Legal Practitioner Complaints Committee v Pillay
[2006] WASAT 309
•17 OCTOBER 2006
LEGAL PRACTITIONERS COMPLAINTS COMMITTEE and PILLAY [2006] WASAT 309
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2006] WASAT 309 | |
| LEGAL PRACTITIONERS ACT 1893 (WA) | |||
| Case No: | VR:314/2005 | 3 APRIL 2006, 23 JUNE 2006 AND 9 AUGUST 2006 | |
| Coram: | JUSTICE M L BARKER (PRESIDENT) MR D R PARRY (SENIOR MEMBER) MS J STANTON (SENIOR SESSIONAL MEMBER) | 17/10/06 | |
| 23 | Judgment Part: | 1 of 1 | |
| Result: | Practitioner found guilty of unprofessional conduct Practitioner suspended from practice from 1 January 2007 to 31 December 2007 inclusive | ||
| A | |||
| PDF Version |
| Parties: | LEGAL PRACTITIONERS COMPLAINTS COMMITTEE NAVEEN CHANDRA PILLAY |
Catchwords: | Vocational regulation Legal practitioner Unprofessional conduct Failure to lodge income tax returns, make provision for payment of income tax and pay income tax Practitioner failed to lodge income tax returns for four years before Australian Taxation Office demand Practitioner failed to lodge income tax returns for total of six years when due Practitioner failed to make provision for income tax obligations for eight years Practitioner declared bankrupt with Australian Taxation Office sole creditor in relation to income tax for eight years No prosecution or conviction Practitioner suffered from chronic posttraumatic stress disorder due to tragic personal circumstances Whether Tribunal should make and transmit a report to Supreme Court (full bench) Whether appropriate disciplinary consequence exceeds orders available to Tribunal Practitioner suspended from practice for 12 months Practice and procedure Application for suppression order in relation to personal circumstances Application refused |
Legislation: | Legal Practice Act 2003 (WA), s 185(2), s 185(3), s 187 Legal Practitioners Act 1893 (WA), s 29A, s 29A(1), s 29A(2), s 29A(3) State Administrative Tribunal Act 2004 (WA), s 61(4), s 62(3) State Administrative Tribunal Rules 2004 (WA), r 43 |
Case References: | A Solicitor v Council of the Law Society of New South Wales (2004) 216 CLR 253 Edward v Legal Practitioners Complaints Committee [2006] WASCA 194 Legal Practitioners Complaints Committee and Stevens [2005] WASAT 210 New South Wales Bar Association v Cummins (2001) 52 NSWLR 279 New South Wales Bar Association v Murphy [2002] NSWCA 138 New South Wales Bar Association v Somosi [2001] NSWCA 285; (2001) 48 ATR 562 New South Wales Bar Association v Stevens [2003] NSWCA 261 New South Wales Bar Association v Young [2003] NSWCA 228 Re A Barrister and Solicitor; re Legal Practitioners Ordinance 1970 (ACT) (1979) 40 FLR 1 Re Maraj (A Legal Practitioner) (1995) 15 WAR 12 The Barristers' Board v A Legal Practitioner (Unreported, Supreme Court of WA, Full Court, Library No 8127, 9 March 1990) Wardell v New South Wales Bar Association (2002) 50 ATR 302 Legal Practitioners Complaints Committee v Dixon [2006] WASCA 27 Ziems v The Prothonotary of the Supreme Court of New South Wales (1957) 97 CLR 279 New South Wales Bar Association v Hamman [1999] NSWCA 404 Council of the New South Wales Bar Association v Archer (No 2) [2004] NSWADT 78 Law Society of Tasmania v Schouten [2003] TASSC 143 |
Orders | 1. The Tribunal finds the practitioner guilty of unprofessional conduct in that he failed to:,(1) lodge income tax returns with respect to his personal income for the financial years 1991 - 1992, 1992 - 1993, 1993 - 1994, 1994 - 1995, 1995 - 1996 and 1996 - 1997, until about 30 September 1999;,(2) discharge his legal or civic obligations to pay income tax with respect to income earned during the financial years 1991 - 1992, 1992 - 1993, 1993 - 1994, 1994 - 1995, 1995 - 1996, 1996 - 1997, 1997 - 1998 and 1998 - 1999, either adequately or at all, during the period 30 June 1999 to 22 October 2002;,(3) make provision for income tax for the financial years 1991 - 1992, 1992 - 1993, 1993 - 1994, 1994 - 1995, 1995 - 1996, 1996 - 1997, 1997 - 1998 and 1998 - 1999, prior to 22 October 2002; and,(4) discharge his legal or civic obligations to pay provisional tax and instalments of provisional tax for the financial years 1997 - 1998, 1998 - 1999 and 1999 - 2000, either adequately or at all, during the period 22 November 1999 to 22 October 2002.,2. The practitioner is suspended from practice for a period of 12 months from 1 January 2007 to 31 December 2007 inclusive.,3. The practitioner pay the costs of the Legal Practitioners Complaints Committee in a sum agreed by the parties or failing their agreement as fixed by the President.,4. The parties have liberty to apply to the President in respect of the commencement date of the suspension order and costs, if necessary. |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : VOCATIONAL REGULATION ACT : LEGAL PRACTITIONERS ACT 1893 (WA) CITATION : LEGAL PRACTITIONERS COMPLAINTS COMMITTEE and PILLAY [2006] WASAT 309 MEMBER : JUSTICE M L BARKER (PRESIDENT)
- MR D R PARRY (SENIOR MEMBER)
MS J STANTON (SENIOR SESSIONAL MEMBER)
- VR 315 of 2005
- Applicant
AND
NAVEEN CHANDRA PILLAY
Respondent
Catchwords:
Vocational regulation Legal practitioner Unprofessional conduct Failure to lodge income tax returns, make provision for payment of income tax and pay income tax Practitioner failed to lodge income tax returns for four years before Australian Taxation Office demand Practitioner failed to lodge income tax returns for total of six years when due Practitioner failed to make provision for income tax obligations for eight years Practitioner declared bankrupt with Australian Taxation Office sole creditor in relation to income tax for eight years
(Page 2)
No prosecution or conviction Practitioner suffered from chronic posttraumatic stress disorder due to tragic personal circumstances Whether Tribunal should make and transmit a report to Supreme Court (full bench) Whether appropriate disciplinary consequence exceeds orders available to Tribunal Practitioner suspended from practice for 12 months Practice and procedure Application for suppression order in relation to personal circumstances Application refused
Legislation:
Legal Practice Act 2003 (WA), s 185(2), s 185(3), s 187
Legal Practitioners Act 1893 (WA), s 29A, s 29A(1), s 29A(2), s 29A(3)
State Administrative Tribunal Act 2004 (WA), s 61(4), s 62(3)
State Administrative Tribunal Rules 2004 (WA), r 43
Result:
Practitioner found guilty of unprofessional conduct
Practitioner suspended from practice from 1 January 2007 to 31 December 2007 inclusive
Category: A
Representation:
Counsel:
Applicant : Ms PE Cahill and Ms PE Le Miere
Respondent : Mr MJ Hawkins
Solicitors:
Applicant : Legal Practitioners Complaints Committee
Respondent : Naveen Pillay
Case(s) referred to in decision(s):
A Solicitor v Council of the Law Society of New South Wales (2004) 216 CLR 253
Edward v Legal Practitioners Complaints Committee [2006] WASCA 194
(Page 3)
Legal Practitioners Complaints Committee and Stevens [2005] WASAT 210
New South Wales Bar Association v Cummins (2001) 52 NSWLR 279
New South Wales Bar Association v Murphy [2002] NSWCA 138
New South Wales Bar Association v Somosi [2001] NSWCA 285; (2001) 48 ATR 562
New South Wales Bar Association v Stevens [2003] NSWCA 261
New South Wales Bar Association v Young [2003] NSWCA 228
Re A Barrister and Solicitor; re Legal Practitioners Ordinance 1970 (ACT) (1979) 40 FLR 1
Re Maraj (A Legal Practitioner) (1995) 15 WAR 12
The Barristers' Board v A Legal Practitioner (Unreported, Supreme Court of WA, Full Court, Library No 8127, 9 March 1990)
Wardell v New South Wales Bar Association (2002) 50 ATR 302
Case(s) also cited:
Legal Practitioners Complaints Committee v Dixon [2006] WASCA 27
Ziems v The Prothonotary of the Supreme Court of New South Wales (1957) 97 CLR 279
New South Wales Bar Association v Hamman [1999] NSWCA 404
Council of the New South Wales Bar Association v Archer (No 2) [2004] NSWADT 78
Law Society of Tasmania v Schouten [2003] TASSC 143
(Page 4)
Summary of Tribunal's decision
1 A legal practitioner conceded that he had been guilty of unprofessional conduct by reason of his failure to lodge income tax returns in relation to six financial years until after the eighth year, make provision for the payment of income tax in relation to eight financial years, pay income tax in relation to eight financial years, and pay provisional tax in relation to three financial years.
2 The practitioner lodged income tax returns and paid income tax for twelve years after commencing practice. However, he suffered posttraumatic stress disorder, owing to tragic personal circumstances. This condition provided a partial explanation, but not an excuse for the unprofessional conduct. The practitioner did not deliberately set out to avoid his taxation obligations.
3 The Tribunal considered that the practitioner's concession, that he had been guilty of unprofessional conduct, was properly made. The practitioner's failures were sufficiently closely connected with legal practice to fall within the ambit of unprofessional conduct, because the income in question was earned through the practice of law.
4 The Tribunal determined that the proper professional disciplinary consequence, in the circumstances of the case, was to suspend the practitioner from legal practice for a period of 12 months. This penalty was necessary and appropriate for the protection of the public and the maintenance of proper standards in the legal profession.
Finding of unprofessional conduct
5 These proceedings involve applications brought by the Legal Practitioners Complaints Committee (Committee) for a finding that Mr Naveen Chandra Pillay (practitioner) is guilty of unprofessional conduct and for consequential orders pursuant to s 185(2) and s 185(3) or s 187 of the Legal Practice Act 2003 (WA) and s 29A of the Legal Practitioners Act 1893 (WA) (LP Act). At the hearing before the Tribunal, the practitioner did not ultimately contest a finding of unprofessional conduct.
6 On the evidence before it, and on the practitioner's admission, the Tribunal finds the practitioner guilty of unprofessional conduct, as alleged by the Committee, by reason of his failure to:
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- (1) lodge income tax returns with respect to his personal income for the financial years 1991 - 1992, 1992 - 1993, 1993 - 1994, 1994 - 1995, 1995 - 1996 and 1996 - 1997, until about 30 September 1999;
(2) discharge his legal or civic obligations to pay income tax with respect to income earned during the financial years 1991 - 1992, 1992 - 1993, 1993 - 1994, 1994 - 1995, 1995 - 1996, 1996 - 1997, 1997 - 1998 and 1998 - 1999, either adequately or at all, during the period 30 June 1999 to 22 October 2002;
(3) make provision for income tax for the financial years 1991 - 1992, 1992 - 1993, 1993 - 1994, 1994 - 1995, 1995 - 1996, 1996 - 1997, 1997 - 1998 and 1998 - 1999, prior to 22 October 2002; and
(4) discharge his legal or civic obligations to pay provisional tax and instalments of provisional tax for the financial years 1997 - 1998, 1998 - 1999 and 1999 - 2000, either adequately or at all, during the period 22 November 1999 to 22 October 2002.
Penalty
7 The unprofessional conduct occurred while the practitioner held practice certificates under the LP Act. Under s 29A(1) of the LP Act the State Administrative Tribunal (Tribunal) has the power to make a finding that a practitioner has been guilty of unprofessional conduct.
8 Section 29A(2) authorises the Tribunal, on making a finding that a practitioner has been guilty of unprofessional conduct, to make and transmit a report thereon to the Supreme Court (full bench), including, where appropriate, a record of the evidence taken at the hearing, and pending the determination of the Court, to suspend the practitioner from practice or to restrict the entitlement of the practitioner to practice, or to deal with the practitioner under subsection (3).
9 Section 29A(3) authorises the Tribunal to order any one or more of the following -
• the suspension of the practitioner from practice for a period, not exceeding two years, specified in the order;
(Page 6)
- • the imposition of conditions or restrictions on the right of the practitioner to practise for a period, not exceeding two years, specified in the order;
• the payment by the practitioner to the Legal Practice Board of a fine not exceeding $10 000; or
• the reprimand of the practitioner.
10 The Committee contends that, on making a finding that the practitioner has been guilty of unprofessional conduct, the Tribunal should make and transmit a report on the finding to the full bench of the Supreme Court.
11 However, the practitioner contends that his conduct does not warrant his suspension from practice. The practitioner offers an undertaking to obtain psychological and medical assistance in relation to a diagnosed psychological condition.
12 For reasons discussed below, the Tribunal considers that the appropriate professional disciplinary outcome, in the particular circumstances of this case, falls within the range of orders which are available to the Tribunal under s 29A(3) of the LP Act. Accordingly, the Tribunal does not consider it appropriate to make and transmit a report to the Supreme Court (full bench). Rather, the Tribunal considers that the appropriate professional disciplinary outcome, in the circumstances of this case, is that the practitioner should be suspended from practice for a 12 month period commencing on 1 January 2007.
Facts
13 The practitioner was admitted to legal practice in December 1977, at the age of 27, following his successful completion of law degrees at the University of Western Australia in 1976. The practitioner purchased a legal practice in 1979. He practised in partnership with his brother, and later with another partner until 1986. He then practised on his own until 1988/1989, when he joined another firm as an independent, but associated practitioner. In 1990, the practitioner moved his practice to Midland, where he has continued as a sole practitioner, undertaking principally commercial work.
14 In 1986, the practitioner was appointed as a part-time magistrate of the Childrens Court of Western Australia. He was subsequently reappointed every three years until he resigned in October 2002.
(Page 7)
15 From the time the practitioner commenced legal practice until and including the 1990 1991 financial year, he lodged income tax returns and paid the assessed income tax as required by law.
16 In December 1986, following a period during which the practitioner and his wife had experienced difficulty in conceiving a child, and after the practitioner's wife had suffered a number of miscarriages, the practitioner's elder daughter was born.
17 In early 1989, following further miscarriages, the practitioner's wife again fell pregnant. There were some difficulties in the early stages of the pregnancy, but the normal testing processes of ultrasound and later amniocentesis did not reveal any abnormalities. However, towards the latter part of the pregnancy, the baby, a boy, developed a very serious and rare medical condition. The practitioner's son was born in November 1989, but had to undergo significant operations. On the sixth day, the practitioner's son died in his arms, four to five hours after he was taken off life support. Having made the decision, with his wife, to take his son off life support, the practitioner felt that he was responsible for his son's death, and still feels that way.
18 Following his son's death, the practitioner returned to work and tried to put these tragic events out of his mind. He did not seek any counselling, although he now thinks that he should have.
19 In October 1989, the practitioner's father-in-law also passed away.
20 In 1991, the practitioner and his wife conceived another child - a daughter. As a result of the tragic events concerning their son, the practitioner and his wife were both very concerned before conception and during pregnancy. The pregnancy was monitored very closely. Their daughter was born, thankfully healthy, in January 1992.
21 The practitioner failed to lodge an income tax return for the 1991-1992 financial year, and for the five subsequent financial years, until about 30 September 1999. The practitioner described to the Tribunal the circumstances in which he failed to lodge tax returns for the 1991-1992 and following financial years, in the following terms:
"I found anything difficult just too hard. I tended to shelve my personal affairs. I failed to lodge the 1991/1992 tax return. The difficulties in coping with personal things such as filing tax returns compounded. I take full responsibility for such failure and the subsequent failures up to 2000. On 15 September 1994,
(Page 8)
- my father, who lived with my sister in Perth, died suddenly. My family was very close. He and I had become very, very close over the years. In our culture (he and [we are] Fijian Indians) a male heir is very important, but my father never talked to me about [my son]. [My son] had been his first grandson.
I neglected my personal affairs and procrastinated. It was hard, difficult and things compounded. The longer I left [it,] the more difficult it became, knowing that [the] debt had grown and that it would be difficult to pay it."
22 Following the first day of hearing, the proceedings were adjourned and the practitioner consulted Ms Leonie Coxon, a clinical and forensic psychologist. Ms Coxon diagnosed the practitioner with chronic post-traumatic stress disorder arising from numerous traumas suffered in the late 1980s and early 1990s. Most significantly, she considered the practitioner's post-traumatic stress disorder resulted from the events associated with his son's death in November 1989. Ms Coxon indicated that post-traumatic stress is a form of nervous shock, and as such, is a condition of a more enduring nature than just an emotional response at the time of a traumatic event. She considered that the practitioner suffered from a moderate level of impairment in functioning at the time.
23 Ms Coxon gave the following evidence:
"It is my opinion that Mr Pillay, during the above mentioned period suffered considerable emotional distress, which would have lead him to behave in a manner which is out of character for him, such as not submitting his taxation returns. The fact that his depression level is so high and he shows signs of suicidal ideation, indicate that he needs to seek psychological and psychiatric treatment immediately."
24 Although Ms Coxon was cross-examined at length, she maintained that, while she only assessed the practitioner on one occasion, in April 2006, she is able to say that the particular, tragic events suffered by the practitioner sixteen years earlier had caused a post-traumatic stress disorder which would have led him to behave in a manner which is out of character, such as not submitting his tax returns.
25 Under cross-examination, the practitioner conceded that, during the period following his son's death, he was able to adequately manage his
(Page 9)
- clients' files, because he "had no choice". He also continued his duties as a part-time magistrate during this period.
26 The practitioner also explained that, from the late 1980's onwards, he had made a contribution of his time and professional services in exchange for shares in a company which had been invited by the government to submit a proposal for a tourist development in the north-west of the State which appeared to have a very good future. The practitioner "had every expectation that as a result I would be able to pay my tax debts". However, owing to a subsequent government decision, the project did not proceed.
27 Thereafter, the practitioner considered that the only realistic way of paying the tax debt was by using proceeds from the subdivision of a 45 acre property in Gidgegannup, near Perth, owned by his wife. According to the practitioner, during 2000, his wife said that she would subdivide the property and that he could have part of the proceeds to pay his tax debt. The practitioner said that, during 2000, he attempted to negotiate with the Australian Taxation Office (ATO) for the repayment of the debt from the sale of his wife's property after subdivision. However, delays occurred for a number of reasons outside his wife's control, including the formulation of a new planning scheme affecting the land. In consequence, a second plan of subdivision had to be submitted. Ultimately, subdivision approval was not granted until 9 August 2005.
28 On or about 11 October 1996, the ATO demanded that the practitioner lodge his tax returns for the 1991 - 1992, 1992 - 1993, 1993 - 1994 and 1994 - 1995 financial years. The practitioner sought, and was granted, an extension of time to lodge these returns until 6 December 1996. The practitioner did not, however, lodge income tax returns for the initial four years demanded by the ATO, nor for the subsequent two years, until about 30 September 1999.
29 Under cross-examination, the practitioner conceded that he was motivated to seek an extension of time from 11 October 1996 to 6 December 1996, and to ultimately file the tax returns in September 1999, by the ATO's demand. The practitioner said that he "had to face up to it", and acknowledged that he was aware, everyday, that the ATO was on to it. He did not, therefore, put an end to the default in the filing of tax returns on his own initiative.
30 On 26 February 2001, the Deputy Federal Commissioner of Taxation (Deputy Commissioner) commenced proceedings against the practitioner
(Page 10)
- in the Supreme Court of Western Australia for the recovery of income tax payable for the financial years ended 30 June 1992 through to, and including, 30 June 1999, unpaid provisional tax for the year ended 30 June 2000, interest charges on income tax payable, and unpaid provisional tax instalments, totalling $386 352.42, plus further interest and costs. On 6 July 2001, the Deputy Commissioner obtained judgment against the practitioner by consent in the sum of $411 016.71 plus costs.
31 On 22 October 2002, a sequestration order was made by the Federal Court of Australia against the practitioner's estate on the basis of the judgment obtained by the Deputy Commissioner. The sole creditor of the practitioner's estate at the time of sequestration was the ATO. The practitioner has not yet been discharged from bankruptcy.
32 In the meantime, the practitioner's annual practice certificate has been renewed each year by the Legal Practice Board (or earlier, the Barristers' Board) and he has continued to practise. Since 1999, he has lodged all income tax returns when due. Since becoming bankrupt, the practitioner has paid all taxes when due. He gave evidence, which was not challenged, that he did not deliberately set about to avoid his taxation obligations.
33 The practitioner was one of the founding members of Stand By Me Children's foundation, which assists children who are at risk. From 1999 to 2004, the practitioner was a voluntary member of Midland Job Link and has voluntarily assisted a community based youth-orientated programme called C-Tek. He also provides pro bono legal advice through the Citizens Advice Bureau in Midland.
Precedent penalty outcomes for failure to pay tax
34 In Re A Barrister and Solicitor; re Legal Practitioners Ordinance 1970 (ACT) (1979) 40 FLR 1, Blackburn CJ, Connor and Davies JJ the Full Court of the Supreme Court of the Australian Capital Territory held, at 24 - 25, as follows:
"The object of disciplinary proceedings is the protection of the public and the maintenance of proper standards in the legal profession. Disciplinary proceedings are not taken by way of punishment, per Barwick CJ in Harvey v Law Society of New South Wales (1975) 49 ALJR 362 at p. 364, or to extract retribution, per Fox, Blackburn and Woodward JJ in Ex parte: Attorney-General for the Commonwealth; re A Barrister and
(Page 11)
- Solicitor (1972) 20 FLR at 244. In the former case Barwick CJ said that the function of the court is:
' … to examine the material proffered to it in order to determine whether that material establishes that the solicitor has failed, by action or inaction, to maintain in his conduct the standards required of him as a member of the profession. The Court's duty is to ensure that those standards of the profession are fully maintained.' (see Barwick CJ in Harvey's case at p. 364).
In the latter case, Fox, Blackburn and Woodward JJ said that the object of disciplinary action is:
' … to protect the public and the reputation of the profession' (at 244)."
See also Re Maraj (A Legal Practitioner) (1995) 15 WAR 12 at 24-25; Edward v Legal Practitioners Complaints Committee [2006] WASCA 194 at [21] per Wheeler JA (with whom Steytler P and McLure JA agreed).
35 In 1990, in The Barristers' Board v A Legal Practitioner (Unreported, Supreme Court of WA, Full Court, Library No 8127, 9 March 1990), the Full Court of the Supreme Court of Western Australia considered a report made to it by The Barristers' Board that a practitioner be fined, suspended from practice, or struck off the Roll of Practitioners. The practitioner had failed to lodge income tax returns in respect of six financial years and had failed to comply with 15 notices issued to him by the Commissioner of Taxation.
36 The Full Court appears to have accepted the complaint that the practitioner was guilty of "illegal conduct" in consequence of his failure to lodge income tax returns and to comply with the Commissioner of Taxation's notices. However, the Court concluded that the practitioner should not be struck off the Roll or suspended from practice as a result of this conduct. Rather, the Court fined the practitioner $1000 on account of the conduct (in addition to fines totalling a further $9000 in consequence of other illegal or unprofessional conduct). The Court's reasoning, expressed at 19, was as follows:
"Overall, the Practitioner's position arises out of the conduct of his personal affairs, a lack of judgment and an unfortunate lack of responsibility. It reveals a failure on his part to appreciate
(Page 12)
- the importance of complying with statutory and professional requirements when his personal convenience was affected."
37 However, since 1990 a line of New South Wales' authority indicates that a legal practitioner's failure to lodge tax returns, make provision for tax, or pay tax, in relation to income derived from the practise of law, is no longer to be regarded as merely a personal affair, but rather as potentially unprofessional conduct which may appropriately warrant the disbarment or suspension of the practitioner from practice, in the interests of the protection of the public and maintenance of proper standards in the legal profession.
38 In New South Wales Bar Association v Cummins (2001) 52 NSWLR 279, Spigelman CJ, with whom Mason P and Handley JA agreed, referred, at [29], to the key admission in the statement of agreed facts that, for 38 years, a legal practitioner, John Daniel Cummins, had not lodged any taxation returns relating to his professional practice, or for any other personal income. The practitioner had not, however, been convicted of any offence. The Chief Justice then stated as follows:
"This failure was an inexcusable pattern of illegal conduct in complete defiance of his civic responsibilities. Mr Cummins put no evidence before the Court which could explain, let alone excuse, this conduct. For almost four decades, Mr Cummins took advantage of the full range of public services made available by taxation, not least in the provision of the court system in which he earned his income. He left the burden of all this to his fellow citizens. Throughout the four decades he engaged in the rank hypocrisy of advocating that other people should perform their legal obligations, while systematically refusing to perform his own.
In the present case, unlike other cases, the barrister did not admit that his actions have jeopardised the reputation and standing of the legal profession. There is no doubt, however, that he has done so."
39 Spigelman CJ stated, at [66], that the preparation and filing of tax returns is closely related to the earning of income, including professional income, and therefore, that the link between the practitioner's failure and his profession was "sufficiently close" to justify a finding of professional misconduct on the basis of the practitioner's failure to lodge returns for 38 years.
(Page 13)
40 Spigelman CJ also held, at [67], that, similarly, and alternatively, the extent of the practitioner's failure to observe "his legal obligations and civic responsibilities by such a systematic course of improper conduct over such a long period of time is of such gravity as to constitute professional misconduct".
41 In A Solicitor v Council of the Law Society of New South Wales (2004) 216 CLR 253, the High Court of Australia held, at [33], that, while "there is a real distinction between professional misconduct, and purely personal misconduct on the part of a professional", the Court in Cummins had "rightly held that the conduct in question was closely related to a barrister's professional activities, involving non-compliance with the revenue laws affecting the earnings from those activities".
42 In New South Wales Bar Association v Somosi [2001] NSWCA 285; (2001) 48 ATR 562, the New South Wales Court of Appeal made declarations to the effect that a legal practitioner, Lawrence Robert Somosi, was guilty of professional misconduct and not a fit and proper person to remain on the Roll of Legal Practitioners in New South Wales, by reason of his failure to lodge income tax returns or to pay any income tax for a period of 17 years. In this case, the practitioner had also been convicted of breaches of taxation legislation.
43 Spigelman CJ, with whom Sheller and Giles JJA agreed, held, at [68], that the factors which his Honour referred to in New South Wales Bar Association v Cummins were equally applicable in relation to Mr Somosi. Mr Somosi "acted in complete disregard of his legal and civic obligations" and "took advantage of the full range of public services made available by taxation, not least the provision of the court system in which he earned his income". At [75], the Chief Justice noted that the practitioner's conviction and penalty was not, of itself, a matter entitled to substantial weight. Rather, "the significant matter is the conduct underlying the convictions … [namely] the failure by a legal practitioner, over a long period of time and in a systematic way, to comply with his legal and civic obligations". This conduct, his Honour held, was entitled to determinative weight in the proceedings.
44 Similarly, in New South Wales Bar Association v Young [2003] NSWCA 228, the New South Wales Court of Appeal declared that a legal practitioner, Andrew Hamilton Young, was not a fit and proper person to remain on the Roll of Legal Practitioners in New South Wales, and ordered that his name be removed from the Roll, because of his failure to lodge income tax returns. Having been admitted to the
(Page 14)
- New South Wales Bar in September 1978, the practitioner did not file any income tax returns from 1 July 1980 until 28 November 1996, and did not pay any income tax for the period 1 July 1980 until 30 June 2000 – a twenty year period. Meagher JA observed and held, at [9], as follows:
"[T]he essential facts of the case … are, quite simply, that for years and years Mr Young failed to file income tax returns when he knew he should have. Deliberately to ignore one's obligations in this manner bespeaks a lack of integrity, particularly if one is not ignorant of the consequence, and a lack of integrity justifies removal of Mr Young's name from the Roll."
46 In New South Wales Bar Association v Stevens [2003] NSWCA 261, the New South Wales Court of Appeal then had to deal with the case of an apparently eminent legal practitioner, Clarence James Stevens, who commenced practice as a barrister on 1 October 1977, but failed to file any tax returns for the financial years 1976 – 1977 through to 1994 – 1995, until May 1996, and failed to file tax returns for the financial years 1998 – 1999 and 1999 – 2000. The practitioner paid no income tax at all for the period from 1 July 1976 to 30 June 2000, until 7 April 2002; see also Legal Practitioners Complaints Committee and Stevens [2005] WASAT 210 at [31] – [33].
47 On the first day of the hearing, the practitioner (Stevens) consented to the making of a declaration that he was not a fit and proper person to remain on the Roll of Legal Practitioners, and an order removing his name from the Roll. He presented psychiatric evidence that his actions were attributable, initially, to a personality disorder and, later, to frank psychiatric illness, as clinically defined. He presented character references by four practising barristers that spoke, in unqualified terms, of his generosity in helping others, his participation in professional activities, and his competence and capacity as a barrister. Nevertheless, Sheller JA,
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- with whom Meagher and Ipp JJA agreed, held, at [57], that the evidence "is of small assistance when the Court is dealing with a history of default, such as the present, in the [practitioner's] civic obligations to lodge income tax returns and pay taxation". His Honour concluded, at [58], that the Court had "no choice but to make the orders it did".
48 By contrast, in New South Wales Bar Association v Murphy [2002] NSWCA 138, the New South Wales Court of Appeal determined that delay in lodgement of three tax returns did not relevantly "reveal such deficiency in character or competence as a legal practitioner that the [practitioner] is not fit to practise as a barrister"; at [172] per Giles JA, with whom Spigelman CJ and Ipp AJA agreed. The practitioner consciously delayed lodgement of one tax return, although it was found by the trial judge that he did so because he was badly advised. There was further delay in filing two other tax returns, because of an accountant's default. However, it was found that the practitioner had endeavoured to have his accountant act more promptly. The Court also noted that "the findings were not consistent with use of money beyond ordinary living expenses" (at [166]) and "the practitioner's lifestyle was free from excess" (at [169]).
The Committee's submissions on penalty
49 Ms PE Cahill, who appeared with Ms PE Le Miere on behalf of the Committee, made essentially six submissions in support of the Committee's contention that the appropriate outcome in the proceedings is for the Tribunal to make and transmit a report to the Supreme Court (full bench).
50 First, Ms Cahill submits that the evidence in relation to the practitioner's mental state between 1992 and 1997 does not provide a sufficient explanation as to why he engaged in the conduct. She submits that the evidence is equivocal and slight. Ms Cahill emphasises that there is no evidence of manifestations of the psychological problem in the practitioner's professional life. In particular, he was able to adequately function as a sole practitioner, which necessarily involves administration, and as a part-time magistrate.
51 We do not consider that the evidence of Ms Coxon is equivocal or slight. The evidence satisfies the Tribunal that the practitioner was suffering from a chronic psychological condition at the relevant time, which provides an explanation as to why he did not give proper attention to his taxation obligations, at least initially. Ms Coxon explained that it is common practice for a person who suffers post-traumatic stress disorder
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- to throw himself or herself into work, in order not to think about the cause of the disorder.
52 While Ms Coxon's evidence does not provide a complete explanation for the unprofessional conduct, we consider it does help to explain why it commenced. Moreover, Ms Coxon's evidence does not excuse the conduct.
53 Secondly, Ms Cahill submits that both the practitioner's and Ms Coxon's evidence came very late in the proceedings, and contrasts with the practitioner's explanation for the default in his Statement of Issues, Facts and Contentions.
54 It is a fair criticism that the practitioner's and Ms Coxon's evidence was filed late in the proceedings. As noted earlier, the practitioner only consulted Ms Coxon after the first day of hearing. However, this criticism does not, in the circumstances of this case, undermine in any way the cogency or significance of the psychologist's evidence. As a costs order will be made in favour of the Committee, there was no real prejudice in allowing the practitioner to rely on evidence obtained after the first day of hearing. Indeed, Ms Cahill, properly, did not ultimately object to the admission of the evidence.
55 The practitioner's and Ms Coxon's evidence, while not expressly alluded to in the Statement of Issues, Facts and Contentions, is not inconsistent with the essential explanation for the default in that document. In particular, the document states that the practitioner had neglected his personal affairs and had thereafter procrastinated. At the date this document was prepared and filed, however, the practitioner was not apparently aware of a formal diagnosis of post-traumatic stress disorder.
56 Thirdly, Ms Cahill submits that, although the period of default in the filing of tax returns was limited to six years, it only came to an end as a result of the ATO's demand. She submits that the period of default, therefore, evidences a significant failure to observe taxation obligations.
57 However, Ms Coxon's evidence provides an explanation as to why the practitioner defaulted in his taxation obligations, at least initially. The Tribunal accepts the practitioner's evidence that he did not deliberately set about to avoid his taxation obligations. The period of default in question was considerably shorter than the periods in the New South Wales cases. Nevertheless, the fact that the practitioner did not put an end to the default
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- on his own initiative is certainly relevant in determining an appropriate outcome.
58 Fourthly, Ms Cahill submits that Ms Coxon's evidence only provides an explanation as to why the practitioner failed to lodge tax returns, and does not provide an explanation as to why he did not make an effort to set aside income to meet his taxation obligations or why he spent all of the money he earned.
59 However, the Tribunal considers that Ms Coxon's evidence provides an explanation as to why the practitioner failed to set aside income, at least initially, to meet his taxation obligations. The emotional distress led him to behave in a manner that was out of character. This provides an explanation both for the failure to lodge taxation returns and to make appropriate provision in order to pay income tax, at least initially. Furthermore, the Tribunal finds that the income earned during the period in question was spent on professional and ordinary living expenses, not on a lavish lifestyle.
60 Fifthly, Ms Cahill submits that the practitioner's conduct in relation to his bankruptcy is relevant to the question of penalty. She notes, correctly, that the second adjournment in the hearing was granted in order to enable the practitioner to conduct discussions with the trustee in bankruptcy with a view to having the bankruptcy annulled. Ms Cahill submits that the practitioner's failure to make any substantial progress in this respect between the second hearing day of 23 June 2006 and the third and final hearing day of 9 August 2006 should count against him. Ms Cahill also notes that the tax debt remains wholly undischarged.
61 However, the unprofessional conduct which is the subject of the proceedings occurred during the period leading up to, not following, the making of the sequestration order. The unprofessional conduct does not involve the failure to discharge the ATO's claim on the practitioner's bankrupt estate. Moreover, we accept the submission made by Mr MJ Hawkins, who appeared on behalf of the practitioner, that the practitioner does not have a continuing legal obligation to pay the tax debt. Rather, the ATO has a claim against the bankrupt estate. Although the New South Wales cases refer to legal and civic obligations to pay tax, there cannot be a civic obligation to discharge a debt which no longer exists at law.
62 It follows that the practitioner's failure, following the sequestration order, to make substantial progress in achieving the annulment of the
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- bankruptcy or in satisfying the tax debt does not properly count against him in relation to the appropriate professional disciplinary consequence of the conduct which occurred prior to the sequestration order.
63 Finally, Ms Cahill submits that the Tribunal should take a very dim view of someone who holds the position of part-time magistrate, and receives public income in that capacity, in determining the proper disciplinary consequence of the unprofessional conduct.
64 However, the evidence indicates that income tax was paid in relation to the practitioner's income earned as a part-time magistrate. The income which is the subject of the unprofessional conduct in this case was income generated from private legal practice. Certainly, as Spigelman CJ observed in Cummins and Somosi, the fact that a practitioner takes advantage of public services made available by the payment of taxation, including notably the court system, is relevant in determining the professional disciplinary consequence of failing to pay tax in respect of income earned in legal practice. However, the Tribunal does not consider that, in this particular case, a more significant professional disciplinary consequence should flow simply because the practitioner held a part-time judicial office at material times
The practitioner's submissions on penalty
65 For the practitioner, Mr Hawkins submits that the practitioner's unprofessional conduct does not warrant a suspension from practice. He submits that the public would be better served if the practitioner were supported in his efforts to overcome his medical condition. He submits the practitioner has sought professional assistance to deal with his problems and will give the Tribunal an undertaking to consult and continue to consult a psychologist and medical practitioners until it is considered that further consultation is unnecessary.
The Tribunal's finding on penalty
66 The Tribunal does not consider that the proper disciplinary outcome, in the particular circumstances of this case, lies beyond the range of orders which it has jurisdiction to make under s 29A(3) of the LP Act and, accordingly, does not consider that this is an appropriate case to make and transmit a report to the Supreme Court (full bench). While there are a number of circumstances in which transmission of a report may be appropriate, we do not consider this to be one of them: see generally as to the circumstances, Edward v Legal Practitioners Complaints Committee
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- at [22] and [23] per Wheeler JA (with whom Steytler P and McLure JA agreed). The Tribunal has come to this conclusion for four main reasons.
67 First, as Ms Cahill fairly acknowledged at the outset, the period of default in the lodgement of income tax returns in this case, namely six years, was considerably shorter than the periods of default in Cummins (38 years), Somosi (17 years), Young (17 years) and Stevens (19 years), in each of which the proper disciplinary outcome was disbarment of the practitioner.
68 Secondly, in significant contrast to the New South Wales cases, the practitioner in this case submitted income tax returns and paid income tax for a considerable period of time after he commenced legal practice. In each of the New South Wales cases in which the practitioner was struck off, the practitioner commenced legal practice and then failed to file any tax returns throughout the whole, or practically the whole, of his legal career.
69 Thirdly, we accept the evidence of Ms Coxon that, at the time of the default, the practitioner suffered from chronic post-traumatic stress disorder, which caused him to behave in a manner which was out of character in failing to submit income tax returns. We consider that Ms Coxon's evidence provides a partial explanation, but not an excuse, for the practitioner's conduct.
70 Ms Coxon's evidence helps to explain why a competent professional, who had previously met his income tax obligations, found the preparation and submission of the 1991/1992 tax return, and making provision for and paying tax for that year, in his words, "just too hard". However, the practitioner's evidence indicates that, after he had neglected his taxation affairs due to his nondiagnosed condition, he failed to remedy the default by submitting tax returns and paying income tax which would have been assessed on those returns, and failed to submit further tax returns and pay tax in respect of the further period, because he knew that the "debt had grown and that it would be difficult to pay it". It appears that, after a certain point in time, the practitioner realised that he "had to face up to" his taxation obligations. Although he submitted the outstanding tax returns in September 1999, he did not pay his tax debt, because the tourist development did not proceed and the subdivision was delayed. In other words, the psychological evidence explains why the initial default occurred, but not why it was not fully remedied, nor why further default occurred. It appears that the reason for the practitioner's conduct
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- after the initial default was a lack of funds, rather than his psychological or medical condition.
71 Fourthly, we find that the practitioner did not deliberately set out to avoid his taxation obligations. The practitioner has not lived a lavish lifestyle and the income which he generated from legal practice during the years in question was apparently spent on professional and ordinary living expenses. To borrow Giles JA's words from Murphy at [169], the practitioner's lifestyle "was free from excess". In contrast, in Wardell v New South Wales Bar Association (2002) 50 ATR 302, the evidence showed that a barrister, who had become bankrupt on his own petition, had enjoyed an income "far in excess of that required to meet ordinary living expenses", and pursued a "lavish lifestyle", spending in a way that relegated his tax debt to a last priority. The trial judge, Cripps AJ, considered that this showed "such a reckless disregard for his obligations as to amount to an intention to avoid them".
72 In these circumstances, the Tribunal considers that the appropriate professional disciplinary outcome in this case is the suspension of the practitioner from legal practice for a period of 12 months. As noted earlier, the object of disciplinary proceedings is the protection of the public and maintenance of proper standards in the legal profession. The public has a right to expect that legal practitioners comply with their legal and civic obligations to pay tax in relation to income generated from the practise of law. In particular, a person who consults a lawyer has the right to expect that legal fees which he or she pays to the lawyer will be properly accounted for in terms of income tax. Moreover, it is now clear that the maintenance of proper standards in the legal profession in this country also requires that legal practitioners comply with their legal and civic obligations to pay tax in relation to income earned as a legal practitioner.
73 In this case, to preclude the practitioner from earning a living for 12 months in the profession which has provided his principal source of income for 27 years, is a significant, but appropriate penalty, sufficient to protect the public and to ensure the maintenance of proper professional standards. Not to suspend the practitioner and simply to condition his practice certificate on obtaining medical treatment would be a manifestly inadequate outcome. It would not be an outcome that would give the public the confidence they are entitled to have, that lawyers they consult scrupulously obey the requirements of taxation law in relation to professional income. It would also run the serious risk of watering down professional standards. A reprimand and fine would also be an inadequate
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- outcome. On the other hand, to strike the name of the practitioner off the Roll of Practitioners, or to suspend him for more than two years, is not called for, as it would be an excessive means of ensuring public confidence in the legal profession.
74 The Tribunal considers that the 12 month period of suspension should commence on 1 January 2007, so as to enable clients' affairs to be finalised or clients to obtain alternative professional services.
Application for suppression order
75 The practitioner makes an application, in effect, pursuant to s 62(3) of the State Administrative Tribunal Act 2004 (WA) (SAT Act), that the Tribunal omit from its reasons for decision details concerning the practitioner's son and the practitioner's condition. The application is expressed to be made out of concern as to the effect that full publication of details may have on the practitioner's wife and daughters.
76 Section 62(3) of the SAT Act provides that the Tribunal may, in the circumstances described in s 61(4), order that any evidence given before the Tribunal, the contents of any documents produced to the Tribunal or any information that might enable a person who has appeared before the Tribunal to be identified, is not to be published. The circumstances described in s 61(4) are:
"(a) to avoid endangering the national or international security of Western Australia or Australia;
(b) to avoid damaging inter-governmental relations;
(c) to avoid prejudicing the administration of justice;
(d) to avoid endangering the physical or mental health or safety of any person;
(e) to avoid offending public decency or morality;
(f) to avoid endangering property;
(g) to avoid the publication of confidential information or information the publication of which would be contrary to the public interest; or
(h) for any other reason it is in the interests of justice."
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77 The Tribunal does not consider that any of the circumstances described in s 61(4) of the SAT Act are established. In particular, there is no evidence that publication of the details set out in these reasons would endanger the physical or mental health of the practitioner's wife or daughters.
78 Indeed, the Tribunal considers that it is in the interests of justice for the details set out in these reasons to be published so that the decision, which is of wide significance to legal practitioners in this State, can be fully and properly understood. The Tribunal has taken care, however, not to include certain details concerning the practitioner's son which are not necessary for a proper understanding of these reasons.
Conclusion
79 The practitioner properly concedes that he has been guilty of unprofessional conduct by reason of his failure to lodge income tax returns, make provision for the payment of income tax, pay income tax and pay provisional tax, and the Tribunal has so found. These failures were sufficiently closely connected with legal practice to fall within the ambit of unprofessional conduct, because the income in question was earned through the practice of law.
80 The Tribunal has determined that the appropriate professional disciplinary consequence of the practitioner's unprofessional conduct in the circumstances of this case is the suspension of the practitioner from practice for a period of 12 months.
Orders
81 The Tribunal makes the following finding and orders:
1. The Tribunal finds the practitioner guilty of unprofessional conduct in that he failed to:
(1) lodge income tax returns with respect to his personal income for the financial years 1991 - 1992, 1992 - 1993, 1993 - 1994, 1994 - 1995, 1995 - 1996 and 1996 - 1997, until about 30 September 1999;
(2) discharge his legal or civic obligations to pay income tax with respect to income earned during the financial years 1991 - 1992, 1992 - 1993, 1993 - 1994, 1994 - 1995, 1995 - 1996, 1996 - 1997,
- 1997 - 1998 and 1998 - 1999, either adequately or at all, during the period 30 June 1999 to 22 October 2002;
- (3) make provision for income tax for the financial years 1991 - 1992, 1992 - 1993, 1993 - 1994, 1994 - 1995, 1995 - 1996, 1996 - 1997, 1997 - 1998 and 1998 - 1999, prior to 22 October 2002; and
(4) discharge his legal or civic obligations to pay provisional tax and instalments of provisional tax for the financial years 1997 - 1998, 1998 - 1999 and 1999 - 2000, either adequately or at all, during the period 22 November 1999 to 22 October 2002.
- 2. The practitioner is suspended from practice for a period of 12 months from 1 January 2007 to 31 December 2007 inclusive.
3. The practitioner pay the costs of the Legal Practitioners Complaints Committee in a sum agreed by the parties or failing their agreement as fixed by the President.
4. The parties have liberty to apply to the President in respect of the commencement date of the suspension order and costs, if necessary.
- I certify that this and the preceding [81] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUSTICE M L BARKER, PRESIDENT
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