Mendonca v Tax Practitioners Board
[2019] FCA 1757
•24 October 2019
FEDERAL COURT OF AUSTRALIA
Mendonca v Tax Practitioners Board [2019] FCA 1757
File number(s): NSD 329 of 2019 Judge(s): THAWLEY J Date of judgment: 24 October 2019 Catchwords: ADMINISTRATIVE LAW – challenge to a decision of the Tax Practitioners Board pursuant to the Administrative Decisions (Judicial Review) Act 1977 (Cth) and s 39B of the Judiciary Act 1903 (Cth) – Board exercised discretion not to investigate conduct that may breach the Tax Agent Services Act 2009 (Cth) – whether jurisdictional error – whether Board understood nature or scope of the discretion – decision set aside Legislation: Administrative Decision (Judicial Review) Act 1977 (Cth)
Judiciary Act 1903 (Cth) s 39B
Tax Agent Services Act 2009 (Cth) ss 1-5, 20-5(1)(a), 30-10, 30-15, 30-20, 30-25, 30-30, 40-5(1)(b), 60-5, 60-10, 60-15, 60-20, 60-95, 60-100, 60-105, 60-110, 60-115, 60-125, 90-1
Tax Agent Services (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) s 17
Cases cited: Bringinshaw v Briginshaw (1938) 60 CLR 336
Cainv New South Wales Land and Housing Corporation (2014) 86 NSWLR 1
Hossainv Minister for Immigration and Border Protection 264 CLR 123
Mendonca v Tax Practitioners Board [2017] AATA 2177
Mendonca v Tax Practitioners Board [2018] FCA 1686
Minister for Immigration and Border Protection v Stretton (2016) 237 FCR 1
Minister For Immigration and Border Protection v SZMTA (2019) 363 ALR 599
Minister for Immigration and Border Protection v SZVFW (2018) 357 ALR 408
Plaintiff M64/2015 v MIBP (2015) 258 CLR 173
Pollard v RRR Corporation Pty Limited [2009] NSWCA 110
Public Service Board of New South Wales v Osmond (1986) 159 CLR 656
Shrestha v Minister for Immigration and Border Protection (2018) 264 CLR 151
Singh v Minister for Home Affairs [2019] FCAFC 3
Date of hearing: 24 October 2019 Registry: New South Wales Division: General Division National Practice Area: Administrative and Constitutional Law and Human Rights Category: Catchwords Number of paragraphs: 76 Counsel for the Applicant: The applicant appeared in person Counsel for the Respondent: Mr M Cleary Solicitor for the Respondent: Australian Government Solicitors ORDERS
NSD 329 of 2019 BETWEEN: GERARD MENDONCA
Applicant
AND: TAX PRACTITIONERS BOARD
Respondent
JUDGE:
THAWLEY J
DATE OF ORDER:
24 OCTOBER 2019
THE COURT ORDERS THAT:
1.The matter be listed for a case management hearing at 9.00am on 31 October 2019.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(Revised from transcript)THAWLEY J:
OVERVIEW
This is an application for judicial review under the Administrative Decision (Judicial Review) Act 1977 (Cth) (ADJR Act) and s 39B of the Judiciary Act 1903 (Cth) of a decision made by the Tax Practitioners Board on 8 February 2019 (the Decision). The Decision was a decision by the Board not to investigate two complaints made by the applicant against Mr Clive Nelson and Ms Lauren McGinty.
BACKGROUND
From 2006 the applicant was an employee of Chan & Naylor Parramatta Pty Ltd, a company which provided accounting, taxation and wealth advisory services. Ms McGinty was an employee of Chan & Naylor and Mr Nelson was a non-executive director.
The history leading to this application is long, but originated with the applicant’s complaint that Chan & Naylor had failed to pay him performance bonuses for six of the years during which he was employed.
The applicant commenced proceedings against Chan & Naylor in the District Court of NSW. His claim related, amongst other matters, to the bonuses to which he claimed to be entitled.
On 12 June 2014, after considering extensive evidence, Balla DJC found against the applicant. Her Honour found the applicant’s evidence to be unreliable. The evidence which had been given by Mr Nelson and Ms McGinty was referred to in her Honour’s reasons in making adverse findings against the applicant. Her Honour also concluded that the primary document which the applicant relied upon in support of his claim – a “Staff Bonus Calculator” – did not exist in 2006 and was created at some later time, contrary to the applicant’s case.
On 8 February 2017, the applicant received notice that the Board was considering terminating his registration as a tax agent as a result of the adverse findings against him in the District Court.
On 5 May 2017, the applicant lodged a complaint with the Board against Ms McGinty, stating that she gave false and misleading sworn evidence to the District Court in regard to the payment of bonuses by Chan & Naylor.
On 7 May 2017, the applicant lodged a complaint with the Board against Mr Nelson relating to the evidence he had given in the District Court proceedings. The applicant requested that the Board exercise its investigatory powers. He referred to ss 60-100, 60-105, 60-110 and 60‑115 of the Tax Agent Services Act 2009 (Cth).
His complaint referred to an email dated 4 February 2008 which had been sent by Mr Nelson and “a Bonus Calculator attachment that did not get attached to the email”. The applicant stated in his letter:
On 16 January 2008 at 7.12 PM Clive Nelson sent an e-mail about a Bonus Calculator attachment that did not get attached to the e-mail.
On 16 January 2008 at 7.14 PM (after 2 minutes) Clive Nelson made a booking in his calendar for a meeting of all client-managers on 8 February 2008 and circulated his calendar booking to Lauren McGinty, Elizabeth Pizzardi, Neetu Shankar, Man Lai and myself.
On 4 February 2008, Clive Nelson sent an e-mail to Lauren McGinty, Elizabeth Pizzardi, Neetu Shankar, Man Lai and myself with the bonus calculator attachment that was referred to in his 16 January 2008 e-mail. Clive Nelson gave sworn evidence that this bonus calculator attachment was blank/incomplete without numbers and given for the first time on 4 February 2008.
The evidence of Mr. Mendonca, Mrs. Mendonca, Mr. D'Sylva and e-mails of 17 May 2012 and 23 May 2012 from Mr. Mendonca to Solicitor Mark Paul of Bartier Perry (all tendered as evidence before the Tax Practitioners Board) proves that blank/incomplete bonus calculator was given for the first time on 13 March 2006 NOT 4 February 2008. In addition, Lauren McGinty who was one of the recipients of this e-mail did NOT give sworn evidence in support of or to corroborate the sworn lie of Clive Nelson. Kota Keniry gave sworn evidence that he accessed all my e-mails but also did NOT give sworn evidence in support of or to corroborate the sworn lie of Clive Nelson.
Evidence should be evaluated according to the proof which is in the power of one side to have produced and in the power of the other to have contradicted See Blatch v. Archer (1774) 1 Cowp 53 at 65; 98 ER 969 at 970 (Lord Mansfield). Tax Agent, Clive Nelson, obstructed the course of justice, perverted the course of justice, gave false and misleading sworn testimony to obtain the following financial advantage by deception: Avoid paying my unpaid bonus + 50% to 80% of my legal fees + bearing his own legal fees of more than $300,000.
As a measure of procedural fairness, Mr. Mendonca respectfully requests for the Tax Practitioners Board to exercise its power to inspect the bonus calculator attachment to 4 February 2008 e-mail of Clive Nelson in the e-mail box of Clive Nelson, Lauren McGinty, Elizabeth Pizzardi and Neetu Shankar who continue to be employed by Chan & Naylor Parramatta Pty. Ltd. and in the e-mail box of Man Lai and Gerard Mendonca that can be accessed through Kota Keniry according to his sworn evidence - This would have increased the credibility and reliability of the evidence of Gerard Mendonca and avoided any adverse finding by Judge Balla.
On 25 July 2017 the Board wrote to the applicant advising that it did not have jurisdiction to consider the two complaints (the 25 July 2017 decision).
On 20 August 2017, the applicant lodged an application for review of the 25 July 2017 decision with the Administrative Appeals Tribunal (AAT).
On 10 November 2017 the AAT found that it did not have jurisdiction to review the 25 July 2017 decision and the application was dismissed: Mendonca v Tax Practitioners Board [2017] AATA 2177.
On 24 August 2017, the applicant sought internal review of the 25 July 2017 decision. He made submissions and produced documents in support of his internal review request on 9 December 2017.
On 15 January 2018, a senior independent officer of the Board reviewed the application and affirmed the 25 July 2017 decision.
On 6 February 2018, the Board notified the applicant that it would be taking no further action in regard to the District Court findings against him. The letter included:
In deciding to finalise the matter, the Board noted:
1in the District Court decision (referred to above), Justice Balla made adverse findings about your conduct, including that:
a. you created a disputed 'Bonus Policy' document to use in a proceeding you brought against Chan & Naylor Parramatta Pty Ltd (Chan & Naylor) concerning an employment issue (the Bonus proceeding); and
b.that finding significantly impacts on the reliability of not only your evidence in relation to that issue, but to all of your oral evidence in those proceedings.
2in the same District Court proceeding, Justice McLoughlin however observed (on page 24 of his judgment dated 6 November 2015):
"However in relation to that bonus policy, without wishing to demur from her Honour's findings, it may be that the onus was on the defendant (Chan and Naylor (Parramatta) Pty Ltd atf Chan & Naylor (Parramatta) Trust) to call Mr Safetli (the general manager of the defendant company) and it may be that the expert evidence on which her Honour based her findings merely went to the extent that the document was not created within the defendant's premises which does not exclude Mr Safetli from having been the author of it".
3the finding of Justice Mcloughlin in the District Court judgment dated 6 November 2015 raised doubt as to whether you created the disputed 'Bonus Policy' document to use in the Bonus proceeding, and in turn whether you provided false or unreliable evidence in that proceeding;
4adverse findings made by Judge Cameron regarding your conduct in the FCCA decision (referred to above); and
5your submissions in two Statutory Declarations that you have provided to the Board (one in respect of the District Court matter and the other in respect of the FCCA matter), including that:
a.you did not create the disputed 'Bonus Policy' document;
b.you had been the victim of poor legal advice; and
c.it would be a miscarriage of justice in the circumstances for the Board to find that you are not a fit and proper person within the meaning of the TASA based on the findings of Judge Balla in the District Court decision.
The Board concluded that “the nature and degree of … conduct was not sufficient to support a finding that you are not a fit and proper person to remain registered as a tax agent under the TASA”.
On 12 February 2018, the applicant sought judicial review of the 25 July 2017 and 15 January 2018 decisions in the Federal Court of Australia. The Board conceded that the 25 July 2017 and 15 January 2018 decisions were affected by jurisdictional error: Mendonca v Tax Practitioners Board [2018] FCA 1686 (Mendonca No 1). In relation to this issue, Farrell J stated at [15] to [17]:
[15]In its submissions filed on 27 September 2018 in response to Mr Mendonca's submissions in chief, the Board conceded that the decision made on 25 July 2017 was affected by jurisdictional error because the Board concluded that it only had jurisdiction to consider conduct which constituted "tax agent services". This was because:
(1)The Board has jurisdiction to review "any conduct that may breach this Act": see s 60-95(1)(b) of the Tax Agent Services Act;
(2)This would include any conduct that was in breach of the Code. The "Code of Professional Conduct" applies to (among other persons) registered tax agents: see s 30-5.
(3)The Code is not, in its terms, limited to conduct which amounts to tax agent services. Rather, the Code regulates 'personal and professional conduct as a registered tax agent': see s 30-1. At s 30-10 the Code relevantly provides:
30-10 The Code of Professional Conduct
Honesty and integrity
(1) You must act honestly and with integrity.
[16]The Board concedes that this error was "jurisdictional" because it involved a misapprehension of the limits of the Board's power to investigate and it would be conduct which is covered by s 6(1)(b) of the ADJR Act.
[17]The Board concedes the decisions made on 15 January 2018 were subject to error because they sought to uphold or affirm the decision made on 25 July 2017 which was, in effect, no decision at all.
The Court made orders quashing the 25 July 2017 and 15 January 2018 decisions. The Court also noted that the Board undertook to consider again whether or not to investigate the applicant’s complaints.
On 27 November 2018, the applicant was notified that the Board would reconsider the two complaints, and was invited to provide further written submissions. The applicant provided two additional responses: the first on 2 December 2018 stating what he believed to be the Board’s powers; the second on 5 January 2019 in support of his complaints.
The Board decided on 8 February 2019 not to conduct an investigation into the complaints against Mr Nelson and Ms McGinty and provided reasons for that decision.
The 8 February 2019 decision of the Board is the subject of this application for judicial review.
LEGISLATIVE SCHEME
The Board is established by s 60-5 of the Act, found in Subdivision 60A. Subdivision 60A also sets out the membership, function and powers of the Board. The Board is comprised of the chair and six or more other members: s 60-10. As to functions, s 60-15 provides:
60-15 Functions
The functions of the Board are:
(a)to administer the system for the registration of *registered tax agents, BAS agents and tax (financial) advisers; and
(b)to investigate:
(i) applications for registration; and
(ii) conduct that may breach this Act; and
(c)to impose sanctions for non-compliance with the *Code of Professional Conduct; and
(d)to issue, by legislative instrument, guidelines to assist in achieving the functions mentioned in paragraphs (a), (b) and (c); and (e) such other functions as are conferred on the Board by this Act, the regulations or any other law of the Commonwealth; and
(f)to do anything incidental or conducive to the performance of its functions.
As to powers, s 60-20 provides:
60-20 Powers
The Board has power to do all things necessary or convenient to be done for or in connection with the performance of its functions.
Relevant to the investigatory function of the Board is Subdivision 60E, entitled “Investigations”, comprising ss 60-95 to 60-125.
Section 60-95, which is the central provision of present relevance, provides:
Investigations
(1) The Board may investigate:
(a) your application for registration; or
(b) any conduct that may breach this Act; or
(c) other matters prescribed by the regulations.
(2) The Board must notify you in writing if the Board decides to investigate you. The notice must be given within 2 weeks after the decision is made.
(3) An investigation is taken to commence on the date of the notice.
(4) The Board:
(a) has a discretion as to its procedure; and
(b) is not bound by the rules of evidence.
Conduct which “may breach” (s 60-95(1)(b)) the Act includes conduct which might be in breach of the “Code of Professional Conduct” which is found in s 30-10 of the Act. The Code provides:
30-10 The Code of Professional Conduct
Honesty and integrity
(1)You must act honestly and with integrity.
(2)You must comply with the *taxation laws in the conduct of your personal affairs.
(3) If:
(a)you receive money or other property from or on behalf of a client; and
(b)you hold the money or other property on trust;
you must account to your client for the money or other property.
Independence
(4)You must act lawfully in the best interests of your client.
(5)You must have in place adequate arrangements for the management of conflicts of interest that may arise in relation to the activities that you undertake in the capacity of a *registered tax agent, BAS agent or tax (financial) adviser
Confidentiality
(6)Unless you have a legal duty to do so, you must not disclose any information relating to a client’s affairs to a third party without your client’s permission.
Competence
(7) You must ensure that a *tax agent service that you provide, or that is provided on your behalf, is provided competently.
(8)You must maintain knowledge and skills relevant to the *tax agent services that you provide.
(9)You must take reasonable care in ascertaining a client’s state of affairs, to the extent that ascertaining the state of those affairs is relevant to a statement you are making or a thing you are doing on behalf of the client.
(10)You must take reasonable care to ensure that *taxation laws are applied correctly to the circumstances in relation to which you are providing advice to a client.
Other responsibilities
(11)You must not knowingly obstruct the proper administration of the *taxation laws.
(12)You must advise your client of the client’s rights and obligations under the *taxation laws that are materially related to the *tax agent services you provide.
(13)You must maintain professional indemnity insurance that meets the Board’s requirements.
(14)You must respond to requests and directions from the Board in a timely, responsible and reasonable manner.
Subdivision 30-B, comprising s 30-15 to 30-30, is entitled “Your liability for administrative sanctions”. Section 30-15(1) provides that the subdivision applies if the Board is satisfied, after conducting an investigation under Subdivision 60-E, that a person has failed to comply with the Code. Section 30-30 provides that the Board may terminate registration. The Board may also give a written caution, make an order under s 30-20 or suspend registration under s 30-25: s 30-15(2).
A registered tax agent is required to be a “fit and proper person” to be registered. Section 20‑5(1)(a) provides:
20-5 Eligibility for registration as registered tax agent, BAS agent or tax (financial) adviser
Individuals
(1)An individual, aged 18 years or more, is eligible for registration as a *registered tax agent, BAS agent or tax (financial) adviser if the Board is satisfied that:
(a) the individual is a fit and proper person;
…
This requirement is one of the “tax practitioner registration requirements”: s 90-1.
A registered tax agent may have their registration terminated if they cease to meet one of the “tax practitioner registration requirements”, including being a fit and proper person. Section 40-5(1)(b) provides:
40-5 Termination of registration—individuals
(1)If you are a *registered tax agent, BAS agent or tax (financial) adviser and an individual, the Board may terminate your registration if:
(a)…
(b)you cease to meet one of the *tax practitioner registration requirements; or …
If the Board decides to investigate a person, it may exercise certain coercive powers, including the powers: to request the production of documents or things (s 60-100); to require witnesses to appear before the Board (s 60-105); and to take evidence on oath or affirmation (s 60-110).
The Act does not provide a mechanism for making or dealing with complaints. The only reference in the Act to the concept of a complaint is that the Board must notify a “complainant (if any)” of the outcome of an investigation – see: s 60-125(8)(c)(ii).
THE BOARD’S DECISION
The Board identified the subject matter of the complaints against Mr Nelson and Ms McGinty as relating to an allegation that they gave false and misleading evidence to the District Court. It is evident from the Board’s reasons that it understood the underlying complaint being made concerned the fitness and propriety of Mr Nelson and Ms McGinty to be registered in accordance with the Act.
The Board noted that, under s 60-95(1), it could investigate, amongst other matters, conduct that may breach the Act or matters that were prescribed by regulation.
The Board decided that it would not commence an investigation into the allegations made by the applicant against Mr Nelson and Ms McGinty.
The matters which it referred to in its reasons for making that decision included:
The conduct alleged by you against Mr Nelson and Ms McGinty could give rise to potential breaches of the Code (such as section 30-10(1), which requires a tax agent act with honesty and integrity). As you correctly asserted, these provisions reach beyond the delivery of tax agent services.
However, considering the principle in Briginshaw, there is insufficient evidence that Mr Nelson or Ms McGinty contravened the Code. In particular:
•On its own, the fact that Mr Nelson or Ms McGinty gave evidence which contradicts yours is not proof that either Mr Nelson or Ms McGinty gave false or misleading evidence;
•Mr Nelson’s affidavit of 2 October 2013 and Ms McGinty’s affidavit of 11 September 2013 do not materially depart from the evidence led during your proceedings against Chan & Naylor Parramatta;
•To the extent that Mr Nelson and Ms McGinty’s evidence in Court differs from their affidavits, the Board is satisfied that Mr Nelson and Ms McGinty gave reasonable explanations for those differences;
•Of particular relevance to your case:
oYou and Mr Nelson offered conflicting views of your job interview in 2006, during which you say you were shown a copy of the Bonus Calculator;
oOther conversations occurring between Mr Nelson and Mr Mendonca were only witnessed by Mr Brian D’Syla, who did not given evidence to the District Court and cannot be located in ATO records;
oThe Bonus Calculator shown to you during your performance review meeting in January 2008 had been prepared with “a set of hypothetical numbers” (Nelson affidavit, para 34). This does not conflict with Mr Nelson’s later evidence of later producing the Bonus Calculator in an email to staff which was “in blank form” (Nelson affidavit, para 35);
oYour evidence that there was an earlier Bonus Policy which existed around 19 November 2006 is not supported by the sworn evidence of at least four other Chan & Naylor employees (Mr Nelson, Ms McGinty, Mr Keniry and Mr Naylor);
oIn particular, Mr Keniry’s evidence was accepted without objection and was subject to little cross-examination, which supports the possibility that the Bonus Policy document indeed did not exist prior to 11 July 2007;
oYour evidence that you were not at a client managers’ meeting in September 2007 to discuss/agree with all client-managers (Gerard Mendonca, Lauren McGinty, Elizabeth Pizzardi, Man Lai and Neetu Shankar) to adopt the Bonus Policy of 11 July 2007 conflicts with Mr Nelson’s evidence. Ms McGinty was not cross-examined about this meeting and Ms Pizzardi, Ms Lai and Ms Shankar were not called as witnesses.
The Board also considers the following to be relevant:
•Her Honour Judge Balla made formal findings in the District Court that she was not prepared to accept your evidence at face value, on the basis of a number of inconsistencies in both your conduct during the events at Chan & Naylor Parramatta from 2006 to 2012, and the evidence led during your proceedings;
•Your wife, Ms Renuka Mendonca, is not a suitably dispassionate witness to have sufficient weight applied to her evidence. In the District Court proceedings, she accepted that the bonus calculator she saw in 2008 contained numbers;
•Mr Brian Gregory D’Sylva cannot be located on the details currently available;
•Mr Hais (Hassam) Safetli was not called during the District Court proceedings, and the anecdotal suggestion that Mr Safetli was a person convicted of a serious crime makes his evidence less likely to be reliable;
•ATO guidance on records retention, which the Board adopts, is that tax records only need to be retained for five years. Given the effluxion of time, seeking a copy of any form of the Bonus Calculator from Chan & Naylor Parramatta is unlikely to be successful, and has already been subject to the Court’s compulsory powers;
•The District Court of NSW, Federal Circuit Court and Fair Work Commission have all, in separate decisions over a protracted period, concluded that you are not a reliable witness. Your evidence has often been tested in the face of sufficiently impressive and independent witnesses, and found to be not credible.
The Board concluded by stating:
For completeness, the Board notes that you sought the Board's position on using its compulsory powers to obtain a copy of the Bonus Calculator for you to be able to view.
Should the Board have commenced an investigation under section 60-95 of the TASA and issued a notice under either 60-100 or 60-110, any evidence so adduced or obtained would immediately be considered "official information" under section 70-35.
No officer of the Board could release that information to you without committing an offence under s 70-35(1), and none of the exceptions in s 70-40 of the T ASA would apply. You would therefore not have been able to view the document concerned even had the Board commenced a formal investigation.
Conclusion
The Board notes that you have also pursued your underlying dispute with Chan & Naylor Parramatta through more appropriate forums which are able to make findings of fact, namely the District Court of NSW, Federal Circuit Court and with the Fair Work Commission, and these the outcomes of those proceedings have not been favourable to you.
In light of the Board's concerns that the evidence available does not support the commencement of an investigation, it will not be taking any further action on your complaint. The Board appreciates that this is not the outcome you are seeking and that you would be disappointed with this decision. We apologise for this.
The Board believes that, with the conclusion of this review, we have addressed your concerns to the extent that is reasonable and appropriate in light of the evidence available and the powers available to the Board under the T ASA.
THE APPLICATION TO THIS COURT
The applicant relied upon an amended originating application for judicial review filed on 15 July 2019. The applicant also filed lengthy written submissions. The grounds of judicial review relied upon in the amended originating application were as follows:
1.Error of principles
2.Denial of procedural fairness and substantial miscarriage of justice.
3.Failure to have regard to relevant considerations
4.Errors on face of the record and jurisdictional errors.
5.Failed to follow procedures required by law to be observed in making decisions
6.Legal unreasonableness
7.Lack of intellectual justification for decision
8.Failure to give adequate reasons
9.Constructive failure to exercise jurisdiction
10.Errors otherwise in Craig v The State of South Australia and/or House v R sense.
The particulars set out in the amended originating application could not be easily reconciled with the grounds of review. Having regard to the grounds and particulars identified in the application and having considered the written submissions, the applicant’s complaints appear to comprise the following:
(1)failure to provide adequate reasons;
(2)misunderstanding the discretion under s 60-95(1);
(3)error in concluding that evidence of matters prior to 2010 could not substantiate a contravention of the Code, leading to a termination under s 30-30;
(4)that the Board acted unreasonably; and
(5)that the Board failed to accord procedural fairness.
CONSIDERATION
Failure to provide adequate reasons
The amended originating application included:
The Board failed to consider with adequate reasons that the evidence available does support the commencement of an investigation and it must take any further action on the complaint and the Board has not addressed Mr Mendonca’s concerns to the extent that is reasonable and appropriate in light of the evidence available and the powers available to the Board under TASA.
The applicant expanded on this particular in his submissions by reference to Pollard v RRR Corporation Pty Limited [2009] NSWCA 110. The applicant submitted:
Failure to consider in the exercise of its jurisdiction giving adequate reasons is a jurisdictional error and error on the face of the record. As the Court of Appeal commented In Pollard v RRR Corporation Pty Limited [2009] NSWCA 110:
the giving of adequate reasons lies at the heart of the judicial process. Failure to provide sufficient reasons promotes “a sense of grievance” and denies “both the fact and the appearance of justice having been done”, thus working a miscarriage of justice: see [57] and the cases there referred to;
Pollard, to which the applicant refers, does not address the position of administrative decision-makers but, rather, concerns the obligation on a judge of a superior court of record to provide reasons following a hearing: Pollard at [57]-[59].
There is no common law obligation which requires an administrative decision-maker to provide reasons for decisions: Public Service Board of New South Wales v Osmond (1986) 159 CLR 656. Many Commonwealth administrative decisions are the subject of a statutory obligation to provide reasons. There was, however, no statutory requirement for the Board to provide reasons for its decision not to commence an investigation following receipt of a complaint.
In any event, the Board provided reasons for its decision, which set out its understanding of relevant aspects of its powers, what it considered to be the important operative facts relevant to considering whether to commence an investigation and its reasoning process for deciding not to commence an investigation. The applicant has not established jurisdictional error by the Board in failing to provide adequate reasons for its decision.
However, that does not mean that the reasons in fact given might not reveal that the Board did err in a manner which is jurisdictional.
Misunderstanding of the discretion under s 60-95(1)
The applicant submitted that the power to investigate was a “power coupled with a duty” such that the Board had no discretion other than to investigate once it decided it had power to do so. The applicant relied upon Cainv New South Wales Land and Housing Corporation (2014) 86 NSWLR 1, Basten JA at [14] to support this proposition.
In Cain at [14], Basten JA said:
[14]The word “may”, “if used to confer a power, indicates that the power may be exercised or not, at discretion”: Interpretation Act 1987, s 9(1). Nevertheless, such a power can, in particular circumstances, be coupled with a duty to exercise the power: Ward v Williams (1955) 92 CLR 496. The District Court held that s 91(1)(a) conferred a power coupled with a duty, with the result that the Tribunal had no discretion to decline to make the order sought once satisfied that the power was engaged.
His Honour observed at [24] to [25]:
[24]On the contrary, where the statute uses the same terminology in various provisions, it will usually (though not necessarily) be appropriate to give it the same meaning in each case. Both s 87 and s 91 confer a power on the Tribunal by use of the word “may”: a clear reason must be established to conclude that in one situation the Tribunal has a discretion, but in another it does not.
[25]The difference in effect between “may” and “must” (or “shall”, being the term identified as imposing a duty in s 9(2) of the Interpretation Act) does not depend upon the existence of s 9 of the Interpretation Act; it is an element of ordinary English usage. Nor did the distinction escape the drafter of the Residential Tenancies Act, which uses the language of power and the language of obligation with, to all appearances, deliberate precision: cf the use of “must” in s 84(3) and s 85(3). There is nothing in the surrounding provisions which require a strained construction of s 91.
Lemming JA stated at [46], and [48] to [49]:
[46]The text of s 91 is an unpromising starting point for discerning a contrary intention. It is plain that “may” where used in precisely the same context in s 91(5) bears its ordinary meaning connoting a discretion.
…
[48]Section 91 is to be construed “so that it is consistent with the language and purpose of all the provisions of the statute”: Certain Lloyd’s Underwriters v Cross [2012] HCA 56; (2012) 248 CLR 378 at [24] (emphasis in original, citing Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69])… The first two sections (s 84(3) and s 85(3)) commence “The Tribunal must, on application by a landlord, make a termination order if …” and are followed by nine provisions in the form “The Tribunal may, on application by a landlord, make a termination order …”: s 86(4), s 87(4), s 89(5), s 90(1), s 91(1), s 92(1), s 93(1), s 94(1), s 95(3) (emphasis added).
[49]The change in language from “must” to “may” is a remarkable feature of the structure of the Division. It is a large task to disregard the prima facie purposeful shift in language between the first two and the last nine conferrals of power.
Section 60-95 has been set out at [25] above. Subsection (1) of s 60-95 states that the Board “may” investigate any conduct that may breach the Act. Subsection (2) states that the Board “must” notify a party should it choose to conduct an investigation.
The decision whether to commence an investigation in accordance with s 60-95(1) is discretionary. This is clear from the language of the provision read in the context of the Act as a whole. There is nothing in the Act understood in light of the objects which it was enacted to achieve which would suggest it was intended that the Board must investigate a matter each and every time it considered it had power to investigate. Such a legislative scheme would be unworkable.
However, I consider the Board misunderstood its task. This is most evident from the following sentence of its reasons:
However, considering the principle in Briginshaw, there is insufficient evidence that Mr Nelson or Ms McGinty contravened the code.
What the Board had to consider was whether it should exercise the discretionary power to investigate “conduct which may breach this Act”: s 60-95(1)(b). The sentence set out above, read in the context of the reasons as a whole, indicates that the Board proceeded on the basis that it could only exercise the discretion to investigate if the material before it in fact established, to the standard explained in Bringinshaw v Briginshaw (1938) 60 CLR 336, that there had been a contravention. This misunderstood the discretionary power by setting the bar too high. The task was to consider whether to exercise the discretion to investigate “conduct which may breach” the Act. It could not have been contemplated that the discretion to investigate would only be exercised if a contravention was established.
Allied to this concern is the fact that the material before the Board provided what could be regarded as examples of conduct relevant to the question of contravention, but which were not mentioned in the reasons for decision. Of course, the reasons for decision must be read in a practical, common sense way understanding that there was no statutory obligation to provide the reasons. Nevertheless, as a matter of good public administration the Board chose to provide reasons intended to do more than merely document the fact of the Decision. The statement of reasons was clearly intended to explain the basis upon which the Decision was made. In such circumstances the fact that the Board was not under a statutory obligation to provide reasons does not prevent the Court from drawing an inference from the absence of any reference to the material that the Board did not consider the material or did not engage with it sufficiently to discharge the statutory function – compare: Plaintiff M64/2015 v Minister for Immigration and Border Protection (2015) 258 CLR 173 at [25], [36]. One might have expected a reference to the evidence which had been provided to the Board, to which the Court was taken in argument, in circumstances where the Board proceeded on the basis that the evidence was “insufficient”, together with an explanation as to why it was regarded as “insufficient”. Further, it is one thing for evidence to be “insufficient” to establish a contravention of the Code. It is quite another for evidence to be “insufficient” to warrant commencing an investigation.
Pre-1 March 2010 conduct
In its reasons for decision, the Board stated:
Under the Tax Agent Services (Transitional Provisions and Consequential Amendments) Act 2009, conduct which occurred before the enactment of the TASA cannot be used to substantiate a breach of the Code unless the requirements in section 17 of the transitional provisions had been complied with, that is:
•Mr Nelson and Ms McGinty had been given a show cause notice by the Tax Agents’ Board;
•The Board had decided to investigate Mr Nelson and Ms McGinty; and
•The Board had written to Mr Nelson and Ms McGinty under section 60-95 of the TASA to notify them of the investigation.
As there is no evidence this was done, evidence occurring prior to 1 March 2010 cannot be used to substantiate a termination of registration under section 30-30 of the TASA, as the Code does not apply retrospectively.
The applicant submitted that “the Board erred in considering that evidence occurring prior to 1 March 2010 cannot be used to substantiate a termination of registration under s 30-30 of the TASA”.
The point the Board was making in the section of its reasons set out at [55] above was that – if it were to decide to commence an investigation – it could not use pre-1 March 2010 conduct to conclude that there had been a breach of the Code warranting termination under s 30-30 unless the three requirements in s 17 the transitional provisions had been complied with. Registered tax agents were required to comply with the Code from 1 March 2010 when it came into force – see: s 1-5, Item 4 of the Act; s 17 of the Tax Agent Services (Transitional Provisions and Consequential Amendments) Act 2009 (Cth).
The Board was correct to conclude that pre-1 March 2010 conduct could not have been used, in the circumstances identified by and on the material before the Board, to decide to terminate the registration of Mr Nelson and Ms McGinty under s 30-30 for breach of the Code.
For the reasons below, however, even if the Board had erred in this respect, I would have concluded that the error was not an error of sufficient gravity to warrant the conclusion that the error was jurisdictional: Hossainv Minister for Immigration and Border Protection 264 CLR 123 at [25]. If there was an error, it was not shown to be sufficiently material. The conclusion reached by the Board with respect to pre-1 March 2010 conduct was not shown to have any operative causal effect on the decision reached: (a) the decision was not made because of the Board’s understanding; and (b) it was not shown that, if the Board had proceeded with a different understanding, the outcome would have been different.
The Board expressly noted that conduct which occurred before 1 March 2010 was relevant to the question of fitness and propriety which arises under ss 20-5(1)(a) and 40-5(1).
The Board considered that an assessment of the fitness and propriety of Mr Nelson and Ms McGinty under ss 20-5(1)(a) and 40-5(1) would have to be based on their current situation and could not be limited to conclusions based exclusively on past conduct. The Board stated:
Whilst the Board could consider conduct of Mr Nelson and Ms McGinty in 2008 (if it were proven), they would likewise have to include assessment of their behaviour since 2008 and the relative evidence of any witnesses, including adverse court decisions in which Mr Mendonca appears to have been found to have fabricated evidence.
The Board’s consideration of the use of evidence of pre-1 March 2010 conduct to establish a breach of the Code enlivening a power to terminate under s 30-30 (which was not shown to be materially incorrect) was not material to the decision not to investigate because the Board accepted that pre-1 March 2010 conduct was relevant under ss 20-5(1)(a) and 40-5(1).
In Shrestha v Minister for Immigration and Border Protection (2018) 264 CLR 151 at [10], Kiefel CJ, Gageler and Keane JJ stated:
[10] For the reasons given in Hossain, the fact that the postulated legal error could have had no impact on the Tribunal’s decisions denied that error the character of a jurisdictional error. The postulated legal error at most led the Tribunal to ask a superfluous question. The Tribunal’s reasons for decision in each case make perfectly clear that its treatment of the relevant circumstance (as meeting the enrolment element of the definition of an “eligible higher degree student”, rather than as enrolment in the particular course in which the visa holder had been enrolled at the time of grant of the visa) did not impact on anything which the Tribunal otherwise did in finding facts and in reasoning to a conclusion as to the preferable exercise of discretion. For that reason, the postulated legal error could not have taken the decision of the Tribunal beyond the authority conferred on the Tribunal.
In Minister For Immigration and Border Protection v SZMTA (2019) 363 ALR 599 at [46], Bell, Gageler and Keane JJ stated (footnotes omitted):
[46] Where materiality is in issue in an application for judicial review, and except in a case where the decision made was the only decision legally available to be made, the question of the materiality of the breach is an ordinary question of fact in respect of which the applicant bears the onus of proof. Like any ordinary question of fact, it is to be determined by inferences drawn from evidence adduced on the application.
If the Board’s understanding of the relevant provisions was in some way legally incorrect, its misunderstanding of the issue was not shown to have any material causal relevance in the sense that: (a) the decision was made because of the erroneous understanding; or (b) if the Board had proceeded with the correct understanding the outcome might have been different. The consequence is that the error was insufficiently material for it to qualify as jurisdictional.
Unreasonableness
The applicant submitted that the decision was legally unreasonable or that there was no intellectual justification for the decision. The applicant stated that the Board made: “[the] type of errors included but not limited to a decision that is so unjust and unreasonable that no reasonable decision-maker would have made such a decision”.
As to legal unreasonableness, the Full Court in Singh v Minister for Home Affairs [2019] FCAFC 3 at [61] (Reeves, O’Callaghan and Thawley JJ) stated:
The question of whether a decision is legally unreasonable is answered by reference to whether or not the decision is within the scope of the statutory authority conferred on the decision-maker; it involves an assessment of whether the decision was lawful or authorised having regard to the scope, purpose and objects of the statutory source of power: Minister for Immigration and Border Protection v Stretton (2016) 237 FCR 1; Minister for Immigration and Border Protection v SZVFW (2018) 357 ALR 408 at [54]-[60] (Gageler J); [78]-[79] (Nettle and Gordon JJ); [135] (Edelman J). Such a conclusion might be drawn, for example, if it:
(1)is “illogical”, though an inference of unreasonableness will not be supported merely because a decision appears to be irrational: SZVFW at [10] (Kiefel CJ); [82] (Nettle and Gordon JJ); Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at [68] (Hayne, Kiefel and Bell JJ);
(2)“lacks an evident and intelligible justification”: Li at [76] (Hayne, Kiefel and Bell JJ); SZVFW at [10] (Kiefel CJ), [82] (Nettle and Gordon JJ);
(3)is plainly unjust, arbitrary, capricious or lacking in common-sense: Stretton at [11] per (Allsop CJ, with whom Griffiths and Wigney JJ relevantly agreed at [87], [90]); Muggeridge v Minister for Immigration and Border Protection (2017) 255 FCR 81 at [35] (Flick, Perry and Charlesworth JJ).
Legal unreasonableness may also be found where the “result is so unreasonable that it could not have been reached if proper reasoning had been applied in the exercise of the statutory power in the particular circumstances”: Minister for Immigration and Border Protection v SZVFW (2018) 357 ALR 408 at [83] (Nettle and Gordon JJ).
Thus, a decision might be found to be unreasonable either:
(1)after identification of specific error shown to affect the decision; or
(2)by reference to the outcome or result of the decision: Minister for Immigration and Border Protection v Stretton (2016) 237 FCR 1 at [12] (Allsop CJ).
If I had not concluded that the Board misunderstood the task under s 60-95(1), I would have concluded that it was unreasonable to approach the exercise of the discretion under section 60‑95(1) on the basis that, before the Board would exercise its discretion to commence an investigation, it needed sufficient evidence on the Briginshaw standard of actual contravention of the Code. The making of a discretionary decision on that basis could not have been one within the contemplation of the legislature in enacting section 60-95(1) given the terms of the provision are directed to investigating whether there “may” have been a breach of the Act.
Procedural fairness
The applicant submitted that the Board failed to afford procedural fairness. The applicant’s submissions referred to the Board’s failure to consider “a voice recording and transcript” of Mr Nelson. The transcript related to a complaint made by another person, Mr Wilson, about a meeting he had with Mr Nelson on 26 March 2013.
Although it was initially submitted for the Board that the transcript was not before the Board in relation to the applicant’s complaint, it was evident that the Board had in fact received Mr Wilson’s transcript at least in the context of the applicant’s two complaints. As noted earlier, the applicant sought judicial review before this Court of two decisions of the Board: Mendonca No 1. In the context of those proceedings, the applicant had served an affidavit to which was annexed the transcript of the meeting with Mr Nelson. Accordingly, it is tolerably clear that the applicant was putting that material forward as relevant to his complaint against Mr Nelson. And it must also have been obvious from the content of the transcript that the applicant was suggesting that it was relevant to fitness and propriety.
In one sense, the Board’s submission that the transcript was not provided to it in the context of the applicant’s complaints might be regarded as suggesting that the Board did not consider the transcript. However, ultimately, I am not satisfied that is has been established that the Board did not consider the transcript in the context of the applicant’s complaint.
Apart from the transcript, there was nothing else in the reasons of the Board or the submissions made by the applicant to support the allegation of procedural unfairness on the part of the Board. Accordingly, this aspect of the application has not been made out.
CONCLUSION
For those reasons, the Board’s decision must be set aside.
However, given that these reasons were delivered ex tempore, the appropriate course is to list the matter for the making of orders after the parties have had an opportunity to consider the reasons just delivered.
I certify that the preceding seventy-six (76) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Thawley. Associate:
Dated: 28 October 2019
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