David Mahaffy and Tax Practitioners Board

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[2014] AATA 17 

Division GENERAL ADMINISTRATIVE DIVISION

File Number(s)

2013/5357

Re

David Mahaffy

APPLICANT

And

Tax Practitioners Board

RESPONDENT

DECISION

Tribunal

Mr S. Webb, Member
Date 8 January 2014
Date of written reasons 15 January 2014
Place Canberra

1.          The application for a stay of the decision under review is granted, subject to further order and subject to the following conditions and orders:

1. from the date of this order while the stay is in force:

a) Mr Mahaffy does not provide tax agent services to new clients, that is, persons he had not provided such services to prior to 24 September 2013; and

b) on or before 29 January 2014, Mr Mahaffy files evidence in the form of a statutory declaration that he has given the Tax Practitioners Board (the Board) the names and contact details of each client to whom he has provided tax agent services from 1 June 2011; and

c) Mr Mahaffy conducts himself in a civil and appropriate manner in all dealings with the Board and the Tax Office, and he communicates with the Board and the Tax Office in writing only; and

d) Mr Mahaffy provides copies of all materials he files in the Tribunal to the Board through its legal representative, the Australian Government Solicitor; and

e) Mr Mahaffy complies in a timely manner with Tribunal listings and orders, including any timetable set for the filing of evidence and a Statement of Facts, Issues and Contentions; and

f) Mr Mahaffy conducts himself in a civil and appropriate manner in his dealings with the Board, the Board’s legal representatives, officers of the Tribunal and members of the Tribunal in the course of the proceedings; and

2. there is liberty to apply on two days’ notice if the above conditions are not strictly complied with; and

3. on or before 9 AM on 22 January 2014, Mr Mahaffy is to inform the Tribunal and the Respondent whether or not he will be legally represented in these proceedings and, if so, the name and contact details of his legal representative; and

4. on or before 9 AM on 22 January 2014 Mr Mahaffy is to inform the Tribunal and the Respondent of summons he intends to issue and to lodge properly completed documents for this purpose; and

5. a telephone preliminary conference is to be listed on the earliest convenient date after 17 January 2014; and

6. the application is to be progressed to hearing with reasonable expedition and without undue delay.

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

Mr S. Webb, Member

TAXATION – renewal of registration as a tax agent refused – application for refusal decision to be stayed – fit and proper person – bankruptcy – bad behaviour – related Court proceedings - balance of interests – desirability of securing the effectiveness of the hearing – stay granted subject to conditions

Administrative Appeals Tribunal Act 1975 (Cth), s 41

Tax Agent Services Act 2009 (Cth), ss 20-5, 20-25

Australia and New Zealand Banking Group Ltd v Mahaffy

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Details
Case
[2014] AATA 17
Decision Date

CaseChat Overview and Summary

The Tax Practitioners Board appealed against the decision of the Administrative Appeals Tribunal to grant a stay of a decision to suspend Mr David Mahaffy’s registration as a tax agent. Mr Mahaffy applied to the Tribunal for a review of the Board’s decision, and the Tribunal granted a stay of the decision to suspend his registration. The Board considered the Tribunal’s decision to be in error and appealed it to the Federal Court. The Court was required to determine whether the Tribunal had erred in granting a stay of the decision to suspend Mr Mahaffy’s registration. The Court considered the relevant case law on the appropriate considerations for a stay of a decision, and weighed the competing interests of Mr Mahaffy, his clients, the Board, and the public. The Court concluded that a stay should be granted, subject to certain conditions, to ensure the timely progress of Mr Mahaffy’s application to a hearing and to address the public interest in the administration of justice.

The Court noted that Mr Mahaffy’s previous bad behaviour and improper conduct weighed heavily against the grant of a stay, but the interests of his clients, and the low level of complaints against him, weighed in favour of a stay being granted. The Court also considered the consequences of a stay not being granted for Mr Mahaffy in the conduct of his business and in his ability to earn income, and the consequences for the Board and the Tax Office in their ongoing dealings with Mr Mahaffy, and for members of the taxpaying public employing him as a tax agent, if his previous bad behaviour is repeated. The Court rejected the Board’s submission that Mr Mahaffy should be required to notify each of his clients of the Board’s decision, providing each with a copy of the decision, and instead ordered a further condition requiring Mr Mahaffy to file evidence, in the form of a statutory declaration, that he has provided the names of all of his clients from 1 June 2011 to the Board within 14 days. The Court concluded that the grant of a stay is desirable subject to conditions, and to issue orders to ensure the timely progress of Mr Mahaffy’s application to a hearing.

The Court ordered that the decision of the Administrative Appeals Tribunal to grant a stay of the decision to suspend Mr Mahaffy’s registration as a tax agent be set aside, and that a stay of the decision be granted, subject to conditions. The conditions included that Mr Mahaffy not take on new clients, and that he file evidence, in the form of a statutory declaration, that he has provided the names of all of his clients from 1 June 2011 to the Board within 14 days. The Court also ordered that the stay be subject to Mr Mahaffy’s strict compliance with appropriate standards of behaviour, and requiring him to communicate with the Board and the Tax Office only in writing. The Court noted that the risk of repeated bad behaviour may adequately be addressed by rendering the stay subject to Mr Mahaffy’s strict compliance with appropriate standards of behaviour, and requiring him to communicate with the Board and the Tax Office only in writing. The Court rejected Mr Mahaffy’s submission that he should be allowed to take on new clients, and instead ordered that he not take on new clients and, furthermore, that it is conditioned to provide a mechanism to ensure that he does not.

Orders

Orders of the court

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Background

Background to the litigation

When considering a stay application, the matters to be considered include[1] –(a)the prospects of success;(b)the consequence for the applicant if the stay is not granted;(c)the public interest;(d)the consequences for the respondent in carrying out its functions, whether the stay is granted or not;(e)whether the application for review would be rendered nugatory if the stay is not granted; and(f)any other relevant matters, including the time the reviewable decision has been in force and the time likely to be required to prepare the application for hearing.[1] Re Scott and Australian Securities and Investments Commission [2009] AATA 798, per Downes J at [4].Background Mr Mahaffy told me that he has operated as a registered tax agent in Narrabri, New South Wales, for 26 years. In 1993 he was involved in litigation with the Tax Office which was resolved in his favour. He says that subsequently he has encountered difficulties with the Tax Office. It appears that Mr Mahaffy was involved in litigation with his brother over several years arising from disputation about the conduct of business and related financial matters. A costs order was made by Judge McLoughlin SC – DB Mahaffy & Associates Pty Limited v JR Mahaffy (NSW District Court proceeding 2007/295752)[2]. Mr Mahaffy made allegations of bias against the Judge. An appeal against the costs order was dismissed by the NSW Court of Appeal - DB Mahaffy & Associates Pty Limited v JR Mahaffy [2010] NSWCA 341. Judge McLoughlin SC rejected the allegations made against him by Mr Mahaffy and referred the matter to the Board[3]. Mr Mahaffy is facing six contempt charges resulting from his subsequent conduct and behaviour. These are due to be dealt with by the NSW Supreme Court on 24 April 2014.[2] T6.[3] T13. An ancillary matter relating to superannuation guarantee obligations arose in respect of Mr Mahaffy and his brother. This was determined on review by the Tribunal against Mr Mahaffy – see DB Mahaffy & Associates Pty Ltd and Commissioner of Taxation [2011] AATA 796 (the DB Mahaffy case). Mr Mahaffy did not appeal this decision. In the course of these proceedings, Mr Mahaffy’s behaviour was noted to be less than satisfactory. Mr Mahaffy was involved in litigation with the Australia and New Zealand Bank. On 4 March 2013, in the ANZ v Mahaffy case, a sequestration order was made against him, rendering him bankrupt. Mr Mahaffy did not attend the final hearing of this matter. He told me that he attempted to appeal the judgement soon thereafter, but was ruled out of time. On his unchallenged evidence, he then sought legal advice from Mr Garry Jauncey of Latham Chambers in Sydney, a barrister providing him with pro bono advice and representation. But there were delays and Mr Mahaffy fell ill. In the result, he filed an application for extension of time to lodge an appeal on 8 November 2013. The matter is presently listed in the Federal Court of Australia on 11 February 2014. There is evidence that Mr Mahaffy has behaved badly in dealings with officers of the Board and the Tax Office – see T14 to T29.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Thirdly, Mr Mahaffy suffers from ongoing and serious health problems. This has already affected the timely progress of his application. He has asked for his application to be progressed as expeditiously as is reasonable. Conclusion Mr Mahaffy’s previous bad behaviour and improper conduct weighs heavily against the grant of a stay. His credit hangs by a thread. There are important and competing public interests concerning the protection of tax payers and the administration of justice. The interests of Mr Mahaffy’s clients, and the low level of complaints against him, weigh in favour of a stay being granted for the duration of proceedings in the Tribunal, whereby the basis of the findings against him will be tested. The consequences of a stay not being granted are likely to be serious for Mr Mahaffy in the conduct of his business and in his ability to earn income. The grant of a stay will secure the effectiveness of the hearing and determination of his application, but this may have adverse consequences for the Board and the Tax Office in their ongoing dealings with Mr Mahaffy, and for members of the taxpaying public employing him as a tax agent, if his previous bad behaviour is repeated. Weighing all of these matters in the balance, I have formed the opinion that it is desirable to grant a stay subject to conditions, and to issue orders to ensure the timely progress of Mr Mahaffy’s application to a hearing. It is possible, in the circumstances, that the public interest may be adequately addressed by the imposition of conditions, such as some of those proposed by the Board, precluding Mr Mahaffy from providing tax agent services to any new clients and requiring his strict compliance with standards of conduct and behaviour. Furthermore, the risk of repeated bad behaviour may adequately be addressed by rendering the stay subject to Mr Mahaffy’s strict compliance with appropriate standards of behaviour, and requiring him to communicate with the Board and the Tax Office only in writing. I reject Mr Mahaffy’s submission that he should be allowed to take on new clients. In the circumstances that is not appropriate. In my opinion it is desirable that the grant of a stay is conditional on Mr Mahaffy not taking on new clients and, furthermore, that it is conditioned to provide a mechanism to ensure that he does not. For this reason, I will order a further condition requiring Mr Mahaffy to file evidence, in the form of a statutory declaration, that he has provided the names of all of his clients from 1 June 2011 to the Board within 14 days. I do not accept the Board’s submission that Mr Mahaffy should be required to notify each of his clients of the Board’s decision, providing each with a copy of the decision. In view of the very low level of complaint against Mr Mahaffy by his existing clients, I do not consider that this is necessary. Members of the public and Mr Mahaffy’s existing clients are able to access decisions on the public record and information about these proceedings if they choose to do so. Weighing the competing interests in this case, I do not think that it is necessary or desirable to go further for the purposes of conditioning the stay in the manner proposed.

Ratio Decidendi

Legal Principle Established

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