred in conjunction with fraudulent and illegal conduct.

45 At [20], having said in the preceding paragraph that the legal profession has ‘long required the highest standards of integrity’, Spigelman CJ elaborated on this statement as follows:-

There are four interrelated interests involved. Clients must feel secure in confiding their secrets and entrusting their most personal affairs to lawyers. Fellow practitioners must be able to depend implicitly on the word and the behaviour of their colleagues. The judiciary must have confidence in those who appear before the courts. The public must have confidence in the legal profession by reason of the central role the profession plays in the administration of justice. Many aspects of the administration of justice depend on the trust by the judiciary and/or the public in the performance of professional obligations by professional people.

46 At [22], the Chief Justice said that values such as these formed part of the ‘traditional professional paradigm’, which still had ‘a vitality of abiding significance’ within the legal profession.

47 At [23], he commented as follows on amendments to the Act in 2001 having the effect of strengthening the degree of supervision of practitioners by the Bar Association and the Law Society through the exercise of their powers in regard to practising certificates:-

The most recent amendments to the scheme of professional regulation contained in the Legal Profession Amendment (Disciplinary Provisions) Act 2001 affirm this long standing tradition, by the introduction of detailed provisions for review of conduct by legal practitioners involving acts of bankruptcy, indictable offences and tax offences. Although this new legislation is not directly applicable to the present case, it does manifest the continued vitality of the professional tradition.

48 In our view, these observations imply that the factors to be taken into account by the professional associations in granting, suspending or cancelling practising certificates under Part 3 of the Act are not, as the Respondent argued, to be treated as irrelevant to our conclusions regarding the nature and scope of professional misconduct.

49 At [28], the Chief Justice summed up his reasons for concluding that the barrister was not a fit and proper person to remain on the Roll of Practitioners:-

In the present case, I am satisfied that the barrister’s complete disregard of his legal and civic obligations with respect to the payment of income tax was such that he must be regarded, at the present time, as permanently unfit to practice.

50 At [29], his elaboration of this conclusion included the comments that the barrister’s failure to lodge tax returns over 38 years was ‘an inexcusable pattern of illegal conduct in complete defiance of his civic responsibilities’ and that ‘for almost four decades, Mr Cummins took advantage of the full range of public services made available by taxation, not least in the provision of the court system by which he made his income’.

51 The Chief Justice then went on to consider whether the declaration of professional misconduct should be made. At [56], he said, as indicated above at [26], that professional misconduct may include acts which are ‘sufficiently closely connected with actual practice, albeit not occurring in the course of such practice’. At [66], he applied this principle to the facts before him:-

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.

52 He added the following at [67]:-

Similarly, and alternatively the extent of Mr Cummins’ failure to observe his legal obligations and civic responsibilities by such a systematic course of improper conduct over such a long period of time is of such gravity as to constitute professional misconduct, for the reasons I have mentioned above in relation to fitness.

53 In our opinion, nothing in this judgment expressly or impliedly refutes the proposition that a prolonged failure to observe what the Chief Justice called ‘civic obligations’ with respect to the payment of taxation may amount to professional misconduct, even if no illegality is present. On the other hand, his judgment does not contain an affirmative statement to this effect. The reason is that in the facts before him, both a sustained failure to observe the ‘civic obligations’ and an illegal failure to file tax returns were present.

54 Another reason why no such statement was forthcoming is that the Court’s verdict, at [28], that the barrister had acted with ‘complete disregard of his legal and civic obligations with respect to the payment of income tax’ was delivered primarily for the purpose of determining whether he was fit and proper to remain on the Roll. So long as the Court found also – as in fact it did find – that this conduct was sufficiently connected with professional practice, or in the alternative that it did not need to be so connected, in order to fall within the ambit of professional misconduct, the conclusion that it was professional misconduct necessarily followed.

55 This approach necessarily left undetermined the question whether similar but less culpable conduct by the barrister – such as defaulting in tax payments without any accompanying illegality – might constitute professional misconduct while not providing grounds for removal. In this connection, it is essential to bear in mind that, as pointed out above at [32], a finding of professional misconduct does not necessarily lead to the conclusion that the practitioner concerned is not a fit and proper person to practise and must therefore be removed from the roll of practitioners. One or more lesser orders, within the range set out in s 171C of the Act, may well be appropriate instead.

56 If any further guidance on this issue can be obtained from Spigelman CJ’s broad discussion of the standards of conduct to be expected of practitioners, it is, in our view, to this effect. At the very least, a failure, without any accompanying illegality, to comply with one’s ‘civic obligations’ to pay tax was implicitly considered by him to constitute a serious breach of traditional professional standards, in the absence of extenuating circumstances. This failure on the barrister’s part was almost certainly a factor of major significance in persuading the Court that it must declare him both to have committed professional misconduct and to be unfit to remain on the Roll.

57 We may make this point in another way. As we read the judgment, the commission, even the repeated commission, of the offence of failing to file tax returns may not of itself have been held to constitute professional misconduct, let alone to warrant removal from the Roll. What mattered to the Court was that this offence was committed with a view to, and had the result of, shielding the barrister from his obligation to pay substantial amounts of tax.

58 On the associated issue whether failure to observe such ‘civic obligations’ is sufficiently closely connected with legal practice to fall within the ambit of professional misconduct, the judgment of Spigelman CJ clearly provides a positive answer, so long as some at least of the income giving rise to the obligations has been earned in the course of legal practice.

59 On this specific issue, the Chief Justice’s ruling was endorsed by the High Court in A Solicitor v Council of the Law Society of New South Wales [2004] HCA 1 at [33]. The Court stated that he ‘rightly held that the conduct in question was closely related to the barrister’s professional activities, involving non-compliance with the revenue laws affecting the earnings from those activities’.

New South Wales Bar Association v Stevens

60 This case, which is reported at [2003] NSWCA 261, also involved a barrister who practised for a number of years without lodging any income tax returns. The Bar Association relied on his ‘failure to lodge income tax returns and failure to pay income tax over many years’. This is stated in the leading judgment, given by Sheller JA, at [5]. Meagher JA and Ipp AJA agreed with this judgment.

61 The barrister had approached an accountant in 1983 with a view to filing the taxation returns that he had failed to file since 1977. None were actually lodged until February 1996. Eventually taxation returns for each year were lodged and for the years 1996, 1997 and 1998 they were lodged on time.

62 The barrister sought to distinguish his case from Cummins on the basis he was not trying to avoid his tax debts, that he had taken some steps to bring his affairs in order over the years and that he had not gone bankrupt. This distinction was rejected by Sheller JA.

63 His Honour summed up his conclusions as follows, at [58]:-

The claimant has established that by failing to lodge income tax returns and failing to pay income tax during the periods referred to the opponent has been guilty of professional misconduct and is not a fit and proper person to remain on the roll of legal practitioners.

64 As in Cummins, the Court did not have to rule on whether non-compliance with ‘civic obligations’ to pay tax, standing alone – i.e., without any accompanying illegality – would constitute professional misconduct. But at a number of points in his judgment (some of which were drawn to our attention by Mr McCulloch), Sheller JA made comments suggesting that proof of breaches of such ‘civic obligations’ was, at the least, of material significance in this context.

65 At [15], for instance, he said that

… the opponent throughout the years that he failed to lodge income tax returns and failed to pay any income tax would have been well aware of his obligations to do so and the consequences of not doing so in terms both of illegality and defiance of civic responsibilities which the Chief Justice [in Cummins ] so eloquently describes (emphasis added).

66 At three places in his judgment – specifically, at [23], [27] and [30] – Sheller JA referred in disapproving terms to the ‘financial and civic irresponsibility’ displayed by the barrister. At [57], he referred to the barrister’s ‘history of default’ in the discharge of ‘civic obligations to lodge income tax returns and pay taxation’.

New South Wales Bar Association v Murphy

67 This case, reported at [2002] NSWCA 138, came to the Court of Appeal on appeal from a decision of McLellan J, in the Supreme Court, overturning the Bar Association’s cancellation of a barrister’s practising certificate in exercise of its powers under Part 3 of the Act. The Court of Appeal dismissed the appeal. Giles JA delivered the leading judgment, with which Ipp AJA agreed. Spigelman CJ delivered a short concurring judgment.

68 In essence, the case against the barrister was one of failure to meet taxation obligations, coupled with the commission of an act of bankruptcy. There was no illegal failure to file tax returns. In addition, the Court, while holding that McLellan J had erred in ruling that cancellation of the certificate should not have occurred in the absence of proof of dishonesty, made its own finding that there had been no dishonesty on the barrister’s part.

69 At [163], Giles JA summed up the material allegations against the barrister:-

The appellant’s submissions came down to failure to address taxation obligations in three respects. First, the respondent had failed properly to manage his finances to provide for payment of tax, and provisional tax, ahead of the assessments in the early 1990’s. Secondly, the respondent had failed to pay more after the assessments were made. Thirdly, and perhaps inconsistently, the respondent had failed to go bankrupt in 1993 when his position became hopeless. All this, in the appellant’s submission, was while the respondent had paid other creditors and discharged other debts (for example the debt to the bank).

70 Under s 38FC(1) of the Act, the Bar Council is required to cancel a barrister’s practising certificate if (a) it becomes aware that the barrister has committed an act of bankruptcy or been found guilty of an indictable offence or a tax offence and (b) it considers that this act of bankruptcy, indictable offence or tax offence was committed in circumstances that showed the barrister not to be a fit and proper person to hold a practising certificate.

71 At [107], Giles JA made the following comments on this provision:-

The test of a fit and proper person to hold a practising certificate is stated as to each act of bankruptcy, indictable offence and tax offence. The fact of commission of an act of bankruptcy, an indictable offence or a tax offence is not what matters. The Council, and the Court, must look to the circumstances in which the act of bankruptcy, indictable offence or tax offence was committed. If no more than the fact of commission of an act of bankruptcy, an indictable offence or a tax offence is known, an opinion as to what the circumstances of the commission show cannot be held. What matters is the circumstances in which the act of bankruptcy, indictable offence or tax offence was committed.

72 The Respondent relied on this passage as showing (a) that cancellation of a practising certificate and removal from the Roll are two distinct procedures, in which different criteria must be applied, and (b) that the former is the less serious procedure. In further support of these propositions, he referred to other parts of the judgments of Spigelman CJ (paragraphs [1], [4] and [12]) and of Giles JA ([102 – 106, 108 – 112]). Within these paragraphs, we have found the most useful pronouncements to be the following, which are in the latter judgment at [109] and [111] respectively:-

109… By the addition to s 127 of the Act in the 2001 amendments, conduct “involving an act or acts of bankruptcy” or “that gave rise to a finding of guilt of the commission of an indictable offence or a tax offence” is professional misconduct if it “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”. The different language in s 38FC, also used in ss 37, 38FE and 38FH, may be explained by the subject matter of Parts 1A and 1AA, the giving and taking away of practising certificates, although s 38A departs from that language. Even if not entitled to practise because without a practising certificate, the legal practitioner remains on the roll. The legal practitioner still has the status of a fit and proper person to be a legal practitioner but is not a fit and proper person to hold a practising certificate.

111… As has been seen, a legal practitioner may be denied a practising certificate and so precluded from practising as a legal practitioner for reasons other than fitness to practise, or for reasons less than directly connoting unfitness to practise. The question for s 38FC is whether the legal practitioner is to be precluded from practising because unfit to do that for which the legal practitioner remains admitted and enrolled. The difference between unfitness to hold a practising certificate and unfitness to be a legal practitioner may not be great in many cases. But the difference can not be overlooked.

73 With reference specifically to the significance of failing to pay or provide for tax debts, as compared with other categories of debt, the Respondent relied on a further paragraph ([161]) in the judgment of Giles JA:-

The appellant submitted that over a period of many years the respondent had “failed to address in any significant way” his taxation obligations. It submitted that the taxation obligations were of a special kind, in that as a self-employed person the respondent received income out of which he had to pay tax and so was particularly required to ensure timely payment of tax. Taxation obligations are effectively imposed, not voluntarily undertaken. Many other financial obligations, though not all, are in reality imposed, as a necessity of modern life. Although the payment of tax in obedience to the taxation laws involves both legal and civic duties, see New South Wales Bar Association v Cummins , so also a good citizen meets other financial obligations, those voluntarily undertaken as well as those in reality imposed. I do not see why taxation obligations should be given special significance, and to do so would be likely to lead to an uncertain hierarchy (are rates on a par with tax, is a gambling debt less significant than the rent?). A legal practitioner who spends all his or her money on self-indulgent high living, in disregard of ordinary commercial obligations, may be just as much (or as little) deserving of criticism as a legal practitioner who prefers ordinary commercial obligations over taxation obligations. But criticism is really not the point. The point is what the conduct shows of the legal practitioner’s fitness to hold a practising certificate.

74 Mr McCulloch, for the Applicant, drew our attention to two other short passages in Giles JA’s judgment. These indicated, he submitted, that in determining that the barrister was, after all, a fit and proper person to hold a practising certificate the Court of Appeal considered it relevant that he had not spent the income that should have gone to meet his tax obligations on goods and services of an unnecessary and extravagant nature. The passages in question are at [166] and [169] respectively and are as follows:-

166… the findings [in relation to the barrister’s failure to put aside money from the higher income of the 1990 tax year] were not consistent with use of the money beyond ordinary living expenses, including the payments in respect of the respondent’s children. Implicit in the findings was that the respondent simply failed in foresight.

169… It was not a case of enjoying disposable income which could have gone to meet the taxation liability. There were cogent reasons for the expenditure supporting the respondent’s children, and his lifestyle was free from excess.

75 Our comments on the competing contentions arising from the Murphy case are as follows.

76 We agree, as indeed we must, with the Respondent that cancellation of a practising certificate is a distinctly different and less serious measure than removal from the Roll and accordingly must be based on different criteria. But this does not mean that considerations that are relevant to cancellation are for that reason also irrelevant to removal. Still less does it follow that considerations that are relevant to cancellation are irrelevant to the issue that we must determine, which is whether or not the Respondent has been guilty of professional misconduct. Under s171C(1)(b) and (c) respectively, cancellation and temporary suspension of a practising certificate are in fact orders that may be made by the Tribunal if it has found professional misconduct or unsatisfactory professional conduct.

77 Giles JA’s comments denying any ‘special significance’ to taxation obligations may not, in our view, be entirely compatible with the judgment of Spigelman CJ in Cummins. But Giles JA also pointed out that, irrespective of whether a practitioner defaults in relation to tax obligations, ‘ordinary commercial obligations’ or other categories of obligation, his or her conduct may be ‘deserving of criticism’ if it involves expenditure on ‘self-indulgent high living’.

78 This last observation of Giles JA is, as we see it, in line with the passages on which Mr McCulloch relied. A factor underlying the Court’s decision that the barrister’s practising certificate should not be cancelled was that he had not engaged in expenditure on ‘self-indulgent high living’.

Wardell v New South Wales Bar Association

79 This decision of Cripps AJ in the Supreme Court is reported at [2002] NSWSC 548. It also concerned the Bar Council’s cancellation of the practising certificate of a barrister on the ground that he was not a fit and proper person to hold such a certificate. Cripps AJ upheld the Council’s decision to cancel the certificate.

80 The barrister had been declared bankrupt on his own petition, with the ATO as his largest creditor. The evidence showed that although he had had an income well above what was needed to meet ordinary living expenses, he had become indebted to the ATO for more than a million dollars. A major reason was that over a number of years he had spent considerable sums on ‘discretionary lifestyle choices’, which included annual overseas holidays and heavy gambling. The amounts of ‘high living’ expenditure ‘over and above ordinary business expenses and necessary domestic expenses’ were said by Cripps AJ, at [30], to have been between $200,000 and $250,000. The barrister had not failed to file tax returns or committed any other offences.

81 His Honour confirmed the decision of the Bar Council, holding that on the facts the then recent decision in Murphy should be distinguished. At [29], he accepted that, by virtue of that decision, tax debts should not be given a ‘special significance’. He also cited Giles JA’s observations regarding ‘self-indulgent high living’, to which we have just referred in this judgment.

82 At [33], Cripps AJ stated that it was ‘important’ to remember that the barrister’s debts to the ATO in Murphy were ‘small in comparison with’ the indebtedness with which he was dealing. He mentioned also Giles JA’s finding, quoted above at [74], that in Murphy ‘there were cogent reasons for the expenditure supporting the respondent’s children, and his lifestyle was free from excess’.

83 By contrast, the practice adopted by the barrister in Wardell was, as stated in the judgment at [43], to ‘spend money, over a long period of time, on what has been described as “discretionary lifestyle pursuits”, even though he was ‘able to pay his debts’.

84 The principle of crucial importance in Cripps JA’s decision was stated by him as follows at [42]:-

I would suggest, however, that now it is generally recognised by right thinking members of the community that people have an obligation to meet their debts, if they can, and that the failure of a person to meet his or debts over a long period of time without any exculpating features other than that the money was spent elsewhere would promote in the minds of right thinking people in our community that that person was not a fit and proper person to hold a practising certificate.

85 His Honour held that the barrister ‘spent money knowing that if he did so that amount of money was not available to meet his indebtedness to the ATO’ (at [44]) and that the barrister had shown ‘such a reckless disregard for his obligations as to amount to an intention to avoid them’ (at [45]).

86 The Respondent argued that the statement of principle on which Cripps JA relied – i.e., the passage just quoted from paragraph [42] of his judgment – was wrong, being unsupported by authority and was unnecessary for the decision. We do not agree. The proposition put by his Honour was, as we see it, a corollary to statements of Giles JA in Murphy. Giles JA treated an absence of expenditure on ‘self-indulgent high living’ in that case as relevant in considering whether cancellation of a practising certificate was justified. Cripps JA simply treated the presence of such expenditure as relevant also in making a determination on the same issue.

87 In the alternative, the Respondent argued that the inclusion of the phrase ‘without any exculpating features’ in paragraph [42] supported his argument that any complaint of professional misconduct based on a failure to meet tax obligations would have to allege that the failure was in some way improper. This contention has more force. We will return to it in the next and final section of this judgment.

Our conclusions

88 We will now attempt to draw together the different threads of this judgment.

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.

95 In so deciding, we take full account of the fact that no general proposition covering this factual situation was made in any of the authorities that we have discussed. But we think that this conclusion necessarily follows from four considerations of major importance.

96 The first of these is that, as we understand the judgments in Cummins and Stevens, the barrister’s failure in each of those cases to comply with his ‘civic obligations’ in relation to tax played a major role. If non-compliance with the legal obligation to file tax returns had been the only matter alleged, the Court would not have taken such a serious view of the case.

97 Secondly, and crucially, the deficiencies in the barrister’s conduct in each of those two cases were assessed primarily with a view to determining whether they were fit and proper to remain on the Roll. The question whether the conduct in question might have constituted professional misconduct, but at a level of seriousness not warranting removal from the Roll, was not explored. This is, however, a possible outcome that we must take into account in considering the terms of the Information in this case.

98 At this point in the reasoning, it is worth recalling that the underlying test for professional misconduct, as set out at [25] above, is whether the conduct in question ‘would reasonably be regarded as disgraceful or dishonourable by legal practitioners of good repute and competency’. This test is modified and extended by the terms of s 127 of the Act. The test of fitness to remain on the Roll is materially different.

99 Thirdly, while acknowledging that the criteria to be applied in deciding whether a practising certificate should be cancelled differ both from the criteria for removal from the roll and from the test, just outlined, for determining professional misconduct, we cannot accept the Respondent’s argument that the former set of criteria is wholly irrelevant to the issue of professional misconduct. On the contrary, we consider that the decisions and the statements of principle in Murphy and Wardell, dealing as they do with conduct broadly similar to that alleged against the Respondent, provide useful guidance in determining whether this alleged conduct of the Respondent is capable of amounting to professional misconduct. We repeat here the observation that cancellation and suspension of a practising certificate are within the range of orders that the Tribunal can make under s 171C(1) of the Act, following a finding of professional misconduct.

100 Fourth and finally, the ruling given in Cummins (see [51] above) that the preparation and filing of tax returns by a barrister is sufficiently connected with the conduct of legal practice to fall potentially within the ambit of professional misconduct is, we consider, directly applicable to the Respondent’s handling of his tax obligations in this case.

101 For the foregoing reasons, we dismiss the Respondent’s application for a declaration that the matters set out in the Information are incapable in law of constituting professional misconduct within the meaning of s 127 of the Act.

102 The costs of this application should be reserved.