N2000/867 and Australian Prudential Regulation Authority - [2001] AATA 979

DECISION AND REASONS FOR DECISION [2001] AATA 979

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N2000/867

GENERAL APPEALS DIVISION )
           Re      [Applicant's name]
  Applicant
           And    Australian Prudential Regulation Authority
  Respondent

DECISION

Tribunal M J Sassella, Senior Member

Date30 November 2001
PlaceSydney

Decision      The decision under review is affirmed.
  ..............................................
  Senior Member
CATCHWORDS
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY – superannuation funds – previous criminal convictions against trustee of fund – understatement of income tax – prudential risk to superannuation entity - struck off as legal practitioner – previous good character – waiver of disqualified status – waiver not granted

Superannuation Industry (Supervision) Act 1993 – ss 6(1)(a)(vii), 10(1) definitions of "APRA", "Regulator", "reviewable decision" (ra), "self managed superannuation fund", "superannuation fund" (a), 17A(1), 19(1), (2), (3), (4), 119, 120(1), (3), (4), 120A(3), (4), (6), (7), 126B(1), (2), (3), (4), (5), 126C, 126D(1), (3), 126E, 344, 345.
Crimes Act 1914 – ss 16G, 19AC, 29B, 29D

[Case citation deleted as it may identify the applicant]
Re VX96A and Insurance and Superannuation Commissioner (1996) 23 AAR 427

REASONS FOR DECISION

30 November 2001 M J Sassella, Senior Member

History of application

On 7 June 1999 NM Accountancy and Tax Services, acting for the applicant, wrote (T25) to the Australian Prudential Regulation Authority ("APRA") ("the respondent") to impart certain information and to make an application. Amongst other things the writer communicated the following:

The applicant was at the time of writing a qualified barrister of the Supreme Court of NSW. He was admitted to practise on 16 September 1976. He had been a solicitor of the court for five years.

The applicant had paid into a superannuation fund since 1993 named the [name] Staff Superannuation Fund ("the fund") with the trustee being F W (Nominees) Pty Ltd. The fund was for the benefit of the applicant and his wife. As at 30 June 1998 the value of the fund was $1,329,323.00.

In March 1999 the applicant and his wife retained the writer to act as their accountant. They asked that arrangements be made to have themselves constituted as trustees of the fund.

The writer considered s 121 of the Superannuation Industry (Supervision) Act 1993 ("the Act") which requires that a superannuation fund trustee not have been convicted of an offence in respect of dishonest conduct.

The applicant had lodged amended income tax returns for the financial years ended 30 June 1990, 1991 and 1992. The Australian Taxation Office ("the ATO") issued amended notices of assessment which contained culpability and interest components. The applicant paid these amounts which the ATO subsequently refunded to him.

The Commonwealth Director of Public Prosecutions ("DPP") brought proceedings against the applicant under s29B of the Crimes Act 1914 ("the Crimes Act") in relation to the understatement of income in his tax returns for the relevant years.

On 4 June 1998 the applicant pleaded guilty to amended charges under s 29D of the Crimes Act. It was agreed between the prosecution and the defence that the s 29D charges would be "treated the same as the [s] 29B charges". He was liable to a maximum penalty of imprisonment for two years or a fine of $10,000, or both. He was sentenced to two years of periodic detention on 5 June 1998.

On 1 December 1998 the original sentence was quashed by the NSW Court of Criminal Appeal. A sentence of 14 months of periodic detention was substituted. This was due to end on 15 September 1999.

From 16 July 1998 the applicant had not practised as a barrister because the Bar Council had cancelled his practising certificate. The NSW Court of Appeal was to consider an appeal against the Bar Council at a hearing scheduled for 9 and 10 September 1999.

The applicant was applying to the respondent to be permitted to be trustee of the fund with his wife. The writer understood that such an application could be made because the applicant had not been sentenced to a penalty of two years jail or more. The applicant had also not been fined a monetary penalty of 120 penalty points.

The writer argued that there were special circumstances. The fund was of longstanding. He applicant's marriage was stable and long lasting. Without the applicant being a trustee a heavy burden was placed on his wife to perform as sole trustee. The applicant and his wife are the sole beneficiaries under the fund. The fund is a substantial fund requiring close monitoring and active involvement in building up the assets and performing administrative acts.

The applicant had had a history of unblemished reputation and impeccable character of the highest order. Over 30 people had deposed on affidavit as to his honesty, integrity, trustworthiness and character. His only other convictions were occasional traffic offences.

On 22 June 1999 the applicant wrote (T26) to the respondent seeking an extension of time as the letter from NM Accountancy and Tax Services had been sent out of time. Section 126B(3) of the Act requires an applicant for waiver of disqualified status to apply within 14 days after the commencement of his or her conviction (s 126B(3)(b) of the Act). Section 126B(4) permits APRA to accept a late application "only if … satisfied that there are exceptional circumstances that prevented the application from being made within th[e] period". He advanced the following reasons:

Ignorance of his disqualification until he learned of it on 5 June 1999.

He was convicted of 5 June 1999. He was devastated by the sentence and was not in a state of mind to address the issue of changing the fund trustees.

After 5 June 1999 the DPP appealed the sentence and the applicant cross-appealed. The applicant also feared a DPP appeal to the High Court.

On 8 March 2000 an APRA delegate decided (T31) under s 126D(3) of the Act not to waive the applicant's disqualified person status. The applicant was notified. Reasons for the decision were provided (T31, pp 175-177):

The grounds for waiver under s 126B(1) of the Act are either (i) that a person is a disqualified person solely because of s 120(1)(a)(i) (a conviction in respect of dishonest conduct) or (ii) the offence leading to the person being a disqualified person is not an offence involving "serious dishonest conduct" as described in s 126B(2) of the Act. These were potentially applicable to the applicant.

Because the applicant was sentenced to less than two years jail and was not fined the offences did not involve serious dishonest conduct.

Waiver of disqualified person status under s 126D(1) of the Act required a decision whether the applicant was "highly unlikely to be a prudential risk to any superannuation entity". Five factors were listed for consideration: (i) the offence to which the application relates, (ii) the time that has passed since commission of the offence, (iii) the applicant's age when the offence was committed, (iv) orders by the court in relation to the offence, and (v) any other relevant matter.

The offences were against ss 29B and 29D of the Crimes Act. The applicant understated his income by $149,078, $166,924 and $196,958 in 1990, 1991 and 1992 respectively. About eight years had elapsed since the "alleged offences". The applicant had been 44 when he had committed the first offence, at a mature age, a factor that counted against him. The court orders involved imprisonment for 14 months. As a relevant matter the delegate considered the applicant's offences to be of a serious nature.

The delegate was not satisfied that the applicant was highly unlikely to be a prudential risk to any other superannuation fund.
In favour of the applicant's application the delegate noted that the applicant had not been convicted of any other offences. However, he considered the offence, while not involving serious dishonest conduct, was nevertheless of a serious nature. He considered the applicant's age when he committed the offences and his failure to give proper consideration to the criminal nature of his actions. "Taking all these matters into account [he was] not satisfied that [the applicant] 'is highly unlikely to be a prudential risk to any superannuation entity'". He therefore decided not to make a declaration waiving the applicant's status as a disqualified person for the purposes of Part 15 of the Act.
On 13 March 2000 the applicant wrote (T32) to the respondent pursuant to s 344(1) of the Act requesting a reconsideration of the primary decision. On 22 March 2000 the applicant provided material in support of his request (T34). The applicant's reasons for believing the decision to be wrong were:

The delegate had made the decision with access to only some of the applicant's materials. The applicant provided a number of testimonials relating to his trustworthiness and character.

The applicant was not permitted to make submissions to the delegate after the delegate received an internal memorandum recommending against the applicant and before the final decision was made.

The delegate appears not to have exercised his own independent duty of research and analysis, having accepted the findings and recommendations of another person in APRA.

The delegate had not stated or understood "that the two section 29D charges were used as a legal fiction in relation to monies which the Applicant honestly believed were not income. The fiction was applied because the Crown accepted that the Applicant honestly believed this fact, and S29B was inappropriate. Accordingly the Crown conceded that the two 29D charges were to be treated precisely equivalen (sic) to the 29B charges, which involved much lesser criminality and penalties".

The sums quoted by the delegate were reduced by the fact that the applicant had declared the sum of $178,801 of the total of the sums listed by the delegate. The applicant had maintained records of all income and payments in the three relevant tax years.

The delegate had not taken into account the fact that the applicant had had no problems with the ATO from 1966 to 1990 and from 1992 to date, a total of 32 years.

The delegate had not taken into account the applicant's distinguished career in law from 1972 to 1998. He had had no complaints about his trustworthiness, honesty or integrity. It had been established that his character was of the highest order.

The delegate had not considered that the chances of a repeat by the applicant of his omissions were patently nil.

Due weight was not given to the past history of the fund in relation to which, since it was established in 1980, there had been no complaints. The applicant was due to have access to the proceeds in the fund in a little over three years.

The delegate's comments as to the applicant's age cried out for an explanation as to why he had infringed then after such a blameless life. He provided reports by Dr Jonathan Phillips, a psychiatrist, dated June 1998 and July 1999 which were not put before the criminal courts because of an agreement between the respective counsel.

The delegate placed undue weight on his subjective opinion of the seriousness of the offences when the legislature defined them as not involving serious dishonest conduct and when the applicant had been punished severely and was rehabilitated. He had not offended again in eight years.

The applicant is totally rehabilitated. There is no likelihood of a repeat of the events of the past.

There is more than a high degree of probability that the errant behaviour will not occur in the future.

The risks involved in operating a superannuation fund are that the trustee will decamp with the funds, deal with the assets in an illegal way, or fail to keep proper records or honestly complete returns to the ATO and other government authorities. The applicant was convicted of no offence relating to deliberate concealment, destruction of records, obstruction of government officers in the course of their duty or their inquiries, deceitful or fraudulent practices such as use of false names, false bank or other accounts, illegal schemes, or breaches of the law to earn income. There is no suggestion that the applicant will decamp with the trust assets. There is no evidence that the applicant has ever dealt with any assets in an illegal way. He has always kept records and never acted rashly. The applicant's sole problem is in completion of his tax returns. There is no probability of this happening again.

The applicant does not seek waiver in relation to any fund involving members other than himself and his wife.

On 8 May 2000 a different APRA delegate decided to affirm the primary decision (T2). Amongst the reasons for his decision were the following:

The delegate noted the utilisation of ss 29B and 29D of the Crimes Act.

The delegate noted the declaration in later years of $178,801 but saw this as a matter in mitigation only and that mitigation somewhat reduced if they were declared after the understatements had been detected by the ATO.

The delegate considered the offences to which the application related. He noted that there were five charges under the Crimes Act. There were three charges of imposition under s29B and two charges of defrauding the Commonwealth under s29D. The applicant had lodged his income tax returns with the ATO in 1990, 1991 and 1992 underestimating his income for those years by $656,636. The applicant had received cheques from solicitors for fees owed to him for his services as a barrister that were not included as part of his gross income. He had dealt with these cheques by banking them in the year they were received, or endorsing them in the year they were received in favour of third parties for payment of debts owing by the applicant to those third parties, or banking them not in the year of receipt but in later year, or endorsing them in favour of third parties in years after the year in which they were received for the payment of debts owed by the applicant to those third parties. The delegate noted that Mr Justice Sheller (with whom Levine J agreed) in the Court of Criminal Appeal referred to "seriousness of the offences" and "the defendant's culpability for the offences charged". These comments support the seriousness of the offences. On appeal the applicant was sentenced to 14 months imprisonment for each offence to be served concurrently and by way of periodic detention.

The delegate considered that the statutory standard for "serious dishonest conduct" in s126B of the Act applies only for the purposes of s126B (1) (b) of the Act. The applicant appears to consider that the definition applies for all purposes. The delegate considered that the purpose of the provision is to delineate those cases in which a declaration of waiver of disqualified status may be given. It is not intended to provide that offences of this kind are not serious for the purposes of s126B (1).

The delegate noted again that about eight years have elapsed from the time of the last of the offences.

The delegate noted that the applicant was about 44 years of age when he committed the offences.

The delegate noted the penalties imposed by the Court of Criminal Appeal.

In relation to "any other relevant matter", the delegate considered the medical reports from Dr Jonathan Phillips. The first of Dr Phillips' reports, dated 2 June 1998, concluded that the applicant's failure to fully declare his income in a number of tax years and also to keep appropriate books was explained, at least in significant part, by his underlying obsessive compulsive personality structure. His second report, dated 20 July 1999, considered that the applicant was no longer suffering from an adjustment disorder of any type, or from a major depressive disorder. This report concluded that the applicant would not offend in a similar manner to the events of the past or offend in any other manner.

The delegate referred to the 19 character references attached to the applicant's request for reconsideration. These attest to the applicant's apparent good character and behaviour and service to the community over many years. The delegate noted, however, that in the appeal judgment it was held that the applicant's good character carried little weight against a confession of guilty that over a period of three years the applicant knowingly understated his income by large amounts for his own benefit.

The delegate was not fully convinced that the applicant had maintained reliable responsible records. He relied on the opinion of Dr Phillips who said that the applicant had little control of his own affairs and had not maintained reliable responsible records.

The delegate did not consider that the hardship caused to the applicant's wife as a result of the inability of her husband to act as trustee of the fund was a relevant consideration in ascertaining whether the applicant is highly unlikely to be a prudential risk to any superannuation entity.

The delegate considered that the applicant's convictions were serious. He had engaged in large-scale tax evasion sustained over a period of three years. This involved transactions that were many and complex.

The delegate noted that steps had been taken to assist the applicant to ensure that his arguments were fully before this delegate before this new decision was made.

The delegate considered that the applicant, by concentrating on his fitness to be trustee of his own fund, was not addressing the criterion that he must be highly unlikely to be a prudential risk to any superannuation entity.

The delegate noted that he had considered the reports of Dr Phillips. He noted that he had also taken into account the applicant's punishment and rehabilitation.

In his conclusion the review delegate wrote:
"I consider the offences committed by [the applicant] were of a systematic and serious nature, committed over an extended period of time.
"I note that [the applicant] has not been convicted of any offences other than those that are the subject of this application and he has maintained his good conduct since the time of the offences. I have also considered [the applicant's] mature age and the time since he committed the offences, and the improvement in his medical condition reported by Dr Jonathan Phillips.
"Taking all the matters above into account I am not satisfied that [the applicant] is highly unlikely to be a prudential risk to any superannuation entity.
"Therefore I have decided to confirm the decision made on 8 March 2000 by Mr Roger Brown not to make a declaration waiving [the applicant's] status as a disqualified person for the purposes of the... Act."

On 7 June 2000 the applicant lodged with the Administrative Appeals Tribunal ("the tribunal") an application for review of the decision dated 8 May 2000 (T1).
Relevant legislation

The relevant legislation is the Superannuation Industry (Supervision) Act 1993 sections 6(1)(a)(vii), 10(1) definitions of "APRA", "Regulator", "reviewable decision" (ra), "self managed superannuation fund", "superannuation fund" (a), 17A(1), 19(1), (2), (3), (4), 119, 120(1), (3), (4), 120A(3), (4), (6), (7), 126B(1), (2), (3), (4), (5), 126C, 126D(1), (3), 126E, 344, 345.
Note that s 120A commenced to operate on 18 January 2001 (Financial Sector Legislation Amendment Act (No. 1) 2000) and so was not applicable in the applicant's situation where the primary and reviewable decisions were made before that date.
Superannuation Industry (Supervision) Act 1993
…
6 General administration of Act
(1)       Subject to subsections (3) and (4):
(a)APRA has the general administration of the following provisions, to the extent that administration of the provisions is not conferred on the Commissioner of Taxation by paragraph (e):
…
(vii)     Parts 13 to 16;
  …
Division 2—Interpretation
10 Definitions
(1)       In this Act, unless the contrary intention appears:
          …
          APRA means the Australian Prudential Regulation Authority.
          …
Regulator means:
(a)APRA if the provision in which it occurs is, or is being applied for the purposes of, a provision that is administered by APRA; and
(b)ASIC if the provision in which it occurs is, or is being applied for the purposes of, a provision that is administered by ASIC; and
(c)the Commissioner of Taxation if the provision in which it occurs is, or is being applied for the purposes of, a provision that is administered by the Commissioner of Taxation.
…
reviewable decision means:
…
(ra)a decision of the Regulator under subsection 126D(3) refusing to make a declaration waiving an applicant's status as a disqualified person;
…
self managed superannuation fund has the meaning given by section 17A.
…
superannuation fund means:
(a)a fund that:
…
17A Definition of self managed superannuation fund
Basic conditions—funds other than single member funds
(1)Subject to this section, a superannuation fund, other than a fund with only one member, is a self managed superannuation fund if and only if it satisfies the following conditions:
(a)it has fewer than 5 members;
(b)if the trustees of the fund are individuals—each individual trustee of the fund is a member of the fund;
(c)if the trustee of the fund is a body corporate—each director of the body corporate is a member of the fund;
(d)each member of the fund:
(i)is a trustee of the fund; or
(ii)if the trustee of the fund is a body corporate—is a director of the body corporate;
(e)no member of the fund is an employee of another member of the fund, unless the members concerned are relatives;
(f)no trustee of the fund receives any remuneration from the fund or from any person for any duties or services performed by the trustee in relation to the fund.
…
19 Regulated superannuation fund
Definition
(1)A regulated superannuation fund is a superannuation fund in respect of which subsections (2) to (4) have been complied with.
Fund must have a trustee
(2)       The superannuation fund must have a trustee.
Trustee must be a constitutional corporation or fund must be a pension fund
(3)       Either of the following must apply:
(a)the trustee of the fund must be a constitutional corporation pursuant to a requirement contained in the governing rules;
(b)the governing rules must provide that the sole or primary purpose of the fund is the provision of old-age pensions.
Election by trustee
(4)The trustee or trustees must have given to APRA, or such other body or person as is specified in the regulations, a written notice that is:
(a)in the approved form; and
(b)signed by the trustee or each trustee;
electing that this Act is to apply in relation to the fund.
Note:The approved form of written notice may require the trustee to set out the tax file number of the fund. See subsection 299U(1).
…
Part 15—Standards for Trustees, Custodians and Investment Managers of Superannuation Entities
119 Object of Part
The object of this Part is to set out rules about the eligibility of trustees, custodians and investment managers of superannuation entities.
120 Disqualified persons
Individuals
(1)       For the purposes of this Part, an individual is a disqualified person if:
(a)at any time (including a time before the commencement of this section):
(i)the individual was convicted of an offence against or arising out of a law of the Commonwealth, a State, a Territory or a foreign country, being an offence in respect of dishonest conduct; or
(ii)       a civil penalty order was made in relation to the person; or
(b)       the person is an insolvent under administration; or
(c)       the Regulator has disqualified the individual under section 120A.
…
(3)A reference in this section to a person who has been convicted of an offence includes a reference to a person in respect of whom an order has been made under section 19B of the Crimes Act 1914, or under a corresponding provision of a law of a State, a Territory or a foreign country, in relation to the offence.
Law on spent convictions does not apply
(4)Division 3 of Part VIIC of the Crimes Act 1914 does not apply in relation to the disclosure of information about a conviction of the kind mentioned in paragraph (1) (a), if the disclosure is for the purposes of this Part.
120A The Regulator may disqualify individuals
…
(3)The Regulator may disqualify an individual if satisfied that the individual is otherwise not a fit and proper person to be a trustee, investment manager or custodian, or a responsible officer of a body corporate that is a trustee, investment manager or custodian.
(4)       A disqualification takes effect on the day on which it is made.
…
(6)The Regulator must give the individual written notice of a disqualification, revocation of a disqualification or a refusal to revoke a disqualification.
(7)The Regulator must cause particulars of a notice given under subsection 120A(6) or 344(6) (result of internal review) to be published in the Gazette as soon as practicable.
…
126B Application for waiver of disqualified status
(1)An individual may apply to the Regulator for a declaration under section 126D waiving his or her status as a disqualified person for the purposes of this Part only if:
(a)he or she is a disqualified person solely because of the operation of subparagraph 120(1)(a)(i); and
(b)the offence leading to him or her being a disqualified person is not an offence involving serious dishonest conduct as described in subsection (2).
(2)For the purposes of paragraph (1)(b), an offence involves serious dishonest conduct if the penalty actually imposed for the offence is:
(a)a term of imprisonment of at least 2 years or such longer period (if any) as is specified in the regulations; or
(b)a fine of at least 120 penalty units or such larger fine, if any, as is specified in the regulations.
(3)       An application must:
(a)       be in writing; and
(b)be made within 14 days after the commencement of this subsection or the person's conviction, whichever is the later; and
(c)       identify the offence to which the application relates; and
(d)to the extent that the court documents relating to the offence exist—be accompanied by a copy, certified to be a true copy by the Clerk or Registrar of the court, of those documents; and
(e)give consent to the Regulator making inquiries in relation to the applicant of any law enforcement agency, regulatory agency or court that the Regulator believes on reasonable grounds has in its possession or control information directly relevant to the Regulator's consideration of the application; and
(f)        be signed by the applicant.
(4)The Regulator may accept an application meeting conditions referred to in     subsection (3) other than paragraph (3)(b) after the end of the period referred to in that paragraph only if the Regulator is satisfied that there are exceptional circumstances that prevented the application from being made within that period.
(5)       The court documents are:
(a)       the information or indictment against the applicant; and
          (b)       the transcript of the proceedings; and
          (c)       witness statements and affidavits; and
          (d)       the court's judgment and orders; and
          (e)       the court's reasons for judgment.
…
126C Application must be decided within a period of time
(1)Subject to this section, the Regulator must decide an application made under section 126B within 60 days after receiving it.
(2)If APRA thinks that it will take longer than 60 days to decide the application, the Regulator may extend the period for deciding it by no more than 60 days.
(3)The extension must be notified in writing to the applicant within 60 days after the Regulator receives the application.
(4)If the Regulator makes an extension, the Regulator must decide the application within the extended period.
(5)If the Regulator has not decided the application by the end of the day by which the Regulator is required to decide it, the Regulator is taken to have decided, at the end of that day, to refuse the application under subsection 126D(3).
126DNotifying of the outcome of an application
(1)If APRA is satisfied, having regard to any of the following:
(a)the offence to which the application relates;
(b)the time that has passed since the applicant committed the offence;
(c)the applicant's age when the applicant committed the offence;
(d)the orders made by the court in relation to the offence;
(e)any other relevant matter;
that the applicant is highly unlikely to be a prudential risk to any superannuation entity, APRA must, by notice in writing given to the applicant, make a declaration waiving the applicant's status as a disqualified person for the purposes of this Part.
Note:APRA's power under this subsection does not extend to self managed superannuation funds, see subsection 6(1).
…
(3)If the Regulator decides not to make a declaration waiving the applicant's status as a disqualified person for the purposes of this Part, the Regulator must:
(a)by notice in writing, record that it has so decided; and
(b)give the applicant a statement, to which a copy of the notice referred to in paragraph (a) is attached, telling the applicant:
(i)that the Regulator has so decided and of the reasons for that decision; and
(ii)that the applicant must resign immediately and confirm that resignation, in writing, to the Regulator; and
(iii)that if the applicant fails so to resign and is the responsible officer of a body corporate that is a trustee, investment manager or custodian of a superannuation entity the Regulator will tell the body corporate of the applicant's status as a disqualified person.
…
126E The effect of seeking a waiver of disqualified person status
(1)       If:
(a)       a person is a disqualified person; and
(b)the person is eligible to make application for a declaration waiving his or her status as a disqualified person; and
(c)the person makes application for such a declaration under subsection 126B(3) within the application period specified in that subsection;
the person is treated, for the purposes of this Act, (other than the purpose of the application for the declaration) as not being, and as never having been, a disqualified person until that application is decided.
(2)On deciding an application for a declaration waiving the disqualified person status of a person to whom paragraphs 1(a), (b) and (c) apply:
(a)if the Regulator decides to make the declaration, the Act applies as if the person had never been disqualified; and
(b)if the Regulator decides not to make the declaration, the person again becomes a disqualified person from the date of the decision.
(3)       If:
(a)       a person is a disqualified person; and
(b)the person is eligible to make application for a declaration waiving his or her status as a disqualified person; and
(c)the person makes application for such a declaration under subsection 126B(4);
then:
(d)pending the decision of the application the person continues to be a disqualified person for the purposes of this Act; but
(e)if the Regulator decides to make a declaration waiving the person's status as a disqualified person, the person is treated, for the purposes of this Act, as if the person had never been a disqualified person.
…
344 Review of certain decisions
Request for review
(1)A person who is affected by a reviewable decision of the Regulator may, if dissatisfied with the decision, request the Regulator to reconsider the decision.
How request must be made
(2)The request must be made by written notice given to the Regulator within the period of 21 days after the day on which the person first receives notice of the decision, or within such further period as the Regulator allows.
Request must set out reasons
(3)       The request must set out the reasons for making the request.
Regulator to reconsider decision
(4)Upon receipt of the request, the Regulator must reconsider the decision and may, subject to subsection (5), confirm or revoke the decision or vary the decision in such manner as the Regulator thinks fit.
Deemed confirmation of decision if delay
(5)If the Regulator does not confirm, revoke or vary a decision before the end of the period of 60 days after the day on which the Regulator received the request under subsection (1) to reconsider the decision, the Regulator is taken, at the end of that period, to have confirmed the decision under subsection (4).
Notice of Regulator's action
(6)If the Regulator confirms, revokes or varies a decision before the end of the period referred to in subsection (5), the Regulator must give written notice to the person telling the person:
(a)       the result of the reconsideration of the decision; and
(b)the reasons for confirming, varying or revoking the decision, as the case may be.
Notice to Commissioner of Taxation
(7)If the Regulator gives a notice to a person under subsection (6) telling the person that a decision under section 40 has been revoked or varied, the Regulator must give to the Commissioner of Taxation particulars of the notice.
AAT review of Regulator's decisions
(8)Applications may be made to the Administrative Appeals Tribunal for review of decisions of the Regulator that have been confirmed or varied under subsection (4).
Period for making certain AAT applications
(9)If a decision is taken to be confirmed because of subsection (5), section 29 of the Administrative Appeals Tribunal Act 1975 applies as if the prescribed time for making application for review of the decision were the period of 28 days beginning on the day on which the decision is taken to be confirmed.
Section 41 of AAT Act
(10)If a request is made under subsection (1) in respect of a reviewable decision, section 41 of the Administrative Appeals Tribunal Act 1975 applies as if the making of the request were the making of an application to the Administrative Appeals Tribunal for a review of that decision.
Hearings in private
(11)The hearing of a proceeding relating to a reviewable decision is to take place in private and the Administrative Appeals Tribunal may, by order:
(a)       give directions as to the persons who may be present; and
(b)give directions of a kind referred to in paragraph 35(2)(b) or (c) of the Administrative Appeals Tribunal Act 1975.
Only trustees affected by certain reviewable decisions
(12)For the purposes of this section and section 345, a person is taken not to be affected by a reviewable decision (other than a reviewable decision covered by paragraph (ba), (c), (d), (pa), (pb), (q), (r), (ra), (rb), (s) or (t) of the definition of reviewable decision in section 10) unless the person is the trustee of a superannuation entity that is affected by the decision.
345 Statements to accompany notification of decisions
(1)If a written notice is given to a person affected by a reviewable decision telling the person that the reviewable decision has been made, that notice is to include a statement to the effect that:
(a)the person may, if dissatisfied with the decision, seek a reconsideration of the decision by the Regulator in accordance with subsection 344(1); and
(b)the person may, subject to the Administrative Appeals Tribunal Act 1975, if dissatisfied with a decision made by the Regulator upon that reconsideration confirming or varying the first-mentioned decision, make application to the Administrative Appeals Tribunal for review of the decision so confirmed or varied.
(2)If the Regulator confirms or varies a reviewable decision under subsection 344 (4) and gives to the person written notice of the confirmation or variation of the decision, that notice is to include a statement to the effect that the person may, subject to the Administrative Appeals Tribunal Act 1975, if dissatisfied with the decision so confirmed or varied, make application to the Administrative Appeals Tribunal for review of the decision.
(3)A failure to comply with the requirements of subsections (1) and (2) in relation to a reviewable decision or a decision under subsection 344(4) does not affect the validity of that decision.

Hearing and appearances

The tribunal convened a hearing in this application in Sydney on 16 August 2001. The applicant represented himself. Mr Michael Wigney of counsel represented the respondent.
The tribunal had access to the following documentary evidence and materials:

Exhibit TD1 – Section 37 statement and associated documents, 25 June 2001.

Exhibit A1 – Applicant's statement of facts and contentions, 31 July 2001.

Exhibit A2 – Statement of Naomi Annette Witcombe, taxation officer, 13 February 1997.
Exhibit A3 – Affidavit dated 23 April 1999 by the applicant as lead document for other affidavits and materials lodged with the NSW Court of Criminal Appeal.

Exhibit A4 – Applicant's chronology of events.

Exhibit A5 – Article, "Super trustees face charges on late returns", The Sydney Morning Herald, 5 April 2001, p 2.

Exhibit R1 – Respondent's statement of facts and contentions, 13 July 2001.

Exhibit R2 – Respondent's outline of submissions, 16 August 2001.

The court cases

Much of this case revolves around what occurred at the three court cases emanating from the applicant's tax return problems. It may be useful to provide a short summary of the important aspects of each.
District Court of NSW

The judgment of Viney J is not included in the tribunal's materials. This summary comes from the judgments by Sheller JA, Levine J and Barr J in the NSW Court of Criminal Appeal (T24).
The facts behind the conviction were that the applicant lodged income tax returns in respect of the financial years ending 1990, 1991 and 1992 in which he understated his income by a total of $656,636. He did this in that he had received cheques from solicitors for fees owed to him that were excluded from his gross income. He dealt with these cheques in four ways.
First, with respect to some he banked them in the year of receipt.
Second, he endorsed some in the year when they were received in favour of third parties for the payment of debts he owed these third parties. These cheques did not reach his bank account.
Third, he banked some but in a year later than the year of receipt.
Fourth, he endorsed some cheques in favour of third parties in years after the year when he had received them. Again, these were to defray debts owed by him to these parties.
The ATO investigated the applicant in 1993 and 1994. Two years later the DPP laid charges, three under s 29B ("imposition on the Commonwealth") and two under s 29D ("defrauding the Commonwealth") of the Crimes Act. As the appeal court noted, although the s 29D charges were for a more serious offence, it was agreed that they should be treated as equivalent to the s 29B charges. This was because the applicant had believed that some of the cheques were not assessable income when they were received under an arrangement he had with two firms of solicitors. This created a technical difficulty in respect of the proofs under s 29B and so charges were laid under s 29D to avoid that difficulty.
The applicant pleaded guilty to all five offences on 8 September 1997. He relied at sentencing on statements as to his good character made by 25 people, six of whom gave oral evidence. The applicant did not give evidence. The applicant argued that the offences arose from his disorganisation, that the endorsement of the cheques was motivated by convenience rather than greed, and that his cooperation with the ATO should be taken into account.
Viney J imposed a sentence of two years imprisonment on each count, to be served concurrently by way of periodic detention. He took account of the applicant's character evidence, the fact of declaration of some cheques in later years and the applicant's likelihood of being disbarred.
The DPP appealed Viney J's decision to the Court of Criminal Appeal. The applicant cross-appealed.
NSW Court of Criminal Appeal

The DPP considered the sentence imposed by Viney J manifestly inadequate. The applicant appealed the severity of the sentence and Viney J's failure to apply ss 16G and 19AC of the Crimes Act.
Sheller JA in his judgment noted that, by pleading guilty to the s 29B charges, the applicant admitted for the three years that he had to his knowledge untruly represented by understatement his gross income by amounts totalling $512,960 with the object or the purpose of obtaining a benefit. $178,801 had been declared in later years. The declaration in later years was not seen by the judge as an answer to the applicant's earlier omission. The voluntary inclusion of these amounts in later income tax returns may be a matter to be taken into account in mitigation.
Section 29D of the Crimes Act provided that "A person who defrauds the Commonwealth or a public authority under the Commonwealth is guilty of an indictable offence …" There is no explicit mental element. The two charges under s 29D related to 1991 and 1992. They related to a total of $143,676 not included in any of the applicant's income tax returns before August 1993 (a month after the ATO began its investigation and the date when the ATO first raised issues with the applicant).
Sheller J referred to the statements of good character submitted on behalf of the applicant. He said that the evidence characterised the applicant as a hard working barrister, devoted to his wife and family yet able to give time to community projects such as regular Saturday morning cricket coaching for children, a man highly regarded by friends and colleagues and without a blemish on his honesty or integrity, apart from the tax offences. The judge referred to evidence from Mr Peter Capelin QC as important. Mr Capelin had noticed a change in the applicant in 1988 or 1989. He appeared stressed. He saw the applicant as disorganised because he did too much. He considered that the applicant had adjusted his habits and would not offend again.
The judge considered the character evidence a powerful testament to the applicant's many qualities but it left open one gap. "While witnesses could speak of the stress under which the respondent's workload placed him and his disorganisation in running his practice, they could not provide the best evidence to explain why a person with the [applicant's] reputation for honesty and integrity failed over a period of three years to include in his income tax returns a very substantial part of the income he was receiving. The [applicant] was the person to give evidence about this but he chose not to." This was said to place Viney J in a difficult position in setting a sentence.
Sheller JA considered that payment of outstanding taxation once caught out, past integrity and good character, devotion to family and work and contribution to the community are matters of little weight against confession by a plea of guilty that over three years, until caught out, the applicant understated his income by very large amounts for his own benefit or advantage.
Sheller JA held that Viney J had erred in not according the applicant a remission in sentence under s 16G of the Crimes Act. Such a remission applies to a Commonwealth offence where the accused is sentenced and confined according the State or Territory criminal justice system and that system has "truth in sentencing" arrangements in place that do not permit remissions from sentence. The section provides for a reduction in the maximum sentence. Sheller JA reduced the applicant's sentence by ten months. At the same time he did not consider that a recognizance release under s 19AC(4) of the Crimes Act was appropriate in view of the seriousness of the offences.
He found that Viney J had underestimated the seriousness of the offences. Viney J had described the arrangement between the applicant and certain solicitors whereby the applicant agreed to delay presentation of some cheques as "very reasonable and sensible" but tax legislation did not see it that way. Sheller JA considered that the third party endorsements removed the cheques from any likely record of the applicant having received them. He also considered that there should be no mitigation in sentence resulting from declaring the receipt of any cheques in later years where the declaration occurred in or after August 1993. He did not impose a full custodial sentence, which he considered warranted, because of double jeopardy and the hardship to the applicant such a sentence would cause as he had adjusted himself to and partly served a sentence by way of periodic detention.
Levine J agreed with Sheller JA. Barr J, however, took a tougher line. He emphasised that the applicant had deliberately understated his income and did so with the intention to pay less tax than he should have. He saw the culpability of the applicant as high. "He committed the offences out of greed". He favoured placing the applicant in full-time custody for six months from the date of judgment.
[Case citation deleted as it may identify the applicant] (T36)

On 3 July 1998, the day when Viney J sentenced the applicant, the applicant was directed to show cause why his practising certificate should not be suspended or cancelled. On 13 July 1998 the applicant notified the Bar Association that he would cease acting as a barrister, that he would wind up his practice promptly and in no way act as a barrister after 16 July 1998. The undertaking was for the period of the sentence – to 30 June 1999.
On 16 July 1998 the NSW Bar Association resolved to cancel the applicant's practising certificate and to apply to the Supreme Court of NSW to have the applicant struck off the roll of legal practitioners. The applicant conceded professional misconduct but argued that suspension from the role of legal practitioners was the appropriate remedy. The court held by a majority that the applicant was to be struck off.
Mason P noted in his judgment, "What started as innocent and careless conduct in which money was declared in tax returns even when cheques were endorsed to third parties, became in the barrister's own words 'increasingly reckless and … deliberate … I did so knowing that I may not declare those cheques for income tax (affidavit par 19). In cross-examination before us, the barrister accepted that his busy workload at the Bar provided no excuse for misconduct which he knew at the time to be wrong" (paragraph 8).
Mason P addressed the testimonials provided in support of the applicant. He said at paragraph 28 that most writers stopped at the point of exercising a favourable opinion as to the unlikelihood of the applicant reoffending and as to the writer's willingness to deal with the applicant in a professional capacity regardless of the misconduct. This was said to reflect the genuine and limited response of witnesses trying to give an honest assessment. "Only a few of the witnesses (notably Mr Bruce Collins QC) apparently felt qualified to grapple with the difficult issue of the barrister's fitness to practice in a profession whose very reputation was (as the barrister himself recognised) itself tarnished by the barrister's own professional misconduct."
Mason P referred (paragraph 29) to the applicant's affidavit dated 23 April 1999 (Ex A3, pp 154-162), notably paragraphs 22-23, where "the barrister recognised that his omissions were deliberate, dishonest and motivated in part by financial gain". It might be said, however, that this is taken somewhat out of context in several paragraphs where the applicant describes how he had effectively lost control of his conduct and had become reckless. In paragraph 30 Mason P writes, "The barrister spoke of 'leading two lives': first, his public life as a barrister, community and family man in which he achieved 'the highest possible standards that I was capable of'; secondly, the private persona in which he was increasingly becoming 'burnt out' as he was 'drawn towards deliberate ignorance and recklessness as to the risks and consequences of the situation'".
Mason P regarded it as significant (paragraph 56) that Viney J, in sentencing the applicant, did so on two understandings. One was that he had paid all penalties by way of reassessment. The other was that his career as a barrister would be terminated. Mason P ascertained that the applicant had in this tribunal successfully challenged the penalties imposed and the money had been repaid to him with interest. The applicant was also, of course, seeking to avoid the absolute termination of his career at the bar in the Supreme Court proceeding.
Mason P characterised the applicant's conduct as representing a high level of dishonesty with greed as the primary motivation, however he accepted that the applicant felt regret and shame as regards the intrinsic wrongness of the conduct (paragraph 65).
Mason P discussed (paragraph 77) the purpose behind removing a practitioner from the roll. The purpose is not punitive but protective of the public. "[I]t is no answer for the practitioner who has been convicted and punished by the criminal law to say that he or she has already been punished for conduct which shows unfitness". The court's jurisdiction aims generally to maintain and encourage appropriate standards of professional behaviour. This involves deterring an offender from repeating the offence and deterring others who might be tempted to offend.
Mason P considered whether to strike off or suspend the applicant. He saw suspension as appropriate where a legal practitioner has fallen below the high standards to be expected of such a practitioner, but not in such a way as to indicate that he or she lacks the qualities of character and trustworthiness which are the necessary attributes of a person entrusted with the responsibilities of a legal practitioner. His conclusion was (paragraph 101):
"In my view the proven misconduct and conviction establish unfitness to practise. There was significant and prolonged dishonesty for personal gain. The barrister's response to detection, conviction and sentence has been creditable. And it demonstrates genuine contrition. The door to readmission is never closed. But the professional misconduct is of such a nature that it demonstrates unfitness to practise which must be marked by disbarment. To do less would depart from the principles established in [cases cited]."

Priestly JA agreed with Mason P. However, Davies AJA favoured a three year suspension. He made the following comments (paragraphs 121, 128, 131):
"The offences were serious offences, but they appear not to have arisen out of an innate tendency to dishonesty, but rather from a lack of attention on the part of [the applicant] to the management of his own affairs. During the years in question, [the applicant] became a much sought after barrister on country circuits. He was away from his chambers in Sydney for long periods. He did not have a proper secretary. He took too much work. He was inclined to leave cheques in a drawer in his chambers rather than go down to the bank. He was also asked by two firms of solicitors to delay banking the cheques until he was authorised to do so. He foolishly agreed to this course of action. Because [the applicant] was not attending to his own affairs in a businesslike away, he personally and his affairs got into a muddle. He took to endorsing some of the cheques by way of payment of accounts due, rather than banking them and paying the accounts with his own cheque. Sometimes, he put cheques into bank accounts other than his own business bank account. He attended to his income tax returns between the end of term in each year and Christmas Day. As his returns were rushed and as he had, in any event, inadequate information to hand, it came about that his returns were untrue and knowingly so....

"On the whole of the evidence, it seems to me that it should not be said of [the applicant] that he cannot be held out to members of the public as a person in whom they can repose their confidence or that he is a person with whom other lawyers would be embarrassed to deal. I am satisfied that [the applicant's] offences do not show that he has a lasting character defect. Rather, I am satisfied that the aberration resulted from a lack of attention by [the applicant] to his own personal affairs. Although, in the end, there was conscious dishonesty, [the applicant] arrived at that stage by allowing his personal affairs to become disorganised. He did not set out, calmly had deliberately, to defraud the Commonwealth. This conclusion reflects, I believe, the sentences which were imposed....

"... I consider the suspension for a term of three years, commencing on 17 July 1998, the day after [the applicant] ceased to carry on practise as a barrister would be appropriate. In my opinion, the matter is not so serious as to call for [the applicant's] removal from the Roll. …"

Findings on material questions of fact with reference to the evidence and other materials in support of those findings

These reasons have been written without access to a transcript.
The applicant is subject to Part 15 of the Act through the following process of reasoning. Each of the facts necessary to this reasoning process has been found by the tribunal to apply in this case:

The applicant's fund is a "superannuation fund" in accordance with s 10(1) of the Act. It is a fund that is indefinitely continuing and is a provident, benefit, superannuation or retirement fund.

It is as "regulated superannuation fund" under ss 10(1) and 19(1)-(4) of the Act. In accordance with s 19 the fund has a trustee; its governing rules appear on somewhat approximate evidence to provide that the sole or primary purpose of the fund is the provision of old-age pensions; and the trustees appear (again on scanty evidence) to have given APRA written notice in proper form, properly signed, electing that the Act apply to the fund.

The fund, being a regulated superannuation fund, is a "superannuation entity" under s 10(1) of the Act.

The fund is also a "self managed superannuation fund" under ss 10(1) and 17A(2) of the Act.

The applicant is an individual whose status under the Act is regulated by Part 15. Part 15 of the Act prescribes standards for trustees and other functionaries in relation to superannuation entities. Sections 119-127 of the Act comprise Part 15.
Section 120(1) provides for the disqualification of an individual who is then termed a "disqualified person". An individual is a disqualified person if, ignoring irrelevant criteria, at any time he or she "was convicted of an offence against or arising out of a law of the Commonwealth, …, being an offence in respect of dishonest conduct". The tribunal finds that the applicant was convicted of five offences in respect of dishonest conduct on 5 June 1998 (Ex A4). The applicant appealed to the NSW Court of Criminal Appeal which upheld the convictions but reduced the penalty on 1 December 1998 (Ex A4). There were three offences committed under s 29B and two under s 29D of the Crimes Act. Sections 29B and 29D have been repealed and equivalent offences are now in the Criminal Code in Part 7.3 (see the Criminal Code Act 1995). The tribunal finds that the applicant was properly considered by both himself and APRA to be a disqualified person under s 120 of the Act.
Section 121(1) of the Act prohibits a person from intentionally being, or acting as, a trustee of a superannuation entity if the person is, and knows he or she is, a disqualified person. Section 121(3) requires a person who is or becomes a disqualified person to notify APRA immediately in writing. The tribunal notes that there is no suggestion that the applicant has committed any offence under s 121. He is accepted by the respondent (and the tribunal) to have acted to notify APRA of his disqualified status immediately he learned of it, as is demonstrated in T25 and T26.
Section 126B of the Act permits a disqualified person to apply, as the applicant did (T25) to APRA for a declaration under s 126D of the Act waiving his or her status as a disqualified person for the purposes of Part 15 if several conditions are met. These, and whether the applicant meets them, are:

He must be a disqualified person solely because of s 120(1)(a)(i) of the Act. That is to say, the applicant must have been disqualified because of a conviction relating to an offence in respect of dishonest conduct. That is the case here.

The offence leading to the disqualification is "not an offence not involving serious dishonest conduct" as described in s 126B(2) of the Act. Section 126B(2) describes an offence involving serious dishonest conduct, for the purposes of s126B(1)(b), as an offence where the penalty actually imposed is a term of imprisonment of at least two years or a fine of at least 120 penalty points. The tribunal finds that this condition has been met in the applicant's case. His term of periodic detention, after an appeal, was 14 months. There was no fine.

The written application must fulfil six requirements listed in s 126B(3). The tribunal finds that paragraph (a) is met in that the application (T25) was made in writing. Paragraph (b) was not met. This requires the submission of the application within 14 days after the person's conviction. In the applicant's case he was convicted on 5 June 1998 but did not apply until 7 June 1999. The lateness of his application brought him within s 126E(3). He cannot act as a trustee unless and until he succeeds in obtaining a waiver. Had he applied within 14 days, under s 126E(1) of the Act, he could have acted as trustee pending a decision by APRA. Paragraph (c), identification of the offences to which the application relates, was satisfied by T25. Paragraph (d) requires provision of copies of relevant court documents. T27 shows that this was done, although it seems not at the time of lodgement of the application. Section 126B(6) of the Act allows for this delay. Paragraph (e), requiring the provision of forms giving consent for APRA to seek information from law enforcement and other agencies, was apparently complied with (T27), but again not as part of the original application. Paragraph (f), the requirement that the disqualified person signs the application, was not complied with. However, the application was signed by a person who was clearly the applicant's authorised agent. This would substantially satisfy the statutory requirement. The application, then, suffered primarily from being lodged out of time.

The applicant applied (T26) for an extension of time as permitted by s126B(4) on the statutory basis that there were exceptional circumstances preventing him from applying within the required 14 days. Judging from its decisions on the merits of the applicant's case, APRA granted the extension but the Section 37 documents do not show how this aspect was considered and decided on.

APRA had 60 days in which to decide the applicant's case (s126C of the Act). It actually took eight months (T31). However, the applicant did not appeal to the tribunal after 60 or 120 days (s120B(2), (4), (5) of the Act) at the end of the statutory period. He awaited the formal decision with reasons attached.
Section 126D details the matters to be considered for waiver of disqualified person status. These matters were addressed by APRA at both levels of its decision-making. The matters are:
The offence to which the application relates (s126D(1)(a)).

The time that has passed since the applicant committed the offence

(s126D (1)(b)).

The applicant's age when he or she committed the offence (s126D(1)(c)).

The court orders in relation to the offence (s126D(1)(d)).

Any other relevant matter (s126D(1)(e)).

These considerations are to assist APRA to decide whether "the applicant is highly unlikely to be a prudential risk to any superannuation entity". If so satisfied, then APRA makes a written declaration waiving the applicant's status as a disqualified person.
The tribunal has already set out the respondent's thinking about the matters to be addressed in s 126D(1) of the Act. It has also provided a summary of the applicant's submissions at the earlier stages. The applicant gave oral evidence at the hearing. This was unsworn evidence due to an oversight by the tribunal. However, the tribunal is satisfied that the applicant did his utmost to provide his evidence and answer questions truthfully.
Applicant's oral evidence

The applicant was keen to clarify some facts and to emphasise certain others.
He commended the reports by Dr Phillips to the tribunal. These best set out his situation, he said, but were not available to Viney J or the Court of Criminal Appeal. They were not tendered to Viney J because Dr Phillips was not available for cross-examination. They were provided to the respondent which had misconceived their import. APRA had ignored Dr Phillips's explanation for the applicant's situation. Dr Phillips considers that the applicant will not reoffend. Dr Phillips's reports diagnosed the applicant's problems as follows. In the report dated 2 June 1998 (T22) he said, amongst other things:
"[The applicant] felt unable to refuse legal work in the years beginning 1987. He pushed himself relentlessly to keep pace with his cases. He could not find a way to regulate his practice. … He spent little time on the administration of his practice and became careless with his book work. …
"Quite simply, [the applicant] had a psychological obsession with legal work in the years beginning 1987 and the compulsion to continue to work at a frenetic and psychologically dangerous pace. He exhibited marked obsessive and compulsive personality traits in those years, but probably did not meet DSMIV criteria for obsessive compulsive personality disorder.... On my assessment his failure to fully declare his income in a number of tax years and also to keep appropriate books will be explained, at least in significant part, by his underlying personality characteristics.
"[The applicant] has suffered from considerable depression and anxiety, at least from 1993. His symptoms have been mentioned above and will not be repeated here. He clearly makes the criteria for an adjustment disorder with mixed anxiety and depressed mood DSMIV 309.28 (chronic type) and probably a major depressive disorder DSMIV 296.22 (single episode, moderate severity, non-psychotic). His abnormal mood State has been linked with his legal difficulties and exacerbated by the slowness of the legal process."

On 20 July 1999 Dr Phillips provided a new report (T28). He wrote that the applicant was no longer suffering from an adjustment disorder of any type, or from a major depressive disorder.
"He experiences temporary depressive and anxiety symptoms and sees it occurred principally when he considers the legal process which he will now face. The symptoms do not reach the threshold for a... psychiatric diagnosis.... He now accepts that a balanced lifestyle is necessary, rather than being an option. He has undergone a mellowing of his personality and his former obsessive personality traits were not in evidence at the recent interview.... He does not try to rationalise his past behaviour or explain it away. He is an intelligent man and is keen to put all aspects of his life in order. Taking my examination of [the applicant] overall and noting the above matters, I do not believe that he would again offend in a manner similar to the events in the past, or offend any other manner additionally."
The applicant told the tribunal that he is not working at present. He is not under the same pressures as in the past. He put to the tribunal that in only a short time he will have access as a beneficiary to the fund.
The applicant was concerned at suggestions that his record keeping at the time of commission of the offences was poor. He referred to the evidence of ATO officer, Ms Witcombe (Ex A2) who wrote that in her work as investigations officer she had prepared schedules setting out bankings and endorsed cheques "based principally upon material provided to the ATO auditors by [the applicant]". She identified certain other information also provided by the applicant. The applicant stressed to the tribunal that his records were complete but in a disorganised state. The applicant was concerned that Sheller JA had wrongly criticised him in T24 at pages 115-116.
The applicant submitted that his deficiencies in handling his tax affairs should not be held against him as regards any role he may have as superannuation trustee. The superannuation accounts are submitted annually for audit. Thus, if he should get into difficulty, this would be detected by the auditor.
The applicant was concerned that the respondent had seen him as attempting to downplay the seriousness of the offences. The applicant conceded before the tribunal that the offences were serious. However, he asked that the tribunal also consider that the cause was not a permanent character defect. He referred also to mitigating factors. He relied on the judgment of Davies AJA (T36). The judge's comments at paragraph 43 above were cited. There was also the testimonial by Mr P H Capelin QC (Ex A3, pp 251-258), cited by Davies AJA, to the effect that his mixed up affairs, and stress, affected his thinking and his conduct of business affairs. He had always been a loner keen to prove to his family and colleagues that he was successful. He is a good man, a good barrister, a fine father and husband.
The applicant put to the tribunal that he has no other criminal convictions and he shows no innate tendency to dishonesty.
The applicant asked that the tribunal consider "what has happened to" him between 1993 and 1998. He has lost his career (on 16 July 1998). He has attracted media attention. There has been gossip at the bar. He has lost self-esteem. He has had time in jail. None of this was taken into account by APRA. He put forcefully that after this there is no way he would want to go through all of this again.
The applicant then discussed the fund. He stressed that he is not seeking to be trustee of a corporate fund. He wants only to be a trustee of his own fund. The fund comprises only his own and his wife's moneys. He queried why he would want to meddle with his own money. He addressed s 126D of the Act and submitted that the correct way to consider whether it is highly unlikely that an applicant will be a prudential risk to any superannuation entity is to identify all possible risks, then identify any prudential risks, then gauge the future likelihood of any of these risks attaching. APRA had not done this.
The applicant said that he was not tempted to dip into the superannuation fund because he has greater assets outside that fund.
The applicant pointed out that the fund always files its tax returns on time. He compared this performance with the general performance of such funds as shown in Ex A5. The Sydney Morning Herald reported on 5 April 2001 that as many as a third of superannuation trustees face criminal prosecution because they have failed to lodge annual returns on time.
The applicant submitted that there was no evidence that he lacks the ability to be a trustee.
The applicant pointed out that the community has entrusted him with the presidency of the local Cricket Club, a body with a turnover of $90,000 a year.
The applicant addressed the outcome in the Court of Criminal Appeal. He referred to the fact that the court had allowed the periodic detention to remain in place and had not opted for a fully custodial sentence.
The applicant addressed the matters raised in s126D(1) of the Act:

He had received a sentence (14 months) a bit longer than half of the maximum sentence (of two years). The sentence was periodic detention, not incarceration.

The onus is on the respondent to consider all the relevant factors. The respondent had dwelt too much on s126D(1)(a), the offence, at the expense of the other factors.

The Act gives an applicant a "second chance" if justice requires it. Four factors are listed in s126D (1). The respondent must consider how likely it is that a problem may arise in the future if the disqualified status is removed.

As regards s126D (1)(a), the nature of the offence, the applicant denied that he tried to minimise the gravity of the offence. He argued that he had been taken to suggest this when he indicated that his offences, attracting as they did no fine and a sentence of less than two years, were regarded under s126B (1)(b) and (2)(a) of the Act as not offences involving serious dishonest conduct. In a sense he wanted recognition of this statutory state of affairs whilst conceding that, on a wider analysis, the offences were serious. This misunderstanding appears in the reviewable decision and reasons (T2) at paragraphs 28, 29 and 48. The decision-maker also wrongly accepted the worst scenario as regards the state of the applicant's bookkeeping (paragraphs 42 and 51).

The respondent included some internal guidelines derived for the Insurance and Superannuation Commission in the Section 37 Statement (T3). The applicant was critical of these. He said that the guidelines had no status, being purely internal agency documents. The guidelines addressed the criteria for waiver of a person's disqualified status. At paragraph 19 they say:
"The criteria for granting a waiver is [sic] that, in order to protect superannuation entities from possible risk, a person's disqualification should not be waived unless the Commissioner is satisfied in all the circumstances and on the basis of credible material that the person is highly unlikely to pose a prudential risk to superannuation entities that is greater than the risk posed by any other person who has not been convicted of an offence in respect of dishonest conduct."

At paragraph 20 they say:
"As a general rule, an individual or responsible officer of a body corporate should not be granted relief from the disqualified persons rules where the offence was a deliberate and premeditated financial offence such as a fraud, financial misappropriation or misrepresentation or an offence which concerns the abuse of a position of trust."

The applicant submitted that the statutory provisions do not say what appears in these guidelines. The tribunal would have to agree with Mr the applicant's submissions on these guidelines.
The applicant put to the tribunal that he volunteered the information to APRA that he was disqualified (see T25). He approached APRA about the problem. However, s121 (3) of the Act compelled him to do this in any event.
The applicant emphasised that his only interest is in being trustee of his own fund. He is not interested in being trustee of any other superannuation fund.
Respondent's submissions

Mr Wigney said that the respondent did not concede that it had made any errors of fact or law. Paragraph 26 of T2, the reasons for the reviewable decision, set out the applicant's convictions. There had been no issue as to the correctness of this paragraph.
Mr Wigney defended as justified Sheller J's inferences, which were adverse to the applicant and concerned his endorsement of cheques to third parties (see paragraph 32 above).
Mr Wigney argued that s126D had been enacted to enable the waiver of only minor or old offences. This is borne out in paragraph 4 of Ex R2 where the explanatory memorandum relevant to s 126D is extracted. The explanatory memorandum explained the mischief that s 126D would address:
"Currently the impact of the disqualified person provision means, for example, that even persons whose only offence was a minor offence involving dishonesty 20 years ago, for example, shoplifting, are disqualified persons and cannot act as trustee … These new provisions will allow the Commissioner to waive the disqualified person status of such an individual".
Mr Wigney referred to the decision in Re VX96A and Insurance and Superannuation Commissioner (1996) 23 AAR 427. In that case the applicant had been convicted at age 21 in 1969 in the United Kingdom of submitting two fraudulent insurance claims with a total value of 134 pounds stirling. He was disqualified from being a trustee of a superannuation entity under s 120(1)(a) of the Act. He sought a waiver of the disqualification. This was refused. He appealed the refusal to the tribunal. The applicant's conviction was regarded as spent under the relevant United Kingdom law. The tribunal affirmed the respondent's refusal to waive the disqualification.
The tribunal considered the applicant's age (21) as a mitigating factor. The applicant considered that the offences, having been expunged in the United Kingdom, did not require declaration in Australia. That this was not the case was explained to him and he delayed thereafter in disclosing the convictions. He was reluctant to disclose them to the tribunal. In the tribunal's view this reflected adversely on his credibility. It was suggested that this involved adverse inferences as to his wisdom, good judgment, forethought and deliberation. This could mean that in his work as a superannuation trustee his decisions would be affected by similar deficiencies.
The tribunal considered the meaning of the words "prudential risk to superannuation entities" in s126D (1). The tribunal said that the Act "provides for extremely high standards of honesty to be applied to persons and corporations seeking to become trustees. It is clearly desirable that, in the context of a person or corporation acting as trustee, such high standards should not only be expected but strictly enforced" (p 430).
The tribunal considered the meaning of the word, "prudential" and consulted the Macquarie and Oxford dictionaries. It concluded (p 435):
"Thus, in the context of s 126C(5), the Tribunal must be satisfied on the totality of the evidence before it that the applicant is unlikely to pose any risk in the exercise, as officer of the company which is to be a trustee, of his judgment, wisdom and provident care in the management of the superannuation entities under his control. In the latter context, in the circumstances of this case, it is not so much the significance of the sums involved in the offences committed by the applicant but rather the issue of whether, given the fact that the offences were committed, people entrusting superannuation funds can be assured that is highly unlikely that in the discretions exercised, the wisdom adopted, the judgment applied and the provident care extended in the management of the funds, the applicant's actions would be highly unlikely to pose any risk."
Mr Wigney submitted that there were additional factors to be taken into account in identifying prudential risks. He said that the tribunal considered the issue only from the perspective of people entrusting superannuation funds. He said that the Act imposes a number of significant obligations and duties on trustees of superannuation entities. These include, but are not limited to, the requirement to lodge annual returns, the duty to keep certain records, the duty to prepare and keep accounting accurate records, the duty to notify the Regulator and the Commissioner of Taxation of certain matters and the duty to make and maintain investments on an arm's length basis. He said that these statutory duties and obligations are of course ultimately designed to protect members of superannuation entities, however any question of prudential risk should not be looked at exclusively from the perspective of members. Non-compliance with these statutory duties and obligations would amount to a prudential risk.
Mr Wigney submitted that s 126D has nothing to do with giving disqualified persons a second chance or the benefit of the doubt. It is concerned with prudential risks. It is not a punishment provision.
Mr Wigney submitted that the various judges had paid due regard to the applicant's suffering and penitence but had still convicted him and imposed a penalty or disqualification on him.
Mr Wigney pointed out that if the applicant's disqualification is waived the waiver permits him to act as trustee of any fund he might wish to be associated with. It is not possible to permit him to be a trustee of only his own fund.

Mr Wigney emphasised that an offence taken to be "not an offence involving serious dishonest conduct" under s 126B(1)(b) is not automatically a non-serious offence under s 126D(1)(a) of the Act. Section 126B(1)(b) is a gateway provision that an applicant must satisfy to reach the first stage of waiver. Having reached that point, s 126D(1)(a) requires a quite different decision about the nature and seriousness of the offence.
Mr Wigney submitted that the applicant's success at the Court of Criminal Appeal did not reflect an assessment that the court saw the offences as not serious. The court made clear that the offences were serious and, but for double jeopardy, would have imposed fully custodial sentences. Mr Wigney queried why the applicant pleaded guilty if he was not guilty. The applicant had said it was to get the matter over and done with. Counsel said that this was not borne out by events.
Mr Wigney impugned the value of the applicant's cooperation with the ATO. He said that this followed the ATO's discovery of the cheques endorsed to third parties. It was not an act of spontaneous honesty. The judges took it into account in sentencing but still imposed significant sentences.
Mr Wigney said that the applicant, who had done the wrong thing, seems to regard himself as the victim. "'They took away his profession'." It was in fact his own doing, said Mr Wigney. Mr Wigney conceded that the applicant has suffered. However, that is not relevant under s 126D(1). The relevant issue is prudential risk management.
The applicant responded to these submissions. He said that the characterisation of an offence as not involving serious dishonesty under s 126B(1)(b) must affect considerations under s 126D(1)(a).
He pointed out that the applicant in VX96A (supra) failed because he had not been candid with the respondent or the tribunal about the surrounding events. The applicant in that case had not changed in 26 years. The applicant said that he has changed.
The tribunal asked the applicant how it could be sure that, if his disqualification is lifted, he will not take on too much work as a superannuation trustee, it having been established that he could act as trustee for any fund whatsoever if the disqualification is lifted. In his evidence the applicant had said he wanted to return to the bar despite it having brought out his obsessive compulsive inclinations in and after 1987.
The applicant responded that he had changed in his three years away from the bar. He had been through so much he would never do the same thing again. He has been punished and has no motivation to do the wrong thing by his or anyone else's superannuation fund.
The offence to which the application relates

The offences have been thoroughly raked over above. It should suffice to say that seven judges have considered them. Of the seven all saw them as serious offences. Any differences of opinion related only to the proper sentence or disqualification from practice that ought to be imposed. The applicant was fortunate not to have been sentenced to jail full-time. Had the Court of Criminal Appeal had its way, he would have been denied periodic detention. He was fortunate also that the sentence was for less than two years, after his cross-appeal. Had Viney J's original sentence stood, the applicant could not (because of s 126B(2)(a) of the Act) have applied for a waiver. The Court of Criminal Appeal appeared reluctant to leave matters as they did and did so only because of apparent double jeopardy and the applicant's having arranged his affairs around periodic detention.
The tribunal accepts the respondent's characterisation of the provision in s 126B(1)(b) as relevant only to the question of whether a disqualified person can apply for a waiver. Having cleared that hurdle an applicant must expect that a decision-maker will bring to bear in its consideration of s 126D(1)(a) all the factors relevant to the offences committed. Even the applicant conceded that the offences were serious. The tribunal agrees with the judges, the respondent and the applicant and so finds.
The respondent submitted (Ex R2) that the seriousness of the offences alone would compel the tribunal to not be satisfied that the applicant is highly unlikely to be a prudential risk to any superannuation entity. The type and seriousness of the dishonesty involved in the offences -- namely knowingly and systematically making false statements to the revenue motivated by greed -- goes to the very heart of the type of conduct that the Act is designed to prevent. Any risk of a failure to keep proper records or to honestly complete appropriate returns to APRA on the part of the applicant would amount to a prudential risk. Having regard to the nature and seriousness of those offences, it could not be concluded that APRA can be assured that it is highly unlikely that in the discretions exercised, the wisdom adopted, the judgment applied and the provident care extended in the management of the funds, the applicant's actions would be highly unlikely to pose any risk.
The tribunal finds force in these submissions. However, the tribunal also recognises that the applicant speaks with apparent sincerity as regards his resolve not to repeat his misdeeds and he indicated how, in the superannuation context, an auditor would detect any recidivism on his part quite quickly.
The tribunal finds the nature of the offences a serious but not necessarily fatal impediment to the applicant being granted a waiver.
The time that has passed since the applicant committed the offence

On the basis of the explanatory memorandum quoted earlier (see paragraph 77) this might be intended to require that the offence was committed a great many years ago before this consideration can be of any benefit to an applicant. The period of less than a decade in the applicant's case, in addition to the seriousness of his offences when compared to the shoplifting example in the explanatory memorandum, would appear to work against the applicant.
However, the Act itself leaves open the implications to be read into this factor. It is clear in the present case that no one is alleging any similar offences or similar acts or omissions on the applicant's part since 1993. In so far as this factor can be a gauge to whether an applicant has reformed and rehabilitated himself or herself, the applicant appears rehabilitated. That is Dr Phillips's view.
The applicant's age when he committed the offence

In the VX96A case (supra) it was to the applicant's advantage that he had committed the offences at the age of 21 when less was expected of him than of a mature person. The same cannot be said for the applicant. Indeed, compared to the applicant in that other case, the applicant was mature. He was engaged in a lucrative and honourable profession, a cornerstone of which is the requirement of the utmost in honesty and trustworthiness in its practitioners. Put bluntly, the applicant should have known much better than was indicated by his conduct. This factor, in the tribunal's view, is the most embarrassing for the applicant and is taken into account by the tribunal in its ultimate decision.
The orders made by the court(s)

The tribunal has already covered this. The applicant's sentence was for 14 months periodic detention. The appeal judges would have favoured full-time imprisonment for between six and 14 months. The judges also gave the applicant little comfort in their comments on the seriousness of the offences. There is little of comfort for the applicant here.
Any other relevant matter

The respondent recognised some of these. Mr Wigney suggested that the applicant was struck from the roll of legal practitioners on criteria not unlike those applicable to trustees under the Act. Both the Act and the legal practitioner rules have as their aim the protection of the public.
He referred also the testimonials, which were voluminous, about the applicant.
He referred to Dr Phillips's medical reports.
He referred to the fact that the applicant had said that his longstanding intention was to become trustee and that he had had a close and longstanding relationship with the building up of assets in his fund.
Finally, the applicant wishes to become a trustee to relieve his trustee wife of some of her burden.
The tribunal would add the applicant's assertions that he has been fully rehabilitated and is absolutely unmotivated to repeat his wrongdoing.
The tribunal would also add its concern as to whether the applicant could stop himself from overdoing it in his work as a trustee.
Tribunal's consideration

As regards these matters the tribunal has reached the following conclusions:

The analogy connecting the applicant's status as a disbarred barrister with his disqualification as a trustee, while superficially attractive, does not stand ultimate scrutiny. The array of virtues, skills and functions expected of a barrister appear to the tribunal considerably greater than the requirements of the trustee of a superannuation fund.

The tribunal has read and considered the testimonials. However, for similar reasons to those expressed by the judges in the various courts, the tribunal found them of limited utility because few tried to explain why the applicant committed the offences. In the present situation they do not provide a guide as to whether it is highly unlikely that he would be a prudential risk to any superannuation entity.

The tribunal has considered Dr Phillips's reports and accepts his diagnoses. It also accepts that in 1999 Dr Phillips considered the applicant unlikely to reoffend. However, the tribunal notes that Dr Phillips has not assessed the applicant in relation to the functions and duties of a superannuation entity trustee and notes that it is over two years since the previous assessment. Dr Phillips's views, while worthy of consideration, are not definitive.

The next two matters, the applicant's interest in the fund, and the desire to assist his wife, are seen by the tribunal as reasons for the applicant wishing to be a trustee. They suggest that he would be motivated to work diligently and responsibly in the position.

The tribunal accepts the applicant's assertions that he regards himself as rehabilitated and completely devoid of any motivation to reoffend. The applicant was completely convincing in his evidence in these respects.

The tribunal's sole reservations are threefold.
The first is that the offences were very serious and were of a type that would be anathema in the context of the prudential management of a superannuation fund. If the applicant were to reoffend it would be a major embarrassment to the respondent and the tribunal. There is a distinct risk in lifting the disqualification. It could even be regarded as an indication that decision-makers operating under the Act are making soft decisions. This could undermine public confidence in the security of their superannuation investments.
Second, the applicant did characterise his situation as one in which things had been done to him. In his oral evidence he said that his career had been taken from him, that he had been sent to jail, that he had been scrutinised by the media and that the denizens of the bar had gossiped about him. This suggests that, despite his argument that he has been rehabilitated and penitent, he feels that he has been treated unfairly by the system. This tends to undermine any argument that he has accepted full accountability for his actions.
Third, the applicant has little to do at present. He clearly has been a terrier for hard work. It is conceivable that, if enabled to work as a superannuation entity trustee, he would be motivated to maximise his potential in that work. He could take on too much of that type of work this time. He could become obsessive and compulsive about this work next time. When asked to answer that suggestion his response was not totally satisfactory. He simply said that he had changed, he had been through so much that he would not want to repeat the experience. He did not suggest what, if any, mechanisms he had for avoiding the pitfalls.
The tribunal is cognisant that the hurdle in the Act is high. The tribunal must consider that is highly unlikely that the applicant will be a prudential risk to any superannuation entity. The tribunal could be confident that is unlikely that he would be a prudential risk. It is not confident that he is highly unlikely to be such a risk. That is solely for the reason of the third of the reservations stated above.
Conclusion

The tribunal has found that it is not satisfied, having regard to the factors in s 126D(1) of the Act, that the applicant is highly unlikely to be a prudential risk to any superannuation entity.
This decision does not give the tribunal great pleasure. The tribunal was impressed with much of the applicant's presentation and accepts that he has had a dreadful eight years, perhaps even 14 years. However, the tribunal concluded that, on the evidence, it could reach no other conclusion.
Decision

The decision under review is affirmed.
I certify that the 118 preceding paragraphs are a true copy of the reasons for the decision herein of
Signed:         .....................................................................................
  Associate
Date/s of Hearing  19 August 2001
Date of Decision       30 November 2001
Counsel for the Applicant              Self Represented
Counsel for the Respondent         Michael Wigney
Solicitor for the Respondent        Adele Connor