Legal Services Commissioner v Graham

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QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL


CITATION:

Legal Services Commissioner v Graham [2024] QCAT 387

PARTIES:
LEGAL SERVICES COMMISSIONER

(applicant)

v
MICHAEL ANTHONY GRAHAM

(respondent)

APPLICATION NO/S:

OCR 208-23

MATTER TYPE:

Occupational regulation matters

DELIVERED ON:

18 September 2024

HEARING DATE:

15 July 2024

HEARD AT:

Brisbane

DECISION OF:

Justice Williams

Assisted by:
Mr Richard Barnes, Practitioner Panel Member
Mr Keith Revell, Lay Panel Member

ORDERS:

1.     The Respondent’s conduct identified in respect of each of Charges 1 to 5 in the discipline application is found to constitute professional misconduct.

2.     The Respondent not be granted a practising certificate before 27 February 2026.

3.     The Respondent complete the QLS Practice Management Course prior to being granted a principal’s practising certificate.

4.     The Respondent is publicly reprimanded.

5.     The Respondent pay the LSC’s costs of and incidental to the discipline application, to be assessed on the standard basis as if this were a proceeding before the Supreme Court of Queensland.

CATCHWORDS:

PROFESSIONS AND TRADES – LAWYERS – COMPLAINTS AND DISCIPLINE – DISCIPLINARY PROCEEDINGS – PROFESSIONAL MISCONDUCT – where the respondent was charged and convicted of various tax offences in 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014 and 2017 – where the respondent pleaded guilty and was fined for the charges for which he was convicted – where an application for disciplinary orders against the respondent was subsequently brought by the applicant Commissioner pursuant to s 456 of the Legal Profession Act 2007 (Qld) – where the applicant alleges that the charges against the respondent constitute unsatisfactory professional conduct or professional misconduct – whether conduct also breached Australian Solicitors Conduct Rules as likely to material degree to bring profession into dispute – whether the respondent engaged in unsatisfactory professional conduct or professional misconduct – whether disciplinary orders should be made pursuant to s 456 of the Legal Profession Act 2007 (Qld) – practising certificate previously cancelled and period expired – payment of debt to ATO paid in full prior to hearing – evidence of remorse and rehabilitation – whether Tribunal should recommend respondent being struck from roll – whether supervision appropriate – whether the respondent should be ordered to pay the Commissioner’s costs of the application

Australian Solicitors Conduct Rules 2012, r 5

Legal Profession Act 2007 (Qld), s 5, s 6, s 69, s 70, s 418, s 419, s 420, s 423, s 453, s 456, s 462, s 656
QLS Administration Rule 2005, r 31

Tax Administration Act 1953 (Cth), s 8C

Adamson v Queensland Law Society Incorporated [1990] 1 Qd R 498

A Solicitor v Council of the Law Society of New South Wales [2004] HCA 1; (2004) 216 CLR 253
Attorney-General v Bax [1999] 2 Qd R 9
Attorney-General & Minister for Justice Queensland v Priddle [2002] QCA 297
Briginshaw v Briginshaw (1938) 60 CLR 336
GLJ v Trustees of the Roman Catholic Church for the Diocese of Lismore (2023) 97 ALJR 857; [2023] HCA 32
Legal Services Commissioner v Brown

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Details
Case
[2024] QCAT 387
Decision Date

CaseChat Overview and Summary

The matter before the court involved an application by the Legal Services Commissioner (LSC) for disciplinary orders against a legal practitioner, Mr Graham, pursuant to s 456 of the Legal Profession Act 2007 (Qld). The LSC alleged that Mr Graham's conduct, which included being charged and convicted of multiple tax offences between 2005 and 2017, constituted unsatisfactory professional conduct or professional misconduct. The central issues for the court were whether Mr Graham's actions breached the Australian Solicitors Conduct Rules and, if so, whether they constituted unsatisfactory professional conduct or professional misconduct warranting disciplinary action.

The court considered extensive evidence regarding Mr Graham's financial history, his repayment of the tax debt to the Australian Taxation Office (ATO), and his explanations for his conduct. Mr Graham submitted that his failures to file tax returns and GST returns were due to negligence rather than deliberate tax avoidance and that he had shown remorse and taken steps to rectify his financial and administrative failings. The court weighed this against the severity of Mr Graham's repeated failures to meet his tax obligations, despite being a legal practitioner.

The court concluded that Mr Graham's conduct constituted professional misconduct. It found that his repeated failures to comply with tax obligations were a serious breach of the professional standards expected of legal practitioners. Despite acknowledging Mr Graham's remorse and efforts to rectify his financial situation, the court determined that the seriousness of his misconduct warranted a strong response.

The court ordered that Mr Graham not be granted a practising certificate before 27 February 2026, that he complete the QLS Practice Management Course prior to being granted a principal’s practising certificate, that he be publicly reprimanded, and that he pay the LSC’s costs of the application. This decision reflects the court's consideration of both the gravity of Mr Graham's misconduct and the need to uphold the integrity of the legal profession.

Orders

Orders of the court

1. The Respondent’s conduct identified in respect of each of Charges 1 to 5 in the discipline application is found to constitute professional misconduct.

2. The Respondent not be granted a practising certificate before 27 February 2026.

3. The Respondent complete the QLS Practice Management Course prior to being granted a principal’s practising certificate.

4. The Respondent is publicly reprimanded.

5. The Respondent pay the LSC’s costs of and incidental to the discipline application, to be assessed on the standard basis as if this were a proceeding before the Supreme Court of Queensland.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

It is convenient to deal with the second issue at the outset.Further evidence of payment in full of the tax debt owed to the ATO At the hearing, the Respondent relied on a further affidavit of the Respondent that had been sworn on 11 July 2024, being the week before the hearing.[35] The Respondent’s affidavit included the following further evidence:[35]Leave was granted to read and file the affidavit and a copy was added to Tab 8 of Exhibit 1 Hearing Book.(a)As at 22 January 2024:(i) The Respondent owed approximately $767,000 to the ATO.(ii) The Respondent also had a mortgage of $788,000 on his apartment at Newstead.(b)The Newstead apartment was purchased in August 2017 for $1.245 million, with a mortgage of approximately $980,000.(c)The mortgage had increased to approximately $870,000 due to redrawing on excess payments.(d)A valuation of the property indicated that the property was now worth approximately $2.5 million.(e)The Respondent and his wife applied to refinance the property, which was subsequently approved.(f)On 5 July the balance of the amount owed to the ATO, being approximately $579,000 was paid to the ATO.(g)Exhibits ‘MAG-01” and ‘MAG-02” show that the Respondent was consequently in credit with the ATO in the amount of $3,670.(h)Refinancing the apartment had enabled the Respondent to finalise his debt with the ATO as he always intended. This further evidence establishes that the Respondent has now repaid to the ATO his tax liabilities in full, together with any interest and penalties imposed by the ATO. This needs to be considered in the context of the earlier evidence from the Respondent that:(a)He took responsibility for repayment of the debt owed to the ATO.(b)He did not declare bankruptcy.(c)He entered into a payment arrangement with the ATO and was paying the tax debt off by instalments as required by the terms of the agreement with the ATO. These factual circumstances are particularly relevant to the appropriate sanction and are discussed further below. Whether the Respondent’s conduct was deliberate to avoid tax liability or was negligent is contentious between the parties. The Respondent submits that the Respondent’s evidence[36] shows that:[36]Both the Respondent’s affidavit sworn 29 January 2024 and his oral evidence at the hearing.(a)The failures to furnish the income tax returns and the GST returns were as a result of negligence and not an attempt by him to avoid paying tax.[37][37]See for example affidavit at paragraphs [83], [75], [126], [142], [180] and [181]. (b)The Respondent did not engage in fraud by way of intentionally concealing income in order to avoid exposure to tax liability.(c)The Respondent did not set out to avoid payment of tax and provided an explanation in his affidavit.[38][38]Respondent’s affidavit at [116] – [119], [124], [126], [131], [133] – [137], [139], [141] – [142] and [179] at Tab 5 of Exhibit 1 Hearing Book.(d)The Respondent’s explanation is that his focus and dedication to his work meant that he was negligent to other aspects of his life including his health and taxation affairs.[39][39]Respondent’s affidavit at [52].(e)The Respondent had a disposition for problem avoidance in aspects of his life and was unable to discipline himself, as he should have, to make the necessary lodgements and meet his tax obligations in a timely manner.[40] [40]Respondent’s affidavit at [107].(f)The Respondent gave evidence that he had a mental barrier towards addressing his taxation obligations and each year the problem grew bigger and administratively more difficult. His record keeping was in disarray and spread “indiscriminately” over five different storage premises.[41][41]Respondent’s affidavit at [135] and [148].(g)The Respondent relevantly shows insight by his evidence that:“In hindsight, my focus and dedication to my work has at times been to my detriment and meant that I was neglecting other aspects of my life. Significantly, this has been true for both my health and my taxation affairs”.[42](h)The Respondent’s financial position collapsed from 2008 and his assets were liquidated to pay down debt.[43] This included the loss of the family home in 2014.[44] The Respondent’s focus on his practice at the expense of other priorities is to be considered in this context.[45](i)The Respondent was a sole practitioner at the relevant times and his practice involved high volume cost assessment work. On reflection the Respondent accepts he may have taken on too much work.[46](j)The Respondent accepts the gravity of his conduct, has shown remorse and insight into the effect on the profession’s standing.[47](k)The Respondent ultimately did deal with the 9 annual income returns and 66 monthly BAS, which took approximately 18 months to locate, compile and sort records and professional accounting fees of $18,000.[48] This task took longer than the 6-weeks given in the final notice but was completed prior to the Respondent’s appearance in court.(l)The Respondent did not avoid the payment of tax by entering bankruptcy but rather entered into a very long and onerous long term repayment agreement with the ATO relating to all tax outstanding and interest.[49] (m)At the time of the written submissions the Respondent had met all his obligations under the agreement and gave evidence that he would continue to do so.[50](n)The Respondent has put in place arrangements to prevent similar lapses reoccurring and had been compliant with tax obligations from the 2018 financial year onwards, namely for 5 years.[51](o)The Respondent has cooperated in respect of these proceedings, accepting “guilt” and looking to bring them to an expeditious conclusion.[42]Respondent’s affidavit at [52] at Tab 5 of Exhibit 1 Hearing Book.[43]Respondent’s affidavit at [64] and [66] – [71].[44]Respondent’s affidavit at [67] – [68].[45]Respondent’s affidavit at [75] and [106].[46]Respondent’s affidavit at [134] and [166].[47]Respondent’s affidavit at [53].[48]Respondent’s affidavit at [148] – [150].[49]Respondent’s affidavit at [177] – [178].[50]Respondent’s affidavit Exhibits “MAG-05” and “MAG-06” at Tab 5 of Exhibit 1 Hearing Book.[51]Respondent’s affidavit at [145] and Exhibit “MAG-04” at Tab 5 of Exhibit 1 Hearing Book.

Decision

Reasons for decision

Section 456 of the LP Act states:“456 Decisions of tribunal about an Australian legal practitioner(1)If, after the tribunal has completed a hearing of a discipline application in relation to a complaint or an investigation matter against an Australian legal practitioner, the tribunal is satisfied that the practitioner has engaged in unsatisfactory professional conduct or professional misconduct, the tribunal may make any order as it thinks fit, including any 1 or more of the orders stated in this section.(2)The tribunal may, under this subsection, make 1 or more of the following in a way it considers appropriate—(a) an order recommending that the name of the Australian legal practitioner be removed from the local roll;(b) an order that the practitioner’s local practising certificate be suspended for a stated period or cancelled;(c) an order that a local practising certificate not be granted to the practitioner before the end of a stated period;(d) an order that—(i)imposes stated conditions on the practitioner’s practising certificate granted or to be issued under this Act; and(ii) imposes the conditions for a stated period; and(iii) specifies the time, if any, after which the practitioner may apply to the tribunal for the conditions to be amended or removed;(e) an order publicly reprimanding the practitioner or, if there are special circumstances, privately reprimanding the practitioner;(f) an order that no law practice in this jurisdiction may, for a period stated in the order of not more than 5 years—(i) employ or continue to employ the practitioner in a law practice in this jurisdiction; or(ii) employ or continue to employ the practitioner in this jurisdiction unless the conditions of employment are subject to conditions stated in the order.(3)The tribunal may, under this subsection, make 1 or more of the following—(a) an order recommending that the name of the Australian legal practitioner be removed under a corresponding law from an interstate roll;(b) an order recommending that the practitioner’s interstate practising certificate be suspended for a stated period or cancelled under a corresponding law;(c) an order recommending that an interstate practising certificate not be, under a corresponding law, granted to the practitioner until the end of a stated period;(d) an order recommending—(i) that stated conditions be imposed on the practitioner’s interstate practising certificate; and(ii) that the conditions be imposed for a stated period; and(iii) a stated time, if any, after which the practitioner may apply to the tribunal for the conditions to be amended or removed.(4)The tribunal may, under this subsection, make 1 or more of the following—(a) an order that the Australian legal practitioner pay a penalty of a stated amount, not more than $100,000;(b) a compensation order; (c) an order that the practitioner undertake and complete a stated course of further legal education;(d) an order that, for a stated period, the practitioner engage in legal practice under supervision as stated in the order;(e) an order that the practitioner do or refrain from doing something in connection with the practitioner engaging in legal practice;(f) an order that the practitioner stop accepting instructions as a public notary in relation to notarial services;(g) an order that engaging in legal practice by the practitioner is to be managed for a stated period in a stated way or subject to stated conditions;(h) an order that engaging in legal practice by the practitioner is to be subject to periodic inspection by a person nominated by the relevant regulatory authority for a stated period;(i) an order that the practitioner seek advice from a stated person in relation to the practitioner’s management of engaging in legal practice;(j) an order that the practitioner must not apply for a local practising certificate for a stated period.(5)To remove any doubt, it is declared that the tribunal may make any number of orders mentioned in any or all of subsections (2), (3) and (4).(6)Also, the tribunal may make ancillary orders, including an order for payment by the Australian legal practitioner of expenses associated with orders under subsection (4), as assessed in or under the order or as agreed.(7)The tribunal may find a person has engaged in unsatisfactory professional conduct even though the discipline application alleged professional misconduct.”

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.