Frugtniet v Tax Practitioners Board

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FEDERAL COURT OF AUSTRALIA

Frugtniet v Tax Practitioners Board [2019] FCAFC 193

Appeal from: Frugtniet v Tax Practitioners Board [2018] FCA 387
File number: VID 413 of 2018
Judges: PERRY, MOSHINSKY AND LEE JJ
Date of judgment: 8 November 2019
Catchwords: ADMINISTRATIVE LAW – Appeal from Federal Court decision dismissing appeal under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) against Administrative Appeals Tribunal (AAT) decision – where no further hearing held after reconstituting the AAT – where AAT affirmed Tax Practitioners Board decision terminating the appellant’s registration as a tax agent under ss 40-5(1)(b), Tax Agent Services Act 2009 (Cth), on the ground it was not satisfied he was a fit and proper person – whether AAT breached procedural fairness including by reason of delay or the failure by the reconstituted Tribunal to hold a further hearing – whether AAT erred in having regard to certain evidence of conduct in court and other tribunal proceedings – whether AAT erred in having regard to a witness statement where the witness was not called – whether AAT had jurisdiction to determine the validity of the Board’s decision – where only a court may authoritatively determine whether an administrative body has acted within jurisdiction – where AAT’s decision effectively overtook any jurisdictional error in the Board’s decision – appeal dismissed
Legislation:

Tax Agent Services Act 2009 (Cth) ss 20-5, 20-15, 40-25, 60-95, 60-125

Administrative Appeals Tribunal Act 1975 (Cth) ss 33, 44
Cases cited:

Ahmed v Minister for Immigration and Multicultural Affairs [2001] FCA 506; (2001) 184 ALR 343

Frugtniet v Australian Securities and Investments Commission [2019] HCA 16; (2019) 93 ALJR 629

Frugtniet v Board of Examiners [2002] VSC 140

Frugtniet v Board of Examiners [2005] VSC 332

Frugtniet v Tax Practitioners Board [2018] FCA 387; (2018) 74 AAR 279

Frugtniet v Tax Practitioners Board [2015] FCA 1066; (2015) 67 AAR 336

Haritos v Federal Commissioner of Taxation [2015] FCAFC 92; (2015) 233 FCR 315

Kennedy v Administrative Appeals Tribunal [2008] FCAFC 124; (2008) 168 FCR 566

MZXRE v Minister for Immigration and Citizenship [2009] FCAFC 82; (2009) 176 FCR 552

NAIS v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 77; (2005) 228 CLR 470

Re Adams and the Tax Agents’ Board (1976) 7 ATR 87

Shi v Migration Agents Registration Authority [2008] HCA 31; (2008) 235 CLR 286

Sullivan v Civil Aviation Safety Authority [2014] FCAFC 93; (2014) 226 FCR 555
Date of hearing: 29 November 2018
Date of last submissions: 13 December 2018
Registry: Victoria
Division: General Division
National Practice Area: Administrative and Constitutional Law and Human Rights
Category: Catchwords
Number of paragraphs: 93
Counsel for the Appellant: The Appellant appeared in person
Counsel for the First Respondent: Mr P Gray QC
Solicitor for the First Respondent: Australian Government Solicitor
Counsel for the Second Respondent: The Second Respondent filed a submitting notice

ORDERS

VID 413 of 2018
BETWEEN:

RUDY FRUGTNIET

Appellant
AND:
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Details
Case
[2019] FCAFC 193
Decision Date

CaseChat Overview and Summary

The case of Frugtniet v Tax Practitioners Board involves an appeal against the decision of the Administrative Appeals Tribunal (AAT) which upheld the decision of the Tax Practitioners Board to terminate Frugtniet's registration as a tax agent under the Tax Agent Services Act 2009 (Cth). The central issue before the court was whether the AAT erred in its decision-making process and whether it had jurisdiction to assess the validity of the Board's decision. Frugtniet argued that the AAT breached procedural fairness, failed to hold a further hearing after the tribunal was reconstituted, and improperly considered certain evidence.

The court found that the AAT did not breach procedural fairness, nor did it err in the evidence it considered. The court held that the AAT’s decision, which affirmed the Board’s termination of Frugtniet’s registration, effectively addressed the jurisdictional issues and was therefore valid. Specifically, the AAT was not required to hold a further hearing as it had all necessary information to make its decision. The court further noted that the AAT correctly considered the evidence, including witness statements and the applicant's past conduct, which demonstrated his unsuitability to be a registered tax agent.

The court dismissed Frugtniet's appeal, finding no merit in his arguments concerning procedural fairness or the AAT's consideration of evidence. The AAT's decision to terminate Frugtniet's registration was upheld, and Frugtniet was ordered to pay the costs of the first respondent as agreed or assessed.

Orders

Orders of the court

1. The appeal is dismissed.

2. The appellant is to pay the first respondent’s costs as agreed or assessed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

On 30 August 2017, the second Tribunal made a decision on the papers, that is, without holding a further hearing: Frugtniet and Tax Practitioners Board [2017] AATA 1393; (2017) 106 ATR 434 (the second Tribunal decision). In reaching its decision to affirm the Board’s decision, the Tribunal stated that it had regard to all of the documents admitted into evidence during the course of the remittal hearing, as well as the transcript of the 2016 hearing (AAT reasons at [11]). 4. THE SECOND TRIBUNAL DECISION4.1 The issues before the Tribunal The Tribunal identified three questions for determination at [19] of its reasons:•Did Mr Frugtniet cease to meet the requirement for registration as a tax agent that he is a fit and proper person?; If so:•Should the discretion to terminate his registration be exercised?; If so:•Should a period, during which Mr Frugtniet cannot apply for registration, be imposed? Mr Frugtniet also submitted that the Board’s decision to terminate his registration was invalid, which the Tribunal rejected as we later explain: see further at [80]-[87] below. 4.2 The finding that Mr Frugtniet was not a fit and proper person and termination of his registration The Tribunal found at [67] that it was not satisfied that Mr Frugtniet was a fit and proper person on the basis of detailed and careful findings which may be summarised as follows. First, the Tribunal found that the applicant “knowingly gave false answers to two of the questions asked of him in his application” for registration as a tax agent in May 2008 (at [28]). Specifically, the applicant answered “No” to questions requiring him to disclose matters relevant to the Board’s assessment of his character, thereby neglecting to disclose that the Board of Examiners had not been satisfied that he was a fit and proper person for admission to legal practice in Victoria on two occasions, and that appeals to the Supreme Court of Victoria against those decisions had been dismissed in Frugtniet v Board of Examiners [2002] VSC 140 (Frugtniet [2002]) and Frugtniet v Board of Examiners [2005] VSC 332 (Frugtniet [2005]). The Tribunal found that Mr Frugtniet had knowingly given false answers to these questions as he “must have understood that these matters would be relevant to any consideration of his fame, integrity and character” (at [28]). Secondly, the Tribunal noted that the Victorian Civil and Administrative Tribunal (VCAT) found that the Law Institute of Victoria was justified in disqualifying Mr Frugtniet for a period of three years under the Legal Profession Act 2004 (Vic): Law Institute of Victoria Ltd v Frugtniet [2011] VCAT 596. The basis for the VCAT decision was that in 2010 Mr Frugtniet deliberately and falsely represented to a Magistrate and barrister that he was a sole practitioner and solicitor. VCAT observed that Judge Jenkins, Vice President, held that Mr Frugtniet had “failed to demonstrate any insight into his behaviour and failed to express any responsibility or remorse. Indeed he has denied any transgressions whatsoever, notwithstanding clear and objective evidence.” An appeal against that decision to the Victorian Court of Appeal was dismissed other than the findings by VCAT of contempt and as to costs: Frugtniet v Law Institute of Victoria Limited [2012] VSCA 178.

Ratio Decidendi

Legal Principle Established

Mr Frugtniet also submitted that the Board’s decision to terminate his registration was invalid, which the Tribunal rejected as we later explain: see further at [80]-[87] below. 4.2 The finding that Mr Frugtniet was not a fit and proper person and termination of his registration The Tribunal found at [67] that it was not satisfied that Mr Frugtniet was a fit and proper person on the basis of detailed and careful findings which may be summarised as follows. First, the Tribunal found that the applicant “knowingly gave false answers to two of the questions asked of him in his application” for registration as a tax agent in May 2008 (at [28]). Specifically, the applicant answered “No” to questions requiring him to disclose matters relevant to the Board’s assessment of his character, thereby neglecting to disclose that the Board of Examiners had not been satisfied that he was a fit and proper person for admission to legal practice in Victoria on two occasions, and that appeals to the Supreme Court of Victoria against those decisions had been dismissed in Frugtniet v Board of Examiners [2002] VSC 140 (Frugtniet [2002]) and Frugtniet v Board of Examiners [2005] VSC 332 (Frugtniet [2005]). The Tribunal found that Mr Frugtniet had knowingly given false answers to these questions as he “must have understood that these matters would be relevant to any consideration of his fame, integrity and character” (at [28]). Secondly, the Tribunal noted that the Victorian Civil and Administrative Tribunal (VCAT) found that the Law Institute of Victoria was justified in disqualifying Mr Frugtniet for a period of three years under the Legal Profession Act 2004 (Vic): Law Institute of Victoria Ltd v Frugtniet [2011] VCAT 596. The basis for the VCAT decision was that in 2010 Mr Frugtniet deliberately and falsely represented to a Magistrate and barrister that he was a sole practitioner and solicitor. VCAT observed that Judge Jenkins, Vice President, held that Mr Frugtniet had “failed to demonstrate any insight into his behaviour and failed to express any responsibility or remorse. Indeed he has denied any transgressions whatsoever, notwithstanding clear and objective evidence.” An appeal against that decision to the Victorian Court of Appeal was dismissed other than the findings by VCAT of contempt and as to costs: Frugtniet v Law Institute of Victoria Limited [2012] VSCA 178. Thirdly, the Tribunal took into account adverse comments made about Mr Frugtniet by the Victorian Supreme Court in Frugtniet [2002] and Frugtniet [2005]. In particular in a passage quoted by the Tribunal at [27] from Frugtniet [2005], Gillard J found that:67. The appellant carries with him a massive bag of dishonest conduct. It is a pattern of conduct committed over an extensive period … 68. His pattern of conduct raises a substantial question mark concerning his honesty and his character and reputation. He is a person who does not appear to have learned from his experiences during 1989 to 2000. He carries a very heavy burden of persuading this Court that he is a person of good character and reputation and a fit and proper person to practise law. He has not discharged that burden. The way he has presented himself to this Court shows a man who is loose with the truth and is prepared to distort the truth if he thinks it will help him. Often he was asked questions which he failed to answer and went off on some tangent seeking to minimise his criminality in the past. The evidence does not persuade me that the appellant has learned from his past experience, or that he is a person motivated to tell the truth. …70. The appellant has to frankly and candidly state the level of his dishonesty in the past, and not seek to hide it. He must show that it will not reoccur. Unfortunately he has not demonstrated any of these matters to the Court. Indeed, he is one of those witnesses who, when asked a question, thinks how he should answer the question rather than answering it truthfully and accurately. It will take, in my view, many years of blameless conduct before one could have any confidence that the appellant has shed his past, turned over a new leaf and intends to pursue a blameless and honest career.