Irene Burnett and Tax Practitioners Board
[2014] AATA 87
•24 February 2014
[2014] AATA 87
Division GENERAL ADMINISTRATIVE DIVISION File Number
2014/0136
Re
Irene Burnett
APPLICANT
And
Tax Practitioners Board
RESPONDENT
DECISION
Tribunal Deputy President K Bean
Date 24 February 2014 Place Adelaide The Tribunal declines to make the orders sought under s 35 of the Administrative Appeals Tribunal Act 1975.
..............[ Sgd ]……..........
Deputy President K Bean
CATCHWORDS
PRACTICE AND PROCEDURE – Tax agents – Application to stay refusal to renew registration as a tax agent – Public interest considerations – Severe adverse consequences to applicant if stay refused – Where substantive application may be rendered nugatory – Stay granted.
PRACTICE AND PROCEDURE - Application for confidentiality orders - Whether cogent reasons to depart from norm - Damage to applicant's reputation - Declined to make confidentiality orders sought.
LEGISLATION
Tax Agent Services Act 2009, s 20-50, subs 30-10(1), (4), (7), (9) and (10), subs 60-125(2) and (8)(c)(iia)
Administrative Appeals Tribunal Act 1975, ss 35 and 41
CASES
Re Dekanic and Tax Agents’ Board of New South Wales (1982) 6 ALD 240
Re Scott and Australian Securities and Investments Commission (2009) 51 AAR 114
Re Nelson and Tax Agents’ Board of Queensland (1993) 30 ALD 317
Australian Securities and Investments Commission v Administrative Appeals Tribunal (2009) 181 FCR 130
Re Opus Capital Ltd and Australian Securities and Investments Commission (2010) 117 ALD 608
Re Kanina Banner Pty Ltd and Minister for Health and Ageing (2002) 66 ALD 663
Re TNST and Australian Securities and Investments Commission (2009) 50 AAR 176
Re Pochi and Minister for Immigration and Ethnic Affairs (1979) 2 ALD 33
Re Modini and Tax Agent’s Board of Queensland (2005) 89 ALD 496Re Gillespie and Australian Securities and Investments Commission (2012) 60 AAR 1
REASONS FOR DECISION
Deputy President K Bean
24 February 2014
INTRODUCTION
The applicant, Mrs Burnett, is a chartered accountant and has been a registered tax agent since 1980. However on 11 December 2013, the Tax Practitioners Board (the Board) decided not to grant her most recent application for renewal of her tax agent registration.
The reason for that decision was that the Board was not satisfied that Mrs Burnett met the statutory requirements for renewal of her registration. In particular, the Board was not satisfied that she was a ‘fit and proper’ person to be registered as a tax agent, as required by s 20-5 of the Tax Agent Services Act 2009 (the TASA). The Board accordingly also determined that Mrs Burnett’s registration as a tax agent would cease on 6 February 2014.
Mrs Burnett was apparently advised of this decision approximately a month after it was made, by letter dated 8 January 2014. On 13 January 2014, she filed an application for review of that decision by this Tribunal, and an application for a stay of the decision, pursuant to s 41 of the Administrative Appeals Tribunal Act 1975 (AAT Act). A hearing was held in relation to Mrs Burnett’s stay application on 28 January 2014, and at a Directions Hearing convened on 4 February 2014, I made the following order:
Pursuant to s 41(2) of the Administrative Appeals Tribunal Act 1975, the Tribunal orders that the operation and implementation of the decision of the respondent dated 11 December 2013 and advised to the applicant by letter dated 8 January 2014 is stayed until the decision of the Tribunal on the application for review comes into operation or until further order of the Tribunal on the following condition:
(a)that the applicant does not provide tax agent services to any person she has not provided such services to prior to the date of this decision.
As it transpired at the Directions Hearing that Mrs Burnett sought confidentiality orders under s 35 of the AAT Act, including with respect to my Reasons for Decision in relation to the stay order, I decided not to publish my reasons for the stay order at that stage, pending determination of Mrs Burnett’s confidentiality application. A further hearing was held on 7 February 2014 in relation to that application, at which time I indicated that once I had determined the confidentiality application, I would give reasons for that decision and for making the stay order at the same time. Accordingly these reasons relate both to the stay order made on 4 February 2014, and my decision in relation to Mrs Burnett’s confidentiality application.
Before addressing the issues which arise from the two interlocutory applications more directly however, I will first outline the factual background to the matter. I should also add that although further material has been filed subsequently, my reasons for granting the stay order of course make reference only to the material which was before me when I made that order.
BACKGROUND
From the material before me, it appears that in October 2009, officers of the Australian Taxation Office (ATO) visited Mrs Burnett’s practice in order to undertake a review of her files. As a result of that review, the ATO subsequently directed Mrs Burnett to either provide additional information or make voluntary amendments to two income tax returns (ITRs). However she apparently declined to do so and the two ITRs were referred to audit, resulting in adjustments totalling $80,151.00.
A further review of Mrs Burnett’s practice was carried out by the ATO in March 2011, and audits conducted by the ATO subsequent to that review apparently found that seven ITRs were not “reasonably substantiated”. As a result of the audits, adjustments were made to those seven ITRs, totalling $119,408.00. Penalties were also imposed in one audit as it was considered that the shortfall was a result of “reckless behaviour” and “the errors in the ITRs were considered to be attributable primarily to ‘tax agent error’”.
On 2 December 2011, the ATO apparently provided the Board with a referral relating to Mrs Burnett, based largely on the above information.
On a date which was not apparent from the material before me at the time I made the stay order, but appeared to have been some time after April 2011, the Board apparently also received a complaint from a person alleging that she had accessed the records of his clients through the “Tax Agent Portal” without authorisation on three occasions between 29 June 2010 and 4 April 2011.
A further audit of Mrs Burnett’s files was apparently carried out by the ATO in the first half of 2013, relating to 20 clients. Following audit of these files, adjustments were made to the ITRs of all 20 clients (and one further return for the year ended 30 June 2011) totalling $391,466.00. Sixty-two penalties were apparently imposed, with 55 imposed for lack of reasonable care, four imposed for recklessness and three imposed for “intentional disregard”. Apparently the ATO considered the errors found were primarily attributable to “tax agent error”.
The results of this further audit apparently constituted the main basis for a further referral by the ATO to the Board in relation to Mrs Burnett on or about 23 July 2013.
Following receipt of the second ATO referral, the Board apparently wrote to Mrs Burnett, on 1 October 2013, notifying her that it had decided to formally investigate whether her conduct may have breached the TASA.
As a result of the ensuing investigation, on 11 December 2013, the Board ultimately determined that it was satisfied that Mrs Burnett had failed to comply with subs 30-10 (1), (4), (7), (9) and (10) of the Code of Professional Conduct (the Code) in the TASA.
The breaches found related to Mrs Burnett’s failure to:
·act honestly and with integrity;
·act lawfully in the best interests of her clients;
·ensure that tax agent services that she provided, or that were provided on her behalf, were provided competently;
·take reasonable care in ascertaining a client’s state of affairs, to the extent that ascertaining the state of those affairs was relevant to a statement she was making or a thing she was doing on behalf of the client; and
·take reasonable care to ensure that taxation laws were applied correctly to the circumstances in relation to which she was providing advice to a client.
The Board’s finding that Mrs Burnett had failed to act honestly and with integrity related to her accessing records using the Tax Agent Portal without authorisation to do so, and all of the other breaches of the Code related to the results of the 2013 audit.
Having found these breaches, the Board apparently then proceeded directly to consider Mrs Burnett’s application for renewal of her registration as a tax agent, which had been received on 9 April 2013.
In its letter to Mrs Burnett of 8 January 2014, the Board indicated that it had decided to reject her application for renewal of her registration as a tax agent on the basis that she was not considered to be a “fit and proper person” as required by s 20-5 of the Act. The Board gave the following reasons for concluding that Mrs Burnett was not a fit and proper person within the meaning of the TASA:
(a) the object of the TASA is to ensure that tax agent services are provided to the public in accordance with appropriate standards of ethical and professional conduct;
(b) the Board takes seriously any conduct that breaches the TASA, particularly where the conduct calls into question an agent’s integrity;
(c) your continued failure to comply with your taxation obligations, particularly in light of your previous prosecution by the ATO for failing to comply with your taxation obligations, demonstrates a pattern of behaviour and lack of appreciation and regard for the taxation laws, particularly as they relate to the timely lodgement of BAS;
(d) there is a clear public interest in registered agents upholding the standards applicable to the preparation and lodgement of activity statements;
(e) the ATO’s findings, which demonstrates a lack of appreciation and regard for the ATO and the taxation laws;
(f) your response in respect of the allegations made about your unauthorised access of details using the Tax Agent Portal demonstrates a lack of understanding an (sic) appreciation of the seriousness of that conduct;
(g) failure to deal with the Commissioner appropriately reflects adversely on your fitness and propriety, as a registered tax agent you are required to be of such competence, good fame, integrity and character that others may entrust their taxation affairs to your care;
(h) it was of the view that, on the basis of the matters outlined above, you are not of good fame, integrity and character and therefore you are not a fit and proper person to be registered as a tax agent.[1]
[1] Decision of the Tax Practitioners Board dated 8 January 2014, pp 6-7.
In respect of item (c), I was advised at the stay hearing that this did not relate to any previous criminal prosecution of Mrs Burnett by the ATO, but was simply a reference to previous audits of Mrs Burnett’s files by the ATO. There was nothing before me at the time I made the stay order to suggest any failure by Mrs Burnett to comply with her personal taxation obligations.
It is against this background that I have been required to determine, firstly, whether a stay order should be made, and secondly whether I should make the confidentiality orders sought by Mrs Burnett. I will first give my reasons for deciding to grant a stay in the matter, before turning to the confidentiality issues.
THE STAY APPLICATION
Legal framework and applicable princples
My power to grant a stay of the Board’s decision is contained in s 41(2) of the AAT Act, which relevantly provides that, if the Tribunal is of the opinion that it is “desirable to do so” it may “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”.
A preliminary question arises in relation to a decision of the kind under consideration here, not to renew a registration, as to whether a stay order is effective to continue the registration. However the TASA contains a provision which has the effect of continuing an agent’s registration until an application for renewal has been decided.[2] Having regard to the analysis set out in Re Nelson and Tax Agents’ Board of Queensland (1993) 30 ALD 317, I am satisfied, as conceded by the Board, that the stay order I have made, in combination with that provision, is effective to continue Mrs Burnett’s registration pending resolution of her substantive application to this Tribunal or revocation of the stay.
[2] See s 20-50(2).
As to the considerations relevant to whether a stay should be granted, the considerations which are most relevant to determining whether a stay should be granted in a matter of this kind were conveniently summarised by Downes J in Re Scott and Australian Securities and Investments Commission (2009) 51 AAR 114 as follows:
1. The prospects of success.
2. The consequence for the applicant of the refusal of a stay.
3. The public interest.
4.The consequences for the respondent in carrying out its functions depending upon whether a stay is granted or not.
5.Whether the application for review would be rendered nugatory if a stay were not granted.
6.Other matters that are relevant, amongst which I would include the length of time that the ban has already been in place and the gap between today and the hearing of the application.[3]
[3] At [4].
By reference to the decision of the Tribunal in Re Dekanic and Tax Agents’ Board of New South Wales[4], Mr d’Assumpcao, who appeared as counsel for the Board at the stay hearing, conceded that, having regard to the applicable principles, a stay of a decision to cancel a tax agent’s registration would ordinarily be granted unless the public interest requires otherwise. He also conceded that that proposition was equally applicable to a decision not to renew a tax agent’s registration. However, Mr d’Assumpcao contended that there was a strong public interest in refusing the stay in this matter, and indicated that, primarily for that reason, the Board opposed the granting of a stay.
[4] (1982) 6 ALD 240, 242 per Davies J.
Consideration
As it constituted the main reason for the Board’s opposition to the grant of a stay, I propose to deal first with the question of the public interest, before turning to the other considerations relevant to whether a stay should be granted.
The public interest
As I understood the position, the Board opposed a stay primarily upon the basis that there was a material risk of the type of conduct identified by the Board in its decision being repeated in the period pending the determination of the application for review.
In oral submissions, Mr d’Assumpcao also submitted that, as the files chosen for audit were chosen randomly, it could be inferred that problems of the kind identified in the files which were audited were likely to be present in many of Mrs Burnett’s other files. In essence, the Board submitted that the evidence supported the existence of a material risk that a proportion of the returns and other documents prepared by Mrs Burnett would not be prepared to the requisite standard, would not be accurate, and may expose her clients to adjustments, penalties and/or interest charges. The Board relied upon the fact that adjustments were made to all of the 20 files audited in 2013, totalling $391,466.00, although no information was provided to me as to the attribution of the adjustments as between the files, or the average adjustments per ITR.
The Board also pointed to what it had found to be Mrs Burnett’s unauthorised use of the Tax Agent Portal, together with her response to this allegation. However, I inferred that this was something of which the Board had been aware since before 21 June 2013, when it wrote to Mrs Burnett about the allegation, and which did not result in any earlier action by the Board with respect to Mrs Burnett. In these circumstances, in my view that matter did not lend significant support to the Board’s contention that the public interest required refusal of the stay order.
As to the risk that problems of the kind uncovered by the 2013 audit would recur if a stay were granted, I ultimately accepted Mr d’Assumpcao’s submission that it could reasonably be inferred that there were likely to be similar problems in files not caught by the ATO’s audit, particularly given that problems appear to have been found with all 20 of the files randomly audited in 2013. I further accepted that, so long as Mrs Burnett continued to practice, there was a risk of further instances of the kind revealed by the 2013 audit, potentially resulting in inaccurate returns, and further adjustments and penalties. The precise extent of the claimed irregularities and the extent to which Mrs Burnett was responsible for these is contested by Mrs Burnett and has not yet been determined by this Tribunal. However I accepted for the purposes of the stay application that the granting of a stay carried a real risk of further irregularities of the kind apparently revealed by the 2013 audit, and there was a public interest in avoiding or minimising that risk.
As against this however, Mrs Burnett gave evidence at the stay hearing that she currently has about 1,500 clients for whom she lodges returns each year. In raw statistical terms therefore, the 20 files which were audited comprise approximately 1.3% of Mrs Burnett’s practice.
Mrs Burnett also gave evidence that approximately half of her clients are required to lodge Business Activity Statements (BAS) by 28 February this year. She gave evidence that in the event her registration was to cease on 6 February 2014, this would result in very significant inconvenience, disruption and potential expense to many of her clients, particularly those with BAS due this month. She said that in her opinion it would be extremely difficult for those clients to secure services elsewhere which would result in lodgement of accurate BAS by the due date of 28 February 2014. She also said that, in the event that some clients were not able to obtain alternative services in sufficient time to allow them to lodge accurate BAS by the due date, this would be likely to cause further problems for them as it would bring them to the adverse attention of the ATO.
In these circumstances, whilst I accepted that there was a public interest in Mrs Burnett not practising pending the determination of the application for review in this matter, I also considered that there was some counter-veiling public interest in her continuing to practise pending determination of the application, so as to avoid the disruption, inconvenience and potential expense to her clients which would have been caused by her abruptly ceasing to practice on 6 February 2014.
I also considered that, in light of the decision which had been reached by the Board, and Mrs Burnett’s current situation, the risk of further irregularities of the kind apparently disclosed by the 2013 audit was lower than it would have been in the absence of that decision. In other words, Mrs Burnett having been squarely put on notice as to the Board’s concerns and facing the threat of cessation of her registration, I considered there was less risk of irregularities in her practice in the period pending determination of her substantive application than there was prior to the Board’s decision.
In summary, I accepted that the public interest militated in favour of a stay being refused, although there were also counter-veiling public interest considerations, as I have indicated above. I also considered that the Board’s submissions in opposition to a stay carried less weight than they otherwise might have, given the apparent delay between when the Board first received the complaint about unauthorised use of the Tax Agent Portal and when the Board ultimately took action in respect of that, as well as the delay between the referral by the ATO on 23 July 2013 and the Board’s decision not to renew Mrs Burnett’s registration on 11 December 2013. I also noted that it appeared to have taken approximately a month for the Board to notify Mrs Burnett of its decision not to renew her registration, and it decided to allow her to continue to practise for a further two months after making that decision.
The consequences for Mrs Burnett of refusal of a stay
Weighing against the public interest concern put forward by the Board was the fact that, on the evidence before me, refusal to grant her a stay was likely to have resulted in the destruction of Mrs Burnett’s livelihood.
Mrs Burnett’s evidence, which was not disputed by the Board, was that she is solely dependent on her income as a tax agent and superannuation fund auditor, and if her tax agent registration ceased, it was likely that she also would not be able to continue practising as a superannuation fund auditor. Mrs Burnett further indicated that both she and her husband were dependent upon her income and that within approximately three to five months after cessation of her registration she would expect that she and her husband would be unable to meet their mortgage payments and would have to sell their house.
Mrs Burnett also said that if her registration ceased she would be forced to sell her practice, as she is a sole practitioner and it would not be viable for another agent to ‘mind’ her practice pending the outcome of the Tribunal’s determination of her substantive application. She estimated that it would take her approximately three months to sell her practice. She also made reference to the fact that if she was not given an opportunity to sell her practice, her clients would simply “walk”. In other words, as I understood her evidence, if her registration was to cease abruptly, her clients may simply go elsewhere and she would not be able to sell her practice as a viable business. It was left unclear on the evidence as to whether the proceeds of any sale of her practice would be likely to avoid or delay the need to sell her house.
In addition, Mrs Burnett said that cessation of her registration in these circumstances would result in the destruction of her professional reputation and make it impossible for her to re-establish a practice in the event that her substantive application to this Tribunal was ultimately successful. She also said that cessation of her registration would make it very difficult for her to again work as a chartered accountant.
In other words, if a stay had not been granted and Mrs Burnett’s substantive application had not been dealt with to finality within a few months, the effect of the evidence was that Mrs Burnett and her husband would have been at risk of losing their home, regardless of the outcome of that application. Even if the substantive application was to have been dealt with quickly, as she would have been forced to advise her clients of the cessation of her registration, it seemed likely in any event that Mrs Burnett would have been forced to sell her practice quickly and/or that the practice would have suffered substantial, perhaps irreparable, damage. I considered these to be extremely serious consequences which, if they had been suffered by Mrs Burnett, would have had the further result that, to a large degree, her substantive application to the Tribunal would have been rendered nugatory or futile.
Accordingly, in my view the adverse consequences to Mrs Burnett of not granting a stay weighed heavily in favour of granting a stay in this matter.
The prospects of success of the substantive application
I did not have sufficient material before me to allow me to fully assess the merits of Mrs Burnett’s substantive application, and nor was it necessary for me to do so in this context. However I noted that Mrs Burnett strongly rebutted many of the allegations against her and made a number of points in response to the allegations when they were first put to her by the Board, including the following:
·She claimed that she asked all of her clients about their deductions and relied upon what they told her. Whilst she did not necessarily sight all documents needed to substantiate deductions, she said that this was not standard practice in any event. She also claimed that some of the deductions ultimately disallowed as a result of the ATO audits had been allowed in previous years and that the ATO “is not consistent with their own policies”;[5]
·She claimed not to understand how approximately $80,000.00 in adjustments resulting from the 2009 audits was arrived at;
·She claimed that some of the contentious deductions related to “living away from home allowances” which was a complex issue, and required adjudication by the Tribunal;
·In relation to allegations that she “reinstated” previously disallowed amounts and made similar claims in future years, Mrs Burnett claimed that “[t]he amendments lodged were for a much lower amount than originally claimed”. She also asserted “I have the right to re-lodge these claims. Each year will have different assessable income amounts and different deductions for the same client”;[6]
·She also claimed that she was in fact authorised to use the Tax Agent Portal on the occasions on which the Board had found she was not authorised; and
·She further claimed that her
(i)“tax lodgement performance is above the average performance of similar sized practices”; and
(ii)“I have a listing of around 1,000 tax returns per year, and have been told that my number of adjustments was small compared to other agents.”[7]
[5] Mrs Burnett’s response to the Board, p 3.
[6] Mrs Burnett’s response to the Board, p 4.
[7] Mrs Burnett’s response to the Board, p 6.
Having regard to the information I had about Mrs Burnett’s responses to the allegations and findings against her, I was satisfied that her substantive application was not unmeritorious. I also noted that the Board did not rely upon absence of merit in her application as a factor weighing against the grant of a stay in her case.
Overall assessment and conclusion
In summary therefore, I was satisfied that, having weighed the competing public interests discussed above, overall the public interest militated against the grant of a stay. However, in my view, that public interest was outweighed by the severe adverse consequences which would have flowed to Mrs Burnett were a stay not to have been granted, and which would, to a large degree, have rendered her substantive application to the Tribunal nugatory.
Whilst there is clearly some risk entailed in Mrs Burnett continuing to practise pending the hearing and determination of her substantive application to the Tribunal, I concluded that it would be highly undesirable for Mrs Burnett to suffer many of the consequences of losing her registration, including potentially losing her home and business, before this Tribunal had had an opportunity to fully consider the merits of her application and make a decision in relation to it. In practical terms, that outcome would largely have deprived Mrs Burnett of the opportunity to seek effective review of the Board’s decision by this Tribunal.
If Mrs Burnett’s substantive application had been devoid of merit, that would have been another factor weighing heavily against the grant of a stay. However, I was satisfied that Mrs Burnett’s application had some merit, and the Board did not contend otherwise. I was also satisfied that this matter could not practically be dealt with in an expedited manner, in a way which obviated the need for a stay. That was partly because, if Mrs Burnett’s registration had ceased on 6 February 2014, she would have been obliged to cease acting for her clients and advise them of the reasons for this, resulting in significant reputational damage and damage to her business. I inferred from her evidence that she would also have been effectively forced to attempt to sell her business quickly, whilst it still had some value.
For these reasons, I decided that it was appropriate for me to grant a stay of the Board’s decision, pending determination of Mrs Burnett’s substantive application by this Tribunal.
In the event I decided to grant a stay, the Board requested that I impose the following conditions:
a)the Applicant does not provide tax agent services to any new clients, that is, persons she had not provided such services to prior to 11 December 2013; and
b)within 14 days of the date of the order,
(i)the Applicant provides the Respondent with the names and contact details of all such clients; and
(ii)the Applicant files and serves evidence in the form of a statutory declaration that she has notified each client to whom she has provided tax agent services since 1 June 2011 of the decision under review (including giving each such client a copy of the Board correspondence dated 8 January 2014 setting out the reasons for decision);[8]
[8] Respondent’s Further Submissions, [7].
In response to that request, Mrs Burnett submitted as follows:
Point 7. is a disgraceful request for anyone to make.
This would have a similar effect on my ability to earn a living as de-registration.
Time taken and cost involved to comply is bad enough, but end result is to say to clients to go elsewhere as I am not a fit & proper person to do their accounts.
More than 99% of my referrals are by word of mouth. I have a lot of friend and relative groups as my clients. Informing any new client would have a ripple effect on my client base, and cause undue & unnecessary harm to my business when I am found to be innocent of any wrongdoing.
This is BEFORE I have a chance to rebut any allegations.
THIS REQUEST IS ANOTHER EXAMPLE OF THE BULLY TACTICS USED BY THE ATO & ITS ASSOCIATES !!!!
If this behaviour is allowed to go on, there will be more cases such as this.[9]
[9] Applicant’s response to Respondent’s Further Submissions, p 2.
Having regard to the highly prejudicial effect on Mrs Burnett’s practice of imposing the second condition sought by the Board, I decided not to impose that condition. However, in light of the concerns raised by the Board and the results of the 2013 audit, I decided that the first condition represented a reasonable compromise between the public interest and Mrs Burnett’s interests, and I decided to impose that condition, in respect of clients Mrs Burnett had not provided services to prior to the date of my order.
For completeness, I note that at the stay hearing both parties indicated that they could be ready for a final hearing within approximately two months. Having regard to the concerns raised by the Board and my decision to grant a stay, I have now listed this matter for a final hearing on 3 and 4 April this year. I am hopeful that this should result in final disposition of the matter within approximately three months of the date of these reasons, and I note that this is not entirely out of keeping with the approach taken by the Board, which resulted in Mrs Burnett’s registration continuing for two months after the Board’s decision not to renew her registration.
THE CONFIDENTIALITY APPLICATION
As I have alluded to above, at a Directions Hearing convened after the stay hearing, it transpired that Mrs Burnett also sought orders under s 35 of the AAT Act, providing that the proceedings remain confidential at this stage. The orders sought by Mrs Burnett included orders to the effect that:
(a)Her name be replaced by a pseudonym in any Decision and Reasons for Decision published by the Tribunal;
(b)The hearing be held in private;
(c)Publication of her name and of any material tending to identify her be restricted to Members and staff of the Tribunal, the parties and their representatives and the staff of the Tribunal’s transcript provider; and
(d)Publication of the evidence given before the Tribunal and of matters contained in documents lodged with the Tribunal be restricted to Members and staff of the Tribunal, the parties and their representatives and professional advisers, and the Tribunal’s transcript provider.
The legal framework
The Tribunal’s power to make confidentiality orders is set out in s 35 of the AAT Act, which relevantly provides as follows:
35 Hearings to be in public except in special circumstances
…
Private hearing etc.
(2)Where the Tribunal is satisfied that it is desirable to do so by reason of the confidential nature of any evidence or matter or for any other reason, the Tribunal may, by order:
(a)direct that a hearing or part of a hearing shall take place in private and give directions as to the persons who may be present; and
(aa)give directions prohibiting or restricting the publication of the names and addresses of witnesses appearing before the Tribunal; and
(b)give directions prohibiting or restricting the publication of evidence given before the Tribunal, whether in public or in private, or of matters contained in documents lodged with the Tribunal or received in evidence by the Tribunal; and
(c)give directions prohibiting or restricting the disclosure to some or all of the parties to a proceeding of evidence given before the Tribunal, or of the contents of a document lodged with the Tribunal or received in evidence by the Tribunal, in relation to the proceeding.
(3) In considering:
(a) whether the hearing of a proceeding should be held in private; or
(b)whether publication, or disclosure to some or all of the parties, of evidence given before the Tribunal, or of a matter contained in a document lodged with the Tribunal or received in evidence by the Tribunal, should be prohibited or restricted;
the Tribunal shall take as the basis of its consideration the principle that it is desirable that hearings of proceedings before the Tribunal should be held in public and that evidence given before the Tribunal and the contents of documents lodged with the Tribunal or received in evidence by the Tribunal should be made available to the public and to all the parties, but shall pay due regard to any reasons given to the Tribunal why the hearing should be held in private or why publication or disclosure of the evidence or the matter contained in the document should be prohibited or restricted.
Evidence, contentions and relevant authorities
At the hearing in relation to the confidentiality issues on 7 February 2014, Mrs Burnett indicated that she was particularly concerned that confidentiality be maintained pending the Tribunal’s decision in relation to her substantive application. She stated that she thought disclosure of her name was “premature” at this stage and that “word travels quickly” and if it were to become known that the Board had decided not to renew her registration, this “may have a detrimental effect” on her practice. She said that “mud does stick”, inferring that even if her substantive application was ultimately successful, publication of her name in the context of these proceedings may have an enduring adverse effect on her practice and earning capacity.
Mrs Burnett also indicated that it was her preference that the proceedings remain private and that it would be embarrassing for her if details of this matter were to come to the attention of her clients. She further indicated that it was her experience that the general public is quick to lose confidence in a tax agent and it can be very difficult to regain that confidence once lost. She also indicated that in the event the hearing was to be held in public and members of the public attended, this would be embarrassing for her. Significantly however, Mrs Burnett did not contend that disclosure of her name at this stage of the proceedings would be likely to result in media attention, or otherwise have a severely detrimental impact on her practice or her ability to earn an income.
For its part, the Board strongly opposed the making of any confidentiality orders and made detailed written and oral submissions in support of its position.
Mr d’Assumpcao, who also appeared for the Board at the confidentiality hearing, pointed out that the power to make confidentiality orders is only enlivened where the Tribunal is “satisfied that it is desirable to do so by reason of the confidential nature of any evidence or matter or for any other reason”. He pointed out that there was nothing confidential about the evidence which was likely to be given in this matter, and therefore the Tribunal could only make confidentiality orders if it was satisfied that it was desirable do so “for any other reason”.
Mr d’Assumpcao also submitted that the only “reason” given by Mrs Burnett in support of her request for confidentiality orders was the risk of damage to her reputation. He further submitted that the relevant authorities were to the effect that avoidance of damage to a person’s reputation was not a sufficient reason for the grant of a confidentiality order.
Mr d’Assumpcao relied upon observations of the then President of the Tribunal, Brennan J, in Re Pochi and Minister for Immigration and Ethnic Affairs (1979) 2 ALD 33, as follows:
… the Tribunal’s powers are intended to facilitate the flow of relevant information to it, and if the exclusion of the public or even of a party is essential to preserve the proper confidentiality of the information needed to determine the application, that is a price which has to be paid, however reluctantly.
An order excluding the public may be justified more readily than an order excluding a party, but strict criteria govern the making of such an order. There must appear a real possibility of doing injustice to, or inflicting a serious disadvantage upon, a party, a witness or a person giving information if the proceedings were in public; or it must clearly appear that publication of the proceedings would be contrary to the public interest …
Mr d’Assumpcao also relied upon the observations of Downes and Jagot JJ in Australian Securities and Investments Commission v Administrative Appeals Tribunal (2009) 181 FCR 130 at [75] and [76] as follows:
Suppression orders are rarely made in courts, even though publicity undoubtedly disadvantages the parties. Criminal proceedings are a good example. In the AAT itself facts which parties would not wish to be published and which may disadvantage them are frequently published. Social security applications are a good example. The reason these matters are not kept secret is the overriding importance of justice being administered openly and in public. It is not readily apparent why persons in businesses should be treated differently even when, for example, employees may be disadvantaged.
When measured against the existence of the norm of a public hearing and the scheme established by the Corporations Act with respect to banning orders, it is apparent that the AAT would need some cogent reason by reference to the particular case to depart from the ordinary requirement of a public hearing. …
Later in their reasons, their Honours also observed in relation to the power conferred by s 35, “Consistent with our observations above it follows that this power also is one to be exercised sparingly”.[10]
[10] At [79].
Mr d’Assumpcao also relied on the decision of the Tribunal in Re Modini and Tax Agents’ Board of Queensland (2005) 89 ALD 496, in which Member Levy rejected an application for an order suppressing the applicant’s name because of embarrassment caused by her name appearing in public records. He also relied on the decision of the Tribunal in Re Gillespie and Australian Securities and Investments Commission (2012) 60 AAR 1 in which Senior Member McCabe declined to make a confidentiality order notwithstanding that he accepted that “publication of the decision will do significant damage to the applicant’s reputation and employment prospects”.[11] In that matter, Senior Member McCabe concluded that, notwithstanding the serious harm which may flow to the applicant from publication of the Tribunal’s decision, the interests of the investing public dictated that it would not be desirable to make a confidentiality order.
[11] At [8].
In addition to the decisions to which I was referred by Mr d’Assumpcao, I have also had regard to the decision of the Tribunal in Re TNST and Australian Securities and Investments Commission (2009) 50 AAR 176, in which Deputy President McDonald made confidentiality orders restricting publication of the applicant’s name and of evidence given before the Tribunal with a view to protecting the applicant’s reputation and business and employment prospects, pending determination by the Tribunal of the substantive application. Deputy President McDonald stated as follows:
If publication of names and addresses and of the evidence given, in newspapers, television or on the internet, was to occur prior to a decision, but nothing was published concerning the decision, and the applicant was to succeed, permanent damage to a person may occur.[12]
He also pointed out:
Clearly, if an applicant is unsuccessful then the end of the administrative processes has been reached and publication of the details should follow. If that is the case, then what is occurring is a delay in the right to publish, not a permanent ban on publication.[13]
[12] At [12].
[13] At [13].
I have also taken into account the decision of the Tribunal in Re Kanina Banner Pty Ltd and Minister for Health and Ageing (2002) 66 ALD 663 in which Deputy President Forgie made orders under s 35 in circumstances where she was satisfied that public disclosure of the matter before her would “threaten the continued existence of the applicant”. The Deputy President observed as follows:
As in a court, mere financial strain or embarrassment is not a sufficient reason for making a suppression order in the tribunal. In this case, however, I am satisfied that public disclosure of its identity would go beyond mere financial strain or embarrassment but would threaten the very existence of GDL. In doing so, it would threaten the tribunal’s ability to carry out its review processes effectively for the review would be pointless. Even if Kanina Banner were ultimately successful in its application, the decision set aside and its approval as an APL restored, it is likely to be a hollow victory and of no practical consequence to it in view of the enduring commercial loss it would suffer in the meantime. Such a consequence is contrary to the public interest in persons being affected by a decision made under s 23DN being able to have effective recourse to the right of review established by Parliament pursuant to s 25 of the AAT Act and s 23DO(5) of the ACT in relation to decisions made under s 23DN.[14]
[14] At [30].
Similarly, I have also had regard to the Tribunal’s decision in Re Opus Capital Ltd and Australian Securities and Investments Commission (2010) 117 ALD 608, in which Deputy President Hack made confidentiality orders in circumstances where he was satisfied that to do otherwise “could cause serious and irreparable damage to the reputation and standing of Opus and quite wrongly undermine investor confidence in Opus to the detriment of investors”.[15] In these circumstances, Deputy President Hack was satisfied that there were “compelling reasons shown to depart from the norm”.[16]
[15] At [27].
[16] At [25].
Consideration
In light of these authorities, I accept the Board’s submission that the risk of some damage to an applicant’s reputation and/or the risk of some damage to their business, employment prospects or financial situation is not sufficient to warrant the making of a confidentiality order. The effect of the authorities is that more must be shown and, in effect, there must be a real risk of serious and irreparable harm being caused through disclosure of the relevant details, or the disclosure must clearly be contrary to the public interest.
In light of Mrs Burnett’s evidence, both at the stay hearing and at the confidentiality hearing, I am satisfied there is some risk of damage to her reputation and practice if the confidentiality orders sought by her are not made. If those orders are not made, it is possible that one or more of her clients will become aware of the proceedings and perhaps of the nature of the decision made by the Board.
Having said that however, a stay order has been made in this matter and I am satisfied that that order will allow her to continue to practice and earn an income pending determination by the Tribunal of her substantive application. Further, I am not satisfied that publication of the Tribunal’s Reasons for Decision, or any other disclosure of Mrs Burnett’s identity in the course of these proceedings, will have any significant impact on her ability to practice and earn an income during the approximately three month period which I anticipate it will take for the Tribunal to make a final decision in this matter.
I accept therefore that there is some risk of harm being done to Mrs Burnett through disclosure of her name and the details of the proceedings which, even if she is ultimately successful in her substantive application, may be difficult to repair. However, I consider that serious irreparable harm is unlikely to be caused in the particular circumstances of this matter, and vindication by a Tribunal decision in her favour would repair or ameliorate most of the harm Mrs Burnett may have suffered as a result of publication of the details of this matter pending its final determination.
Accordingly, I have concluded that in all of the circumstances, the interests sought to be protected by Mrs Burnett do not outweigh the general public interest in Tribunal proceedings being conducted openly and transparently, combined with the more particular public interest in having access to information about these proceedings. In the event, therefore, I am not satisfied that Mrs Burnett has established a ‘reason’ which justifies departure from the principle enshrined in s 35 of the AAT Act, that Tribunal proceedings should be held in public.
In summary, I am satisfied that the existence of the stay order will protect Mrs Burnett from serious irreparable harm in a tangible, financial sense pending the Tribunal’s determination of her substantive application. I consider that any other damage she may suffer as a result of disclosure of the details of these proceedings pending their final determination is not such as to warrant the making of confidentiality orders, given the public interest in the proceedings being conducted openly.
For these reasons, I have decided not to make the confidentiality orders sought by Mrs Burnett.
NOTIFICATION OF PROFESSIONAL BODIES
There is one further matter I should comment upon, although it does not bear directly on my decision to grant a stay, or the confidentiality application.
It emerged at the stay hearing that, having reached its decision on 11 December 2013, the Board not only notified Mrs Burnett of its decision by letter dated 8 January 2014, it also notified the professional bodies of which she is a member, namely the Institute of Chartered Accountants and the National Tax and Accountants’ Association, by letter of the same date. Mrs Burnett had not previously been aware of this and was understandably concerned by it.
In submissions filed after the hearing, the Board explained that it did this pursuant to subs 60-125(8)(c)(iia) of the TASA, which requires the Board to notify professional associations where it has made a decision that an agent has breached the Code, even if (as appears to be the case here) the Board decides that no further action will be taken against the agent under that provision. The provision requires professional associations to be notified “within 30 days” of making the decision and, having made its decision on 11 December 2013, I accept that the Board was obliged to notify both Mrs Burnett and the professional associations by approximately 12 January 2014 of its decision that Mrs Burnett’s conduct had breached the Code.
Having reviewed the applicable provisions, I also accept that this Tribunal does not appear to have jurisdiction to review a decision of the Board pursuant to subs 60-125(2) that an agent has breached the Code. Accordingly, whilst I was initially concerned that the timing of the Board’s notification to the professional bodies may have effectively denied Mrs Burnett the opportunity to seek a stay from this Tribunal preventing that notification from occurring, I now accept that, as the Tribunal has no jurisdiction with respect to the Board’s decision under subs 60-125(2), it could not have granted a stay with respect to notification of that decision.
The Board does not appear to have been under any statutory obligation to also notify the professional associations that it had decided not to renew Mrs Burnett’s registration in its letter of 8 January 2014, and I consider that, had she had the opportunity, Mrs Burnett could probably have sought a stay from this Tribunal which would have been effective to prevent notification of the professional associations of the Board’s decision not to renew her registration. However, as such a stay could only have prevented notification with respect to the decision not to renew Mrs Burnett’s registration, and not the decision that she had breached the Code, it would have been of limited efficacy from her point of view.
DECISION
The Tribunal declines to make the orders sought under s 35 of the Administrative Appeals Tribunal Act 1975.
I certify that the preceding 75 (seventy-five) paragraphs are a true copy of the reasons for the decision herein of Deputy President K Bean .....[ Sgd ]....
Associate
Dated 24 February 2014
Date of hearing 28 January and 7 February 2014 Applicant In person Mr P d’Assumpcao
Solicitor for the Respondent Australian Government Solicitor
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