Gould and Tax Practitioners Board
[2019] AATA 1056
•28 May 2019
Gould and Tax Practitioners Board [2019] AATA 1056 (28 May 2019)
Division:TAXATION AND COMMERCIAL DIVISION
File Number(s): 2019/0495
Re:Vanda Russell Gould
APPLICANT
AndTax Practitioners Board
RESPONDENT
DECISION
Tribunal:Deputy President I R Molloy
Date:28 May 2019
Place:Sydney
The Applicant’s application for an Order pursuant to section 41(2) of the Administrative Appeals Tribunal Act 1975 is refused.
The interim stay granted on 31 January 2019 is discharged.
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Deputy President I R Molloy
CATCHWORDS
TAX AGENT REGISTRATION - application for a stay of the decision under review - interim stay order in operation - consideration of the applicant's prospects of success - adverse findings against applicant in a decision of the Federal Court of Australia - whether applicant is a person of good fame, integrity and character - the consequences to the applicant if a stay is not granted - the public interest - the consequences to the respondent in carrying out its functions - whether the review would be rendered nugatory - time likely until the hearing of the review - application for stay of the decision under review is refused - interim stay order discharged
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth) s 41
Tax Agent Services Act 2009 (Cth) ss 2-5, 20-5, 20-25, 40-5, 40-25
CASES
Albarran v Companies Auditors and Liquidators Disciplinary Board (2007) 231 CLR 350
Burnett and Tax Practitioners Board [2014] AATA 87
Bywater Investments Limited v Commissioner of Taxation [2015] FCAFC 176
Bywater Investments Limited v Commissioner of Taxation; Hua Wang Bank Berhad v Commissioner of Taxation [2016] HCA 45
Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409
Hua Wang Bank Berhad v Commissioner of Taxation [2014] FCA 1392
Hughes and Vale Pty Ltd v New South Wales [No 2] (1955) 93 CLR 127
Re Dekenic and Tax Agents Board of NSW (1982) 6 ALD 240
Re Scott and Australian Securities and Investments Commission (2009) 51 AAR 114Shi v Migration Agents Registration Authority (2008) 235 CLR 286
REASONS FOR DECISION
Deputy President I R Molloy
28 May 2019
INTRODUCTION
This is a stay application made by the Applicant, Vanda Gould, pursuant to s 41(2) of the Administrative Appeals Tribunal Act 1975 (Cth) (“the Act”). It is made in a proceeding in which Mr Gould seeks review of a decision of the Tax Practitioners Board (“the Board” or “the Respondent”) made on 13 December 2018.
By its decision (“the reviewable decision”) the Board determined inter alia to terminate
Mr Gould’s registration under s 40-5(1)(b) of the Tax Agent Services Act2009 (Cth) (“TASA”). The reviewable decision was to take effect from 7 February 2019.The Board also determined: (a) to reject Mr Gould’s application for renewal of his registration as a tax (financial) adviser under s 20-25(1) of TASA, and (b) that Mr Gould may not apply for registration under TASA for a period of five years from the date the termination of his registration was to take effect under s 40-25 of TASA.
The Board made the reviewable decision based upon its determination that Mr Gould was not a fit and proper person for the purposes of s 20-5(1)(a) of TASA. Mr Gould seeks a stay to retain his registration pending the Tribunal’s determination of his application for review, on condition that he not solicit new clients during that period.
An interim stay has been in place since 31 January 2019. For the reasons set out below the stay should be refused and the interim stay discharged.
PRINCIPLES
Section 41(2) of the Act provides:
The Tribunal may, on request being made by a party to a proceeding before the Tribunal (in this section referred to as the relevant proceeding), if the Tribunal is of the opinion that it is desirable to do so after taking into account the interests of any persons who may be affected by the review, make such order or orders staying or otherwise affecting the operation or implementation of the decision to which the relevant proceeding relates or a part of that decision as the Tribunal considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review.
The discretion to grant a stay was discussed by Downes J in Re Scott and Australian Securities and Investment Commission.[1] His Honour identified six factors which are or could be relevant on such an application: the Applicant’s prospects of success on the application for review; the consequences to the Applicant if the stay is not granted; the public interest; the consequences to the Respondent in carrying out its functions; whether the review would be rendered nugatory if the stay were not granted; and, any other relevant matters, including the likely time to the hearing of the review.
[1] (2009) 51 AAR 114, [4].
Prospects of success
The Board acted on highly critical findings against Mr Gould contained in a decision of the Federal Court.[2] The court, constituted by Justice Perram, found that Mr Gould had engaged in a pattern of conduct that was deceitful and dishonest.
[2] Hua Wang Bank v Commissioner of Taxation [2014] FCA 1392. Appeals from the Federal Court were dismissed by the Full Court of the Federal Court and by the High Court: Bywater Investments Ltd v Commissioner of Taxation [2015] FCAFC 176; Bywater Investments Ltd;Hua Wang Bank Berhad v Commissioner of Taxation [2016] HCA 45.
The court’s findings formed the basis for the Board’s conclusion that Mr Gould was not a person of good fame, integrity and character. As the Applicant points out, the Board’s reasons for decision do not refer to or indicate that there were any independent findings of fact by the Board on these matters.
The Board’s only independent finding of fact was that Mr Gould was late in filing his personal tax returns for the 2016 and 2017 tax years. Both those returns were lodged on 18 October 2018, prior to the reviewable decision and, as the Applicant points out, these omissions or defaults would have been only a minor factor in the Board’s ultimate determination.
The principal issue in the Federal Court proceeding, and ultimately before the High Court, was whether central management and control of five corporate taxpayers resided in Australia and therefore whether they were Australian residents for tax purposes.
The Applicant submits that the High Court decision supplanted a widely-held view that a company’s board of directors constitutes its central management and control notwithstanding the directors are following instructions without real independent consideration of those instructions.
My reading of the High Court decision is that it did not constitute a change in the law concerning the location of a company’s central management and control. The plurality’s reasons contained a detailed review of the cases. The appeal appears to me to have been decided in accordance with those authorities.
Be that as it may, the Applicant submits that in the review before the Tribunal he will contend that his belief that the five companies were not Australian tax residents was entirely reasonable, based on the law as it stood during the relevant tax years through to 2016.
That seems to me to miss the point of Perram J’s judgment so far as the Board, and now the Tribunal, are concerned. It is not whether Mr Gould was mistaken about the law or, if he was mistaken, whether his mistaken belief was reasonable.
The Federal Court’s decision is relevant for its findings of deceitful and dishonest conduct on the part of Mr Gould which go directly to whether he is a fit and proper person to continue to be registered under TASA.[3]
[3] Albarran v Companies Auditors and Liquidators Disciplinary Board (2007) 231 CLR 350, 360; Hughes and Vale Pty Ltd v New South Wales [No 2] (1955) 93 CLR 127, 156-7.
Mr Gould emphasises that he was neither a party nor a witness in the Federal Court proceeding. That could carry a lot of weight in ordinary circumstances. These were not, however, ordinary circumstances.
Mr Gould was not a stranger to the Federal Court proceeding. Perram J found that the proceeding on behalf of the plaintiff/companies, as well as their previous activities, were conducted by Mr Gould. The trial in the Federal Court ran for a number of days and Mr Gould’s conduct was a central issue. He was obviously aware of the proceeding.
The Tribunal is not bound by the strict rules of evidence. The findings of Perram J are admissible evidence on the hearing before the Tribunal. The Respondent has also indicated that it will be placing before the Tribunal the evidence which was before the Federal Court upon which Perram J based his findings.
There is, of course, the prospect that the Tribunal might come to a different conclusion from the Federal Court on issues relevant to whether Mr Gould is a fit and proper person to be registered or maintain registration under TASA. But having regard to the evidence by and on behalf of Mr Gould, and the submissions made on his behalf, I cannot conclude that he has a strong case.
Amongst other things the Applicant has referred to particular documents which, it was submitted, were wrongly characterised by Perram J in his reasons. But this, and the other evidence relied on by the Applicant, do not go very far at all towards answering the severely adverse findings against Mr Gould contained in the Federal Court’s reasons.
I should also say I do not consider Mr Gould’s application is assisted on this issue, or on any other, by affidavits or witness statements as to his good character. These assessments are subjective and confined to each witness’s particular experience or knowledge of Mr Gould.
Additionally, the Commissioner has filed affidavit evidence going to other matters concerning Mr Gould’s fitness to be registered.[4] The Board has given notice that it will be relying on these matters on the review notwithstanding they were not a consideration at the time of the reviewable decision.
[4] Exhibit A, Affidavit of Cathrine Annette Jay dated 22 March 2019; Exhibit B, Affidavit of Cathrine Annette Jay dated 18 April 2019; Exhibit C, Affidavit of Michael Campbell dated 22 March 2019; Exhibit D, Affidavit of Michael Campbell dated 18 April 2019; and Exhibit E, Affidavit of Christian Bullow dated 22 March 2019.
The Tribunal is not bound or limited by the facts which were before the Board. The task of the Tribunal is to reach its own decision on the relevant material including any new, fresh, additional, or different material that is relevant to its decision at the time.[5]
[5] Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409; Shi v Migration Agents Registration Authority (2008) 235 CLR 286.
The additional affidavits include two affidavits of Cathrine Jay, a public servant employed at the Australian Tax Office (“ATO”). She provides evidence concerning an ATO investigation named Operation Rubix. She refers to Mr Gould’s involvement in the matters of investigation. She also gives evidence of tax liabilities that arose out of the operation and in consequence of ATO audit activity.
Ms Jay describes Operation Rubix as concerned with the use of multi-layered off-shore structures based in the UK, Cayman Islands, Bahamas, Samoa and elsewhere by
Mr Gould, his associates and clients of his former accounting firm, Gould Ralph, to avoid Australian taxation and to accumulate wealth off-shore.[6]
[6] Exhibit A, Affidavit of Cathrine Jay dated 22 March 2019, at [7].
The Applicant, by evidence[7] and in submissions, was strongly critical of the contents
Ms Jay’s affidavits and the analysis she presented. There was also evidence disputing
Mr Gould’s alleged involvement in the matters of investigation and, for example, whether or to what extent particular persons were or could properly be classed as his clients or in some such category.
[7] Particularly, Exhibit 3, Affidavit of Mark Ord dated 5 March 2019; and Exhibit 13, Orders of the Federal Court (Logan J), dated 2 April 2019.
Whilst acknowledging that on an application of this nature, the facts can only be considered on a provisional basis, I am not satisfied on the material before me, that
Mr Gould has shown good prospects of success on the review.
Consequences to the Applicant
The Applicant points out he is an independent practitioner. He is the only person associated with his tax practice who is a registered tax agent. He has employees but none of them have an entitlement to deal with the ATO on behalf of his clients.
During the period prior to hearing of the review Mr Gould’s clients will need a tax agent who can lodge Business Activity Statements, tax returns and other documents, and can deal with the ATO on their behalf. The consequences to Mr Gould, and to his clients, of refusing a stay are said to be severe.
The Respondent submits that the Applicant has not addressed the potential for another person to replace him as the relevant registered tax agent pending determination of this proceeding. I think that is right.
It is submitted on behalf of the Applicant that it is not commercially viable for his practice to engage someone “for the sole purpose of signing tax returns”.[8] There is no evidence to support that contention. There is nothing to say that a suitable person could not be engaged to perform that role, or what the expense would be.
[8] Applicant’s reply submissions filed 2 April 2019, [24].
I accept there will be inconvenience and unspecified expenses incurred if a stay is not granted. But it is not contended that the Applicant’s livelihood will suffer as in some cases.[9]
[9] Compare Re Dekenic and Tax Agents Board of NSW (1982) 6 ALD 240, page 242; and Burnett and Tax Practitioners Board [2014] AATA 87, [43].
I accept the Board’s submission that the consequences to Mr Gould of refusing a stay do not come near to outweighing the public interest to which I will now refer.
Public interest
I accept the Respondent’s submission that the public interest favours refusing a stay in light of the serious implications of the Applicant’s conduct, as found by the Federal Court, for the revenue, the integrity of Australian tax laws, the standing of the tax profession within the community, and the ability of the Commissioner of Taxation to discharge his statutory functions.
The Federal Court decision, as the Respondent submits, points to sustained, calculated and layered dishonesty on the part of the Applicant, various corporate entities he controlled, and an individual acting at his behest. As the Board submits, such dishonesty was directed towards a revenue authority and formed part of a protracted course of conduct designed to conceal the Applicant’s ownership, management and control of five corporate taxpayers. The Federal Court described the Applicant’s conduct as disgraceful.[10] These findings were not displaced on appeal.
[10] Hua Wang Bank v Commissioner of Taxation [2014] FCA 1392, [485].
These matters are sufficient for me to say the public interest strongly favours refusal of a stay.
The evidence of Ms Jay reinforces my view on the question of public interest. I accept the Board’s submission that that evidence demonstrates a serious risk to the revenue, and to tax-payers within the Applicant’s client-base, if he is to continue practising as a tax agent pending the outcome of this proceeding.
I appreciate that Ms Jay’s evidence is untested. The Applicant has also adduced evidence challenging the accuracy of some of what she has to say, and seriously questions whether her evidence, particularly her first affidavit, discloses the complete picture.[11]
[11] Exhibit 3, Affidavit of Mark Ord dated 5 March 2019.
Mr Gould has indicated the allegations against him in Ms Jay’s affidavit will be contested and, as I have indicated, some apparent shortcomings in that evidence have been identified. Whilst acknowledging these matters, I am taken by the seriousness and nature of the matters raised in that evidence, which to my mind provide a further reason to say that the public interest strongly favours refusal of the stay application.
Consequences to the Board
There are no adverse consequences to the Board if a stay is granted except so far as it could be argued that the Board will not be able to fulfil its duties under TASA in maintaining appropriate standards of professional and ethical conduct amongst tax agents.[12]
[12] Tax Agent Services Act 2009 (Cth), s 2-5.
Utility of the review
The application for review will not be rendered nugatory if the stay is not granted.
Mr Gould’s registration will have been terminated in the meantime. If successful, however, the five-year ban on his applying for registration may be set aside or reduced.Other relevant matters
Directions were made on 17 May 2019 to advance the application to hearing; including requiring hearing certificates to be lodged by 11 October 2019.
CONCLUSION
I am not satisfied the Applicant has established a strong case such that it could be said his application for review is more likely to succeed than not. Importantly I think there is a significant public interest in refusing the stay.
Taking these and the other matters into account the stay should be refused. It follows that the interim stay should be discharged.
I certify that the preceding 45 (forty -five) paragraphs are a true copy of the reasons for the decision herein of Deputy President I R Molloy
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Associate
Dated: 28 May 2019
Date(s) of hearing: 17 May 2019 Counsel for the Applicant: Mr John Hyde Page Solicitors for the Applicant: Mark J Ord Lawyer & Consultant Counsel for the Respondent: Mr Anthony McInerney SC with Mr Greg O'Mahoney
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