New South Wales Bar Association v Archer

[2004] NSWADT 38

CITATION:	New South Wales Bar Association v Archer [2004] NSWADT 38
DIVISION:	Legal Services Division
PARTIES:	APPLICANT Council of the New South Wales Bar Association RESPONDENT Stephen John Archer
FILE NUMBER:	032019
HEARING DATES:	11/2/2004
SUBMISSIONS CLOSED:	02/11/2004
DATE OF DECISION:	02/25/2004
BEFORE:	Chesterman M - ADCJ (Deputy President); Norton S SC - Judicial Member; Bennett C - Member
APPLICATION:	Summons - application to set aside
MATTER FOR DECISION:	Preliminary matter
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Legal Profession Act 1987
CASES CITED:	Arnhill Pty Ltd v General Terminal Co Pty Ltd (1991) 23 NSWLR 545 Botany Bay Instrumentation & Control Pty Ltd v Stewart [1994] 3 NSWLR 98 Lucas Industries Ltd v Hewitt (1978) 18 ALR 555 National Employers Mutual General Assurance Association Ltd v Waind & Hill [1978] 1 NSWLR 372 Stevens v New South Wales Bar Association, unreported, Supreme Court of NSW, 16 July 2003 Trade Practices Commission v Arnotts Ltd (1989) 88 ALR 90 Wardell v New South Wales Bar Association [2002] NSWSC 548
REPRESENTATION:	APPLICANT I McCulloch, barrister RESPONDENT S Cuddy, solicitor
ORDERS:	1. Clauses 1.6 and 1.8 are to be deleted from the Schedule to the summons to the Respondent, dated 10 November 2003, to produce documents to the Tribunal.; 2. Except as set out in Order 1, the Respondent’s application to set aside the summonses to produce documents, dated 10 November 2003 and issued on the application of the Informant, is dismissed.; 3. First access to the documents produced in response to the summonses to the third parties is granted to the Respondent. This is to be exercised within seven days of the date of these reasons. The documents may be uplifted for copying, but must be returned within 48 hours. Access is then granted to the Informant, on the same basis as to uplifting and copying, except to any document in relation to which the Respondent has objected to access being granted. ; 4. The documents listed in the Schedule (amended in accordance with Order 1) to the summons to the Respondent are to be produced within seven days of the date of these reasons. Access is granted to the Informant, except to any document in relation to which the Respondent has objected to access being granted. The documents may be uplifted for copying, but must be returned within 48 hours.; 5. Any objection to access to a document is to be listed for hearing.; 6. Costs of this application reserved.

1 On 9 October 2003, the Council of the Bar Association of New South Wales, as Applicant, filed in the Tribunal an Information containing two complaints under Part 10 of the Legal Profession Act 1987 (‘the Act’) against Stephen John Archer, the Respondent.

2 The Applicant alleges that the Respondent, a legal practitioner within the meaning of s 128 of the Act, has been guilty of professional misconduct. In the Second Schedule to the Information, it requests the Tribunal (a) to find to this effect; (b) to find also that he is not a fit and proper person to remain on the Roll of Legal Practitioners; and (c) to order that his name be removed from the Roll or, in the alternative, to make an order under any one or more of sub-paragraphs (b), (c), (d), (e) or (f) of sub-section 171C(1) of the Act.

3 The two grounds on which the Applicant seeks a finding of professional misconduct are set out in the First Schedule to the Information. They are as follows:-

1. Stephen John Archer failed to discharge his legal and civic obligation to pay income tax for the years ended 30 June 1988 to 30 June 2002, adequately or at all.

2. Stephen John Archer failed to make provision, or any adequate provision from income he had received, for the payment of income tax for the years ended 30 June 1988 to 30 June 2002.

4 In the Particulars to Ground 1, reference is made to the making of two sequestration orders against the estate of the Respondent, dated respectively 18 December 1991 and 21 March 2002. It is stated that each of these was made following the presentation of a creditor’s petition by the Deputy Commissioner of Taxation. The Particulars state also that on 7 April 1997 the Respondent was made bankrupt on his own petition, with the Deputy Commissioner of Taxation as his most substantial creditor.

5 The Particulars to Ground 2 set out four matters in the following terms:-

(a) Stephen John Archer, having entered into an agreement with his wife on 29 March 1988 which was registered under the Family Law Act 1975 (“the Agreement”), chose to make payments to his wife in purported performance of the Agreement, in circumstances where, had he approached the Family Court for an order to vary the Agreement, the Agreement would have been varied such that he could have, had he chose to do so, met his obligations under the Agreement and discharged his legal and civic obligations to pay tax.

(b) Stephen John Archer chose not to approach the Family Court to vary the Agreement, although he knew that he could not, or that it was unlikely that he would be able to, comply both with the Agreement and with his legal and civic obligation to pay tax.

(c) Stephen John Archer chose to incur debts in respect of goods and services and other items for his own benefit and that of his family and associates and to discharge those debts in preference to the debt which arose in favour of the Australian Taxation Office by reason of assessments issued to him from time to time, following filing of income tax returns by him.

(d) Stephen John Archer preferred to pay debts other than tax debts in circumstances where he knew that, irrespective of whether he paid his tax debt, he would continue to enjoy the benefits available to the public as a result of the expenditure of public funds, whereas if he were not to pay other debts, his standard of living would be adversely affected.

6 In his Reply, filed on 30 October 2003, the Respondent admitted in relation to Ground 1 that in some of the years between 30 June 1988 and 30 June 2001 he did not pay all the income tax that he was assessed to be liable to pay. He also admitted the making of the two sequestration orders and his being made bankrupt on his own petition.

7 In relation to Ground 2, he admitted that in some of the years between 30 June 1988 and 30 June 2001 he did not make adequate provision for the payment of income tax. He also admitted that he entered into the Agreement, that he did not approach the Family Court to vary the Agreement and that from time to time he both incurred debts in respect of goods and services and paid debts other than tax debts.

8 In relation to both Grounds, he denied the other matters alleged and claimed that none of the matters alleged was capable in law of constituting professional misconduct within the meaning of s 127 of the Act.

The present application

9 This judgment relates to an application made by the Respondent to set aside 16 summonses to produce documents. These were issued by the Tribunal on 10 November 2003, pursuant to an application by the Applicant. The Tribunal’s power to issue a summons to produce documents arises under s 84 of the Administrative Decisions Tribunal Act 1997.

10 One of the summonses was directed to the Respondent himself. The other 15 were directed to third parties. These comprised the Respondent’s wife, three public authorities, five banks, two accountants’ firms, the District Court, the Administrative Appeals Tribunal and two wine-sellers. The Respondent did not seek to set aside a further summons to a third party, namely the Supreme Court.

11 By the time this application came on for hearing, three of the third parties had indicated that they had no documents to produce. Out of the remaining 13 (including the Supreme Court), all except the Respondent’s wife had produced documents to the Tribunal pursuant to the summons. The Respondent himself had not produced any documents.

12 Each of the summonses required the production of documents relating to the affairs of the Respondent and, in some instance, of his wife, during the period from 1 July 1987 to the present. In most of them, a wide range of documents was specified. In the summonses to the banks, for instance, production was required of all documents and records (whether electronic or otherwise) relating to any type of account held by the Respondent or his wife since 1 July 1987.

13 In the summons to the Respondent, 16 categories of documents were listed. In addition to his passport or passports since 1 July 1987, these included all documents and records since this date relating to the following: his dealings with the Australian Tax Office, his bank accounts, his credit card accounts, his financial affairs generally, any family trust or superannuation scheme set up by him or for his benefit, the operation of the Agreement with his wife, the sequestrations and subsequent administration of his estate and any court proceedings for a money judgment against him.

14 In a letter to the Applicant’s solicitors dated 19 November 2003, which was admitted into evidence in this application, the Respondent’s solicitors indicated that, according to instructions received from their client, the only documents within the range set out in the summons that he had in his possession were in the categories of documents and records relating to (a) bank accounts, (b) payments to his wife pursuant to the Agreement and (c) the administration of his estate following sequestration. In this letter, the Respondent’s solicitors also pointed out that the Applicant’s solicitors already had copies of the Agreement and of the transcript of the Respondent’s examination in bankruptcy. They added that they were instructed to deny that the Respondent was ever a party to a ‘family trust’ and that he ever set up a superannuation scheme to benefit himself or any member of his family.

The arguments of the Respondent

15 The principal grounds on which Mr Cuddy, on behalf of the Respondent, claimed that the summonses should be set aside were (a) that they were oppressive, on account of the onerous requirements that they imposed upon the recipients, and (b) that they sought the production of numerous documents that were irrelevant to the issues raised in the Information and for that reason amounted to a ‘fishing expedition’.

16 In support of the proposition that, on these grounds, the summonses were an abuse of process, Mr Cuddy cited National Employers Mutual General Assurance Association Ltd v Waind & Hill [1978] 1 NSWLR 372; Botany Bay Instrumentation & Control Pty Ltd v Stewart [1994] 3 NSWLR 98 at 99-101. He relied on Arnhill Pty Ltd v General Terminal Co Pty Ltd (1991) 23 NSWLR 545 at 555-556 for the proposition that the appropriate test is whether production of the documents specified is ‘necessary’ for ‘disposing fairly’ of the proceedings.

17 In addition, he claimed that the summons to the Respondent constituted a flagrant attempt to obtain discovery through the device of a subpoena (in this connection, he cited Lucas Industries Ltd v Hewitt (1978) 18 ALR 555 at 569), and that the summonses to the third parties should be set aside because no notice of their issue had been served on the Respondent.

18 As an alternative to striking out the summonses, Mr Cuddy submitted that they should be restricted in scope so as only to require production of documents in existence within the period between 1 July 1987 and 30 June 2002. He argued that no later document could possibly be relevant to the issues raised in the Information.

19 In elaborating on these arguments, Mr Cuddy indicated that it was the Respondent’s intention, at the hearing of the Information, not to adduce any evidence in support of his Reply. Instead, an application would be made for an order dismissing the Information on the ground that the matters alleged were not capable of constituting professional misconduct.

20 With reference to his contention that the summonses were oppressive, Mr Cuddy emphasised the breadth and generality of the categories of documents listed. He claimed that no attempt had been made to frame sensible limits in order to reduce the heavy burden imposed on the recipients.

21 His principal argument on the issue of relevance was that, when due account was taken of the admissions made by the Respondent in the Reply, it became clear that very few factual matters remained for determination and that very few, if any, of the documents and records sought in the summonses would cast any light on these matters.

22 Specifically, he submitted that, as a result of the admissions relating to Ground 1 of the Information, no further factual matters remained to be determined by the Tribunal, except perhaps the amount by which the sum of the Respondent’s payments of income tax fell short of the amount for which he had been assessed. The only documents relevant to this issue would be those indicating what amounts he had been assessed to pay and what amounts he had paid. All or virtually all of the documents comprised in the summonses fell outside this narrow category.

23 In relation to Ground 2, Mr Cuddy submitted that no documents such as were required by the summonses could be relevant to the factual issues remaining for determination. They could not assist in establishing, for instance, that the Family Court would have varied the Agreement if the Respondent had approached it (as claimed in sub-paragraph (a) of the Particulars), or that the Respondent ‘chose’ not to approach it or ‘knew’ that without a variation he could not comply with both the Agreement and his obligation to pay tax (as claimed in sub-paragraph (b)). Equally, they could not assist in establishing what types of debts the Respondent ‘chose’ or ‘preferred’ to incur or to pay (see sub-paragraphs (c) and (d)).

24 In response to a question from the Tribunal, Mr Cuddy submitted that the Tribunal’s power to set aside a summons necessarily formed part of the broad power to determine its own procedure conferred on it by s 73(1) of the Administrative Decisions Tribunal Act 1997. He referred also to the provision in s 73(5)(b) that the Tribunal should ensure that ‘all relevant material’ is disclosed to it.

The arguments of the Applicant

25 For the Applicant, Mr McCulloch advanced two preliminary arguments relating to the summonses addressed to third parties. He did not cite any authority in support of either of these arguments.

26 The first of them was that the Respondent lacked standing to apply for these summonses to be set aside. Only the recipients, in Mr McCulloch’s submission, could make such an application.

27 The second preliminary argument was that, as all of the summonses (except the summons to the Respondent’s wife) had been answered by the production of documents or a declaration that none of the required documents were in the recipient’s possession, these summonses were ‘spent’. In consequence, all that the Respondent could do was to object to access being granted to the produced documents, or to their being admitted into evidence if they were tendered.

28 In answering the claim of ‘oppressiveness’ made by Mr Cuddy, Mr McCulloch submitted that it was contradicted, so far as all but one of the third party recipients were concerned, by the fact that, as just indicated, they had produced documents or had none to produce. He argued that the Respondent could not be ‘oppressed’ by a requirement to produce documents of a specified kind if he had no such documents and that the types of document required, relating mainly to personal finances, were likely to be readily accessible. He rejected the alleged analogy with discovery, pointing out that the Tribunal had no process of, or akin to, discovery.

29 Mr McCulloch did not, in this context, refer to the letter, described at [14] above, claiming that the Respondent did not possess any documents within the majority of the categories listed in the summons. This letter was not in fact tendered until the final stages of the hearing.

30 On the issue of relevance, Mr McCulloch contended initially that the test to be applied was broader than that put forward by Mr Cuddy. Mr McCulloch relied principally on the judgment of Beaumont J in the Federal Court in Trade Practices Commission v Arnotts Ltd (1989) 88 ALR 90. At 103, in addition to saying that the question of oppressiveness must be considered, Beaumont J formulated the following test of relevance:-

Does the material sought have an apparent relevance to the issues in the principal proceedings, ie, is adjectival, as distinct from substantive, relevance, established? Does the subpoena have a legitimate forensic purpose to this extent?

31 Mr McCulloch submitted that in the present proceedings the documents required by the summonses had apparent relevance at least, even allowing for the admissions contained in the Reply and even if the Respondent chose not to adduce any evidence at the forthcoming hearing. They were likely to furnish evidence of the factual substratum of the matters alleged in the Information.

32 In this context, Mr McCulloch relied particularly on the fact that Grounds 1 and 2 in the Information included respectively an allegation that the Respondent failed to discharge his obligation to pay tax ‘adequately’ and an allegation that the Respondent failed to make ‘adequate’ provision for the payment of income tax. In Mr McCulloch’s submission, the former allegation could not be sustained without evidence of the extent and circumstances of the default in payment. Proof of the latter allegation called for evidence of the Respondent’s income from all sources, of his spending patterns and of associated matters such as whether he sought to ‘quarantine’ his financial resources through measures such as paying sums into a superannuation fund.

33 Mr McCulloch argued that even if the content of the records and documents listed in the summonses did not assist in establishing the allegations contained in Grounds 1 and 2 and their supporting Particulars, it would still be relevant to the issue of aggravation. For that reason, it would bear upon the Tribunal’s determination of the order to be made under s 171C of the Act if it found the Respondent to have committed professional misconduct.

34 In support of this part of his argument, Mr McCulloch placed significant reliance on the decision of Cripps AJ in the Supreme Court in Wardell v New South Wales Bar Association [2002] NSWSC 548. This case concerned the Bar Council’s cancellation of the practising certificate of a barrister on the ground that he was not a fit and proper person to hold such a certificate. The barrister had been declared bankrupt on his own petition, with the Australian Taxation Office (‘ATO’) as his largest creditor. The evidence showed that although he had had an income well above what was needed to meet ordinary living expenses, he had become indebted to the ATO for more than a million dollars. A major reason was that he had spent considerable sums on ‘discretionary lifestyle choices’, which included annual overseas holidays and heavy gambling. He had not failed to file tax returns or committed any other offences.

35 Cripps AJ confirmed the decision of the Bar Council, on the principle that the failure of a person to meet his or debts ‘over a long period of time without any exculpating features other than that the money was spent elsewhere would promote in the minds of right thinking people in our community that that person was not a fit and proper person to hold a practising certificate’ (Wardell at [42]). He held that the barrister ‘spent money knowing that if he did so that amount of money was not available to meet his indebtedness to the ATO’ (at [44]) and that the barrister had shown ‘such a reckless disregard for his obligations as to amount to an intention to avoid them’ (at [45]).

36 Mr McCulloch relied on this decision as showing how the types of documents listed in the summonses might well provide evidence that the Respondent was not fit and proper to remain on the roll. This was because they might assist, if not be essential, in proving patterns of spending on ‘discretionary lifestyle choices’, which by virtue of deliberate intent or recklessness were incompatible with the making of ‘adequate’ payments of income tax, or ‘adequate’ provision for such payments.

37 After the hearing of the application, Mr McCulloch supplied to the Tribunal a copy of an interlocutory judgment by Cripps AJ in Stevens v New South Wales Bar Association, unreported, Supreme Court of NSW, 16 July 2003. In the course of disciplinary proceedings, his Honour rejected an application to set aside subpoenas to the practitioner concerned and his wife, requiring production of numerous documents. The ground put forward was that the subpoenas were vexatious and oppressive. Although the circumstances were again broadly comparable to those of the present case, the judgment provides insufficient detail to be of much use.

38 Finally, Mr McCulloch opposed the claim by Mr Cuddy that the summonses should be restricted in scope so as only to require production of documents in existence within the period between 1 July 1987 and 30 June 2002. He pointed out that while the Information did not concern any obligations to pay tax for the years following 30 June 2002, some of the tax assessed for the years prior to that date would not fall due for payment until after that date. For this reason, evidence of the Respondent’s patterns of spending after 30 June 2002 would be relevant in these proceedings.

The Tribunal’s conclusions

39 At the outset, we should state that, in our opinion, the Tribunal does have power, by virtue of the provisions of s 73 of the s 73(1) of the Administrative Decisions Tribunal Act 1997, to set aside a summons under s 84, in whole or in part.

40 In our judgment, however, the arguments advanced by Mr McCulloch on behalf of the Applicant must be accepted, subject to some exceptions and qualifications.

41 We do not consider that ‘oppressiveness’ can be sufficiently demonstrated solely from the fact that the description of one or more categories of document in a summons to produce is, on the face of it, wide and general. At the end of the day, however, this was all that Mr Cuddy could put forward as a basis for claiming that the summonses were oppressive.

42 We have some sympathy also for Mr McCulloch’s submission that, when a summons has been answered by the production of documents or a statement that no document within the range specified is within the recipient’s possession, it should no longer be possible to claim that the summons is ‘oppressive’. But in the absence of authority on this point (so far as we are aware), we would prefer not to base our conclusion regarding oppressiveness on this proposition.

43 On the issue of relevance, we accept Mr McCulloch’s submission that the test to be applied is as stated by Beaumont J in Trade Practices Commission v Arnotts Ltd (1989) 88 ALR 90 at 103. It is sufficient that the summons or subpoena should have a ‘legitimate forensic purpose’ to the extent that the material sought has an ‘apparent relevance’ to the issues in the principal proceedings.

44 If this test is applied, the approach adopted by Cripps AJ in Wardell v New South Wales Bar Association [2002] NSWSC 548 is sufficient to illustrate that the material sought in these summonses has an ‘apparent relevance’ to the questions whether the Respondent, during the years in question, made ‘adequate’ payments of income tax, or ‘adequate’ provision for such payments.

45 In our judgment, even if the more guarded test set out in Arnhill Pty Ltd v General Terminal Co Pty Ltd (1991) 23 NSWLR 545 at 555-556 is applied – namely that production of the documents specified must be ‘necessary’ for ‘disposing fairly’ of the case – the same result follows. This is because the Tribunal could not fairly make the determination or determinations required by the case – namely, as to whether the Respondent has been guilty of professional misconduct and, if so, what order should be made under s 171C of the Act – unless it could reach conclusions as to (a) the scale of the admitted failures of the Respondent to pay tax and to provide for the payment of tax, and (b) the reasons why such failures occurred.

46 A finding that there were minimal failures, or that there were good grounds for such failures, would most likely preclude a finding of professional misconduct. On the other hand, it is the Applicant’s case, albeit disputed in the Reply, that the evidence supporting the allegations in the two Grounds and their supporting particulars will prove sufficient failures, without proper justification, to warrant such a finding.

47 Subject to two qualifications, we consider that the link between the categories of documentary evidence sought in the summonses and the allegations which, according to the Applicant, must be proved by it is sufficient to satisfy the stricter test of relevance stated in Arnhill.

48 The two qualifications are that we do not believe that the test of relevance is satisfied by the requirements in the summons to the Respondent to produce (a) all records relating to ‘any family trust’ and (b) all records relating to ‘any superannuation scheme’. These are respectively items 1.6 and 1.8 in the summons. On the other hand, the requirement to produce all records of contributions by the Respondent to a family trust (item 1.7) does fall within the test.

49 On this ground, we consider that items 1.6 and 1.8 should be deleted from the summons to the Respondent. This deletion may not, however, be of practical relevance in view of the Respondent’s denial, through his solicitors, of the existence of any family trust or superannuation scheme.

50 We accept Mr McCulloch’s argument (see [39] above) that evidence of the Respondent’s patterns of spending since 30 June 2002 may be relevant in these proceedings. This is because during this time various obligations to pay tax assessed in respect of preceding years are likely to have arisen. It follows that there are no grounds for restricting the scope of the summonses to a period ending on 30 June 2002.

51 On the other hand, we reject the first of Mr McCulloch’s two preliminary submissions, namely that the Respondent lacked standing to object to the summonses addressed to third parties. Although Mr Cuddy did not point this out, the contrary principle was applied in Botany Bay Instrumentation & Control Pty Ltd v Stewart [1994] 3 NSWLR 98, a case on which he relied.

52 We would prefer not to rule on Mr McCulloch’s second preliminary submission. This was that, as all of the summonses (except the summons to the Respondent’s wife) had been answered by the production of documents or a declaration that none of the required documents were in the recipient’s possession, these summonses were ‘spent’. No authority was cited to assist us on this matter.

53 Finally, we do not accept Mr Cuddy’s argument that the summonses to the third parties should be set aside on the ground that no notice of their being issued was served on the Respondent. Although such notice is required in Practice Note No.7, clause 5, a failure to give notice does not of itself provide grounds for setting aside a summons.

The orders to be made

54 Clauses 1.6 and 1.8 should be deleted from the Schedule to the summons to the Respondent, dated 10 November 2003, to produce documents to the Tribunal.

55 Except as just indicated, the Respondent’s application to set aside the summonses to produce documents, dated 10 November 2003 and issued on the application of the Applicant, should be dismissed.

56 The matter of access to produced documents was raised during the hearing. We make the following orders to dispose of this matter.

57 As agreed at the hearing, first access to the documents produced in response to the summonses to the third parties is granted to the Respondent. This is to be exercised within seven days of the date of these reasons. The documents may be uplifted for copying, but must be returned within 48 hours. Access is then granted to the Applicant, on the same basis as to uplifting and copying, except to any document in relation to which the Respondent has objected to access being granted.

58 The documents listed in the Schedule (amended as just indicated) to the summons to the Respondent are to be produced within seven days of the date of these reasons. Access is granted to the Applicant, except to any document in relation to which the Respondent has objected to access being granted. The documents may be uplifted for copying, but must be returned within 48 hours.

59 Any objection to access to a document is to be listed for hearing.

60 The Respondent raised concerns about disclosure of the contents of produced documents by the Applicant to third parties. We accept the Applicant’s argument, however, that the Respondent is sufficiently protected in general terms by the usual implied undertaking applying to documents produced in response to a subpoena or summons. We decline to make any special order in this case.

61 The Respondent submitted that he should have an order for costs to the extent that he was successful in this application and that otherwise the matter of costs should be reserved. In our judgment, however, although the Respondent has been successful to a limited degree, the costs of this application should be reserved.