Hannaford and Tax Agents' Board of Qld

[2009] AATA 741

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 741

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2009/1819

TAXATION APPEALS DIVISION		)
Re		JEFFREY HANNAFORD

Applicant

And TAX AGENTS’ BOARD OF QLD

Respondent

DECISION

Tribunal Dr K S Levy RFD, Senior Member

Date25 September 2009

PlaceBrisbane

Decision The decision under review is affirmed.  

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

Senior Member

CATCHWORDS

TAX AGENT – suspension of tax agent’s registration – failure to respond to correspondence from Tax Agents’ Board – whether failure to respond amounts to “misconduct” – breach of standard of conduct – suspension is appropriate – decision affirmed

Administrative Appeals Tribunal Act 1975 (Cth), s 29(1)

Evidence Act 1995 (Cth), ss 55, 135

Income Tax Assessment Act 1936 (Cth), s 251K(2)(b)(ii)

A Solicitor v Council of the Law Society of New South Wales [2004] HCA 1

Council of the Law Society of New South Wales v Foreman (No.2) 1994 (34) NSWLR 408

Cowlishaw and ORS v Tax Agents’ Board of Queensland (1999) 99 ATC 2231

Ex parte Attorney-General (Commonwealth); re A Barrister and Solicitor (1972) 20 FLR 234

Morrissey v Tax Agents’ Board of Queensland [2004] AATA 1078

Pappalardo v Tax Agents’ Board of Victoria (2003) ATC 2207

Wyborn v Tax Agents’ Board of New South Wales [2007] AATA 1492

REASONS FOR DECISION

25 September 2009 Dr K S Levy RFD, Senior Member           

INTRODUCTION

1.      The applicant, Jeffrey Hannaford, was suspended as a tax agent by the Tax Agents’ Board of Queensland (‘the Board”) for 30 days from a date commencing one week after he was advised of that suspension.  The suspension letter was dated 28 April 2009.  He was also advised by telephone, email and facsimile on that same date.

2.      Mr Hannaford has applied to the Administrative Appeals Tribunal (“the Tribunal”) for review of the decision to suspend him as a tax agent.  He did so by application dated 30 April 2009.

ISSUE

3. Mr Hannaford’s application for review under s 29(1) of the Administrative Appeals Tribunal Act 1975 refers to issues that he put in evidence and his dissatisfaction with the system of administration by the Board.  However, it is apparent that the application is made on the basis of challenging the decision dated 28 April 2009 to suspend him from practice as a tax agent for 30 days. 

EVIDENCE

4.      The history leading to the suspension of Mr Hannaford begins with a complaint by a former client of his to the Board on 26 August 2008.  The following sequence of correspondence then ensued:

(a)1 September 2008 – the Board sent a letter to Mr Hannaford with a response deadline of 14 days.  He did not respond.

(b)17 September 2008 – the Board again sent a letter to Mr Hannaford, this time with a response deadline of seven days.  The letter warned that failure to respond might amount to misconduct.  Again, Mr Hannaford did not respond.

(c)7 October 2008 – an officer of the Board secretariat telephoned Mr Hannaford at his practice, Jeffrey Hannaford Pty Ltd.  Mr Hannaford advised he would not receive correspondence unless it was sent by registered post. 

(d)8 October 2008 – the Board re-sent the letters of 1 September 2008 and 17 September 2008 by registered post. 

(e)9 October 2008 – the registered post letter was collected.  Mr Hannaford again failed to respond. 

(f)31 October 2008 – the Board secretariat again tried to telephone Mr Hannaford.  The officer concerned was told that Mr Hannaford was unavailable and so he left his contact details for Mr Hannaford to call him back. 

(g)3 November 2008 – Mr Hannaford returned the call of 31 October 2008.  He requested a meeting in person on the same day.  This occurred as an informal meeting and no notes were taken.  Mr Hannaford undertook to reply to the Board’s previous correspondence.  Mr Hannaford again failed to respond to the Board’s letters.

(h)18 November 2008 – the Board again wrote to Jeffrey Hannaford Pty Ltd by registered post about the continued failure to answer the Board’s correspondence.  Mr Hannaford was advised that if he failed to reply, the matter would be referred to the Board for its consideration.  That letter was sent by registered post.

(i)19 November 2008 – the registered post parcel was collected.  Mr Hannaford again failed to respond.

(j)2 February 2009 – Mr Hannaford had still not responded to any of the Board’s correspondence.  The Board then resolved to forward a “show cause” letter asking why his registration as a tax agent should not be suspended.

(k)11 February 2009 – “show cause” letter was sent by registered post.

(l)12 February 2009 – “show cause” letter was collected.

(m)20 April 2009 – no response had been received in relation to the letter of 11 February 2009.  The Board resolved to suspend the registration of Jeffrey Hannaford Pty Ltd as a tax agent for 30 days commencing one week after the date of notification of his suspension.  The letter also indicated that the applicant still needed to respond to the Board’s previous correspondence.

(n)28 April 2009 – Mr Hannaford was advised of the suspension by letter, telephone, email and facsimile.  Suspension was to be effective from 6 May 2009.

(o)30 April 2009 – Mr Hannaford called the Board’s secretariat to inquire if the suspension was negotiable (Exhibit 1).

5.      Other correspondence was tendered at the hearing.  In a letter dated 9 July 2009 (Exhibit 3), Mr Hannaford emphasised that anyone can make a complaint, but practitioners such as himself and his staff spend considerable time on clients’ affairs, and disgruntled clients do not pay their bills.  Mr Hannaford also gave oral evidence at the hearing and was cross-examined.

6.      Mr Hannaford has been in practice as a tax agent for 31 years.  He incorporated his practice in 2004.  He is also a chartered accountant and undertakes his work as a tax agent within that practice.  His case centred on his “utter frustration with the system”; that it was “not protecting tax agents”; and that of 1,100 clients, 99% of them cause no difficulty but he was concerned with the 1% who do complain and with whom he has to spend considerable time defending himself.  He said that he wanted to “make a stand”. 

7.      Mr Hodge, in cross-examination, sought to ascertain why Mr Hannaford had not answered the Board’s correspondence.  Mr Hannaford became agitated during the hearing and referred to the perceived unfairness of “the system” and that “it was a one way street”.  He did not feel that the Board was supporting him.  It was pointed out to Mr Hannaford that the statute governing the Board was concerned with the public interest; it was to protect the public while ensuring procedural fairness to tax agents.  He admitted that he did not answer the Board’s correspondence, but that he felt as if he was “guilty until proven innocent”. 

8.      He admitted that he did not open the registered post letter dated 11 February 2009 (T13) until very much later when Mr Cooper for the Board called him.  He said that he did not open it as he had not been paid to that time (by the complainant client) and therefore, “the system had not been fixed”.

9.      In relation to the applicant’s understanding of the Board’s decision and whether it acted in his interest, counsel for the respondent took Mr Hannaford to a transcript of the proceedings between Mr Hannaford and the chairman and two members of the Board dated Monday 21 January 2008.  He was referred firstly to page 11 of that transcript, where the chairman had pointed out to Mr Hannaford that they were concerned about whether he was “a fit and proper person”.  In particular, the chairman said at line 17:

… you failed to provide responses to complaints when requested.  You’ve written to the ATO officers describing them as idiots.  And, again, the courts have indicated that if you’re not able to correspond with the ATO on a professional basis then perhaps you are not fit and proper person…

Mr Hannaford informed the Board that time about his practice in Millmerran.

10.     Counsel then took Mr Hannaford to page 14 of the transcript.  Commencing at line 24 of that transcript, the chairman indicated that the Board was going to put questions to Mr Hannaford by setting questions out in writing and sending them to him with a request that he respond, and the Board would then make a decision.  The chairman then went on to say, “can I suggest it's probably appropriate for you to have some idea of the attitude of the Board on some issues.  That comment you made about people’s complaints, I can say that perhaps if you had responded as you were asked you wouldn’t have to be here today because we would have had the explanations…”  Mr Hannaford was then referred to line 36 on page 14 where the chairman said “and, again, if you had responded we would have been very happy to try to work out something as I think we indicated on your letter of registration when we said,  ‘we will register you, but we have concerns about this’…”  Mr Hannaford was then referred to line 45 of that transcript where it said “… Another issue of serious concern to the Board is that we don’t enjoy having our staff treated as a joke and having their time wasted in following up people who don’t respond…”

11.     Mr Hannaford responded to this Tribunal in terms of his dissatisfaction with the Board which he had outlined previously.

12.     The Tribunal then asked Mr Hannaford whether he had any health problems (physical or psychological) that may have impacted on his failing to correspond with the Board.  He said he had no health problems although he did indicate that he worked seven days a week.  Mr Hannaford also acknowledged that he understood the role of the Board and that he chose not to respond to its correspondence. 

13.     Evidence was then received from Mr Cooper, the national business manager of the Board, who had advised he was previously the secretary of the Board.  He was cross-examined by Mr Hannaford.  Both the applicant and the respondent made submissions.

CONSIDERATION

14.     I have taken into account in determining this matter all the statutory and case law and all of the facts presented by Mr Hannaford and the Board. 

15. The primary statutory provision relevant to this matter is s 251K(2)(b)(ii) of the Income Tax Assessment Act 1936 which provides that a Board may suspend or cancel the registration of any tax agent upon being satisfied that “the tax agent … has been guilty of misconduct as a tax agent …”.  The facts outlined in the evidence reveal a reluctance on the part of Mr Hannaford to specifically answer questions about why he did not respond to correspondence.  His answers in his written correspondence, and to counsel during the hearing, where evasive and sometimes antagonistic, such that I did at one stage have to point out to Mr Hannaford that he was obliged to answer the questions of counsel for the respondent.  But his antagonism to being held responsible was, in my opinion, not explicable for any reason which could justifiably exculpate him.  He said there were no health or other mitigating circumstances, although he obviously worked long hours.  At the hearing, however, he did appear at times to be highly stressed and a little emotive with some of his answers.  Mr Hannaford attempted to persuade the Tribunal that he was at times very firm in his attitudes particularly about issues of principle and that this explained his behaviour, which is the subject of the complaint by the Board. 

16.     I can understand and be sympathetic to somebody who had been a dedicated professional for over 30 years and who might be embarrassed and offended at having his professionalism questioned.  However, his answers and the theme of those answers were often not relevant or not sufficiently relevant.  The same is true however of some of the written correspondence and it appears there had been previous dealings with the Board. 

17.     I make a finding of fact that Mr Hannaford has willingly or deliberately refused to respond to the Board’s correspondence.  I also make a finding of fact that the complaint which initiated his suspension occurred only eight months after a previous interaction with the Board, where he was advised of the Board’s attitude to similar circumstances.  I find also that the earlier interactions with the Board, which concerned behaviour similar to the facts in the present matter, is sufficiently relevant.  I have a discretion to exclude that evidence (s 135 Evidence Act 1995), but I decline to exclude it, as I find its probative weight not unfairly prejudicial and also that it is directly relevant, chronologically and in content.  Also, it can “…rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue” (s 55) and is informative of the gravity of the deliberate breach found above.  That evidence is therefore admissible.

18.     Feeling aggrieved might give one a feeling of antagonism towards a person or organisation but that can be no defence to a person in a professional role being non‑compliant in the circumstances in which Mr Hannaford found himself.  Indeed, he acknowledged that “I understand not replying to correspondence constitutes misconduct…” (letter of Mr Hannaford to the Board dated 24 June 2009, p2).  He then said he “…felt that maybe by ‘making a stand’, it would sort out the system”. 

Do the applicant’s actions in all the circumstances amount to “misconduct” as set out in s 251K(2)(b)(ii)?

19.     In determining this question, Mr Hodges referred me to the decision of Morrissey v Tax Agents’ Board of Queensland [2004] AATA 1078 at [49] (per Member Kenny, as he then was). He also referred me to Pappalardo v Tax Agents’ Board of Victoria (2003) ATC 2207 where Senior Member Dwyer stated that failure to respond to correspondence in a timely fashion “shows a lack of proper respect for the Board” and also referred to it as “gross incompetence”; she also said “[a] person who is competent, and fit and proper to be a tax agent would clearly appreciate the importance of responding fully and promptly to correspondence from a regulatory authority” (at [32]). I was also referred to Cowlishaw and ORS v Tax Agents’ Board of Queensland (1999) 99 ATC 2231 where Senior Member Muller (as he then was) said “…the Tribunal regards the failure to treat the Tax Agents’ Board with proper respect, as a serious neglect of the business of a tax agent” (at [9]).

20.     The authorities consistently show that such a breach is to be regarded seriously.  The High Court of Australia recently in A Solicitor v Council of the Law Society of New South Wales [2004] HCA 1 considered the distinction between professional misconduct and personal misconduct. The Court there said “professional misconduct does not simply mean misconduct by a professional person. At the same time even though 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 … Furthermore, even where it does not involve professional misconduct a person’s behaviour may demonstrate qualities of a kind that require a conclusion that a person is not a fit and proper person to practise” (at paragraph 20).

21.     Misconduct in this case, according to the submissions of Mr Hannaford, is tempered by his view that the Board did not support him.  Alternatively, it is important to be mindful of the Board’s role which is to act in the public interest and to balance fairly, on the basis of the available evidence, a complaint made and the professional tax agent’s response.  Misconduct, in that respect, has been the subject of judicial comment by Giles AJA in the Council of the Law Society of NSW v Foreman (No. 2) 1994 (34) NSWLR 408, where his Honour refers to the public interest protection as follows:

But the object of the protection of the public also includes deterring the legal practitioner in question from repeating the misconduct, and deterring others who might be tempted to fall short of the high standards required of them.  And the public and professional colleagues who practice in the public interest, must be able to repose confidence in legal practitioners, so an element in deterrence is an assurance to the public that serious lapses in the conduct of legal practitioners would not be passed over or lightly put aside, but will be appropriately dealt with (at p471).

While those judicial comments deal with legal practitioners, professional standards exist in Australia for almost every professional group and the principles outlined by his Honour are equally applicable to accountants, tax agents and others. 

22.     Specifically for Mr Hannaford, he is obviously a highly trained and experienced accountant.  He is a fellow of the Institute of Chartered Accountants in Australia, a qualification which is well regarded, and is ample evidence of his professional training.  He has, in addition, 31 years of professional experience.  While he is a tax agent, he is also a chartered accountant and is therefore subject to the code of ethics issued by the Accounting Professional and Ethical Standards Board.  The Code of Ethics issued by that Board (APES 110) states at paragraph 150.1 as follows:

The principle of professional behaviour imposes an obligation on members to comply with the relevant laws and regulations and avoid any action or omission that may bring discredit to the profession.  This includes actions or omissions which a reasonable and informed third party, having knowledge of all relevant information, would conclude negatively affects the good reputation of the profession.

23.     The Code of Ethics for professional accountants (APES 110) is a commonsense and plain English view of the expectation of professional accountants, which applies also where they concurrently practice as tax agents. 

24.     ‘Misconduct’ may not always be seen as professional misconduct but rather as “unprofessional conduct”.  This has been defined as follows:

Unprofessional conduct … violates or falls short of, to a substantial degree, the standard of professional conduct observed or approved by members of the profession of good repute and competency (Ex parte Attorney-General (Commonwealth); re A Barrister and Solicitor (1972) 20 FLR 234 at 242-246, cited in Justice JB Thomas Judicial Ethics, 2nd edition, 1997 Law Book Company at p 13).

25.     Failure to answer correspondence may in some circumstances, such as returning telephone messages of clients, not be regarded as professional misconduct or unprofessional conduct (Wyborn v Tax Agents’ Board NSW [2007] AATA 1492 per Deputy President Hack). Those circumstances may refer to unintentional lapses or neglect of a client’s affairs involving inadequate systems or supporting resources or skills. However, in this case, the omissions were deliberate by the applicant’s own admissions and involved refusal to answer correspondence on six occasions and protracted dealings with the Board over eight months. Only at the end of that time did the applicant ask if the Board might be negotiable.

26.     I find that the actions of Mr Hannaford fell short to a substantial degree of the standard of conduct expected by a member of the profession of tax agents.  It is not a reasonable explanation that he could rationally expect to “make a stand” and anticipate that he would “sort out the system”.  Not only is that something that could not be a rational explanation for someone for his qualifications and experience, but that he allowed his emotional preferences to override a reasonable and professional response.

27.     The principles of deterrence which are designed to inhibit members of professional groups from breaching the necessary legislative standards of conduct and certainly for recidivist behaviour, are relevant here also (Cowlishaw (supra); Foreman No. 2 (supra)).

28.     The Board clearly had taken time to discuss previous aberrant behaviour with Mr Hannaford in early 2008 (Exhibit 2 and Exhibit 7).  The Board’s approach in my view, accorded with procedural fairness to the applicant.  His suspension was not inappropriate given the standard of behaviour required of tax agents and his inappropriate and elongated responses.  Considering the fact that he has been a recalcitrant in his poor behaviour and failing to answer correspondence, the period of suspension could be regarded as at the lighter end of the scale.

29.     I affirm the decision of the Tax Agents Board in relation to the applicant’s suspension.

I certify that the 29 preceding paragraphs are a true copy of the reasons for the decision herein of Dr K S Levy RFD, Senior Member.

Signed: ..........................[sgd]..................................................
  Emily Clarke, Associate

Date of Hearing  21 August 2009
Date of Decision  25 September 2009
The Applicant was self-represented
Counsel for the Respondent     Mr M Hodge
Solicitor for the Respondent     Australian Government Solicitor