Kerin and Tax Agents' Board of South Australia

[2009] AATA 764

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 764

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2008/5520

GENERAL ADMINISTRATIVE DIVISION		)
Re		PETER DAVID KERIN

Applicant

And TAX AGENTS' BOARD OF SOUTH AUSTRALIA

Respondent

DECISION

Tribunal Senior Member R W Dunne

Date6 October 2009

PlaceAdelaide

Decision The Tribunal affirms the decision under review.

..............................................

R W DUNNE
  (Senior Member)

CATCHWORDS

TAX AGENTS – re-registration denied – whether person “not of good fame, integrity and character” – conviction for the importation of prohibited goods – removal from roll of practitioners for unprofessional conduct – whether person “not a fit and proper person” – decision affirmed

Income Tax Assessment Act 1936 ss 251BC(1), 251JC(1) and (2), 251QA(b)

Legal Practitioners Conduct Board v Peter Kerin [1996] SASC 5687
Kerin v Legal Practitioners Complaints Committee (1996) 67 SASR 149
In the matter of Peter David Kerin (1997) 195 LSJS 185
Legal Practitioners Conduct Board v Kerin [2006] SASC 393
Re McKay and Tax Agents’ Board of Tasmania (1994) 94 ATC 2057
Ziems v Prothonotary of the Supreme Court of New South Wales (1957) 97 CLR 279
A Solicitor v Council of the Law Society of New South Wales (2004) 216 CLR 253
Re Adamec and Tax Agents’ Board of Victoria [2005] AATA 913
New South Wales Bar Association v Cummins (2001) 52 NSWLR 279
Re Su and Tax Agents’ Board, South Australia (1982) 61 FLR 1
Stasos v Tax Agents’ Board of New South Wales (1990) 90 ATC 4950
Money Tree Management Services Pty Ltd v Deputy Commissioner of Taxation [2000] SASC 314
Re Sargent and Tax Agents’ Board of Victoria [2009] AATA 219

REASONS FOR DECISION

6 October 2009   Senior Member R W Dunne   

introduction

1. The applicant (Mr Peter Kerin) was admitted and enrolled as a barrister and solicitor of the Supreme Court of South Australia in February 1984. He began his practice in a firm in which his father was a partner. On 26 September 1984, he was registered as a tax agent. In late 1987, he set up practice as a sole legal practitioner. On 21 February 2007 or thereabouts, he applied for re-registration as a tax agent and on 30 October 2008 the respondent (“Board”) advised him that his application had been refused. Mr Kerin has, pursuant to s 251QA(b) of the Income Tax Assessment Act 1936 (“ITAA 1936”), applied to this Tribunal for a review of that decision.

2. An order to stay the operation of the decision under review was made by the Tribunal on 20 April 2009. In making the order, the Tribunal recorded the applicant’s undertaking that, until the hearing and resolution of the application for review, the applicant would arrange for his clients’ taxation returns to be prepared by a registered tax agent and his role would be limited to taking instructions, conveying those instructions to the registered tax agent concerned, and then signing the completed taxation returns in his capacity as a tax agent. Pursuant to s 41(2) of the Administrative Appeals Tribunal Act 1975 (“Act”), the implementation of the decision of the Board was stayed until the determination of the application for review or until further order.

3. At the hearing, Mr Kerin represented himself and Mr Richard Ross-Smith, of counsel, appeared for the Board. The Tribunal received into evidence the T documents (Exhibit R1) and the supplementary T documents (Exhibit R2) lodged pursuant to s 37 of the Act, together with the following documents:

·various affidavits submitted on behalf of the applicant (Exhibit A1); and

·Record of Outcome from the Magistrates’ Court of South Australia in the matter of Peter David Kerin, Appellant, and Registrar of Firearms, Respondent (Exhibit R3).

issue

4.      The issue for the Tribunal’s consideration is whether the applicant is “a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters”, pursuant to s 251JC(1)(a)(i) of the ITAA 1936.

legislative framework

5. Part VIIA of the ITAA 1936 deals with the registration of tax agents. When application is made for re-registration, the Board, if satisfied of the matters set out in s 251JC(1) of the ITAA 1936, is required to re-register the tax agent. If the Board is not so satisfied, it shall refuse to re-register the tax agent (see s 251JC(2)). Section 251JC(1) relevantly reads:

“251JC  Re-registration of tax agents

(1)The Board shall re-register the applicant as a tax agent if the applicant satisfies the Board that:

(a)      if the applicant is a natural person:

(i)the applicant is a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters; and

(ii)       the applicant is not an undischarged bankrupt;

(b)      …

(c)      …

(d)in all cases—the applicant has not permanently ceased to carry on business as a tax agent.”

6.      One of the matters that the Board must be satisfied of is that the applicant for re-registration is “a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters”.  This expression is often referred to as the “fit and proper person” requirement. Section 251BC of the ITAA 1936 sets out some particular circumstances where a person is not a fit and proper person. Section 251BC(1) relevantly reads:

“251BC  Fit and proper persons to prepare income tax returns

(1)Without limiting the generality of an expression used in this Part, but subject to this section, a person is not a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters, as at a particular time, if:

(a)      …

(b)      …

(c)      …

(d)      the person is not of good fame, integrity and character;

(e)      …

(f)       …”

background and evidence of applicant

7.      In his application for re-registration as a tax agent, received by the Board on 21 February 2007 (Exhibit R1, T8 at pages 35-44), Question 15 asked the applicant whether he had been “disbarred, expelled or struck off from the practice of your profession, or been disciplined by a professional body or registration board”.  In answering the Question, the applicant wrote:

“SA Supreme Court, December of 2006.  Name removed from Role [sic] of Legal Practitioners in South Australia.  Related to 3 matters, namely, (1) writing a harsh series of letters to a relative having made the mistake of being in a position of conflict after acting for that family member, (2) filing a document with a court that was filed for tactical reasons at the request of a client/friend when, in retrospect, I shouldn’t have been acting due to potential conflict, and, (3) failing to take advice regarding an estate where I was an executor and, as a result, not sending proper correspondence to the beneficiary of the estate and then making a payment of executor’s commission to a co-executor (NOT to me) when it, arguably, should not have been paid.

Please note that none of these matters had nothing [sic] to do with my tax agency practice, they involved NO aspect of criminality, dishonest[y] or deception and resulted from making mistakes when clouded by loyalty to family & friends.  In my respectful submission, given that I’ve never had a complaint from a client of my tax practice in over 20 years these matters have no affect [sic] upon my fitness and propriety to continue as a registered tax agent.”

8.      Question 17 in his application for re-registration asked the applicant whether he had “been convicted or been placed under sentence for any offence in Australia or any other country”.  In response to the Question, the applicant attached a Police Certificate issued by the Australian Federal Police (dated 25 March 2006) which noted the following Disclosable Court Outcomes recorded in relation to the applicant:

COURT	DATE	OFFENCE	COURT RESULT
Adelaide Magistrates Court	03.03.04	Possess a Silencer Possess Unregistered Firearm (2 charges) Fail to Keep Class A or B firearm Secured (3 charges)	On All Charges Convicted: Fined $2,000 Firearms Licence Cancelled.  Disqualified from Holding/Obtaining Licence Until 21/06/05
Adelaide District Court	01.12.03	Import Tier 2 Goods Without Approval	Convicted: Fined $6,000
St James Local Court	23.09.94	Knowingly Make False Statement Import Prohibited Imports (Firearm Parts)	On Each Charge: Fined $750

9. By letter dated 9 April 2008, Mr Kerin was advised by the Board that it had information indicating that he had been removed from the South Australian roll of legal practitioners in December 2006 as a result of adverse findings against him. He was asked to show cause why his application for re-registration as a tax agent should not be refused, under s 251JC(2) of the ITAA 1936, on the basis that he was not a “fit and proper person”. He sought to do so in a letter to the Board dated 16 April 2008 (Exhibit R1, T10 at pages 47-48). Following a meeting before the Board, when he asked to be heard in person, Mr Kerin was advised by letter dated 30 October 2008 (Exhibit R1, T1 at pages 3-5) that his application for re-registration had been refused. In the refusal letter, the Board made reference to the following additional matters it regarded as relevant to the issue of whether the applicant was a person of good fame, integrity and character:

“…

·You were subject to an Order of the Federal Court (‘the Order’) granted at the request of the Australian Securities and Investments Commission (‘ASIC’) which restrained you from providing financial services in Australia on behalf of Clubinvest Limited (‘Clubinvest’), a company of which you were a director.

·The decision of the Supreme Court of South Australia in Legal Practitioners Conduct Board v Kerin [2006] SASC 393 which was handed down on 22 December 2006 and which resulted in your name being removed from the South Australian roll of legal practitioners.

·Your convictions in the District Court of South Australia in December 2003 for the import of prohibited goods (which resulted in a fine of $6,000.00) and in the Adelaide Magistrates’ Court on 3 March 2004 for various firearms offences (which resulted in a fine of $2,000.00).

·The Enforceable Undertaking given to ASIC by yourself and other directors of Food and Beverage Australia Staff Superannuation Fund (‘FABAL Superannuation Fund’) in respect of failure to comply with the level of disclosure in relation to individual member’s entitlements and the overall performance of the fund as required under the Operating Standards prescribed by the regulations made under Section 3312 [sic] of the Superannuation Industry (Supervision) Act 1993.

…”

10.     In addition to those events appearing in paragraph 8 of these reasons, what follows is a chronology of certain events involving complaints and proceedings against or involving the applicant during part of the period he has been registered as a tax agent:

DATE	EVENT
6.3.95	The Legal Practitioners Complaints Committee laid a complaint against the applicant involving findings of unprofessional conduct.
5.7.96	Legal Practitioners Conduct Board v Peter David Kerin [1996] SASC 5687. The Legal Practitioners Conduct Board appealed to the Supreme Court in relation to various charges of unprofessional conduct.
20.9.96	Kerin v Legal Practitioners Complaints Committee (1996) 67 SASR 149. The applicant appealed to the Full Court of the Supreme Court against findings made in relation to unprofessional conduct.
21.11.97	In the matter of Peter David Kerin (1997) 195 LSJS 185. The Law Society of South Australia applied to the Full Court of the Supreme Court to have the applicant’s name struck off the roll of legal practitioners.
22.12.06	Legal Practitioners Conduct Board v Kerin [2006] SASC 393. The Full Court of the Supreme Court ordered that the applicant be removed from the roll of legal practitioners.

11.     In giving his evidence Mr Kerin said that, in the five years prior to the removal of his name from the roll of legal practitioners, his legal practice involved no more than 20 to 30 percent of his time.  He would have also spent about 5 percent of his time acting as a registered tax agent.  In making the present application for review he was not seeking a full or unconditional re-registration, but that a condition be attached to his registration until he made application for re-admission to the roll of legal practitioners.  Until that time, he would not physically prepare any taxation returns, which would be prepared by a firm of registered and practising accountants, and his involvement would only be to take instructions and to physically sign the taxation returns.  He said it was nearly 10 years since the unprofessional conduct complained of had occurred, that there had been no recurrence since that time and there would be no recurrence in the future.  His practice as a tax agent was only small, but it was something that he wanted to expand, if given the opportunity to do so, because of the number of income opportunities that had been taken away from him in recent years.  He admitted that he had been found guilty of unprofessional conduct, but suggested that there was a distinction between unacceptable conduct and unprofessional conduct.  He accepted that his conduct was unsatisfactory, but he did not accept that it was unprofessional.  Not once in 25 years of continuous tax practice had he had a complaint from a client of the practice or from the Australian Taxation Office (“ATO”) about any of the taxation returns that he had prepared and lodged.  He also suggested that the standards required of a tax agent, whilst high, were not as high as the standards required of a legal practitioner.

12.     In cross-examination, when asked by Mr Ross-Smith about the charges of unprofessional conduct by the Legal Practitioners Disciplinary Tribunal, Mr Kerin said he did not believe that, whatever the outcome, it would affect his standing or abilities as a tax agent.  Further, he did not think that the outcome of the strike-off proceedings in the Supreme Court would have any effect on his standing as a tax agent.

the applicant’s case

13.     The case for the applicant is set out in his Statement of Facts, Issues and Contentions.  In essence, it is as follows:

(a)      The conduct that was the subject of the matters that went before the Full Court of the Supreme Court in 2006 occurred in 1999 and 2000 and had not been repeated in the eight or nine years between the time the conduct occurred and when the application for re-registration came before the Board. 

(b)      None of the matters that are referred to in Question 15 of the application for re-registration (see paragraph 7 of these reasons) had anything to do with the applicant’s practice as a tax agent, or involved any aspect of criminality, dishonesty or deception, but resulted from making tactical and procedural mistakes at a time when the applicant’s mind was clouded by loyalty to family and friends.

(c)       The convictions in the District Court in December 2003 and in the Adelaide Magistrates’ Court in March 2004 occurred in extreme extenuating circumstances and involved no aspect of dishonesty or deception.

`(d)      Whilst the applicant has made mistakes in the past, none of those mistakes had been made in relation to his practice as a tax agent and the applicant deserved the benefit of the doubt that he would not make any mistakes in relation to his practice as a tax agent. 

(e)      A significant majority of the applicant’s past mistakes were contributed to by the ongoing effect of an unfortunate marriage.

(f)       The standards to be applied for the applicant’s re-registration as a tax agent are less stringent than the standards to be applied to practitioners of the South Australian Supreme Court, the latter standards being far greater and more stringent than the standards to be applied to other persons.     

the board’s case

14.     The case for the Board was set out in its Statement of Facts, Issues and Contentions and expanded in its outline of submissions.  It is broadly as follows:

(a)The applicant is not a person of good fame, integrity and character and is not a “fit and proper person”.

(b) The behaviour and circumstances bearing upon whether a person is a fit and proper person to conduct the activities of a tax agent are not restricted to the conduct of the person in their capacity as a tax agent. A wider enquiry is warranted by the relevant provisions of the ITAA 1936. When this is done in the case of the applicant, he does not satisfy the “fit and proper person” requirement.

(c)       The function and role of tax agents requires honesty and integrity.  The purpose of registration of tax agents is to uphold those standards.  The applicant lacks the qualities of character and trustworthiness that are necessary attributes of a person entrusted with the responsibilities of a legal practitioner and therefore also a registered tax agent. 

(d)      Personal misconduct and a person’s behaviour, even if it does not amount to professional misconduct, might demonstrate qualities of a kind that require a conclusion that the person is not a fit and proper person to act as a tax agent.

(e)      The behaviour and conduct of the applicant are pertinent to whether he is a fit and proper person to act as a tax agent.  Despite disciplinary proceedings and the suspension of his practising certificate, he engaged in further unprofessional conduct.

(f)       Having regard to the applicant’s behaviour and conduct, which cannot be said to be behind him, isolated and unlikely to recur but which goes to his character and trustworthiness, the applicant is an unsuitable person to have the responsibilities of a registered tax agent. 

consideration

The Decision under Review

15.     The Board resolved at the meeting on 24 October 2008 to refuse the applicant’s application for re-registration as a tax agent.  The reasons for that decision can be found in Exhibit R1, T1 at pages 4-5.  In reaching its decision, the Board had regard, amongst other things, to the additional matters referred to in paragraph 9 of these reasons.  The decision of the Board relevantly reads:

“…

The proceedings before the Supreme Court which resulted in your name being stuck off the roll of legal practitioners were based on a finding by the Legal Practitioners Disciplinary Tribunal that you were guilty of unprofessional conduct in respect of three specific charges.  The Court also noted that you had previously been suspended from practice as a result of orders of an earlier Full Court in November 1997 following findings of unprofessional conduct including the deliberate misleading of the Legal Practitioners Complaints Committee and breach of your duty as a fiduciary in a number of respects.  The Court noted that your conduct in the application before it had some similarity to aspects of the conduct which lead [sic] to your earlier suspension in 1997.

Having regard to all of the circumstances, the Court concluded that you lacked the qualities of character and trustworthiness which are the necessary attributes of a person entrusted with the responsibilities of a legal practitioner and that accordingly, you were not fit to remain a member of the legal profession.  It is apparent from their respective judgments that the Members of the Full Court were particularly concerned by the recurrent nature of the maters before them, both in that case and the earlier decision in 1997 which led to your suspension from practice at that time.

Similarly, in the case of the firearms offences, the Board noted that you had been convicted for the same offence previously and also had regard to the comments of His Honour Judge Bright in his decision as to sentencing where he remarked:-

‘I come back to the offence itself which is the illegal importation, when you well knew it was illegal, and when you took steps to conceal the importation’.

The Enforceable Undertaking and the Order, several years apart, were also viewed by the Board as a further indication that these matters formed part of a consistent pattern of conduct bearing on your good fame, integrity and character, rather than merely isolated cases.

The Board noted the submissions made in your letter dated 16 April 2008 that the conduct which led to you being struck off the roll of legal practitioners had nothing to do with your practice as a tax agent.  While it is true that the matters considered by the Legal Practitioners Conduct Board and the Supreme Court have no direct connection with the preparation of tax returns, the Board nevertheless considered that the nature and frequency of occurrence of the matters brought before ASIC, the Legal Practitioners Conduct Board and the Court demonstrate that you do not have the appropriate level of integrity which would enable the Board to find that you are of sufficient good fame, integrity and character to enable it to conclude that you are a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters.

The Board accordingly decided that it had no alternative but to refuse your application for re-registration as a tax agent under section 251JC(2) of the ITAA 1936

…”

16.     In relation to the additional matters referred to in paragraph 9 of these reasons, the Tribunal is satisfied that, on the evidence, the issues relating to Clubinvest Limited and the Food and Beverage Australia Staff Superannuation Fund did not involve aspects of unprofessional conduct that would adversely affect the applicant’s fitness and properness to practice as a tax agent.

A Fit and Proper Person

17. The scheme of s 251JC(1)(a)(i) and s 251BC(1) of the ITAA 1936 is that the latter defines some matters where a person is taken not to be a fit and proper person. However, s 251BC(1) does not define exhaustively the matters that may determine whether a person is a fit and proper person. None of the matters in paragraphs (a), (b), (c), (e) or (f) are presently in issue. What is in issue is paragraph (d). Thus, the question whether Mr Kerin is a fit and proper person is to be determined by reference to the matters in s 251BC(1) (and presently it is only the “good fame, integrity and character” test in paragraph (d) that is said to be in issue), and then by reference to a wider consideration of fitness and properness. As was stated by Deputy President D P Gerber in Re McKay and Tax Agents’ Board of Tasmania (1994) 94 ATC 2057 at paragraph 35:

“I am satisfied that the effect of s 251BC, and particularly sub-s 251BC(1), in relation to sub-s 251JC(1) is that I am able to consider a multiplicity of factors (it being, however, unwise to attempt to define the factors which may be taken into account) when deciding whether the applicant is ‘a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters’; not being bound merely to consider the various factors in sub-s 251BC(1). However, I am bound to consider the criteria in sub-s 251BC(1) for the reason that if any of them are made out (subject to the discretion contained in sub-s 251BC(3)) I am compelled to find that the applicant is not such a fit and proper person. In other words, if I were to find, for example, that the applicant was ‘not of good fame, integrity and character’, it must be concluded that the applicant is not ‘a fit and proper person (etc)’ for the purposes of sub-s 251JC(1).”

18.     On the evidence before it, the Tribunal finds that the matters to be taken into account in Mr Kerin’s case when considering the good fame, integrity and character test and ultimately the fit and proper person question are:

·the convictions in the St James Local Court of knowingly making a false statement to a Customs Officer and importing prohibited firearm parts;

·the complaint laid against the applicant by the Legal Practitioners Complaints Committee in relation to the convictions in the St James Local Court;

·the appeal by the Legal Practitioners Conduct Board concerning a fine imposed on the applicant for unprofessional conduct arising out of a mortgage practice conducted by him;

·the appeal by the applicant against the findings made by the Legal Practitioners Conduct Board that he had engaged in unprofessional conduct;

·the application brought by the Law Society of South Australia to have the applicant’s name struck off the roll of legal practitioners;

·the conviction in the District Court of importing Tier 2 goods without approval;

·the application by the Legal Practitioners Conduct Board to have the applicant removed from the roll of legal practitioners.

St James Local Court

19.     On 23 September 1994, the applicant was found guilty in the St James Local Court of knowingly making a false statement to a Customs Officer and importing prohibited firearm parts.  On each charge, the applicant was fined $750.

Complaint by Legal Practitioners Complaints Committee

20.     On 6 March 1995, the Legal Practitioners Complaints Committee laid a complaint against the applicant before the Legal Practitioners Disciplinary Tribunal pursuant to the Legal Practitioners Act 1981.  The complaint related to the conviction on 23 September 1994 (paragraph 19 above) and involved findings by the Committee that the applicant had engaged in unprofessional conduct  by seeking to import firearms (or parts) into Australia which he knew to be prohibited imports, knowingly made a false statement to a Customs Officer and misled or attempted to mislead the Committee.

Appeal by the Legal Practitioners Conduct Board

21. This matter (reported in [1996] SASC 5687) involved an appeal to the Supreme Court by the Legal Practitioners Conduct Board. It concerned a fine imposed on the applicant by the Legal Practitioners Disciplinary Tribunal relating to various charges of unprofessional conduct arising out of a mortgage practice conducted by the applicant. The fine was set aside by Duggan J and a recommendation made that disciplinary proceedings be commenced against the applicant in the Supreme Court. In his judgement, Duggan J said (at paragraph 15):

“The misconduct established before the tribunal consisted of failure to observe fundamental requirements of legal professional practice including trust account procedure, the rendering of accounts and the manner in which conflicts of interest are to be approached.”

Appeal by Applicant to the Full Court of the Supreme Court

22. This matter (reported in (1996) 67 SASR 149) concerned the appeal by the applicant to the Full Court of the Supreme Court against findings made by the Legal Practitioners Complaints Committee in the complaint laid on 6 March 1995 (paragraph 20 above). In the decision of the Full Court, Millhouse J said (at page 155):

“A Customs Service Officer, Howarth, had visited the appellant's premises and searched them but had taken no further action. The very officer, though, who was within a few days to prove the letters in court had the appellant not been prepared to consent to their tender! What the appellant wrote - that ‘a senior Australian Customs Service officer - who had no real interest in the matter whatsoever’ - was an outright lie!”

Later, in the decision, Duggan J said (at pages 163-164):

“Of course count 5 could not have been made out unless it had been established that the appellant intentionally misled or attempted to mislead the complaints committee and it was in this respect that his explanations as to why he wrote what he did, including the explanation I have summarised above, became relevant. The credibility of the appellant was crucial to this particular issue and in this respect the Tribunal made unfavourable findings against him both generally and in relation to the matter presently under discussion. The Tribunal carefully considered the evidence on this count and I was unable to detect any flaw in the reasoning of its members. After perusing the evidence, albeit without the advantage of seeing and hearing the witnesses, I agree with the conclusions reached by the Tribunal and I am of the view that misconduct was established by reason of the matters alleged in par 5(1) of the complaint.” (emphasis added)

Application to have Applicant’s name struck off Roll of Legal Practitioners

23. In this matter (reported in (1997) 195 LSJS 185), the Law Society of South Australia applied to the Full Court of the Supreme Court to have the applicant’s name stuck off the roll of legal practitioners. The Society’s application was based on two separate complaints against the applicant which were heard by the Legal Practitioners Disciplinary Tribunal. The first complaint arose out of the importation into Australia by the applicant of prohibited firearms parts. The second complaint involved the applicant being convicted of certain charges of unprofessional conduct arising out of a mortgage practice which he conducted. The Full Court imposed a period of suspension from legal practice on the applicant of 18 months. In the decision of the Court, Duggan J said (at page 197):

“The firearms importation matters have no connection with the practitioner’s legal practice, although he did write letters on his firm’s notepaper.  Of course this does not mean that the correspondence and the importation cannot be taken into account when assessing the practitioner’s fitness to practice.” (emphasis added)

District Court

24.     On 1 December 2003, the applicant was convicted in the District Court of intentionally importing Tier 2 goods (firearm barrel), without approval under the Customs Act 1901, and was fined $6,000.  In his sentencing remarks, Bright J said (Exhibit R1, T5 at pages 16-18):

“…

My difficulty is that, as a solicitor, you well knew your obligations.  As an experienced shooter, you were familiar with, in particular, your obligations in relation to firearms.  You have one prior conviction of a similar nature.

…

I come back to the offence itself, which is the illegal importation, when you well knew it was illegal, and when you took steps to conceal the importation.

…

As your case is for a second offence, and as you were in a position where you so well knew what you were doing was wrong, I am not prepared to impose a small penalty.

…”

In his evidence, the applicant said he did not know why Bright J stated that he had taken steps to conceal the importation, because he did not.  The Tribunal notes the statement was made in the sentencing remarks and obviously influenced the Judge in the significant fine he imposed.

Application by Legal Practitioners Conduct Board to have Applicant removed from Roll of Legal Practitioners

25. In this matter (reported in [2006] SASC 393), the Legal Practitioners Conduct Board applied to the Full Court of the Supreme Court for an order that the applicant be removed from the roll of legal practitioners. The Full Court ordered that the applicant’s name be so removed. In his judgment in the various paragraphs mentioned, Gray J made the following comments about the applicant’s conduct which was the subject of the application by the Legal Practitioners Conduct Board:

“(4) The primary issue to be decided is whether the material before this Court demonstrates that the practitioner is not a fit and proper person to remain a legal practitioner. …

…

(19)  The practitioner placed before the Court a number of affidavits from fellow practitioners and clients that depose that the practitioner is of good character, and that in their dealings with him in a legal capacity, he has been courteous, ethical and professional. A number of the affidavits made reference to the negative impact of the practitioner’s marriage difficulties at the time of the three charges. However, while one may have sympathy for the practitioner’s personal circumstances they do not provide a satisfactory explanation for his unprofessional conduct nor his unwillingness to learn from his earlier suspension.

…

(21)  It is appropriate for this Court to accept and act on the findings of the Tribunal. They were not challenged on the hearing of this application. I agree with the Tribunal’s observations and findings. The conduct was not isolated. The practitioner was unable to satisfactorily explain much of his conduct. His conduct may reasonably be held to violate, or to fall short of, to a substantial degree, the standard of professional conduct expected or approved of by members of the profession of good repute and competence.

…

(25)  The circumstances disclosed before this Court reveal a failure by the practitioner to understand public professional standards. In particular the position is that, despite the earlier suspension from practice, on his return he continued to behave in a manner inappropriate for a legal practitioner. The circumstances, found proved by the Tribunal, demonstrate a disregard of the practitioner’s professional obligations and a failure to meet those obligations. The material before this Court suggests that the practitioner’s behaviour cannot be said to be behind him, isolated, and unlikely to recur.

…

(29)  The totality of the circumstances before the Court indicates that the practitioner lacks the qualities of character and trustworthiness which are the necessary attributes of a person entrusted with the responsibilities of a legal practitioner.  Neither suspension nor supervision are appropriate orders.

(30) The practitioner’s conduct represented a gross departure from proper professional standards. The conduct amounted to an abuse of the privileges that accompany a practitioner’s admission to this Court. His treatment of and his conduct towards clients and others were disgraceful and dishonourable.

(31) The practitioner’s conduct is of such a kind that if tolerated would bring the legal profession into disrepute. It is of a nature that would erode the public’s confidence in the legal profession. The public must be protected from legal practitioners who are ignorant of the basic rules of proper professional practice and who are indifferent to rudimentary professional requirements….” (emphasis added)

26.     In his judgement, White J also made the following observations (at paragraph 49):

“(49)  However, as already noted, the practitioner’s conduct which led to his previous suspension did include, as did his present conduct, the intentional misleading of the Legal Practitioners’ Conduct Board. In the circumstances of this case, I regard this conduct as particularly serious. The practitioner should, at the very least, have been aware from the judgments of this Court involving himself that candour and honesty in his dealings with the Board was required. In this respect, the practitioner’s admission that he had not even read, until shortly before the hearing before the Tribunal, the reasons of the Full Court for suspending him is startling. Although the fact of his suspension, and the processes which led to it, may not have been palatable for the practitioner, it is remarkable that he had not even read the assessment by members of this Court of his conduct. It indicates, in my opinion, ‘an almost reckless lack of concern for the disciplinary processes of the legal profession of which he seeks to remain part’, an indifference to the supervisory authority of this Court, and an indifference to developing an understanding of the standards of conduct which the Court and the community expect of legal practitioners. It militates very much against this Court now having any confidence that the practitioner will modify his behaviour in the future.”

27.     In giving his evidence, the applicant accepted that his conduct was unacceptable or unsatisfactory, but he did not accept that his conduct was unprofessional.  The concepts of “professional misconduct” and “personal misconduct” were considered by the High Court in Ziems v Prothonotary of the Supreme Court of New South Wales (1957) 97 CLR 279. Later, the High Court referred to its decision in Ziems in A Solicitor v Council of the Law Society of New South Wales (2004) 216 CLR 253 where, at paragraphs 19 and 20, it said:

“19.  In Ziems, the conduct of the practitioner which resulted in his conviction and prison sentence had nothing to do with his practice as a barrister. Fullagar J said:

‘Personal misconduct, as distinct from professional misconduct, may no doubt be a ground for disbarring, because it may show that the person guilty of it is not a fit and proper person to practise as a barrister ... But the whole approach of a court to a case of personal misconduct must surely be very different from its approach to a case of professional misconduct. Generally speaking, the latter must have a much more direct bearing on the question of a man's fitness to practise than the former.’

20. The present case was conducted on the basis that the definition of ‘professional misconduct’ in s 127 of the Act did not apply, because the proceedings were brought in the inherent, not the statutory, jurisdiction. The dividing line between personal misconduct and professional misconduct is often unclear. 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 practisehttp:// - #.” (emphasis added)

Moreover, in referring specifically to the position of a tax agent, in Re Adamec and Tax Agents’ Board of Victoria [2005] AATA 913, Member Dr G Hughes said (at paragraph 76):

“The integrity of the tax agent who has been convicted of an offence, albeit in a personal capacity, which is of a nature integral to his professional duties, must necessarily be called into question.”

28.     In New South Wales Bar Association v Cummins (2001) 52 NSWLR 279, Stigelman CJ (with whom Mason P and Handley JA agreed) considered the question of “professional misconduct“ and, in particular, whether it extended to acts not occurring directly in the course of professional practice. His Honour concluded:

“56. There is authority in favour of extending the terminology ‘professional misconduct’ to acts not occurring directly in the course of professional practice. That is not to say that any form of personal conduct may be regarded as professional misconduct. The authorities appear to me to suggest two kinds of relationships that justify applying the terminology in this broader way. First, acts may be sufficiently closely connected with actual practice, albeit not occurring in the course of such practice. Secondly, conduct outside the course of practice may manifest the presence or absence of qualities which are incompatible with, or essential for, the conduct of practice. In this second case, the terminology of ‘professional misconduct’ overlaps with and, usually it is not necessary to distinguish it from, the terminology of ‘good fame and character’ or ‘fit and proper person’.”

29.     In the Tribunal’s opinion, the applicant’s conduct, detailed above, in the period prior to his removal from the roll of legal practitioners was so connected to his legal practice as to amount to unprofessional conduct.  And, as was said by Gray J in the removal proceedings in 2006, the totality of the circumstances before the Supreme Court indicated that the applicant lacked the qualities of character and trustworthiness that are the necessary attributes of a person entrusted with the responsibilities of a legal practitioner.  With respect, the same applies to the applicant as a person entrusted with the responsibilities of a registered tax agent.

30.     The applicant contended the conduct that was the subject of the matters considered by the Supreme Court in the removal proceedings had not been repeated in the years between the conduct occurring and when his re-registration as a tax agent came before the Board.  He deserved the benefit of the doubt that he would not make mistakes in relation to his practice as a tax agent.  The Tribunal does not accept this contention in considering the applicant’s present position.  As was said by Gray J and White J in the Supreme Court proceedings, the material before the Full Court at the time suggested that the applicant’s behaviour could not be said to be “behind him, isolated and unlikely to recur”.  It militated against the Court having any confidence that he would modify his behaviour in the future.  When viewed overall, the applicant’s unprofessional conduct occurred over a long period and could not reasonably be attributed to a “temporary aberration”.  In the circumstances, the Tribunal is not satisfied that the applicant’s behaviour will not recur.

31.     The applicant also contended that none of the matters referred to in Question 15 of his application for re-registration had anything to do with his practice as a tax agent, or involved any aspect of dishonesty or deception.  In the Tribunal’s view, they had everything to do with his practice as a tax agent.  In Re Su and Tax Agents Board, South Australia (1982) 61 FLR 1 at pages 4-5, Davies J, sitting as the President of the Tribunal, spoke of the need for a tax agent to be a person of good reputation, competence and ability when he said:

“The function of a tax agent is to prepare and lodge income tax returns for other persons. A person is a fit and proper person to handle the affairs of a client if he is a person of good reputation, has a proper knowledge of taxation laws, is able to prepare income tax returns competently and is able to deal competently with any queries which may be raised by officers of the Taxation Department. He should be a person of such competence and integrity that others may entrust their taxation affairs to his care. He should be a person of such reputation and ability that officers of the Taxation Department may proceed upon the footing that the taxation returns lodged by the agent have been prepared by him honestly and competently.

There are certain convictions which, in themselves, may be inconsistent with the holding of a tax agent's registration. If a lawyer is convicted of fraud, his name may be struck from the roll of practitioners, for fraud is inconsistent with the practice of the law. If a doctor is convicted of a serious offence relating to illegal drugs, his name may be struck from the register because the offence is inconsistent with the task which medical practitioners perform. If a tax agent is convicted of an offence of tax evasion, his name may be taken from the register, for tax evasion is inconsistent with the role which tax agents are called upon to perform.

If offences for which a tax agent is convicted are not of that character, they may nevertheless justify the removal of his name from the register if, of themselves, or in combination with other factors, they indicate that the tax agent is not a person of such integrity and competence that clients' affairs should be entrusted to him or that he is not of such integrity and competence that officers of the Taxation Department may place reliance upon returns prepared and lodged by him. …”

32.     The matters referred to in Question 15 also involved aspects of dishonesty or deception.  In the course of his judgement in the Supreme Court removal proceedings, White J said (at paragraph 47):

“In my opinion, the conduct of the [applicant] in deliberately misleading the [Legal Practitioners’ Conduct Board] so soon after he had resumed practice in mid 1999 is particularly significant. It demonstrates either a continued failure by the [applicant] to appreciate the standards of conduct required by practitioners or a continuing unwillingness or inability to meet those standards.”

33.     Moreover, in his response to the Board’s notice to show cause, the applicant argued that the matters that led to the removal of his name from the roll of legal practitioners involved no aspect of dishonesty or deception.  Again, in his judgment in the Supreme Court removal proceedings, Gray J said:

“24.  The earlier unprofessional conduct involved deception of the Legal Practitioners Complaints Committee.  The practitioner’s deception of the [Legal Practitioners Conduct Board] is a serious matter.  Public confidence in the legal profession necessarily involves confidence in the disciplinary process.  The need for integrity in the disciplinary process underscores the importance of the professional obligations of candour and frankness owed by practitioners to the [Legal Practitioners Conduct Board] and [Legal Practitioners Disciplinary Tribunal].  The attempt for whatever reason to conceal relevant information from the [Legal Practitioners Conduct Board] indicates a weakness of character of a disqualifying nature.  If the practitioner is to be allowed to practise in the future, the Court must be satisfied that he is of good character.”

34.     In his Statement of Facts, Issues and Contentions, the applicant argued that the convictions in the District Court in December 2003 and the Adelaide Magistrates Court in March 2004 occurred in extreme extenuating circumstances and involved no aspect of dishonesty or deception.  However, this was not the view taken by Bright J in the District Court (see paragraph 24 above).

35.     In Stasos v Tax Agents’ Board of New South Wales (1990) 90 ATC 4950, Hill J (at page 4959) made a number of observations about the role and conduct befitting a tax agent:

“In addition to the tax agent dealing with his client, he will, almost invariably have dealings with officers of the Australian Taxation Office and perhaps the boards or tribunals to which I have already referred. Those dealings must be able to be carried on in an atmosphere of mutual trust. The Commissioner and his officers must be able to accept that, to the best of the ability of the tax agent, returns have been prepared which are true and accurate. This is particularly so now that the Commissioner has proceeded to a system of self assessment, with inaccuracies only coming to light in case of random audit or, presumably, other information coming to the hands of the Commissioner.

The Commissioner and his officers must be able, also, to accept the word of a tax agent when acting for a taxpayer in negotiations, and a fortiori in matters proceeding in a Board, the Administrative Appeals Tribunal or indeed a court it is imperative that the honesty and integrity of the tax agent not be called into doubt. So it is that it is a requirement, not only of initial registration, but of remaining on the register that a tax agent be a fit and proper person to perform the duties of a tax agent and bear the responsibilities that come with those duties.”

36.     In relation to his dealings with the ATO, it was the applicant’s evidence that, not once in 25 years of continuous practice, had he had a complaint from the ATO.  However, the Tribunal notes in Money Tree Management Services Pty Ltd vDeputy Commissioner of Taxation [2000] SASC 314, a matter in which the applicant was acting as solicitor on record, he was ordered to pay the ATO’s indemnity costs on the basis that he ought to have known the application pursued on behalf of his client had no prospects of success, yet prosecuted it anyway. In ordering costs against the applicant personally, Debelle J made the following statements:

“9.  … Furthermore, I am not satisfied that Mr Kerin has correctly related the effect of the advice given by Mr Walsh.  Mr Kerin has already misrepresented advice given on other issues.  …

13.  … He [the applicant] knew both the nature and the content of the advice given to him by both Ms Layton QC and Mr Hackett-Jones QC.  He has, in his affidavit, misrepresented the content of that advice.  Indeed, to use the word ‘misrepresent’ is to put the matter kindly from Mr Kerin’s standpoint. …”

37.     In Re McKay (supra), Deputy President D P Gerber said it was unwise to attempt to define the factors that may legitimately be taken into account when deciding whether a person satisfies the fit and proper person requirement.  In Stasos (supra), Hill J also observed (at page 4959) that the content of what is necessary to constitute a person a fit and proper person to pursue a particular vocation (such as a legal practitioner or a tax agent) may vary having regard to the vocation under consideration. It is not necessary to confine oneself to the special provisions of the relevant Act in question in deciding whether a man is fit, provided one gives weight only to matters which can fairly be seen to be relevant to the vocation in issue. In his closing, the applicant contended that these observations meant there were different standards applying to legal practitioners and to other persons seeking to re-register as tax agents. Earlier, he had put to the Tribunal, without any authority but as a “common sense submission”, that the standards to be applied to his re-registration as a tax agent were less stringent than the standards that applied to him as a practitioner of the Supreme Court. Assuming these contentions are effectively the same, the Tribunal does not accept them. The requirement in s 251JC(1) of the ITAA 1936 for re-registration as a tax agent is fitness and properness and there may be different nuances that can apply to different persons applying, such as lawyers, accountants and financial advisers. However, this is not to say that different standards apply to different applicants or that different standards apply to legal practitioners and other applicants for re-registration as a tax agent. As was observed by Senior Member G D Friedman in Re Sargent and Tax Agents Board of Victoria [2009] AATA 219 (at paragraph 6):

“6.  In The Law Society of South Australia v McKerlie [2008] SASC 222 Gray J stated at [22] that public confidence and trust in the legal profession are essential to effective functioning of the profession. The same would appear to be true of the profession of preparing tax returns and transacting business on behalf of taxpayers in income tax matters.”

With respect, the Tribunal agrees with Senior Member Friedman’s observation.

38.     The applicant placed before the Tribunal a number of affidavits from fellow practitioners and clients that deposed he was of good character, and in their dealings with him in a legal capacity, he had been ethical and professional.  As Mr Ross-Smith put to the Tribunal, the affidavits do not go to the qualities necessary to satisfy the fit and proper person requirement.  They were largely unrelated to that requirement and, for the most part, were of little assistance to the Tribunal. 

conclusion

39.     For the reasons stated above, the Board was correct to refuse the applicant’s application for re-registration.  The Tribunal is of the view that the applicant is, at the time of the hearing, a person “not of good fame, integrity and character” pursuant to s 251BC(1)(d) of the ITAA 1936. Adopting the reasoning of Deputy President D P Gerber in Re McKay (supra) and, having concluded that the applicant is a person “not of good fame, integrity and character”, it must be concluded that he is not “a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters” for the purposes of s 251JC(1) of the ITAA 1936.

40.     The order to stay the operation of the decision under review made by the Tribunal on 20 April 2009 is discharged.

decision

41.     The Tribunal affirms the decision under review.

I certify that the 41 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member R W Dunne

Signed:         ............J Coulthard..........................................
  Associate

Date of Hearing  26 June 2009
Date of Decision  6 October 2009
Advocate for the Applicant       Self-represented
Counsel for the Respondent     Mr R Ross-Smith
Solicitor for the Respondent     AGS