Le'Sam Accounting Pty Ltd and Tax Practitioners Board

[2021] AATA 1593

Le'Sam Accounting Pty Ltd and Tax Practitioners Board [2021] AATA 1593 (21 May 2021)

Administrative Appeals Tribunal

ADMINISTRATIVE APPEALS TRIBUNAL              )
  )         No: 2020/0223 - 24
TAXATION AND COMMERCIAL DIVISION            )

Re: Le'Sam Accounting Pty Ltd
Applicant

Re: Sam Rizkallah
Applicant

And: Tax Practitioners Board
Respondent

DIRECTION

TRIBUNAL:  Deputy President Bernard J McCabe

DATE OF CORRIGENDUM:            31 May 2021

PLACE:           Sydney

The Tribunal directs the Registrar, pursuant to subsection 43AA(1) of the Administrative Appeals Tribunal Act 1975, to alter the text of the decision in these applications as follows:

1. Delete paragraph one of the orders, found on the first page of the decision, and replace with “The decisions made under ss 40-5(1)(b) and 40-15(1)(b) of the TAS Act, to terminate the registration of both Mr Rizkallah and Le’Sam Accounting Pty Ltd as tax practitioners, are affirmed.”

1        

2. Delete the first sentence of paragraph sixty four and replace with “The Tribunal affirms the decisions made under ss 40-5(1)(b) and 40-15(1)(b) of the TAS Act to terminate the registration of both Mr Rizkallah and Le’Sam Accounting Pty Ltd as tax practitioners”.

.............................SGD........................
Bernard J McCabe, Deputy President

Division:TAXATION AND COMMERCIAL DIVISION

File Number(s):       2020/0223 - 24

Re: Le’Sam Accounting Pty Ltd

APPLICANT

AndSam Rizkallah

APPLICANT

Tax Practitioners BoardAnd  

RESPONDENT

DECISION

Tribunal:Deputy President Bernard J McCabe

Date:21 May 2021

Place:Sydney

1.The decisions made under s 20-5 of the TAS Act, to terminate the registration of both Mr Rizkallah and Le’Sam Pty Ltd as tax practitioners, are affirmed.

2.The decision of the Board to impose a non-registration period on Mr Rizkallah, pursuant to s 40-25 of the TAS Act, is varied to prevent him from applying for registration for a period of three and a half years.

3.The decision of the Board to impose a non-registration period on Le’Sam Accounting Pty Ltd, pursuant to s 40-25 of the TAS Act, is set-aside. The Tribunal decides in substitution that a non-registration period should not be imposed.

...........................SGD........................

Bernard J McCabe, Deputy President

Catchwords

REGISTRATION AS A TAX AGENT – where the records of a former client were improperly accessed – where the former client was engaged in litigation against the applicant – where the applicant was evasive, dishonest and non-compliant in his dealings with the respondent – where the applicant was late in filing a personal income tax return - where the applicant was evasive in his evidence provided to the Tribunal – applicant no longer satisfies the fit and proper person requirement for registration – decisions under review affirmed – periods precluding application for re-registration varied

Legislation

Taxation Administration Act 1953 (Cth)
Tax Agent Services Act 2009 (Cth)

Cases

Hill and the Tax Practitioners Board [2020] AATA 678

Minister for Immigration and Ethnic Affairs v Pochi [1980] FCA 85

Stasos v Tax Agents Board [1990] FCA 379

Sullivan v Civil Aviation Safety Authority [2014] FCAFC 93

REASONS FOR DECISION

Deputy President Bernard J McCabe

1. Sam Rizkallah has been a registered tax agent for the better part of four decades. In recent years, he conducted his practice through Le’Sam Accounting Pty Ltd (Le’Sam). Le’Sam is also registered as a tax agent, and Mr Rizkallah was at all material times the company’s only director and the supervising tax agent. On 5 December 2019, the Tax Practitioners’ Board (the Board) decided to cancel Mr Rizkallah’s registration and prohibit him from applying for registration for three years after the Board found he no longer met the ‘fit and proper person’ requirement in s 20-5(1)(a) of the Tax Agent Services Act 2009 (Cth) (TAS Act). The Board also cancelled Le’Sam’s registration and imposed a three-year non-registration period on the company after finding it did not comply with the requirement in s 20-5(3)(a) that each of its directors be a fit and proper person. Mr Rizkallah and Le’Sam have asked the Tribunal to review those decisions of the Board.

2. The central allegation against Mr Rizkallah is that he improperly accessed (or instructed an employee to access) the Australian Taxation Office Tax Agents’ Portal (the Portal) to access records of a former client in circumstances where that individual was involved in legal proceedings against Mr Rizkallah. The Board says that error was compounded by the way in which Mr Rizkallah responded to the Board’s investigation into the subsequent complaint from the former client. The Board also concluded Mr Rizkallah had filed his own income tax returns late following the income year ended on 30 June 2018.

3. I am satisfied Mr Rizkallah is not a fit and proper person within the meaning of the TAS Act. He should be deregistered and he should not be permitted to seek registration for an extended period. I explain my reasons for those conclusions below. I also explain I am satisfied Le’Sam should be deregistered, although I am not persuaded the company should be subjected to a period during which it may not seek re-registration.

   What happened?

4. The applicants came to the attention of the Board after a complaint from a former client (hereafter referred to as Mrs B). Mrs B and her husband had been long-standing clients of the applicants’ practice. The couple had also been friends with Mr Rizkallah, but the marriage of Mr and Mrs B broke down sometime in 2014. Mr Rizkallah was caught up in the acrimonious split. Mr Rizkallah and his wife had contributed to the purchase of a property by one of Mr B’s companies in 2011. Mr Rizkallah said he and his wife made the contribution on the understanding they would receive an interest in the property. In 2015, Mrs B commenced proceedings in the Supreme Court of New South Wales with respect to the property. Mr Rizkallah and his wife were named as respondents to the proceedings, which were subsequently transferred to the Family Court where an argument ensued over the nature (if any) of the Rizkallahs’ interest in the property.[1]

   [1] Statement of Mr Rizkallah dated 15 July 2020 at [36] - [37]

5. As it happens, the applicants’ last substantive work for Mrs B was completed in August 2013 when the applicants had prepared and filed her tax return for the income year ended 30 June 2012. She engaged a new accountant in 2014. There is no evidence that Mrs B or the new agent formally notified the applicants that the engagement with Le’Sam had been terminated, but the new accountant had filed material on her behalf through the portal. Mr Rizkallah insisted he was unclear through much of 2019 whether Mrs B was still a client of the practice.

6. That claim is surprising on its face. The applicants’ practice was not especially large, and Mr Rizkallah was the only registered tax agent supervising the work.[2] He also made clear in his evidence that he played a central role in the business and routinely formed close relationships with his clients. He said he was a trusted adviser to many of them and claimed the goodwill of the business depended entirely on his presence given the nature of those relationships.[3] One can readily infer from the evidence that he was familiar with the comings and goings of most clients. I acknowledge Mr Rizkallah said in his statement dated 15 July 2020 that Mrs B was not a substantial commercial client of the practice in her own right, so she was not marked out for special attention on that basis. He also said Mrs B had worked for the business run by Mr B, so Mr B was the main point of contact in relation to that work: at [18]. Mr Rizkallah added he was unaware of Mrs B providing notice that she had engaged a new agent, and he was unaware of any advice or contact to that effect from a new agent: at [21] - [22]. But Mr Rizkallah acknowledged he and his wife had been friends with Mr and Mrs B for many years and he was certainly aware of the marriage breakdown: at [19] - [20]. He continued to act on behalf of – and remain in contact with – Mr B, the estranged husband. Mr Rizkallah was also keenly aware Mrs B was in the process of suing him. He had a significant economic interest at stake in the proceedings - although he initially claimed in his evidence that he did not assume from that fact that there was any real tension between him and Mrs B.

   [2] Mr Rizkallah explained in his statement dated 13 February 2020 that the firm had around 900 clients. The clients were serviced by a team that comprised Mr Rizkallah himself, four assistant accountants and a handful of clerical staff: at [3].

   [3] Statement dated 13 February 2020 at [6], [7].

7. Mr Rizkallah recalled in his evidence that he was contacted by Mr B in early March 2019. Mr B referred to the ongoing proceedings in the Family Court. Mr Rizkallah said Mr B asked if his former wife remained a client of the practice. Mr Rizkallah claimed he did not know and agreed to find out. Mr Rizkallah said he did not see anything improper in providing information of that kind to Mr B. Mr Rizkallah said in his statement that he had been told by his own solicitors that Mr B may be entitled to obtain disclosure of his former wife’s financial affairs. Mr Rizkallah said he was under the impression Mr B might be able to demand that information in due course by issuing a subpoena directed to the firm so he saw no issue in disclosing whether Mrs B was still a client: at [43] - [48]. Mr Rizkallah said he acted for couples in the past where there was a divorce and it was always his practice to confirm when asked whether each of them was still a client: at [48]. While that may have been his usual practice, it is unclear whether Mr Rizkallah had ever previously been asked to provide information about a client (or former client) in circumstances where he was a party to proceedings involving that client.

8. In a statement dated 20 September 2020 that was filed just before the hearing, Mr Rizkallah recalled that – following a telephone call from Mr B in early March 2019 - he asked one of his employees, Ms Nashed, to find out whether Mrs B was still a client at the time. That evidence is, on its face, consistent with the account of Ms Nashed. Ms Nashed recalled in her statement dated 15 July 2020 that Mr Rizkallah called her into his office on 4 March 2019 and handed her Mrs B’s tax file number with instructions to confirm whether Mrs B was still a client of the firm: at [7]. Neither witness expressly stated Mr Rizkallah instructed Ms Nashed to access the portal although Mr Rizkallah insisted in his evidence there would be nothing wrong in doing so for the limited purpose of confirming Mrs B’s status.

9. Ms Nashed said she was a trainee who was relatively new to the job and she was not sure what to do. She says she returned to her desk after receiving the instructions from Mr Rizkallah and logged onto the portal. She entered the tax file number Mr Rizkallah had given her. She recalled in the statement that she used her own Auskey code and password – a unique identifier – when accessing the system: at [8]. (That evidence is contradicted by the system which shows it was Mr Rizkallah’s credentials that were used to access the system. I will have more to say about that discrepancy between the accounts due course.) Ms Nashed recalled she was able to review information the firm had filed for Mrs B in relation to the 2011 and 2012 tax years but noticed nothing had been filed by the firm since. She said she was initially unclear whether Mrs B was still a client of the practice: she did not recall seeing a reference to another accountant on that occasion. Upon consideration, she recalled being satisfied that day that Mrs B was still a client although Ms Nashed did not immediately report that conclusion to Mr Rizkallah: at [8]. For reasons that remain unclear, Ms Nashed made an entry in the system that recorded Mrs B as a client of Le’Sam – which seems odd, if Ms Nashed was satisfied Mrs B was still a client. The system logs recorded the change being made on 4 March 2019: see ST1 at p 244.

10. Ms Nashed said Mr Rizkallah raised the matter with her on 7 March 2019. She recalled being told Mr B had called again to ask about the information. She said she did not immediately share her conclusion about Mrs B’s status with Mr Rizkallah. She instead went back to the portal and accessed the same screens she had previously accessed “to refresh my memory”. In her statement, she explained (at [11] - [12]):

    On this occasion I concluded [Mrs B’s] lodgements were up to date and that either she or another accountant had made lodgements for the years after 2012. I did not view the tax assessments, or the tax returns, nor anything else of a financial nature. I did not view the particulars of any other tax agent who may have been appointed.

    From the information I viewed, it was obvious to me that we were no longer the tax agent for [Mrs B]. Tax returns had been lodged by some person other than ourselves. I quickly went back to Sam and said to the effect “We are no longer the accountants for [Mrs B]. Sam then said to me [sic] to the effect “Please call [Mr B] and tell him.”

11. Ms Nashed did not undo the change she had made to the system on 4 March which had recorded Mrs B as the applicants’ client. Given the revised conclusion she reached as to Mrs B’s status on 7 March 2019, it is not clear why she failed to undo the change she made on the previous occasion. I will return to Ms Nashed’s evidence below.

12. The new tax agent for Mrs B seems to have quickly discovered the change on the portal with respect to Mrs B. The new agent’s details were re-entered into the system on 19 March 2019. Mrs B lodged a complaint with the Board on 26 April 2019. She was concerned the applicants had accessed her tax information on the portal without her authorisation in circumstances where Mr Rizkallah and her ex-husband were respondents to legal proceedings Mrs B had commenced.

13. The Board wrote to the applicants on 23 August 2019. The letter explained the Board was making a preliminary enquiry following the complaint to determine whether further action was required. After a brief explanation of the regulatory framework and the Code of Conduct, the letter said (Rizkallah T documents at p 27):

    In order for the Board to reach a determination in relation to the issue raised in [Ms B’s] complaint, the Board seeks your written response to the following:

    (i) Had you at any stage, had cause to access [Mrs B’s] tax information,

    effected by accessing the Australian Taxation Office (ATO’s) Tax Agent Portal, after you ceased being the tax agent for [Mrs B]?

    (ii) If so,

    a) Please provide details of any access by you or the Company to [Mrs

    B’]s tax information contained on the Tax Agent Portal,

    including:

    date(s) of the access

    reasons of the access

    information obtained

    b) what did you or the Company do with the information obtained.

14. The letter asked for the information to be provided by 6 September 2019. Mr Rizkallah replied on 26 August by email on behalf of himself and Le’Sam. The body of the letter said (Rizkallah T documents at p 28):

    I have yours to me of Friday the 23^rd. What you seem to be implying is that all sorts of problems will arise for me assuming I have acted as the complainant suggested is the case. Surely you will have asked her to identify the dates upon which she alleged I accessed her information. Before I answer your queries, I wish you to identify the dates on which she alleges this accessing took place. Upon receipt of that information I shall reply within 24 hours.

15. Mr Rizkallah concluded his abrupt and essentially non-responsive letter by confirming he was involved in legal proceedings with Mrs B, from which I infer he suspected the complaint was made in bad faith.

16. Ms Cheng, an officer of the Board, replied by email in the afternoon of 26 August: Rizkallah T documents at p 29. She reiterated the request for information, pointing out Mr Rizkallah was able to access the portal without the assistance of the Board and identify the dates on which he accessed the information.

17. Mr Rizkallah instructed his solicitors to take up the matter. The solicitors also acted on behalf of Mr Rizkallah in the proceedings before the Family Court. On 30 August 2019, the solicitor wrote to criticise the Board’s request for information dated 23 August on the basis that “it is lacking in clarity”: Rizkallah T documents at pp 33-34. The letter adopted an aggressive tone, asserting the clients were entitled to fulsome particulars of the complaint. The letter asked, in part:

    6. Is it alleged that our clients accessed information on the ATO tax portal and if so when did this occur?

    7. Is it alleged alternatively that our clients accessed records maintained in their office on behalf of [Ms B]?

18. The letter concluded by raising the prospect that Ms B was engaged in an abuse of process in connection with the litigation.

19. The Board replied to the letter on 5 September. The reply confirmed the Board had commenced a formal investigation of the complaint and attached a notice issued under s 60-100 of the TAS Act that required a response to the same questions included in the Board’s earlier letter. That letter prompted a response from the applicants’ solicitor on 9 September which criticised the Board’s discourtesy in commencing an investigation without further reference to the applicants. From that less-than-promising start, the letter proceeded to demand a copy of the complaint and a copy of the Board’s resolution to commence the investigation. The letter then argued the description of the complaint provided at that point did not expressly allege the applicants had accessed information on the portal – so why was it necessary for the applicants to provide details of any access when none was alleged? The letter continued (Rizkallah T documents at p 51):

    Since there is no valid complaint, we call upon you to immediately terminate your investigation. Our client should not have to be called upon to answer questions about matters that the so-called complaint does not validly nor specifically raise and where those questions have been wrongly and improperly asked by the Board in error.

    The highest the complaint rises, is the insulting remark “This is a very serious unprofessional unethical and illegal. Sam had not reason to access my file.” There is no evidence at all in the complaint that [Mrs B’s] file was accessed! That is why my client is entitled to full particulars requested in our letter to you 30 August 2019. Please also have [Mrs B] provide her complaint and any suggestion of access to her file, by statutory declaration. Please also note that her complaint is not even signed. Anyone could have made that complaint. [Underlining in original.]

20. The letter from the applicants’ solicitor alluded to a possibility the complaint was made to pressure Mr Rizkallah in the Family Court proceedings. It concluded with a demand that the Board provide the information requested therein within seven days, in part to give the Board the opportunity to review “its own unfortunate and indeed inappropriate action”. 

21. The applicants’ solicitor wrote a further email to the Board dated 2 October 2019 following a telephone discussion. The letter renewed the attack made in the earlier correspondence (and which had apparently been the subject of the telephone discussion), saying:

    Our subsequent telephone call we remonstrated that there is no evidence of a complaint. In fact the complaint information contains no particulars and appears to support the fact that our client accountant did not access the relevant tax portal. As such, it appears that without greater particularity, it is a bogus complaint.

22. The letter concluded by observing the Board should never have accepted the complaint and demanded answers to enquiries contained in the letter within seven days.

1. There was a further letter from the applicants’ solicitor dated 4 November 2019 which is described as a submission to the Board. The submission was prepared by the applicants’ solicitor but the document notes Mr Rizkallah had read and approved the contents. The letter repeated some of the denials and evasions contained in earlier correspondence although it conceded somebody in Mr Rizkallah’s office had accessed Mrs B’s file.[4] At the same time, the letter pressed home an even more extravagant attack on the integrity of the Board’s investigation and processes. The solicitor accused the Board of acting unethically, and suggested the Board was determined to proceed come what may. He dismissed the whole exercise as a “charade”. He said the Board’s officers involved in the process should be “ashamed”. The solicitor continued

   Yet again this seems to be the only conclusion to which the hypothetical “man on the Clapham bus” could come. Such arrogance and poor behaviour on the part of a statutory body such as the Board must be regarded as wholly unacceptable. Could it be possibly said that the Board has, in this matter anyway, “acted honestly and with integrity”? One might fairly be entitled to conclude that the use of those words in section 30-10(01) of the TASA Act is a “two-edged sword”.

   [4] Rizkallah T documents at pp 92-93

2. The applicants’ solicitor sent a further letter to the Board on 17 November 2019 accusing the Board of behaving like a Star Chamber.

3. Two things can be said about the correspondence between the applicants and their solicitor (on the one hand) and the Board (on the other). First, the tone of the correspondence was inappropriate, and the extravagant attacks on the Board were scandalous. The applicants conceded in written closing submissions at the hearing that the correspondence was “aggressive and unhelpful”. It was also non-responsive, as the applicants belatedly recognised in their written submissions. It is clear the applicants, through their lawyer, failed to provide the information requested by the Board in circumstances where that request was reinforced with a formal notice provided under s 60-100 of the TAS Act. That is no small matter. Failure to comply with a valid notice under s 60-100 is a criminal offence.[5]

   [5] See ss 8C and 8D of the Taxation Administration Act 1953 (Cth)

4. The non-responsiveness of the responses was not merely unhelpful. It was actively evasive – which brings me to my second observation about the correspondence: it misrepresented facts that were known to Mr Rizkallah at the time. That much is clear from Mr Rizkallah’s statement dated 20 September 2020 which was provided shortly before the hearing. In that statement (at [24]), Mr Rizkallah recalls the following exchange with Ms Nashed:

   At this time in late August 2019, I recollected that it was Marilise Nashed whom

   I had asked to assist in the inquiry as to whether Mrs Bardetta was still a client. I had

   her come into my office and we had a conversation to the following effect:

   SR: “I have received a complaint from the Tax Board about accessing [Mrs B’s] tax portal information. They say it happened on 4 and 7 March 2019.

   I asked you to check if she was still a client. What did you do?”

   MN: “You asked me to check is she was still a client and gave me her tax file

   number. I couldn’t see [Mrs B] on our portal so I added her on”.SR: Why did you appoint me as her tax agent? I only asked you to see if she

   was still a client”.

   MN: “She wasn’t on our system”.

   SR: (angrily) “I am now under investigation for misconduct. They are saying I

   did it to help with a family law case I am involved in”.

   MN: (crying) “She wasn’t on our system. That is the only way I could have

   found out”.

   SR: (softening) “Don’t worry. I will handle it. I will talk to you later”.

5. The date of the conversation with Ms Nashed is important. The statement confirms it took place in August 2019 – that is, at the time the Board first asked about unauthorised access. Indeed, the statement makes clear on its face that the conversation with Ms Nashed was prompted by the Board’s preliminary enquiry. It follows Mr Rizkallah was, on his own evidence, aware from the time the Board first approached him that an employee had accessed the portal in problematic circumstances. Mr Rizkallah was asked about this in cross-examination. The exchange began with Mr O’Mahoney, counsel for the Board, quoting from the letter dated 9 September 2019 sent on behalf of the applicant to the Board which asserted (transcript at pp 127 - 128): “There is no valid complaint we call upon you to immediately terminate your investigation.” The exchange continued:

   Mr O’Mahoney: Do you see that?

   Witness: Yes, I do.

   Mr O’Mahoney: That was you attacking the integrity of the complaint. Correct?

   Witness: Yes, I was.

   Mr O’Mahoney: That was you saying there was nothing to it. Correct?

   Witness: Yes.

   Mr O’Mahoney: That was you inviting the very body charged with investigating you to terminate immediately that investigation. Correct?

   Witness: Yes.

   Mr O’Mahoney: You did that knowing that there was substance to this complaint because you had a conversation with your colleague about the inappropriate access in late August. Correct?

   Witness: Yes.

   Mr O’Mahoney: So really this was you inviting the board to stop an investigation that you knew would unearth unauthorised conduct in terms of access of [Mrs B’s] tax agent portal. Correct?

   Witness: Yes.

   Mr O’Mahoney: If I then ask you to look at the next paragraph, sir. You take issue with the end with the fact that the complaint is not even signed and the words “anyone could have made that complaint.” Do you see that?

   Witness: Yes.

   Mr O’Mahoney: This is you once again not meaningfully responding and honestly responding to the questions asked of you. Correct?

   Witness: Yes.

   Mr O’Mahoney: But actually attacking the complaint and attacking the process. Correct?

   Witness: Yes.

   Mr O’Mahoney: You’d accept, would you not, as an accountant of 36, 37 years standing, that is an entirely inappropriate way to respond to a statutory notice from the Board?

   Witness: Yes.

   Mr O’Mahoney: It’s a disgraceful way to respond to a statutory notice from the Board, you’d accept that?

   Witness: Yes.

6. In the course of the same extended exchange, Mr O’Mahoney drew Mr Rizkallah’s attention to the assertion that the complaint was “bogus”. The exchange continued (transcript at pp 128 - 129:

   Mr O’Mahoney: This was you again taking issue with the idea that there was no substance to the complaint. Correct?

   Witness: Yes, I did.

   Mr O’Mahoney: This was the position you took knowing full well what had occurred because you had had an emotional conversation with your colleague about the accessing – the unauthorised accessing of [Mrs B’s] account. Correct?

   Witness: Yes, I did.

   Mr O’Mahoney: At no stage in this correspondence did you seek to disclose to the Board what you learnt about the unauthorised accessing of [Mrs B’s] account. Correct?

   Witness: Yes.

   Mr O’Mahoney: At no stage did you disclose to the Board in this correspondence or at any time that you came to learn that you had been reinstated without the authority of [Mrs B] as her tax agent, did you?

   Witness: Yes.

   Mr O’Mahoney: You’re agreeing with me you never did that?

   Witness: No, I didn’t.

7. There is no doubt Mr Rizkallah was aware what his lawyers were saying on his behalf in correspondence with the Board. The lawyers confirmed he settled the letter of 4 November and the correspondence followed a consistent theme which Mr Rizkallah initiated in his first exchange with the Board in August – at which point he was likely already aware that a staffer had accessed the portal. Even if he was not specifically aware of the unauthorised access at the time of the first response to the Board on 26 August, he was aware of the true situation shortly thereafter. He did nothing to correct the record. At a minimum, Mr Rizkallah allowed his response to the Board’s investigation to proceed on a premise that he knew to be false. His dishonesty in this regard was compounded by the aggressive bluster evident in the correspondence that he wrote, and in correspondence written at his instruction.

8. I pause to note I considered whether bluster and evasion was Mr Rizkallah’s default mode of dealing with questions after observing him in the witness box during cross-examination.[6] His answers to questions from Mr O’Mahoney were often evasive and discursive, and he appeared affronted by suggestions (for example) that he did not respect the Board. Given the attitude evident in the correspondence, I am unable to credit Mr Rizkallah’s claims that he respected the Board. Indeed, the argumentative exchanges with Mr O’Mahoney appeared to be a tactic for avoiding answers to uncomfortable questions. His approach at the hearing was consistent with the approach he adopted in his dealings with the Board: he feigned outrage and blustered when faced with unwelcome attention.

   [6] The hearing was conducted remotely using the Microsoft Teams platform. I am satisfied the format did not prevent effective cross-examination. Indeed, the unblinking eye of the camera proved to be an effective means of communicating and capturing the feel of a court room.

9. The Board said the dishonesty evident in Mr Rizkallah’s dealings with it should be seen as part of a larger course of dishonest conduct. For a start, the Board argued I should find Mr Rizkallah knew Mrs B was no longer a client when the portal was accessed, notwithstanding his claims to the contrary. I have already observed Mr Rizkallah’s claim that he was uncertain about Mrs B’s status was surprising on its face given he likely knew the firm had not done any work for her for some time prior to 2019, and given he had an ongoing relationship with her ex-husband. Mr Rizkallah was in any event aware Mrs B was suing him and his wife. The relationship had plainly broken down, yet Mr Rizkallah insisted in cross-examination he had no reason to believe there was any animosity between him and Mrs B.[7] That evidence is inconsistent with his first response to the Board on 26 August 2019 in which he brought up the fact Mrs B had commenced proceedings against him in an obvious attempt to invite the Board to infer there was animus between Mr Rizkallah and Mrs B.

   [7] Transcript at pp 71-72

10. It is difficult to credit Mr Rizkallah’s central claim that he had to check the portal to see if Mrs B was still a client. He plainly knew she had ceased being a client some time before, even if Mr Rizkallah was not aware of the identity of her new agent. I note Mr Rizkallah conceded in cross examination it would be complete nonsense to think he might retain a professional relationship with a former client who was in the process of suing him: transcript at p 65. It is not clear what else he was hoping to achieve by accessing the portal, but I am not persuaded he was simply checking the status of Mrs B.

11. The Board argued I should also reject Mr Rizkallah’s claim that he instructed Ms Nashed to access the portal in early March 2019. The Board says it is likely Mr Rizkallah accessed the portal himself, which necessarily entails me rejecting Ms Nashed’s evidence in support of Mr Rizkallah.

12. The Board says I should not accept Mr Rizkallah’s account of how the portal was accessed because he was not a witness of truth. In circumstances where I have found the central thrust of his response to the Board was premised on dishonesty, the Board urges me to reject other aspects of his evidence – including the evidence about who accessed the portal.

13. The evidence about the precise circumstances in which the portal was accessed on 4 and 7 March 2019 is contained in:

    ·     the statement of Ms Nashed dated 15 July 2020, and in her evidence provided at the hearing;

    ·     statements of Mr Rizkallah, including in particular those provided on 1 September 2020 and 20 September 2020, and the oral evidence of Mr Rizkallah at the final hearing; and

    ·     statements of Mr Collits dated 25 August 2020 and 18 September 2020. Mr Collits, an officer of the respondent, was familiar with the technical operation of the portal.

14. Ms Nashed initially recalled accessing the computer on her desk using her own password after she was tasked with working out the status of Mrs B on 4 and 7 March 2019. That evidence was broadly consistent with Mr Rizkallah’s statement dated 1 September 2020. In that statement, he explained (at [7]):

    No holder of an AusKey can enter the tax portal without first using their personal password which is private to that person and not known by any other staff member.

15. Mr Rizkallah agreed in cross-examination that he was aware of the importance of keeping individual passwords secret. He had earlier recognised in his statement that personal passwords should not be shared: [21]. He added it was impossible to determine which password was used to access the portal on 4 or 7 March: at [21].

16. It turns out Mr Rizkallah was mistaken about that last point. Mr Collits, in a subsequent statement dated 18 September 2020, confirmed it was possible to ascertain precisely which password was used (at [13]). The logs confirmed Mr Rizkallah’s password was used on 4 and 7 March 2019 to access the portal and the files of Mrs B.

17. Mr Rizkallah responded to that development in his statement dated 20 September 2019. In the statement, he explained his office used four different AusKey credentials across several different computers. It appears that staff members were able to access those computers and the portal by simply using the general office password which was known to the staff. The staff did not use individual passwords to access the portal. He was asked about all this during cross-examination – in particular, he was asked to reconcile what appear to be quite different accounts of the access arrangements. He denied there was any inconsistency between the various accounts, but he was not able to provide a convincing explanation of how that could be so.

18. There were also difficulties with the evidence of Ms Nashed. I note she has insisted all along that she accessed the portal at Mr Rizkallah’s request: see Exhibit L to Mr Rizkallah’s statement of 30 January 2020. I have already mentioned she originally claimed she accessed the portal from her own computer using her own credentials. At the hearing, she initially confirmed she had her own computer and her own credentials but then said she may have accessed the portal on 4 and 7 March 2019 from another computer using the general office password: transcript at p 161. Confusingly, she continued to insist under cross-examination that she always used her own credentials when accessing the portal: transcript at p 169. Mr O’Mahoney pointed out in his written submissions that Mr Collits of the ATO confirmed in his statement of 25 August 2020 that Ms Nashed regularly used her own credentials to access the portal around this period but (if her account is to be believed) she chose not to do so when accessing the records of Mrs B: see records at annexure CC-6 to Mr Collits’ statement dated 25 August 2020. In closing submissions in reply, the applicants’ counsel said I should not infer anything from that fact, but the apparent inconsistency in Ms Nashed’s behaviour, or in her account, was not satisfactorily explained.

19. Taking the most favourable view of Mr Rizkallah’s evidence, it is apparent the applicants adopted a remarkably lax approach to accessing the portal in circumstances where Mr Rizkallah acknowledged he understood the importance of data security and knew not to share passwords. At a minimum, the applicant’s approach to data security put their clients’ privacy at risk. That is a very serious matter. But the Board says I should go further and find Mr Rizkallah (and, necessarily, Ms Nashed) were being deliberately untruthful about the circumstances in which the portal was accessed.

20. The Courts have made clear the Tribunal should be appropriately circumspect when making findings that have grave implications for individuals. In particular, the Tribunal should not ordinarily make a finding that a witness was dishonest unless the Tribunal is actively persuaded on the evidence that such a finding is justified: see, for example, Sullivan v Civil Aviation Safety Authority [2014] FCAFC 93 at [120] per Flick and Perry JJ. That is not a rule of evidence as such, but rather a necessary incident of the rules of procedural fairness and the provisions of the Administrative Appeals Tribunal Act 1975 (Cth) that were discussed, inter alia, in the Full Court’s decision in Minister for Immigration and Ethnic Affairs v Pochi [1980] FCA 85; (1980) 44 FLR 41. As Logan J explained in Sullivan (at [8]):

    Pochi then is not just a case which illustrates the proposition that the Tribunal’s conclusions must be based on logically probative material. It is also one in which it was held that, where that conclusion may have grave consequences for a party to the review or even third parties, it ought not lightly to be reached and this factor intrudes on what the Tribunal should regard as probative in the making of a reasonable decision.

21. I have already explained I am satisfied Mr Rizkallah was dishonest in his dealings with the Board in that he knew Mrs B’s data had been accessed through the portal even as he disputed that fact in correspondence with the Board. Of course, the fact somebody is dishonest on one occasion, or in one context, does not inevitably mean he or she is dishonest in all circumstances. Here, Ms Nashed purported to corroborate Mr Rizkillah’s evidence about the circumstances in which the portal was accessed. I must take that into account when evaluating Mr Rizkillah’s evidence on this aspect of the matter.  On the other hand, there were clearly difficulties with Ms Nashed’s evidence. I have noted her evidence was inconsistent and confusing. Yet I am reluctant to conclude she was actively dishonest.

22. Mr Rizkallah’s credit has been impugned on other grounds, and both Mr Rizkallah and Ms Nashed gave confusing and unsatisfactory accounts of the precise circumstances in which the portal was accessed on 4 and 7 March 2019. While I am not satisfied I have gotten to the bottom of precisely what happened on those days, I am not satisfied I should find both witnesses gave untruthful evidence on this point. With some hesitation, I accept Mr Rizkillah’s explanation that he asked Ms Nashed to make the enquiries about the status of Mrs B in March 2019. Yet it remains unclear why he needed to do that, or what he hoped to achieve in doing so. Moreover the evidence he gave confirms (a) the applicants had a lax approach to data security, and demonstrated a lack of insight into the sensitivities of accessing information about a former client who was in the process of suing Mr Rizkallah; (b) Mr Rizkallah knew the portal had been accessed in problematic circumstances even as he aggressively disputed that fact in correspondence with the Board; and (c) he failed to respond appropriately to a notice issued under s 60-100 of the TAS Act.

23. There is one further matter of fact that was not in dispute as between the parties. It came to light in the course of the Board’s investigations that Mr Rizkallah had not filed his tax returns for the year ended 30 June 2018 on time. That is a problem in circumstances where there is an established expectation that a tax agent must keep his own or her own taxation affairs in order. Having said that, there is no suggestion that the failure to lodge the tax returns by the deadline on one occasion was part of a larger pattern of non-compliance with respect to his personal tax affairs.

    The requirement that Mr Rizkallah be a fit and proper person

24. Sub-division 20-A of the TAS Act sets out the criteria governing eligibility for registration. The criteria include the requirement in s 20-5(1)(a) that the Board be satisfied the individual is a ‘fit and proper person’. Section 20-5(3)(a) extends the ‘fit and proper person’ requirement to companies that are registered tax agents. That provision says each director of a company must be a fit and proper person. In circumstances where Mr Rizkallah is the only director of Le’Sam, the company’s fate is bound up with Mr Rizkallah.

1. When deciding whether an individual is a fit and proper person, the Board must have regard to the matters referred to in s 20-15. The first matter (referred to in s 20-15(a)) is “whether the individual is of good fame, integrity and character”. The second consideration (referred to in s 20-15(b)) refers to the happening of a number of events set out in s 20-45, or where the individual has been an undischarged bankrupt or served a term of imprisonment within the last five years. None of the matters referred to in s 20-45 are relevant in this case, and Mr Rizkillah is not a bankrupt nor has he served time in gaol. It follows the focus of my enquiry for present purposes is Mr Rizkallah’s ‘good fame, integrity and character’. It is important to remember the interpretation and application of those words must be informed by the objects of the legislative scheme. Section 2-5 provides:

   The object of this Act is to ensure that tax agent services are provided to the public in accordance with appropriate standards of professional and ethical conduct.

2. The Code of Professional Conduct gives effect to the objects of the TAS Act and compliments the registration provisions, including the fit and proper person requirement. The Code is set out in s 30-10(1)-(14). It includes requirements going to:

   ·Honesty and integrity;

   ·Complying with taxation laws in the conduct of the agent’s personal affairs;

   ·Dealing appropriately with monies or properties belonging to others, especially clients;

   ·Acting lawfully in the best interests of the client;

   ·Maintaining the confidentiality of a client’s personal information consistent with the law;

   ·Being competent and taking reasonable care;

   ·Not obstructing the administration of the taxation laws;

   ·Maintaining appropriate insurance; and

   ·Complying with the requirements of the Board, and responding to requests (including requests for information) in a “timely, responsible and reasonable manner”: s 30-10(14).

3. While many of the matters referred to in the Code of Professional Conduct are relevant to the question of whether the individual is a fit and proper person, the fit and proper person requirement involves a more holistic assessment of the agent’s suitability to practise as a registered tax agent. Having said that, I note the evidence establishes Mr Rizkallah did not respond to requests for information from the Board in a “timely, responsible and reasonable manner”, and I have also found he did not act with honesty and integrity in his dealings with the Board. Those findings are certainly relevant to the question I must answer under s 20-5. Mr Rizkallah’s behaviour towards the Board is particularly serious given the Board depends on the willing cooperation of agents to operate the legislative scheme. As Hill J explained in Stasos v Tax Agents Board [1990] FCA 379 at [50]: “Those dealings must be able to be carried on in an atmosphere of mutual trust.” His Honour went on to explain (at [51]):

   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.

4. I am satisfied the evidence establishes Mr Rizkallah is not a ‘fit and proper person’ within the meaning of s 20-5 of the TAS Act. My finding that he adopted a dishonest approach towards the Board when it was investigating a complaint goes to the heart of the fit and proper person requirement. Mr Rizkallah knew the complaint was legitimate, yet he resisted the investigation, made scandalous attacks on the Board and refused to comply with the s 60-100 notice. That was not simply an error of judgment or an example of an unfortunate communication style. It was part of a dishonest strategy to evade responsibility for something improper that occurred at Mr Rizkallah’s behest. He also demonstrated a lax approach to data security, and failed to anticipate the obvious concerns that would arise when the portal was used to access information about a somebody he must have known was a former client – an individual who was involved in legal proceedings against Mr Rizkallah at the time.

5. For the sake of completeness, I note Mr Rizkallah also failed to comply with his obligation to obey the taxation laws in his own affairs, but I do not think his one-off failure to file his returns in a timely way says anything especially helpful about his “good fame, integrity and character”.

   Should Mr Rizkallah’s registration be cancelled in light of the finding he is not a fit and proper person?

6. Section 40-15(1) of the TAS Act provides the Board may terminate an agent’s registration in certain circumstances, including (relevantly) if the agent ceases to meet one of the tax practitioner registration requirements. Those requirements include the requirement that the applicant be a fit and proper person. The applicants emphasise the power to cancel is discretionary. They argue the Board could deal with an adverse finding that an agent was not a fit and proper person by simply imposing conditions on their registration: see, for example, Hill and the Tax Practitioners Board [2020] AATA 678.[8]

   [8] The Board may have the alternative in a case like this of taking administrative action under Division 30 which deals with contraventions of the Code of Professional Conduct. The Code is set out in s 30-10, and the administrative sanctions – including termination of registration, suspension and other orders – are set out in Subdivision 30-B. But the Board did not take that course on this occasion.

7. While the applicants’ primary argument is that Mr RIzkillah is a fit and proper person, they argue in the alternative that the preferable form of administrative action would be to impose conditions on their registration. The conditions would require Mr Rizkallah to undergo appropriate remedial training. I was told that training might include courses on ethics and practice management.

8. I am not satisfied that conditions of that kind are appropriate in the circumstances. Mr Rizkallah’s difficulties are not the product of ignorance. The problems with his behaviour are more fundamental than that. Given the gravity of the factual findings I have made, deregistration is the only appropriate course for Mr Rizkallah. He cannot safely remain in practice given the character flaws he has demonstrated. In circumstances where Mr Rizkallah is the only director of Le’Sam, there is no good reason why the company should not be deregistered as well.

   For what period should the applicants be prevented from seeking (re)registration?

9. The more difficult question is the length of time during which the applicants should be prevented from seeking (re)registration. The power to impose a period during which a deregistered agent may not apply for registration is contained in s 40-25. The discretion to impose such a period is discretionary. I will deal with Mr Rizkallah first.

10. The Board decided Mr Rizkallah should be prevented from applying for registration for three years. In final submissions, Mr O’Mahoney on behalf of the Board submitted there were good reasons for the Tribunal to consider extending the duration of the exclusion period from three years to four years. Mr O’Mahoney pointed out the Tribunal’s proceedings are conducted de novo, and there was no reason in principle why the exclusion period could not be extended if the Tribunal formed the view that was the correct or preferable decision. The Board says the additional details disclosed at the hearing were more damning, which meant a four-year exclusion period might be more appropriate.

11. Mr O’Mahoney also pointed out the applicants had been warned about the possibility the Tribunal might consider imposing a longer period of exclusion. The applicants had the opportunity to withdraw their application in light of the Board’s submissions, and to make their own submissions in reply.

12. It is appropriate to have regard to a range of considerations when determining the length of any exclusion period. The interests of the applicants are obviously relevant. Mr Rizkallah will experience significant economic loss if he is unable to continue as a registered tax practitioner. That will impact on his family. The nature and extent of that hardship was described in his statements provided in support of the stay application. He has already incurred significant expense in conducting these proceedings, although he has also had the benefit of a stay of the reviewable decision. The employees of Le’Sam might also lose their jobs if the practice were to close. Mr Rizkallah’s clients may also experience disruption if he is unable to play a central role in the business, and they will be forced to engage a new firm if Le’Sam is unable to continue. Having said that, the clients will be protected from lax data security and the risk of other shortcomings associated with Mr Rizkallah’s practice.

13. The public interest is decisive in a case like this. The length of the exclusion period sends a signal which helps promote the objectives in the TAS Act. A longer period of exclusion provides specific deterrence to Mr Rizkallah who has not yet demonstrated appropriate insight into the gravity of his behaviour. A significant exclusion period would help him in this regard. Importantly, a significant exclusion period also sends a signal of general deterrence: it reminds other tax agents of the importance of data security, of the need to avoid conflicts of interest when handling information about former clients, and – in particular – the need to respond appropriately and honestly to the Board as it carries out its functions.

14. Section 40-25 says the Board may impose a non-registration period of up to five years. The Board would presumably opt for the maximum period in the most serious cases. The conduct I have identified in this case is certainly serious, and arguably more egregious than the conduct appeared to be at the time the Board made its decision. Having said that, I did not go as far as the Board said I should go in my findings of fact. I did not conclude Mr Rizkallah accessed the portal himself and then conspired with Ms Nashed. If I had made such a finding, it would almost certainly merit the maximum period of non-registration, and other consequences besides.

15. I am satisfied it would be appropriate to impose an exclusion period on Mr Rizkallah of three and a half years in all the circumstances. The extent of his dishonest and aggressive behaviour in dealings with the Board became more apparent during these proceedings, and it is such that a more stringent response is required. The public interest in the proper operation of the regulator (and the regulatory regime the Board conducts) demands it.

16. Le’Sam is in a different position. While it should not remain registered as long as Mr Rizkallah remains a director (at least for the next three and a half years), the company could remain in business if it were to come under different management. If Mr Rizkallah were to cease his involvement with the company, the culture and practices that he built may yet be reformed. At any rate I do not discount the possibility the company might demonstrate it was capable of meeting the eligibility requirements if it were under different management that did not include Mr Rizkallah.

17. While I considered whether it was appropriate to impose a period of non-registration on the company to send a message of general deterrence, I am satisfied that message is adequately communicated by the action taken against Mr Rizkallah.

    Conclusion

18. The Tribunal affirms the decisions made under s 20-5 of the TAS Act to terminate the registration of both Mr Rizkallah and Le’Sam Pty Ltd as tax practitioners. The Tribunal varies the decision of the Board to impose a non-registration period on Mr Rizkallah pursuant to s 40-25 so that he is prevented from applying for registration for a period of three and a half years. The Tribunal sets aside the decision of the Board under s 40-25 which imposed a three-year non-registration period on Le’Sam Pty Ltd and decides in substitution that the non-registration period should not be imposed.

I certify that the preceding 64 (sixty-four) paragraphs are a true copy of the reasons for the decision herein of Deputy President Bernard J McCabe

..............SGD.................

Associate

Dated: 21 May 2021

Date(s) of hearing:	21 – 23 September 2020; 16 October 2020
Counsel for the Applicant:	Mr Michael Cashion
Solicitors for the Applicant	Penhall & Co Lawyers
Counsel for the Respondent:	Mr Greg O’Mahoney
Solicitors for the Respondent:	Self-Represented