Modini and Tax Agents' Board of Queensland
[2005] AATA 1200
•6 December 2005
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2005] AATA 1200
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2005/586
GENERAL ADMINISTRATIVE DIVISION ) Re DENISE MODINI Applicant
And
TAX AGENTS' BOARD OF QUEENSLAND
Respondent
DECISION
Tribunal Dr KS Levy, Member Date6 December 2005
PlaceBrisbane
Decision 1. The Tribunal affirms the decision under review; and
2. The application for suppression of the applicant’s name is rejected.
..........[Sgd]........
KS Levy
Member
Administrative
Appeals
Tribunal
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2005/586
GENERAL ADMINISTRATIVE DIVISION ) Re DENISE MODINI Applicant
And
TAX AGENTS’ BOARD OF QUEENSLAND
Respondent
CORRIGENDUM [2005] AATA 1200
Tribunal Dr K S Levy, Member Date15 June 2006
PlaceBrisbane
I DIRECT THAT paragraph 45 ii of the Tribunal’s Reasons for Decision should read:
Stuart Hunter and Associates – 3 July 2001 to 23 November 2001 (5 months)
Dr K S Levy
MEMBER
CATCHWORDS
TAX AGENTS – application for registration as a tax agent – requirements for registration – fit and proper person to prepare income tax returns – relevant employment – confidentiality order denied – decision affirmed.
Income Tax Assessment Act 1936 s251
Income Tax Regulations 1936 reg 156
Taxation Laws Amendment Act (No 2) No 78 of 1988
Administrative Appeals Tribunal Act (1975) ss 25, 33, 43(1)Australian Postal Commission v Burgazoff (1989) 10 AAR 296
Perpetual Trustee Co (Canberra) Ltd v Commissioner for ACT Revenue (1994) 50 FCR 405
Comcare Australia v Grimes (1994) 50 FCR 60
Denise Lesley Modini and the Tax Agents Board of Queensland [2004] AATA 427
Modini v Tax Agents Board of Queensland [2005] FCA 570
Tax Agents Board of Queensland v Seymour (1990) 21 FCR 357, (1990) 21 ATR 200
Lawlor v Tax Agents Board of Queensland [2002] AATA 1183
Administration of the Territory of Papua New Guinea v Daera Guba (1973) 130 CLR 353
Minister for Immigration and Ethnic Affairs v Daniele (1981) 5 ALD 135, 61 FLR 354
The Commonwealth v Sciacca (1988) 78 ALR 279, 17 FCR 476.
Blair v Curran (1939) 62 CLR 464.
The Commonwealth v Verwayen (1990) 170 CLR 394
Midland Metals Overseas Ltd v Comptroller-General of Customs (1991) 30 FCR 87
Secretary, Department of Social Security v Murphy (1998) FCA 809
Bantick and Secretary, Department of Family and Community Services [2003] AATA 472
Civiti and Tax Agents Board of Victoria 1990(90) ATC 2039
Re Su and Tax Agents Board (1982) 82 ATC 4284
Re Kerr and Tax Agents Board of Queensland (1998) 98 ATC 2109
D’Alessandro v Tax Agents Board of Victoria (1993) 93 ATC 2028
Underwood v Tax Agents Board of Queensland (1993) 26 ATR 1188
Cowlishaw v Tax Agents Board of Queensland [2000] FCA 827
Pappalardo & Tax Agents Board of Victoria [2003] AATA 990,
Dibb and Commissioner of Taxation [2005] AATA 475
Re Pochi and Minister for Immigration and Ethnic Affairs (1979) 26 ALR 247
Flood & Secretary, Department of Social Security (1994) 33 ALD 182REASONS FOR DECISION
6 December 2005 Dr KS Levy, Member 1. This application is a review of a decision of the Tax Agents Board of Queensland (“the Board”) which has refused the applicant registration as a Tax Agent. The reviewable decision of the Board was made on 12 April 2005 pursuant to the Income Tax Assessment Act 1936 (“the Act”). The applicant was formally advised of the Board’s decision by letter dated 26 April 2005.
2. Ms Modini lodged an application for review of that decision with this Tribunal pursuant to section 251QA of the Act.
Background
3. The applicant has made a number of applications for registration as a Tax Agent with the Board. Her initial application was made on 28 October 1999 but was subsequently withdrawn. A second application was made on 1 March 2001 and was considered by the Board and rejected. She made a third application for registration as a Tax Agent on 14 January 2003. The applicant had a long discourse with officers of the Board following lodgement of that application and the matter was finally considered by the Tribunal on 12 December 2003. That application was also refused.
4. The applicant subsequently made a further application dated 6 October 2004. Following some dispute with officers of the Board about apparent handling of previous applications which she has made, she made a personal presentation to the Members of the Tax Agents Board of Queensland on 22 February 2005 (See T37; Folios 125-146 of the T documents). Unfortunately, that application was also declined and it is that decision which is now the subject of review by this Tribunal. Despite some difficulties which the applicant outlined in the way she believed her previous applications have been handled, including information which had been provided to the Board for earlier applications, the Board, on considering all of the material relevant to the application, as well as further and personal representations by the applicant before the Board on 22 February 2005, determined that she had not demonstrated that she had sufficient relevant employment to be able to satisfy the legislative requirements of having substantial involvement with a broad range of tax returns.
Previous Directions Hearings
5. There have also been two directions hearings in this matter at the request of the applicant. Those hearings considered an application for confidentiality orders and subsequently, dealt with the applicant’s request that the respondent not contact any of her former employers. She contended that this application is all about “administrative mismanagement” and “negligence” of the Tax Agents Board. She argued that it was not about “relevant work”.
6. No directions were made as an outcome of either of those two directions hearings. However, the Tribunal noted that the previous appeal to this Tribunal dealt with the various submissions made by the applicant and that no witnesses were called to provide oral evidence in support any of the arguments which were raised. The Tribunal noted the applicant’s submission that she has suffered some emotional stress over the past four or five years as she has pursued her applications for registration as a Tax Agent and, while directing that a hearing be set down for the earliest possible date, that is 16 November 2005, it also enquired as to whether the applicant was well enough to have the hearing proceed on that day. She indicated that she wished the hearing to proceed as soon as possible. The Tribunal also suggested to the applicant that if she chose to proceed and decided she was not well enough to represent herself at the hearing, then she might also consider whether there was a friend or support person that she might like to have available to her during the course of the hearing. She undertook to consider that.
7. In the course of these directions hearings, the Tribunal indicated that it would undoubtedly be helpful if, unlike the previous hearings, that witnesses may assist in the Tribunal’s assessment of the weight of evidence put by both the applicant and the respondent. In that regard, the Tribunal was conscious of the words of Justice Davies of the Federal Court of Australia in Australian Postal Commission v Burgazoff (1989) 10 AAR 296 at 298 where he said:
“…an Administrative Appeals Tribunal, as an administrative body, will feel free to suggest to the parties other additional information which ought to be obtained and sometimes appropriate means of obtaining the information and bringing it into evidence…”
8. The Tribunal also considered the decision in Perpetual Trustee Co (Canberra) Ltd v Commissioner for ACT Revenue (1994) 50 FCR 405 at 418 – 419 where Wilcox J said:
“…the statutory function of the Tribunal requires that it form its own view about the matter in issue. In approaching that task, it is legitimate for the Tribunal to be guided by the parties as to the salient issues and to accept relevant admissions of fact, but the Tribunal should never permit parties to place it in the position of deciding a case on an artificial or inadequate factual basis.”
Issues for Determination
9.The following issues require determination by the Tribunal:
a. Is there an issue estoppel whereby the Tribunal is bound by findings of fact of the previous determination of this Tribunal?
b. Has Ms Modini satisfied the legislative requirements to be registered as a Tax Agent?
c. Should confidentiality orders be made under section 35(2) of the Administrative Appeals Tribunal Act 1975?
Legislation
10. The following legislative provisions of the Income Tax Assessment Act 1936 and Income Tax Regulations 1936 are relevant in deciding the issue for determination:
“Sect 251JA - Original registration of tax agents
(1) The Board shall register the applicant as a tax agent if the applicant satisfies the Board that:
(a) if the applicant is a natural person:
(i)the applicant is a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters; and
Sect 251BC - Fit and proper persons to prepare income tax returns
(1) Without limiting the generality of an expression used in this Part, but subject to this section, a person is not a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters, as at a particular time, if:
…
(b) both of the following conditions are satisfied:
(i) the person was not registered as a tax agent, or as a nominee, for the purposes of this Part immediately before the commencement of section 39 of the Taxation Laws Amendment Act (No. 2) 1988 ;
(ii) the person does not hold such qualifications (whether academic, by way of experience or otherwise) as are prescribed;
(c) the person has not attained the age of 18 years;
(d) the person is not of good fame, integrity and character;
(e)the person has been convicted of a serious taxation offence during the previous 5 years; or
(f)the person is under sentence of imprisonment for a serious taxation offence
Sect 251N - Preparation of returns etc. on behalf of registered tax agents
(1) A registered tax agent or a person exempted under section 251L shall not allow any person, not being his employee, a registered tax agent or, in the case of a partnership which is registered as a tax agent, a member of that partnership:
(a)to prepare on his behalf, either directly or indirectly, his own or any other income tax returns or objections; or
(b)to conduct on his behalf, either directly or indirectly, any business of himself or any other person relating to any income tax return or income tax matter.
Penalty: $1,000.
(2) A partnership or company which is registered as a tax agent shall not allow any person to do anything specified in paragraph (1)(a) or (b).
Penalty: $1,000.
(2A) Subsection (2) does not apply to the extent that the person does the thing under the supervision and control of a registered nominee of the partnership or company.
Note: A defendant bears an evidential burden in relation to the matters in subsection (2A), see subsection 13.3(3) of the Criminal Code .
(2B) A natural person who is registered as a tax agent must not allow any person to do anything specified in paragraph (1)(a) or (b).
Penalty: $1,000.
(2C) Subsection (2B) does not apply to the extent that the person does the thing under the supervision and control of:
(a) the tax agent; or
(b) a registered nominee of the tax agent.
Note: A defendant bears an evidential burden in relation to the matters in subsection (2C), see subsection 13.3(3) of the Criminal Code .
(3) Nothing in this section shall be construed as prohibiting the employment by a registered tax agent or person exempted under section 251L of solicitor or counsel to act in the course of his profession in the preparation of any objection or in any litigation or proceedings before a board, the Tribunal or a court, or in an advisory capacity either in connexion with the preparation of any such return or the conduct of any such business.
INCOME TAX REGULATIONS 1936
REG 156 - Prescribed qualifications for the purposes of subparagraph 251BC
(1) (b) (ii) of the Act(1)
For the purposes of subparagraph 251BC (1) (b) (ii) of the Act, the following qualifications are prescribed:
(a) the person:
(i) shall have completed the academic requirements for the award of a degree, diploma or other qualification from an Australian university, college of advanced education or other tertiary institution of an equivalent standard, and have passed examinations in such subjects, under whatever name, which an appropriate authority of the university, college of advanced education or other tertiary institution certifies to the Board to represent a course of study in accountancy of not less than 3 years' duration and in commercial law of not less than 18 months' duration or shall possess such other qualifications as the Board regards as equivalent to those qualifications;
(ii) shall have:
(A) been engaged in relevant employment on a full-time basis for not less than a total of 12 months in the preceding 5 years;
(B) otherwise been engaged in relevant employment to an extent that the Board regards as equivalent to that referred to in sub-subparagraph (A); or
(C) been engaged in such other employment and for such time as the Board regards as equivalent to being engaged in relevant employment as referred to in sub-subparagraph (A); and
(iii) shall have, by written examination, successfully completed a course of study in Australian income tax law acceptable to the Board;
………
(2)
In this Regulation relevant employment means employment by a person or a partnership or as a member of a partnership in the course of which there has been substantial involvement in income tax matters including:
(a) the preparation or examination of a broad range of income tax returns;
(b) the preparation or examination of objections to assessments issued in respect of such returns; and
(c) the provision of advice in relation to income tax returns, assessments or objections.
Evidence
11.The following documents were admitted into evidence:
§Exhibit 1 Documents prepared in accordance with section 37 of the Administrative Appeals Tribunal Act 1975;
§Exhibit 2 Statement by Mr Peter Robinson dated 31 October 2002
§Exhibit 3 Applicant’s statement in relation to employment with Coutts Robinson dated 20 March 2001
§Exhibit 4 Applicant’s statement in relation to employment with Stuart Hunter (undated)
§Exhibit 5 Statement by Mr Bruce Coutts dated 18 August 2001
§Exhibit 6 Documents submitted by the applicant (sample return)
§Exhibit 7 Documents submitted by the applicant on 3 November 2005 (marked T1, folios 189-205)
§Exhibit 8 Letter from the Secretary, Tax Agents Board to the applicant dated 19 March 2003
§Exhibit 9 Letter of Secretary of Tax Agents Board to the applicant dated 23 April 2003
§Exhibit 10 Letter of Swayne and Hutley to the applicant dated 18 July 2005
12. Sworn evidence was provided by Bruce Coutts, Peter Robinson, Michael Baker, and Stuart Hunter. The applicant’s submissions and comments also being received as sworn evidence.
13. Counsel for the respondent made an opening statement and referred to the previous history of applications and decisions and that section 251JA(1) is the relevant statutory provision. Counsel also referred to the evidence of four employers, of whom only three were available to provide oral evidence at the hearing and which is relevant in satisfying regulation 156(1). Counsel also submitted that the Tribunal should only review the decision of the Board since the date of the last hearing by the Administrative Appeals Tribunal and that if there was no new evidence then the decision of the Board should be affirmed.
14. Counsel also referred to Comcare Australia v Grimes (1994) 50 FCR 60 in relation to issue estoppel and submitted that there is authority that the evidence to a former Tribunal should be regarded as final.
15. Ms Modini submitted in her opening statement that her application has been plagued by mismanagement, personality differences and flaws in the legislation. She maintained that the concept of “relevant work” had been abused and that she does not need to work for Tax Agents as she can work out tax practice herself. She emphasised that in addition to her academic qualifications, she has been accredited by the professional body as a CPA and also holds a public practice certificate.
§ Evidence of Mr Bruce Coutts
16. Mr Coutts indicated that he was a registered Tax Agent, a Fellow of the Institute of Chartered Accountants of Australia and also holds a Bachelor of Commerce degree and a Bachelor of Laws degree. He has been registered as a Tax Agent since 1990.
17. Mr Coutts did not complete a “statement of relevant employment” for a Tax Agents licence for the applicant despite being requested to do so. Ms Modini worked for Mr Coutts from 5 June 2000 to 19 January 2001. She was employed as a clerk/accountant for the preparation of taxation returns. She spent approximately 60% of her time on preparing financial records and 40% of her time in the actual preparation of taxation returns. Mr Coutts could not quantify the number of returns that she did during the course of her employment. However, when asked about her competence, Mr Coutts said that in the area of company, trust and superannuation returns he did not believe that she was competent to prepare these. He stated that his manager and himself conducted a review of some of her work and scaled down the type of work that Ms Modini was not able to do competently. In relation to whether Ms Modini could deal with a wide sector of taxation returns for a whole spectrum of clients, Mr Coutts thought she showed difficulty in preparing taxation returns. He noted that she had prepared one objection during the course of her employment, and as this objection was overseen by a manager, it was completed successfully. He indicated Ms Modini provided no advice to clients whilst employed by him.
18. Under cross-examination by Ms Modini, Mr Coutts disagreed with her assertions that there was a staff turnover problem in his firm at that time. He concluded that she was ultimately dismissed for incompetence.
§ Evidence of Peter Robinson
19. Mr Robinson is a CPA and a Fellow of the Taxation Institute of Australia. He stated that he employed Ms Modini as a professional accountant and that in the course of that employment she completed individual and partnership returns. He thought 80% or 90% of her time would have been spent on doing income tax work and 10% doing general accounting work. He was not aware that she had done any company tax returns, trust tax returns, superannuation tax returns whilst employed there. In addition, he did not believe that she had prepared advices or objections in the course of that employment.
20. Mr Robinson completed the “Statement of Relevant Employment” for her application to be submitted to the Taxation Board before she completed work with that firm. He stated that the main difficulty seemed to be that Ms Modini struggled with coming to terms with their computer software and the way that data was held.
§ Evidence of Michael Baker
21. Mr Baker was employed as the Assistant Secretary of the Tax Agents Board in Brisbane between November 1999 and August 2005. During that period he acted as Secretary on a number of occasions. For a time he worked under a former Secretary, Mr Ian Bosley.
22. He recalled a number of conversations with Ms Modini and that at one stage she had presented material sealed in an envelope. This sealed envelope was contained in another envelope addressed to the Secretary. The internal envelope being addressed as correspondence for the Chairman only. To maintain impartiality, the Chairman instructed Mr Baker to be responsible for Ms Modini’s application and that Mr Baker was to present relevant material to the Chairman at the next Board meeting.
23. Mr Baker prepared a submission to the Board dated 19 October 2004 and enclosed 32 pages of documentation provided by the applicant. It also included an attachment which was the decision of this Tribunal by Member Cowdroy in Denise Lesley Modini and the Tax Agents Board of Queensland [2004] AATA 427 (T13, folio 63-64). In addition, Mr Baker prepared a report to the Board dated 14 December 2004 which referred to additional submissions and documents provided by Ms Modini. (T24, folio 93).
24. Mr Baker then gave evidence that Ms Modini sought and was granted an interview with the Board on 22 February 2005. Mr Baker was in attendance and he stated that Ms Modini was informed that the Board was only interested in “relevant employment” not any of the other information about personality clashes to which she had referred. Mr Baker stated that the Board also heard of her experience with Boulevard Business Centre and that she was a contracted bookkeeper/accountant. The Board was prepared to consider her employment there as relevant if she could provide a certificate by a Tax Agent certifying the extent of her Tax Return work with Boulevard Business Centre. In other words, the Board wanted verification of her activities by a Tax Agent responsible for her involvement in that organisation. The only evidence provided was a letter from Mr Barry Scott, which indicates she was involved in meetings with him and the proprietors of the Boulevard Business Centre, but that Mr Scott completed the Tax Returns for that business (see folio 152 by Mr Barry Scott).
25. Under cross-examination by Ms Modini, where she suggested that adverse comments made by Mr Hunter and Mr Coutts were not forwarded to her prior to the Board making its decision, Mr Baker referred to 2 letters forwarded to her dated 19 March 2003 and 23 April 2003 (Exhibits 8 and 9 respectively) which provided an opportunity for her to respond to the adverse comments of previous employers. She stated from the Bar table in response that she had never received those letters. However, on questioning from the Tribunal, Ms Modini acknowledged that she was aware of these comments at least before the present decision under review. Ms Modini made a number of statements during the course of cross-examination which were not questions to Mr Baker, for example that there were major flaws in the legislation; and she referred to a conversation apparently had with Mr Hayden Daw, a Policy Advisor to the Assistant Treasurer where she claimed that he indicated that Mr Baker had acknowledged inadequacies in the processing of Ms Modini’s application. Mr Baker denied that any such statement was made. Mr Baker was unable to identify any inaccurate statement in any of the documents in evidence, which had been prepared by either himself or Mr Bosley, which was provided to the Board.
§ Evidence of Stuart Hunter
26. Stuart Hunter is a member of the National Institute of Accountants and is a registered Tax Agent. He has been so registered since 1991. Mr Hunter employed Ms Modini as an accountant and she was primarily employed to prepare Business Activity Statements (BAS) returns. He stated it was unlikely that she did any taxation returns involving capital gains but would have done a few individual taxation returns for companies or businesses (about half a dozen such returns). He also estimated that she would have prepared one or two trust returns, a couple of partnership returns but would have not undertaken any superannuation returns.
27. Mr Hunter stated that he effectively supervised Ms Modini in addition to another member of his staff whom Ms Modini was employed to assist. In relation to his assessment of her competence, he stated that she was employed on the basis of her Curriculum Vitae which indicated she was very competent. In practice, she initially appeared to have a degree of competence until his firm received complaints from clients who had never previously made any complaint. Mr Hunter stated that when her work was re-examined, most of the work she had done had to be re-done. This was particularly in relation to BAS returns and individual tax returns.
28. He recalled being contacted by Mr Bosley, Secretary to the Board and while he could not recall exactly his recommendation about Ms Modini, he stated he would have said that he would have concern for the public if the applicant was registered as a Tax Agent. He stated that she was good at disguising her inadequacies.
29. In response to cross-examination by Ms Modini, Mr Hunter provided two specific examples of returns involving Goods and Services Tax (GST) which he stated had extensive errors. The applicant alleged a lack of competence on the part of the witness. Mr Hunter referred to complaints about the applicant by his staff and also stated that she distorted information that she presented.
Additional Evidence by the Applicant
30. The applicant referred to a reference by Mr John Swayne, for whom the applicant worked on the basis of three days a week over the period May to July 2005. This equates to approximately six weeks of work full time. This reference is shown at Exhibit 10.
31. The applicant also referred to a report by Dr Michael Likely, psychiatrist (T61). Based on her presentation to him, his documentary evidence states that it would be advantageous for her to work in an individual capacity. The applicant submitted that there were psychological reasons why she should work alone as she was “on a different level to others” and that she is “too intelligent” to work for some of the practices that she has experienced in the past.
32. She also referred to Exhibit 6, a copy of a tax return which she claims to have completed and which she submitted was re-done by her as a result of the poor work of a previous Tax Agent. She referred to the work she had to do in technical terms. This was uncorroborated.
Submissions
33. Ms Brennan made final submissions that a confidentiality order should not be made under section 35(2) of the Administrative Appeals Tribunal Act 1975 (see Modini v Tax Agents Board of Queensland [2005] FCA 570.
34. In relation to the substantive application before the Tribunal, Counsel accepted that the applicant had worked for twelve months in the past five years. In terms of the legislation it was submitted that she was not an “employee” in relation to Boulevard Business Centre (see Tax Agents Board of Queensland v Seymour 21 FCR 357). Counsel also referred to criteria which defines: “relevant employment”, “substantial involvement” and “broad range” in terms of Regulation 156 (see Lawlor v Tax Agents Board of Queensland [2002] AATA 1183. Counsel’s written submissions also referred the Tribunal to a number of other well recognised authorities in relation to the issue of “relevant employment”. In addition, Counsel referred the Tribunal to folio 152 and submitted that the reference by Mr Scott does not indicate that Ms Modini prepared the tax returns concerned. New evidence presented at the hearing by the applicant of Mr John Swayne was acknowledged but it was submitted that there was no evidence that he was a Tax Agent. The evidence of three former employers, Mr Robinson, Mr Coutts and Mr Hunter was also referred to and suggested that the applicant does not satisfy the requirement for relevant employment. This submission was said to be justified either on the basis of legal analysis, or using a modular approach of looking at evidence presented to the previous hearing by the Administrative Appeals Tribunal and concluding that the evidence provided to this Tribunal is consistent with the previous hearing and that in addition, no new or additional information has been provided.
35. Counsel referred to allegations of gross mismanagement by the Secretary of the Board. Counsel also referred to the applicants medical condition, her employment experience and complaints she has made to politicians and others. Taking all of her submissions and evidence into account, it was submitted that the applicant fails to satisfy the legislation.
36. The applicant’s submissions were that she should be provided with a confidentiality order as her previous applications have been reported in a Tax Law loose leaf service and reported her adversely and unfairly.
37. The applicant alleges that her previous employers should not be regarded as credible witnesses and also alleges that the mental health of one of her former employers is in doubt.
38. In relation to “relevant employment”, the applicant submits that Lawlor’s case is different to her circumstances in that Lawlor was never employed by a Tax Agent. The applicant submitted her view of the relevance of case precedents to her application and provided a document which she submitted indicates other applicants of lesser experience have been registered as tax agents in the past. She also referred to the list of returns she has prepared (see T55, folio 89). In relation to “supervision” she referred to her work experience with Mr Barry Scott (T38) and John Swayne (Exhibit 10). The applicant submitted that she has had a range of exposure to various taxation matters, particularly partnership and individual tax returns. She submitted that she has been disadvantaged in that she could only get employment in small firms and this was a result of age discrimination.
39. On questioning by the Tribunal as to how the applicant maintains current knowledge of the law and practise in relation to, for example, superannuation, the applicant admitted she had not done any work in this area for at least five years. She explained that in any area where she had a question, she would endeavour to obtain an answer from the Centre for Professional Development or that she could go to the ATO website.
40. In relation to the ethical requirements of a professional accountant undertaking taxation work, the Tribunal enquired of her knowledge of the Ethical Statement of the Professional Body. The applicant was unaware of this. The Tribunal mentioned to the applicant that the Ethical Statement is known as APS6. She admitted she did not have knowledge of its content. She thought the requirement where she might not be competent in a particular area would be to endeavour to inform herself by speaking to technical experts in the Australian Taxation Office. The Tribunal indicated that, in fact, the Professional Bodies Ethical Statement APS6 requires a professional to refer matters to a person who had competence in the particular area where a practitioner himself or herself does not have an adequate degree of knowledge and competence.
41. Following the conclusion of the Hearing, the applicant faxed additional information to the Tribunal and the respondent. This additional information indicated inter alia, that while the applicant attends some professional development activities to maintain currency with taxation matters, she has not been able to afford the cost of some ongoing professional education. In addition, she submitted she was competent in company and trust work, but was not current in Superannuation matters and that she would not do such returns. She reiterated her commitment to providing quality services.
Findings on Material Questions of Fact
42. Ms Modini is well qualified academically. She holds the degree of Bachelor of Arts from the University of Sydney and a Bachelor of Commerce from James Cook University of North Queensland. She is a registered teacher, has been admitted as a CPA and holds a Public Practice Certificate from CPA Australia.
43. The applicant presented evidence, and it is accepted that, she has prepared income tax returns over the past five years as follows:
Individual returns – 500 (approx)
Partnership returns – 23
Company returns – 12
Trusts Income Tax returns – 5
Superannuation Fund returns – 1Fringe Benefits Tax Schedules – 2
44. There was no evidence that she had dealt with objections to the Australian Taxation Office in the past five years.
45. Ms Modini worked in employment in which she undertook work related to the duties of a Tax Agent, as follows:
i.Coutts Redington Pty Ltd – 5 June 2000 to 19 January 2001 (8 months)
ii.Stuart Hunter and Associates – 3 July 2001 to 232 November 2001 (5 months)
iii.Bachmann Robinson – 1 July 2002 to 31 October 2002 (4 months)
iv.Swayne and Hutley – 7 May 2005 to July 2005 (on the basis of three days per week (This is the equivalent of 6.5 weeks full time or 1.5 months equivalent).
46. Ms Modini has suffered from a stress related condition between September 1997 and January 2001. It is apparent that she has also suffered psychologically during the course of the past 4½ years in which she has sought registration as a Tax Agent.
47. Ms Modini has had difficulty working harmoniously in the majority of the firms in which she has been employed.
48. Information provided to the Tax Agents Board in 2003 did not involve a denial of procedural fairness as the Board wrote to her prior to its decision. Even if she did not receive those communications, as she claimed, she did have knowledge of all information considered by the Board well before the Board’s consideration and decision of her application which is currently under review by this Tribunal.
49. The applicant appeared before the Tax Agent’s Board in February 2005 and presented her case to them in person, in addition to the documentary evidence and submissions which she had provided (T37).
50. Allegations by Ms Modini that former Secretary, Mr Bosley, that he misinformed the Board as to the facts about Ms Modini’s application is not sustained by the evidence.
51. No evidence of “gross mismanagement” by the Secretary of the Board has been demonstrated.
52. Ms Modini’s complaint about the former Secretary was dealt with at arms length by Mr Baker and the former Secretary was not involved in any submission to the Board when he was the subject of the complaint by the applicant.
53. With the exception of the four month period of employment with Bachmann Robinson in 2002, the applicant has had no supervised relevant work experience in the past 5 years that might be regarded as demonstrating professional competence.
54. The standard of her professional work is regarded by the majority of her relevant employers as demonstrating incompetence.
55. The witnesses were all qualified academically or admitted as a member of a professional body. There was no evidence that any one of those witnesses was unqualified, as suggested by the applicant.
56. All her previous employers are accepted as witnesses of truth. In addition, there is no evidence to suggest one of the applicant’s former employers suffers from a mental health condition, as the applicant has suggested.
Consideration
57. All of the evidence submitted to the Tribunal, both oral and written, and all statutory requirements and case law have been considered in determining the matter. The personal differences between the applicant and the witnesses have not affected the decision in this matter.
Issue Estoppel
58. The first question for determination is whether issue estoppel or cause of action estoppel arises. In particular, Counsel for the respondent submitted at the outset by reference to Comcare Australia v Grimes and Anor (1994) 50 FCR 60, that the evidence provided by employers to the previous Tribunal hearing is the same and that that evidence should be regarded as finally determined and should therefore not be re-litigated. The Tribunal must have regard for the applicability of this concept in the context also of the statutory provisions of the Administrative Appeals Tribunal 1975 that generally accepts that the Tribunal conducts rehearings de novo (see section 43(1) and section 25(4) of the Act).
59. There are authorities which point to the relevance of estoppel to Tribunals (for example see obiter dictum in Administration of the Territory of Papua New Guinea v Daera Guba (1973) 130 CLR 353. Despite that High Court obiter dicta, there is authority running against the relevance of estoppel to tribunals (Minister for Immigration and Ethnic Affairs v Danielle (1981) 5 ALD 135 and Commonwealth v Sciacca (1988) 78 ALR 279).
60. In dealing with factual matters, “[t]he estoppel covers only those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification of its conclusion….” (per Dixon J in Blair v Curran (1939) 62 CLR 464 at 531. However, referring specifically to cases involving issue estoppel and Tribunals, two decisions of the Full Court of the Federal Court are relevant.
61. In Minister for Immigration and Ethnic Affairs v Daniele (1981) 61 FLR 354 at 359, it was said that “issue estoppel, generally but not universally seen as a rule of evidence, cannot have any place in proceedings of the Tribunal and is, to the extent that it is a rule of evidence, expressly excluded by the provisions of section 33 of the Administrative Appeals Tribunal Act 1975 [the “AAT Act”]…. Section 33(1)(b) directing that proceedings should be conducted with little formality and technicality and section 33(1)(c) to the effect that the Tribunal is not bound by the rules of evidence would appear conclusively to point to exclusion of the doctrine. It is our opinion that the Tribunal is entitled to consider all evidence.” (per Fisher and Lockhart JJ).
62. The second relevant decision is Commonwealth v Sciacca (1988) 17 FCR 476 at 480 where the Full Court said:
“If the view is taken that issue estoppel is a rule of law (which may now be the more acceptable view) that would not conclude the matter, as is apparent from what was said by their Honours, because of the administrative nature of the Tribunal and the provisions of section 33(1)(b) of the Administrative Appeals Tribunal Act which directs the Tribunal to conduct its proceedings, so far as possible, without formality and technicality. A finding by an administrative Tribunal will not give rise to an issue estoppel.”
63. In addition to the authorities above, it has been emphasised that the underpinning of the doctrine of estoppel relates to whether or not there is unconscionable conduct. (See Commonwealth v Verwayen (1990) 170 CLR 394 at 440. In that case, Deane J said:
“The doctrine of estoppel by conduct is founded upon good conscience. Itsrationale is not that it is right and expedient to save persons from the consequences of their own mistake. It is that it is right and expedient to save them from being victimised by other people.”
64. Perhaps the most recent and authoritative dealing with issue estoppel in relation to the AAT is the consideration given by Hill J in Midland Metals Overseas Ltd v Comptroller-General of Customs (1991) 30 FCR 87 at 96-97. There, His Honour said:
“…it is clear that the proceedings of the Tribunal, and in particular its findings of fact do not constitute an issue estoppel on any issue… The Administrative Appeals Tribunal is an administrative body. When its jurisdiction is enlivened it is empowered to review an administrative decision under some other enactment: s 25(4)of the (AAT Act). In matters before it, its proceedings are to be conducted with a minimum of formality and with due expedition. It is not bound by the rules of evidence: s 33 of the AAT Act. In reviewing decisions referred to it, the Tribunal is empowered to exercise itself all the powers and discretions conferred upon the decision-maker: s 43(1) of the AAT Act. If the Tribunal so decides after hearing the review, it may affirm the decision under review, vary it or set aside the decision and either itself make a decision or remit the matter back to the original decision-maker for reconsideration: s 43(1).”
65. In considering the principles set out in the above authorities the Tribunal must be mindful that in some cases before the Tribunal, issues can be continually developing. Facts or circumstances which are present at one point in time may be different or further developed at a subsequent time. The applicant in this case submits additional experience not present at the last hearing. Equally, as a five year period is covered by the regulations, there is some prior experience which will not now be relevant. However, there is also an allegation made by the applicant at an earlier directions hearing that the Board made its decision on the basis of information not available to her. She also claims that there was some distortion of information provided by a former Secretary to the Board which resulted in adverse consideration of her claims. She has subsequently faxed additional material to the Tribunal and the respondent prior to the present hearing. She has also faxed additional material to the Tribunal and the respondent since the present hearing.
66. At the hearing, I chose to allow the applicant to put her case in full on the basis of procedural fairness in allowing her to be fully heard, given that it has been an on-going matter and about which she still feels aggrieved. I also proceeded on that basis so that the serious allegations which the applicant made could be tested. I did that on the basis of the statutory power of the Tribunal, not on the basis that issue estoppel might not be applicable. The present application is the review of a new decision, not a rehearing of the previous decision on direction by the Federal Court. This is therefore a fresh decision to be reviewed, acknowledging that there is evidence in this hearing which is common with the previous hearing by the AAT on 12 December 2003.
67. However, having considered the legal authorities above, I conclude that when the Tribunal conducts reviews of administrative decisions, its hearing or re-hearings are held de novo. In that capacity, the Tribunal will have recourse to relevant material which was presented to the primary decision-maker. However, it should never be constrained by having regard to that information only if other evidence is clearly relevant. That conclusion is also supported by the fact that the Tribunal performs its functions as a reviewer of the merits of the decision before it. The Tribunal must arrive at the correct and preferable decision by standing in the shoes of the original decision-maker and considering all evidence afresh. (Section 43 of the AAT Act; Secretary, Department of Social Security v Murphy (1998) FCA 809 Drummond J; and Bantick and Secretary, Department of Family and Community Services [2003] AATA 472.
Should the applicant be registered as a Tax Agent?
68. The next question for the Tribunal is whether the applicant satisfies the legislative requirements to be registered as a Tax Agent. Of the relevant legislative provisions, section 251BC(1) does not disclose any issue which points to Ms Modini not being a fit and proper person for registration as a Tax Agent with the exception of section 251BC(1)(b)(ii) which deals with qualifications, both academic and experiential. Likewise, section 251JA(1) is not in dispute, with the exception of section 251JA(1)(a)(i), that is whether the applicant is a fit and proper person to prepare income tax returns for clients.
69. These requirements are amplified in regulation 156(2) and (6). The applicant has a degree from James Cook University, is a member of CPA Australia and holds a Public Practice Certificate. She clearly satisfies regulation 156(2)(a)(i) and 156(2)(b)(i). That is not disputed by the respondent. The main area of dispute is whether the applicant has satisfied regulation 156(2)(c), that is, whether she has gained “relevant employment” in the last five years in accordance with the definition of that term in regulation 156(6).
70. It is important to note that this legislation is involved in the registration of Tax Agents, not all of whom are members of professional bodies. Therefore, notwithstanding submission urged by the applicant, no exemption exists for members of professional bodies. Also, no national tax standards exist. The registration of a Tax Agent cannot be limited to particular categories of Tax Returns, therefore, registration demands that the person holding themselves out to the public as a Tax Agent must be capable of providing a competent service. The only national standard is that entitled APS6 Statement of Taxation Standards, which is a standard adopted by the two major accounting bodies in Australia, the Institute of Chartered Accountants in Australia and CPA Australia. This standard applies only to the members of those professional bodies and places an ethical obligation on those members. It does not apply to Tax Agents who are not professional Accountants. The legislation is designed to protect the public interest, in that context.
71. It should also be noted that the spirit of the current legislation which emanates from the Taxation Laws Amendment Act (No 2) No 78 of 1988 reveals that there is a public interest objective in ensuring that any person who prepares income tax returns for reward must have appropriate knowledge of the law and practice of income tax in Australia. Any applicant must demonstrate that he or she has had substantial involvement in income tax matters as specified in the regulation. This involves an objective assessment of the applicant’s experience. (See re Civiti and Tax Agents Board of Victoria (1990) 90 ATC 2039 at 2042).
72. In relation as to whether an applicant is a “fit and proper person”, section 251BC(1) of the Act specifies when a person is not “fit and proper”. In Re Su and Tax Agents Board (1982) 82 ATC 4284, Davies J said at 4286:
“A person is a fit and proper person to handle the affairs of a client if he is a person of good reputation, has a proper knowledge of taxation laws, is able to prepare income tax returns competently and is able to deal competently with any queries which may be raised by officers of the Taxation Department. He should be a person of such competence and integrity that others may entrust their taxation affairs to his care. He should be a person of such reputation and ability that officers of the Taxation Department may proceed upon the footing that the taxation returns lodged by the Agent have been prepared by him honestly and competently.”
73. Regulation 156(1)(a)(ii) requires the applicant to have, in addition to academic qualifications, at least twelve months “relevant employment” in the preceding five years. The term “relevant employment” is defined in regulation 156(2) and requires “substantial involvement” in income tax matters which must include, “a broad range of income tax returns”, “the preparation or examination of objections to assessments”, and the provision of “advice” in relation to income tax returns, assessments or objections.
74. Is the applicant’s experience “substantial” and is it in a “broad” range of income tax matters? The Concise Oxford Dictionary defines “Substantial” as “having substance; …of real importance or value, of considerable amount”.. Therefore “substantial” requires an involvement that is not insubstantial or minimal. There must also be experience in a broad range of income tax returns. Similarly, this term must be given its plain meaning and has been interpreted to deny registration to a person lacking experience in company, trust or superannuation fund returns (Re Civiti v Tax Agents Board of Victoria (supra)). Likewise, where there was experience only in individual and partnership returns (Re Kerr and Tax Agents Board of Queensland (1998) 98 ATC 2109); or where there was no experience in particular types of returns which are significant (for example company or superannuation returns) (D’Alessandro v Tax Agents Board of Victoria (1993) 93 ATC 2028), registration as a Tax Agent was refused.
75. It is clear the regulations require a substantial involvement and a broad range of returns. An applicant might undoubtedly be able to satisfy one of those requirements but not both. However, it is clear that both of those criteria must be satisfied for registration. In making the assessment of whether an applicant satisfies those criteria, the regulations do not require experience in every category. Therefore, a lack of experience in one or more categories of taxation returns would not of itself be fatal to the registration of an applicant.
76. One submission put by the applicant with some force was that she did not require to be supervised by others because of the level of her qualifications. She argued also that she works better by herself. The applicant is currently working from her own property and is receiving Centrelink benefits. She clearly does some work and has some clients but they are obviously small in number and with minimal remunerations. She wishes to be registered so that she can charge a fee for her services in the area of taxation as an adjunct to the accounting services she provides.
77. However, supervision for the prescribed period is an important objective of the legislation (see Underwood v Tax Agents Board of Queensland (1993) 26 ATR 1188 per SM (now DP) Muller). The requirement for supervision has been interpreted as excluding contracted employment. In the contemporary environment of many employees being employed under contract, I think it is often now difficult to differentiate between employees and contractors. But supervision is a mandatory requirement. This is confirmed by reading section 251N of the Act which mandates that work done by employees of tax agents must be done under the “supervision” and “control” of a tax agent. Read in conjunction with section 251L which prohibits persons other than tax agents from preparing tax returns for profit, it is clear that the Act intends that recognition of employment which has been supervised and further that self employment does not meet the statutory requirement (Tax Agents Board (Qld) v Seymour (1990) 21 FCR 357).
78. In applying these legislative provisions, the role of the Tax Agents Board is to protect the public interest. The legal requirements under taxation laws in Australia are complex as are the accounting standards. For example, the accounting profession in Australia must now comply with the international financial reporting standards from 1 July 2005.
79. But in terms of specific knowledge required of a Tax Agent, there have been a number of significant amendments in the area of taxation law and superannuation law in recent years. Tax Agents must be competent generally in matters of preparation of income tax returns and this must be able to be attested to independently by professionals who have supervised the work of newer practitioners.
80. The Tribunal was also conscious of the applicant’s submission that, while she can practice as an Accountant doing accounting work, she finds it difficult to earn an income in a self employed practice without the availability of doing taxation work for a fee. However, as was said by Senior Member Dwyer in Pappalardo & Tax Agents Board of Victoria [2003] AATA 990 at [14], “…this is not a situation where personal hardship can be allowed to prevail over community interest”.
81. On a proper analysis of the applicant’s satisfaction of the criteria in the regulations, it must be said that she has formal qualifications, has substantial experience in some limited areas but did not enjoy the confidence of the majority of her employers in relation to her knowledge, ability and/or competence. Most employment the applicant has had in the past three years has not been supervised. She has had some experience in a self employed capacity, but this is not adequate to satisfy the legislation (see Tax Agents Board of Queensland v Seymour (1990) 21 ATR 200. To be a ‘fit and proper person’, “fitness” involves “…honesty, knowledge and ability” (per Cowlishaw v Tax Agents Board of Queensland [2000] FCA 827 at [11] per Kiefel J). In the final analysis, either a person is fit and proper or the person is not. There is serous doubt as to the competence of the applicant as raised by a number of employers. Indeed, apart from the 4 months with Bachmann Robinson in the second half of 2002, which is accepted as being employment with no adverse assessment, the period from June 2000 to November 2001 is regarded as not demonstrating an adequate degree of competence. For all other periods in the past 5 years (apart from 6 weeks in 2005 which was unsupervised), all other periods of work have involved the applicant not having been unsupervised by a Registered Tax Agent, or working by herself.
82. The Tribunal concludes that the requirements of the legislation have not been satisfied and that the purpose of the legislation in reducing risk to the public would not be achieved if Ms Modini was registered as a Tax Agent, on the basis of the evidence presented.
83. Consequently, the Tribunal finds that the applicant does not satisfy regulation 156 at the present time to be a “fit and proper person” for registration as a Tax Agent. This finding does not relate to her honesty or integrity, but relates to satisfying the legislative requirements as to evidence of the degree of competence and supervised experience.
Confidentiality Orders
84. The final question for the Tribunal is whether an order should be made under section 35(2) of the AAT Act so as to provide confidentiality to the applicant.
85. The Tribunal generally has a practice of ordering confidentiality in an appropriate case. (Dibb and Commissioner of Taxation [2005] AATA 475).
86. Section 35(2) of the AAT Act provides as follows:
“Private hearing etc.
(2)Where the Tribunal is satisfied that it is desirable to do so by reason of the confidential nature of any evidence or matter or for any other reason, the Tribunal may, by order:
(a)direct that a hearing or part of a hearing shall take place in private and give directions as to the persons who may be present; and
(aa)give directions prohibiting or restricting the publication of the names and addresses of witnesses appearing before the Tribunal; and
(b)give directions prohibiting or restricting the publication of evidence given before the Tribunal, whether in public or in private, or of matters contained in documents lodged with the Tribunal or received in evidence by the Tribunal; and
(c)give directions prohibiting or restricting the disclosure to some or all of the parties to a proceeding of evidence given before the Tribunal, or of the contents of a document lodged with the Tribunal or received in evidence by the Tribunal, in relation to the proceeding.”
87. The applicant argued that publication of the previous decision of the AAT together with reference to her name and the decision in the matter in the loose leaf service marketed by CCH Australia, has been unfair and that she has been disadvantaged and/or her reputation has been harmed. In considering whether the Tribunal should prohibit or restrict publication of this case or whether it should order that publication or disclosure of the evidence in this matter should be prohibited or restricted, the Tribunal must commence with the principle that it is desirable that all such hearings should be held in public. An inevitable consequence of that principle is that it is desirable that the evidence given to the Tribunal and any document lodged should be available, not only to the parties, but also to the public. However, the Tribunal is required to give due regard to the application by Ms Modini to restrict publication of her name or the evidence, and particularly whether publication or disclosure of the evidence should be prohibited. The policy which is relevant to the Tribunal’s consideration in section 35(2) was outlined by Brennan J in Re Pochi and Minister for Immigration and Ethnic Affairs (1979) 26 ALR 247 at 270 as follows:
“…calculated to ensure that public confidence in proceedings to administer justice is both warranted and maintained. It is a principle of particular importance to a Tribunal which is engaged in reviewing the exercise of administrative power, for administration has hitherto been a cloistered process (McPherson v McPherson [1936] AC 177 at 200) and its exposure to public scrutiny is calculated to enhance greater public confidence in it.”
88. His Honour in Re Pochi at 273 further indicated that those powers, while not intended to be “dormant” would be expected to be exercised “sparingly”. In that case, His Honour also said in relation to the exercise of the discretion about confidentiality orders:
“There must appear a real possibility of doing injustice to, or inflicting a serious disadvantage upon a party, a witness or a person giving information if the proceedings were in public; or it must clearly appear that publication of the proceedings would be contrary to the public interest…” .
89. There is therefore a public interest which must be protected and “…the public interest is best served by allowing publication of …. full reasons for decision without deletion” (re Flood & Secretary, Department of Social Security (1994) 33 ALD 182 at 186. In exercising a discretion, this always involves a balancing of interests, that is, the public interest and transparency in decision making on the one hand and the private interests of the applicant. On the other, the discretion will be exercised more commonly where there is an interest in the Tribunal being able to acquire information which a party might not otherwise provide, for example, the provision on criminal intelligence information which might otherwise prejudice ongoing police investigations. That type of situation does not arise in this case. The Tribunal will also give consideration to prohibiting disclosure of an applicant’s name where severe embarrassment or disadvantage is likely to result from such disclosure.
90. In the present case, it would appear that the applicant is particularly concerned about suffering embarrassment about her name appearing in the public records. While the Tribunal sees no issue of great importance in the suppression of the applicant’s name, the respondent argues that a confidentially order should not be made as her name and the subject matter is already available in the public domain. In that regard, the respondent refers to the decision of Keifel J in the Federal Court of Australia in Modini v Tax Agents Board of Queensland [2005] FCA 570. Also, there is authority that information already publicly available in a decision of the Federal Court does not prejudice the applicant (Dibb and Commissioner of Taxation [2005] AATA 475). It is also the case that the applicant had not sought a private hearing and therefore the Tribunal ‘s practice of suppressing an applicant’s name as a consequence of a private hearing is not a strong one.
91. In the circumstances, the applicant’s request for suppression of her name is rejected.
92. The Tribunal therefore answers the questions as follows:
(1)Issue estoppel does not arise in the present case;
(2)The applicant does not satisfy the requirements of regulation 156 and consequently the decision of the Tax Agents Board is affirmed;
(3)The application for suppression of the applicant’s name is rejected.
I certify that the 92 preceding paragraphs are a true copy of the reasons for the decision herein of Dr K Levy, Member
Signed: Jeff Mills
Legal Research Officer
Date/s of Hearing 16 November 2005
Date of Decision 6 December 2005
The Applicant was unrepresented
Counsel for the Respondent Ms M Brennan
Solicitor for the Respondent Australian Government Solicitor
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