New South Wales Bar Association v Stevens
[2003] NSWCA 95
•24 April 2003
NEW SOUTH WALES COURT OF APPEAL
CITATION: NEW SOUTH WALES BAR ASSOCIATION v STEVENS [2003] NSWCA 95 revised - 7/05/2003
FILE NUMBER(S):
41214/02
HEARING DATE(S): 18 March 2003
JUDGMENT DATE: 24/04/2003
PARTIES:
New South Wales Bar Association (Appellant)
Clarence James Stevens (Respondent)
JUDGMENT OF: Spigelman CJ Meagher JA Sheller JA
LOWER COURT JURISDICTION: Supreme Court - Common Law Division
LOWER COURT FILE NUMBER(S): 13263/02
LOWER COURT JUDICIAL OFFICER: Greg James J
COUNSEL:
P R Garling SC / C E Adamson (Appellant)
P Le G Brereton SC / M A Robinson (Respondent)
SOLICITORS:
Hicksons (Appellant)
Sally Nash & Co (Respondent)
CATCHWORDS:
LEGAL PRACTITIONERS
cancellation of practising certificate
appeal from grant of stay pending appeal against cancellation
where cancellation for taxation offence and failure to notify
where income tax returns not lodged for 20 year period
whether relevant to exercise of discretion under Legal Profession Act 1987
whether proceedings to strike practitioner off the Roll relevant to Court's discretion on stay application
Legal Profession Act 1987, ss 38FC, 38FD
LEGISLATION CITED:
Income Tax Assessment Act 1936 (Cth)
Legal Profession Act 1987 ss 37, 38B, 38 FB, 38FC, 38FD, 38FI
Supreme Court Act 1970 s 23
Taxation Administration Act 1953 s 8C
DECISION:
Appeal allowed
JUDGMENT:
IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL
CA 41214/02
SPIGELMAN CJ
MEAGHER JA
SHELLER JAThursday 24 April 2003
NEW SOUTH WALES BAR ASSOCIATION v Clarence James STEVENS
FACTS
Clarence James Stevens (the Opponent) was the subject of a decision by the Council of the New South Wales Bar Association (the Bar Association) on 10 October 2002 to cancel his practising certificate as of 29 November 2002 pursuant to both s38FC(1)(b) and s38FD(1) of the Legal Profession Act 1987. The decision related to a conviction of the Opponent on 11 July 2001 for a failure to lodge income tax returns for the years 1999 and 2000. The Opponent was granted a stay of the effect of that decision by Greg James J on 2 December 2002 pending an appeal from the decision pursuant to s38B(2). The Bar Association appealed against the grant of a stay.
HELD
(per Spigelman CJ, Meagher and Sheller JJA agreeing)
A
The application for a stay should be determined on the basis of the pending appeal only and not the alternative claim for prerogative relief. [9]
Meagher v Stephenson (1993) 30 NSWLR 736 applied. Hill v King (1993) 31 NSWLR 654 referred to.
B
The overriding principle in an application for a stay is to ask what the interests of justice require. Where such an application involves professional rights to practice, the public interest is entitled to significant weight in the exercise of the Court’s discretion. [83], [104]
Alexander v Cambridge Credit Corporation Limited (1985) 2 NSWLR 685; Bryant v Commonwealth Bank of Australia (1996) 70 ALJR 306 applied. Dwyer v National Companies & Securities Commission (1988) 15 NSWLR 285; Ex parte Farren; Re Austin (1960) 77 WN(NSW) 743 referred to. Sinha v Health Care Complaints Commission [2001] NSWCA 48; Robb & Rees v Law Society of the Australian Capital Territory (Federal Court of Australia, Finn J, unreported, 21 June 1996); Bannister v Walton (Supreme Court of New South Wales, Court of Appeal, unreported, 30 April 1992) discussed.
C
Greg James J inappropriately treated the application for a stay involving professional rights to practice as if it were litigation between two private parties. His Honour failed to give adequate weight to the public interest involved. [106], [118]
New South Wales Bar Association v Cummins (2001) 52 NSWLR 279; Bryant v Commonwealth Bank of Australia (1996) 70 ALJR 306 applied.
D
On the re-exercise of the discretion to grant a stay of the effect of the decision of the Bar Association made pursuant to s38FC(1)(b), the protection of the public and the maintenance of the reputation of the legal profession are entitled to determinative weight. It is also relevant that strike off proceedings have been commenced with respect to a 20 year period of failure to lodge income tax returns. [143], [150]
New South Wales Bar Association v Cummins (2001) 52 NSWLR 279; New South Wales Bar Association v Hamman [1999] NSWCA 404; New South Wales Bar Association v Murphy (2002) 55 NSWLR 23; New SouthWales Bar Association v Somosi (2001) 48 ATR 56 referred to. Wardell vNew South Wales Bar Association [2002] NSWSC 548; Ziems vProthonotary of the Supreme Court of New South Wales (1957) 97 CLR 279 cited.
E
The appeal is also allowed on the alternative basis upon which the Bar Association cancelled the practising certificate of the Opponent, under s38FD of the Act. [171], [173]
ORDERS
Appeal allowed. Orders to come into effect on a date to be determined.
IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL
CA 41214/02
SPIGELMAN CJ
MEAGHER JA
SHELLER JAThursday 24 April 2003
NEW SOUTH WALES BAR ASSOCIATION v Clarence James STEVENS
Judgment
SPIGELMAN CJ: On 10 October 2002 the Council of the New South Wales Bar Association resolved to cancel the Practising Certificate of Clarence James Stevens QC (“the Opponent”) with effect from midnight on Friday 29 November 2002. The Council asserted that it was acting pursuant to both s38FC(1)(b) and s38FD(1) of the Legal Profession Act 1987 (“the Act”).
By further Resolution arising from the same decision-making process, on 24 October 2002 the Bar Council decided to institute proceedings 41003 of 2002 in this Court for an order that the Opponent’s name be removed from the Roll of Legal Practitioners (“the strike off proceedings”). Those proceedings are not before the Court on this occasion.
The Course of the Proceedings
The Opponent instituted proceedings in the Common Law Division of this Court seeking orders in the nature of prerogative relief quashing the decision to cancel his practising certificate and also, pursuant to s38B of the Act, by way of an appeal from the decision. It was common ground before the first instance judge, and in this Court, that any such appeal is by way of a hearing de novo.
Pursuant to s38B(3) the Opponent sought an order staying the effect or operation of the decision to cancel his Practising Certificate. Save insofar as further or other orders are sought, the Opponent did not seek, in terms, a stay on the basis of his claim for judicial review.
Section 38B relevantly provides:
“38B(1) If a Council:
…
(d) cancels … a practising certificate,
the … holder of the practising certificate may appeal to the Supreme Court.
…
(2) The Supreme Court may make such order in the matter as it thinks fit.
(3) Except to the extent (if any) that may be ordered by the Supreme Court, the lodging of an appeal does not stay the effect of the … cancellation … appealed against.”
The proceedings came before Greg James J on an urgent basis on 29 November 2002. The urgency arose from the fact that the Bar Council’s cancellation took effect from midnight on that night. The Opponent sought both an order for extension of time to institute an appeal, pursuant to s38B of the Act and also a stay of the effect of the Bar Council’s decision. His Honour granted the relief for an extension of time. That decision is not contested.
The matter was argued before Greg James J until 6.30pm on Friday, 29 November and thereafter additional written submissions were filed. His Honour gave judgment as a matter of urgency the next Monday, 2 December 2002. His Honour said:
“[6] Having regard to the nature of the matter and that which is to come before the Court of Appeal, and that in my view the plaintiff should be permitted to appeal from the determination to the Bar Council presently referred to and that these matters come before this court to be dealt with urgently. I do not consider it appropriate to give detailed reasons for my conclusions. So suffice it to say, I am of the view that there is an argument of some substance in support of the contentions that prerogative relief may go to the Bar Council’s determination.
[7] In any event, even if I were not of that view, in aid of what is conceded to be the plaintiff’s right to have a de novo hearing on the question of whether or not the tax offence, which had been the cause of the relevant Bar Council’s decision, was committed in circumstances that show him to be not a fit and proper person to hold a practising certificate, a stay is appropriate, at least in the interim, to preserve the status quo, as the written submissions show there is a strongly arguable basis for him to contend, dealing with that matter alone, that he should not be the subject of the cancellation.
[8] As regards to the alternative basis of cancellation under s38FD, it is difficult to see the basis upon which the considerations in that section were addressed in the Bar Council’s decision.
[9] Mr Stevens has little practice left on the evidence before me. He has some matters in which he is currently retained due to come before the court early next year. The Court of Appeal has granted no interlocutory relief nor been moved for any against him. It will not be able to deal with the matters on the application unless and until some time substantially later in the year.
[10] My attention has been drawn to the usual case law concerning balance of convenience. There are additional factors to be considered in a matter of this sort. But one can accept that they could all be appropriately subsumed within what is referred to by Mahoney, JA in Shircliff v Engadine Acceptances (1978) 1 NSWLR 729 at 737 where his Honour refers to the probability or likelihood of success in any such matters:
‘.. I think the degree of probability or likelihood of success is simply that which the court thinks is sufficient in the particular case to warrant preservation of the status.’
[11] Those words apply equally to the balance of convenience. It was submitted that the balance of convenience favoured by the Bar Council in that Mr Stevens had little practice left, but against that what practice he has left is no doubt valuable to him.
[12] I do not see that the argument that was put to me that the legislation has confided to the Bar Council a statutory role, and therefore that role should be respected to the extent that the order extending the time or the order staying the cancellation of the practising certificate should not be made is persuasive since the legislature has also expressed its view when it conferred a de novo right of appeal in the circumstances.”
His Honour made an order staying the effect and operation of the decision in accordance with the prayer for relief in the summons. The order was expressed to be made pursuant to s38B(3) of the Act.
Although the stay was not sought on the basis of the case leading to prerogative relief, nor was his Honour’s decision or order based upon this case, the matter was argued in this Court as if the two causes of action were alternative foundations for the stay. There are three reasons why it is not, in my opinion, appropriate to determine the application for the stay on the basis of the case for judicial review.
First, the facts and matters raised in the appeal cover all of the matters capable of being raised by way of judicial review, but extend well beyond those matters to encompass the merits of the case. Accordingly, concentrating on the express reference to a stay in s38B(3) does not prejudice the Opponent in any relevant way. Indeed the only element of detriment, should the Court ultimately decide not to determine the matter on the basis of the application by way of judicial review, is that the Opponent, if otherwise unsuccessful, would lose the opportunity of having the matter determined in his favour by the Bar Council upon remitter. In the hypothesised circumstances, i.e. the Opponent loses the appeal, this is not a detriment entitled to weight in the exercise of the Court’s discretion to grant a stay.
Secondly, and partially overlapping with the first basis, prerogative relief, which is always discretionary, is often refused on the basis that alternative remedies are available. The position is a fortiori where prerogative writs and a full appeal are available, and availed of, to the same court.
As this Court said in Hill v King (1993) 31 NSWLR 654 at 659, repeating the conclusion of this Court in Meagher v Stephenson (1993) 30 NSWLR 736 esp 738-739:
“Where the same court has both appellate and supervisory jurisdiction in respect of the same order and the grounds for challenging that order, if established, would support the grant of either prerogative or appellate relief the court must decide which form of relief will be granted. If the order was set aside on the appeal there would be nothing left for the court to prohibit or quash and vice versa. The case would be one where the party aggrieved had alternative and inconsistent remedies. Accordingly, proceedings in the nature of prohibition and certiorari directed to the Licensing Court in circumstances where appellate relief is or was also available are necessarily discretionary.”
The discretion to grant prerogative relief may nevertheless be exercised where there is an error going to jurisdiction that is patent and not based on any contested or contestable facts. (See e.g. R v Tottenham and District Rent Tribunal ex parte Northfield (Highgate) Ltd [1957] 1 QB 103 at 107-108; Boral Gas (NSW) Pty Ltd v Magill (1993) 32 NSWLR 501 at 509.) There may be circumstances in which the appeal route may not be available or as efficacious. For example, in the present case it was necessary to grant an extension of time to lodge the appeal (cf Australian Securities Investment Commission v Farley (2001) 51 NSWLR 494).
The test adopted in Meagher v Stephenson at 738-739 is to determine what remedy is most effective and convenient, not just for the applicant for relief but also in the public interest. As I said above I do not regard a lost opportunity to convince the Bar Council of a proposition about which the legal practitioner has been unable to convince the court on a hearing de novo, to be a weighty form of detriment. The effect of the cancellation of the certificate can be completely remedied after a successful appeal. The most effective and convenient proceeding for determining the stay application is the appeal under s38B.
The third matter that makes it difficult to determine this stay application on the basis of the judicial review case is the flimsy nature of the materials before the Court to lay a factual foundation for such a case.
The Opponent’s submissions proceeded on the basis that a copy of the Report and Recommendation of the Professional Conduct Committee of the Bar Association constituted the reasons for decision of the Bar Council. There is a letter to which I will refer below, informing the Opponent of the determination of the Bar Council. It refers to the Report as having been “considered” by that Council. The letter also notes that the file containing all the correspondence between the Opponent and the Bar Council was available to Councillors, as well as certain other material provided subsequently to the Report of the Professional Conduct Committee.
I set out the relevant legislation below. At each point (see s37(2), s38FC(6) and s38FD(2)) a legal practitioner, who is the subject of an adverse decision by the Bar Council, is entitled to request the Council for a statement of its reasons for the action it has taken. An obligation is imposed upon the Council to comply with any such request. No such request was made in the instant case.
In the absence of any statement of reasons, and given the urgent application for interlocutory relief, it is understandable that the Opponent chose to treat the Report of the Committee as if it constituted some form of statement of reasons. It is not. At best the Report gives an indication as to what the reasons might be. It is not appropriate to parse and analyse the Report in the way the Opponent sought to do in submissions. In my opinion, this is altogether too unsafe a foundation for granting the interlocutory orders sought on the judicial review case. Where there is an appropriate alternative and equally efficacious basis for determining the application for interlocutory relief, the Court should focus on that basis.
The judgment of Greg James J was delivered on 2 December 2002. That was also the return date of the summons in the proceedings in this Court seeking orders that the Opponent’s name be removed from the Roll of Legal Practitioners (the strike off proceedings). On that date the Registrar of this Court made orders that the Bar Council provide particulars by 16 December, which was done. The Opponent was directed to file affidavits by 4 February 2003 and the matter was stood over until 10 February 2003.
The Bar Association took no action for more than two weeks after the judgment of Greg James J. On 19 December 2002, being the second last day of the law term, the Bar Association instituted proceedings for leave to appeal from the decision of Greg James J and for an order that the hearing of its application be “expedited and heard in the Court vacation”. The application for the matter to be expedited and heard during the Court vacation was rejected. No application was subsequently made for the matter to be expedited and heard by this Court in the normal course.
On 10 February 2003 both the strike off proceedings and the summons for leave came before the Registrar. The Opponent had not complied with the direction for the filing of affidavits in the strike off proceedings and was directed to file his evidence by 21 February 2003. Both matters were stood over to 3 March 2003.
On 3 March the Opponent was still in default of the order to file affidavits in the strike off proceedings. Both matters were listed before the President of the Court of Appeal. The Bar Council had not sought expedition, but his Honour made directions for the early hearing of the summons for leave now before the Court. His Honour also made directions in the strike off proceedings and set it down for hearing at the beginning of June.
The Legislative Scheme
The legislative scheme presently under consideration has been considered at length in an earlier judgment of the Court. (See New South Wales Bar Association v Murphy (2002) 55 NSWLR 23). It is unnecessary to set out its history or all of the relevant provisions again. It is however pertinent to set out the provisions directly in issue in the present proceedings.
“38FC(1) A Council must refuse to issue, or must cancel or suspend, a practising certificate if:
(a) the Council is aware that the applicant for or holder of the practising certificate has, since being admitted as a legal practitioner, committed an act of bankruptcy or been found guilty of an indictable offence or a tax offence, and
(b) the Council considers that the act of bankruptcy, indictable offence or tax offence was committed in circumstances that show that the applicant or holder is not a fit and proper person to hold a practising certificate.
(2) A Council must, within 14 days after becoming aware that the applicant for or holder of a practising certificate has, since being admitted as a legal practitioner, committed an act of bankruptcy or been found guilty of an indictable offence or a tax offence, give notice in writing to the applicant or holder:
(a) if the Council has not received a statement under section 38FB in relation to the act of bankruptcy or the finding of guilt concerned, requiring the applicant or holder to make a statement in accordance with that section, and
(b) informing the applicant or holder that a determination in relation to the matter is required to be made under this section, and
(c) informing the applicant or holder of the relevant period in relation to the determination of the matter and that the applicant or holder will be notified of any extension of the relevant period, and
(d) informing the applicant or holder of the effect of the automatic suspension provisions in section 38FH in the event of the matter not being determined by the Council or the Commissioner within the relevant period.
(3) Despite subsection (1), a Council may issue a practising certificate to an applicant referred to in that subsection who is a barrister or solicitor if the next relevant date (within the meaning of section 36) in relation to the barrister’s or solicitor’s current practising certificate is imminent and the Council has not made a determination under that section in relation to the applicant.
(4) The issue of a practising certificate in the circumstances referred to in subsection (3) does not prevent a determination from subsequently being made under this Division to refuse to issue a practising certificate to the barrister or solicitor or to cancel or suspend the barrister’s or solicitor’s practising certificate.
(5) Despite any other provision of this Act, a Council required to take action under subsection (1) in relation to a barrister or solicitor may, for the purpose of enabling the proper arrangement of the affairs of the barrister or solicitor:
(a) issue a practising certificate to the barrister or solicitor that remains in force for such period, specified in the practising certificate, as the Council considers necessary to achieve that purpose, or
(b) defer cancelling or suspending the practising certificate held by the barrister or solicitor for such period as the Council considers necessary to achieve that purpose.
(6) If a Council acts under this section and, within 14 days after being notified of the action, the applicant or holder concerned requires the Council to state its reasons for the action, the Council must comply with the requirement without delay.
(7) A Council is not required to take action under this section in relation to a person who has been bankrupt if the person was bankrupt because of an act of bankruptcy that has already been the subject of a determination under this section.
38FD(1) A Council may refuse to issue, or may cancel or suspend, a practising certificate if the applicant or holder has failed to notify a matter (being a failure declared by the regulations to be professional misconduct) and the Council considers that the failure to notify occurred without reasonable cause.
(2) If a Council acts under this section and, within 14 days after being notified of the action, the applicant or holder concerned requires the Council to state its reasons for the action, the Council must comply with the requirement without delay.”
The failure to notify a matter, to which s38FD(1) refers, is a failure to notify as required, relevantly, by s38FB(2), (3) and (4) which provide:
“38FB(2) An applicant for a practising certificate who has failed to notify a matter as required by the regulations (being a failure declared by the regulations to be professional misconduct) must provide a written statement, in accordance with the regulations, showing why, despite the failure to notify, the applicant considers that he or she is a fit and proper person to hold a practising certificate.
(3) A barrister or solicitor who, since being admitted as a legal practitioner:
(a) has committed an act of bankruptcy, or
(b) has been found guilty of an indictable offence or a tax offence,
must provide a written statement, in accordance with the regulations, showing why, despite the act of bankruptcy or finding of guilt and any circumstances surrounding the act or finding, the barrister or solicitor considers that he or she is a fit and proper person to hold a practising certificate.
(4) A barrister or solicitor who fails to notify a matter as required by the regulations (being a failure declared by the regulations to be professional misconduct) must provide a written statement, in accordance with the regulations, showing why, despite the failure to notify, the barrister or solicitor considers that he or she is a fit and proper person to hold a practising certificate.”
Submissions in this Court proceeded on the basis that s38FB(4) was the relevant subsection. It is not clear why s38FB(2) and (3) are inapplicable, but I will proceed on the assumed basis. The Court was provided with the Legal Profession Regulation 1994 as at November 2001 as the relevant form of the Regulations.
The relevant regulation under s38FB(4) is Regulation 69D:
“(1) If a barrister or solicitor is found guilty of an offence (other than an excluded offence), the barrister or solicitor must:
(a) notify the appropriate Council in writing of the finding and the nature of the offence, and
(b) furnish to the appropriate Council, within the time specified by the appropriate Council, such further information as it requires relating to the finding or the commission of the offence.
(2) Subclause (1):
(a) applies to an offence whether or not committed in the course of practice as a legal practitioner, and
(b) applies to a finding of guilt of an offence whether or not the court proceeded to a conviction for the offence, and
(c) applies to an offence committed in New South Wales or to an offence committed outside New South Wales (so long as it would have been an offence, other than an excluded offence, if committed in New South Wales), and
(d) applies to a finding of guilt even if other persons are prohibited from disclosing the identity of the offender, and
(e) extends to an indictable offence committed before the commencement of this clause (and so extends whether the finding of guilt was made before or after that commencement), and
(f) extends to an offence (other than an indictable offence) committed within the period of 10 years occurring immediately before the commencement of this clause (and so extends whether the finding of guilt was made before or after that commencement).
(3) A notification under subclause (1) must be made:
(a) in relation to a finding of guilt that was made before 27 July 2001 in respect of a person who was a barrister or solicitor at 27 July 2001 – within 7 days after 27 July 2001, or
(b) in relation to a finding of guilt that was made on or after 27 July 2001 in respect of a person who was a barrister or solicitor when the finding was made – within 7 days after the finding was made.
(4) Subclause (1) does not require the disclosure of any information previously disclosed in an application for a practising certificate or under this clause.
(5) In this clause, offence includes a tax offence.”
The regulation which declares a failure to notify to be professional misconduct is Regulation 69H, which relevantly provides:
“69H Each of the following failures to notify is declared to be professional misconduct:
…
(c) a failure to notify, without reasonable cause, a finding of guilt of the commission of … a tax offence as required by clause 69D in the time and manner specified in that clause.”
It is also relevant to note s37:
“37(1) A Council may refuse to issue, may cancel or may suspend a practising certificate if the applicant or holder:
(a) is required by the Council to explain specified conduct (whether or not related to practice as a barrister or solicitor) that the Council considers may indicate that the applicant or holder is not a fit and proper person to hold a practising certificate and fails, within the period specified by the Council, to give an explanation satisfactory to the Council, or
…
(2) If a Council acts under this section and, within 14 days after being notified of the action, the applicant or holder requires the Council to state its reasons for the action, the Council must comply with the requirement without delay.”
Background Facts
The Opponent was admitted to the bar on 14 March 1975 and commenced practising as a barrister on 1 October 1977. He was appointed a Queen’s Counsel for the State of New South Wales on 20 November 1991.
During his years of practice at the bar the Opponent participated actively in the affairs of the bar in a manner accepted by the Bar Council as standing to his credit on the issue of fitness to practice. The Opponent was active in the development and introduction of the continuing professional development programme. He was a member of the Education Committee for the last ten years and most recently served as Chairman of that Committee. He was active in the bar’s Continuing Legal Education Committee when it existed. He has been a member of the Law Council Committee on Administrative Law since 1988. He has been a representative of the Bar Association on the Legal Qualifications Committee since 1994. He has delivered papers and chaired sessions of seminars in relation to continuing legal education. He has accepted referred cases on a pro bono basis to a significant degree. He has been the head of 13th Floor Selborne Chambers since 1994.
The matter that led to the decision to cancel his Practicing Certificate and to institute proceedings to remove his name from the Roll of Legal Practitioners, was his failure to comply with his obligations under the Income Tax Assessment Act 1936 (Cth).
Until 2 February 1996, the Opponent did not lodge any taxation returns for the financial years ending 30 June 1976 up to and including 30 June 1984. Until 22 May 1996, the Opponent did not lodge any taxation returns for the financial years ended 30 June 1985 up to and including 30 June 1995. Until 12 September 2001, the Opponent did not lodge taxation returns for the financial years ending 30 June 1999 and 30 June 2000. Until 7 April 2002, the Opponent paid no income tax for the period from 1 July 1976 to 30 June 2000. Since 7 April 2002 to the date of hearing, the Opponent has made two payments towards his accrued indebtedness for the period 1 July 1976 to 30 June 2000, being payments of $825,000 on 8 April 2002 and $35,000 on 19 June 2002.
On 7 April 1998, the Australian Taxation Office commenced proceedings against the Opponent by filing a statement of claim in the Supreme Court of New South Wales. Summary judgment was sought and judgment entered on 27 August 2002, in the amount of $930,283.02. It appears that there was an error of $10 in the amount and the default judgment was subsequently set aside.
On 11 July 2001, the Opponent was convicted in the Local Court of two offences against s8C(1)(a) of the Taxation Administration Act 1953, for failing to lodge income tax returns for the years 1999 and 2000. He was fined $1,500 and ordered to pay court costs of $133. He was further ordered to lodge the returns on or before 11 September 2001.
On 4 September 2002, the Opponent was convicted in the Local Court of one offence against s8C(1)(aa) of the Taxation Administration Act 1953, for failing to provide information to the ATO after being served with a notice. He was fined $550 and ordered to pay court costs of $98.90.
As will presently appear, ultimately the Bar Council acted only on the basis of the conviction of 11 July 2001, which was an important date for the determination of the issues that arise on this appeal.
The Sequence of Events
The relevant documentation was put before Greg James J in the form of an affidavit by the solicitor acting on behalf of the New South Wales Bar Association which was filed in the strike off proceedings. A number of additional documents were annexed to an affidavit of the Opponent, which was otherwise concerned with an explanation for the delay in instituting the proceedings for the purposes of his application for an order that the time for appeal be extended.
The requirement for notice of acts of bankruptcy and offences, together with the powers of refusal, cancellation or suspension of practicing certificates, now found in Pt 3 Div 1AA of the Legal Profession Act 1987, were originally enacted by way of regulation in the Legal Profession Amendment (Notification) Regulation 2001. It was the regulation that was pertinent for renewal of practising certificates for the year 2000/2001.
The form in use for that year required an applicant to state whether or not he or she had been found guilty of an indictable offence at any time and whether or not he or she had been found guilty of any offence other than an indictable offence in the past ten years. In his application for renewal of his practicing certificate for the 2000/2001 year, the Opponent truthfully answered each of these questions in the negative.
The standard form also made provision for further information in the form of a box to be ticked choosing between the following alternatives:
“EITHER:
I have not done anything likely to affect adversely my good fame and character and am not aware of any facts or circumstances that might affect my fitness to remain a legal practitioner.
OR:
I have not done anything likely to affect adversely my good fame and character and am not aware of any circumstances that might affect my fitness to remain a legal practitioner unless the Bar Council considers that my good fame and character or my fitness may be affected adversely by the circumstances in the attached “Disclosure” signed by me or referred to above.”
In his application for a renewal of the Practicing Certificate for the 2000/2001 years, the Opponent ticked the latter box. In his attached “Disclosure” dated 22 June 2001, he said:
“If the disclosure is required to be made only in respect of matters which have occurred and have been determined, I have nothing to disclose. Insofar as the question refers to any circumstance that might affect my fitness to remain a legal practitioner I have assumed “might” to mean “a theoretical possibility”, as distinct from probability.”
The Opponent went on to disclose the fact that he was Chairman of a group of companies involved in agricultural projects in Queensland, with respect to the activities of which he had given personal guarantees. There were proceedings with respect to matters arising from arrangements made with creditors and one creditor was pursuing the guarantees. With respect to taxation matters, the only comment was as follows:
“There are presently disputes with the Australian Taxation Office in relation to the deductibility of expenditure associated with the agricultural project. Conceivably, as a director, in the event of any hearing occurring, comments may be made about my involvement.”
The Opponent added:
“There are professionals who advised us and others who continue to advise us. So far as they are concerned, I ought to have nothing adverse arising from any of the matters.”
The first conviction occurred on 11 July 2001, i.e. after the date of the Disclosure made as part of his application for renewal of a Practicing Certificate for the 2000/2001 year. However, as noted above, s38FB(4) and Reg 69D(3)(a) imposed an obligation to disclose the conviction of 11 July within seven days after 27 July 2001. It was common ground that no such disclosure occurred. There was, accordingly, a failure to notify a matter within s38FD(1) of the Legal Profession Act 1987, enlivening the power of the Council to cancel the practising certificate.
The next relevant event was the application by the Opponent for a renewal of his Practising Certificate for the 2001/2002 year. The Application was a statutory declaration declaring that the information and particulars in the application “are true in substance and in fact”.
The standard Practising Certificate Renewal form again contained the following question:
“Have you been found guilty of any offence other than an indictable offence, whether committed in New South Wales or outside New South Wales, since being admitted in New South Wales, other than as previously disclosed to the Bar Association?”
The Opponent answered “Yes” to this question. The form itself noted in this regard:
“If the answer to this question is yes you may be required to furnish to the Bar Council such further information as it may require relating to the finding of guilt or the commission of the offence.”
The form again contained the “EITHER/OR” choice with respect to identifying matters “likely to affect adversely my good fame and character”. Again the Opponent ticked the box which referred to an attached “Disclosure” statement.
Disclosure occurred by letter dated 20 June 2002, the same date as the application for renewal for Practicing Certificate. The Opponent repeated the statement of his letter of the previous year that:
“I refer to the disclosure required in the Application for Practising Certificate. If the disclosure is required to be made only in respect of matters which have occurred and have been determined, I have nothing to disclose. Insofar as the question refers to any circumstances that might affect my fitness to remain a legal practitioner, I have assumed “might” to mean “a theoretical possibility” as distinct from probability.”
It should be noted that at this stage the conviction had occurred on 11 July 2001 and had been “determined” probably in whatever sense the Opponent was intending to use that term. Nevertheless, disclosure of the fact of conviction had occurred by ticking the “Yes” box on the standard form.
The Opponent went on again to refer to the difficulties involved with the unsuccessful agricultural projects in Queensland. The reference to the involvement of the Australian Taxation Office was, however, more elaborate than on the previous occasion. The Opponent said in his letter:
“There are presently disputes with the Australian Taxation Office in relation, inter alia, to the deductibility of expenditure associated with the agricultural project. The Australian Taxation Office has proceedings issued in the Supreme Court of New South Wales. Having regard to the nature of the entitlement of the Australian Taxation Office to obtain a judgment in reliance upon an assessment, it has the capacity to obtain a judgment against me which I would not be immediately able to meet. I continue to try to resolve the matter with the representatives of the ATO through my legal representatives, and personally. Any resolution, from my point of view, is incumbent upon there being no judgment entered, a position about which the ATO seems to vacillate.
I have sought to defer lodgement of my tax returns for as long as possible because of the way in which the dispute remains unknown. That meant that in July 2001 I received a prosecution notice in respect of failure to lodge the tax return but in respect of which the return was then lodged and no fine was payable (the circumstance being the only offence known to have been committed by me, ever).”
The letter concluded:
“The professional advice I have is that there is a theoretical possibility of the ATO wanting to obtain judgment against me and wanting to enforce that judgment, even by way of bankruptcy. Issues of bad faith on their part have already been raised, insofar as I have a perception, and have been separately advised, that such conduct on their part would appear to be a manifestation of that, were such a course pursued.”
The Bar Association replied to the notification of 20 June 2002 by letter of 25 June 2002 which is not in the papers before the Court. It is, however, referred to in the following way in a Notice of 12 July 2002 issued to the Opponent by the Bar Association pursuant to s38FC(2) of the Legal Profession Act 1987. The Notice states:
“I refer to your letter to the Executive Director of 20 June 2002 and Ms Gibson’s letter to you of 25 June 2002. It appears that the only matter you are required to notify is the tax offence to which you refer on page two of your letter.
Also on 12 July 2002 the Bar Association issued a Notice under s38FI of the Legal Profession Act. That section authorises the Council to require a legal practitioner to provide information, to produce documents or otherwise to assist an investigation. In the Notice served on the Opponent the Council sought details of the finding of guilt and the date on which the income tax return was lodged, together with statements as to whether tax had been assessed and paid. The Notice went further by seeking information on the Opponent’s taxation affairs including details of any other offences and, relevantly:
“Details relating to the lodgement of tax returns for the years ending 30 June 1995 to date including showing the dates by which returns were due, the dates of lodgement of those returns, the period of time for which they were overdue, the amount of tax assessed for each return, amounts paid in respect of each assessment and the dates on which payments were made;
…
Details relating to the lodgement of Business Activity Statement and Instalment Activity Statements and the payments made.”
In a response dated 16 September 2002, to the Notice under s38FI the Opponent provided the following information:
“(a) 2001 Offence
1 By Notice, I was required to furnish the Tax returns for 30 June, 1999 and 30 June, 2000 years by 22 May, 2001. The omission to have so furnished those returns led to my conviction before the Magistrate, Ms Sweeney, on an ex parte hearing.
The order, as subsequently served upon me on 24 July 2001, required that I furnish the returns on or before 11 September, 2001. There was no Notice of Penalty served on me or received by me, ever but apparently I was fined $1500 and costs of $133.
2 I had believed that the returns had been lodged prior to 11 July, 2001, because they were received by me in final form under cover of letter dated 3 July, 2001 and were signed. Some time after 7 September, 2001 I found they had not been lodged when my solicitors forwarded me a letter from the AGS which referred to the returns being outstanding and due by 11 September 2001. A further copy of the returns was signed and lodged electronically on 12 September, 2001, being the same form as had been received in July, 2001.
Tax had been assessed and part has been paid. Subject to what is subsequently said on that subject. I presently have an outstanding lability to the ATO of $1.4 million.
3 I did not notify the Bar Association of the offence because I had believed there was no penalty and believed that the terms of the order had already been complied with, such that there was no notifiable offence. When I later again forwarded the return in September, I did not turn my mind to the possible commission of a notifiable offence. It was only when the renewal of my Practising Certificate arose that I considered the possibility of a notifiable matter.
It was only subsequent to speaking with Ms Barrett that I was prompted to make further enquiries of the Court and found the altered position, namely that a fine and a costs order had been made.
I never received any Notice of Penalty, probably because if it were forwarded to the address in the Order, it would not have been received. I was living in a rented unit at that address in May and June 2001 but never referred to it as my usual residence nor was it an address ever provided to the ATO by me.”
On 27 August the Bar Association had also written to the Opponent seeking information additional to that sought in the Notices. That letter said:
“1 Explain with precision precisely what connection there is between your liability as a guarantor for the unsuccessful agricultural projects in Queensland on the one hand and the disputes you are involved in with the Australian Taxation Office in relation to the deductibility of expenditure associated with that agricultural project.
2 Explain why it is that you apparently chose to defer lodgement of tax returns ‘for as long as possible because of the way in which the dispute remains unknown’. In particular, did you refrain from lodging tax returns on professional advice? For what years did you not lodge tax returns on the date prescribed by the legislation. Was the reason for any late lodgement of tax returns the same for each occasion?”
In response to this inquiry the Opponent said in his communication of 16 September:
“1 There is no direct connection between my liability as a guarantor for the unsuccessful agricultural projects in Queensland, on the one hand, and the disputes I am involved in with the ATO. The indirect connection arises from the fact that my liabilities significantly exceed my assets. I would prefer not to be made bankrupt by any creditor. Accordingly, I have been seeking time to pay in relation to established liabilities. If I am ultimately found to be liable for a significant sum under the guarantees, it may be beyond me to meet the debts but that is at present an unknown.
2 The phraseology was, upon reflection, inaccurately expressed or some words ought to have been added so it read ‘because of a desire to know the ATO’s attitude towards any allowance for deductions in agricultural projects prior to lodgement of the returns’.
The position was that in each of those years, investments had been made in agricultural projects. Prior to those investments being made, Private Binding Rulings had been sought from the ATO and efforts had been made to have those Rulings expedited. Notwithstanding that, they had not been determined. Subsequently, the ATO introduced a regime of Product Rulings. The ATO gave Product Rulings in relation to the relevant agricultural projects. There still remained an issue as to the degree to which they might then have allowed deductions for the earlier years. Because I was a director (non-executive director and chairman) the initial advice of my professionals was to hold off lodgement of returns for as long as possible. The claimed deductions may not have been allowed in whole or in part. I did not want penalties imposed if they could be avoided nor did I want to lodge amended returns if that could be avoided. At that time it was the fifth year in which I had been trying to resolve all matters I had in dispute with the ATO. Then, the professional advice given by my accountants and by the separate accountants used by my wife determined in June, 2001 was that it was appropriate to lodge the returns forthwith and make any amendments later, if necessary.
That covered the reason for late lodgement for the 1999 and 2000 financial years.
There was separate late lodgement of returns for the period from 1977 to either 1993 or 1994.
The late lodgement of the returns was on professional advice first given in 1986, and maintained thereafter. The advice was from my then accountants and from other accountants who they consulted. I had fallen behind in the lodgement of returns. The reason for the late lodgement was to ensure that when returns were finally submitted, they would then also include the current return. In fact, before they were lodged, Final Notices were received and they were lodged for two periods.”
By way of further disclosure the Opponent said in this Response:
“1 On 4 September, 2002, I was convicted by the Magistrate Mr Garbett for having failed to give information to the Australian Taxation Office in the time provided pursuant to a Notice. The material had been provided in a manner acceptable to the ATO before the determination although not in the form sought in the Notice. I was fined $550 with court costs of $98.90. It is probable, but not yet finalised, that there will be a challenge to that determination. A copy of the Summons and Notice of Penalty is enclosed.
2 On 27 August, 2002, by consent, the ATO entered judgment against me in the Supreme Court proceedings in the sum of approximately $1.4 million. At the time of the judgment being entered, application to pay the judgment sum by instalments was sought. That request has been followed up but, to date, no response has been received.”
A Draft Report of the Bar Association’s Professional Conduct Committee is dated 23 September 2002. It consists of pars [1]-[33] of the Final Report to which more detailed reference will be made below. It culminated in an Interim Conclusion and Interim Recommendations proposing that the Council cancel the Opponent’s practising certificate pursuant to each of s38FC(1)(b) and s38FD(1). It also proposed that the Council resolve to commence proceedings in the inherent jurisdiction of this Court to have the Opponent’s name removed from the Roll of Practitioners.
The Opponent was invited to comment on the Draft Report and Recommendations and did so by letter of 4 October 2002. The letter of the Bar Association also requested, pursuant to s38FD(2), a statement with respect to the conviction of a tax offence of 4 September 2002.
The Draft Report of the Professional Conduct Committee referred to the “Disclosure” letter of 20 June 2002, which I have quoted above, and said:
“9 For reasons which will be explained later in this report, it is clear beyond doubt that the Barrister’s disclosure to the Bar Association in the above letter was materially false and incomplete in that it failed to disclose the non-lodgement of tax returns for 20 years and the fact that the barrister then had an outstanding tax liability of more than $1.6m. There can be no other conclusion than that it was a deliberate attempt by the Barrister to keep from the Bar Association matters which obviously adversely affected his good fame and character.
10 It should not be overlooked that at the time the Barrister made his disclosure to the Bar Association, the decision in New South Wales Bar Association v Cummins had been delivered and had received wide publicity, both in the general community and within the profession.
…
29 The Barrister’s original notification on his application for renewal of practising certificate was false and incomplete and must have been designed to keep the true facts from the Bar Council.”
In his Response of 4 October 2002 the Opponent said:
“15 My immediate attention is drawn to the opinion expressed in paragraphs 9-10 and 29 of the Draft Report that the Disclosure Statement attached to my Practising Certificate Application dated 19 June 2002 was deliberately false, incomplete and designed to conceal the true facts from the Association.
16 It was not my intention to make a false or incomplete disclosure or to conceal facts from the Association.
17 My disclosure statement may well have been affected by inhibitions arising from the facts that: (a) I do not view the state of my taxation affairs with pride; and (b) on the contrary, they have been a source of despair to me, particularly as I have endeavoured without success, over several years, to reach a settlement with the ATO.
18 It does not follow, I hope, that I have been guilty of misleading conduct in my Disclosure Statement. I disclosed in it: (a) the existence of the ATO’s then pending proceedings against me in the Supreme Court of NSW; (b) the fact that I could not immediately meet a judgment such as that sought against me; and (c) the fact that the ATO had raised issues of bad faith against me. Those disclosures were bound to lead, as they did, to further inquiries by the Association.
19 I invite the Committee to reconsider its preliminary view that I have been guilty of misleading conduct.”
In his letter the Opponent went to on refer to the “central focus of the Draft Report” being “not unnaturally” the failure to lodge returns for the years ending 30 June 1976 for a period of twenty years. He observed that the Draft Report did not note that he did lodge returns for the years of default in 1996 and that the ATO accepted that “the returns were voluntarily lodged”. The Opponent observed:
“23 The fact that the substantial returns were voluntarily lodged is significant because: (a) it illustrates a desire on my part to meet my tax obligations, albeit belatedly; (b) it demonstrates that paragraph 27 of the Draft Report is incorrect in recording that I only lodged returns “when required to do so by demands by the Taxation Office’; and (c) it distinguishes my case from that of NSW Bar Association v Cummins (2001) 52 NSWLR 27, where (as appears in paragraph 15 on page 282) Mr Cummins did not lodge any tax returns or retain accountants for the purpose of lodging tax returns until after contact had been made with him by an officer of the ATO.
24 The timing of my voluntary lodgement of returns, in 1996, is also significant because: (a) it occurred before the current controversy about non-compliant barristers publicly erupted in 2001; and (b) it represented the culmination of my efforts, over several years, to have my tax affairs put in order by accountants I had retained in or about 1983 for that purpose.”
The Opponent went on to refer to those parts of the Report which highlighted his explanation of a failure to lodge returns in a context of having received professional advice and also pars [25] and [26] of the Draft Report which stated:
“25 The Barrister has offered no rational explanation for his failure to lodge tax returns from 1975 until 1996, other than his statement to the following effect:
‘The late lodgement of the returns was on professional advice first given in 1986 and maintained thereafter …’
26 That explanation if it be an explanation, firstly does not deal at all with the period 1975 until 1986 and secondly, insofar as it seems to suggest that the responsibility for the decision to not lodge returns rests with some professional advisor is simply unacceptable.”
With respect to these observations the Opponent said:
“27 Having entrusted my affairs to them in or about 1983, and having become dependent upon them to prepare my accounts and returns, they appear to have achieved nothing, and apparently failed to communicate effectively with the ATO, until 1995 despite the fact that I paid them each year to prepare and maintain my accounts and relied upon their assurances that, despite the non-lodgement of returns, they were confident that they would be able, always within a short time frame, to negotiate a solution with the ATO.
28 I naively left my affairs with them because I believed that, with several barristers as clients, they had the expertise and experience to achieve what they promised; I had given them all my primary records in the belief that they were preparing and maintaining accounts; and I did not want to disrupt what I, with misplaced optimism, believed to be the most practical course to a solution acceptable to the ATO and myself. Once they had the primary records, and had apparently done so much, I considered myself ‘locked in’ until all the returns were completed.”
Mr P R Garling SC, who appeared for the Bar Association relied on these paragraphs as an admission that the Opponent’s failure to lodge tax returns, between 1983 and 1995 was a deliberate strategy adopted for purposes of negotiation with the ATO.
The Opponent also elaborated on the circumstances relating to his failure to lodge returns at some length, indicating the various accountants with which he had dealt over the period of time. He also attached a statement by one of those accountants, Mr Donald Allum, who noted that the affairs of the Opponent and his wife, to whom he referred as “Clarrie” and “Thalia”, had been handled by a former partner. Mr Allum said:
“In early 1995, probably mid-January, I recall Clarrie and Thalia Stephens make an express appointment with me in my office at Parramatta. Their complaint was that their tax returns for Clarrie were still not brought up to date or filed, they had absolutely no confidence in Warwick, but were committed to having the work completed because all of the primary material had been provided to the practice and apparently so much of the work had been done. There was a certain amount of heat in the discussion. They expressly wanted me to take over the work, ensure Warwick had nothing more to do with it an ensure that whatever had to be done was done. In the past I was aware that there had been delays in Clarrie responding to requests for information but it was made clear to me in the course of that conversation that all of the records and materials that were available had been provided and that it was to be finished as soon as possible. …
Shortly afterwards, still in early 1995, a further meeting was held with Clarrie and Thalia. By that time I had been able to make an initial evaluation of the work which had been done and was required to be done. I also found out the approach that had been intended by Warwick. I understood from Warwick that the appropriate course was for all returns to be prepared and lodged, at the same time. I do not remember any other part of the proposed strategy or advice.”
On the basis of a detailed outline of his contact with his accountants, the Opponent submitted to the Bar Council in his letter:
“32 I understand that I must accept personal responsibility for the non-lodgement of my tax returns and I was negligent in the conduct of my personal affairs – I do not suggest otherwise – but, although I was negligent in dealing with my accountants, I did not wholly disregard my obligations and, on the contrary, sought (albeit belatedly) to fulfil them.”
By letter of 8 October 2002 the Bar Association advised the Opponent of its procedures in the following way:
“A professional conduct committee’s report, after the barrister has been given an opportunity to comment on the draft report, is considered by the full Bar Council. The barrister’s responses to the Committee’s inquiries is available to all Bar Councillors. The usual course is for the Bar Council to make its decision on the basis of that material.
It is not the Bar Council’s practice to provide a barrister with a copy of its final report before that report is submitted to the Bar Council. However, a copy of the report as settled by the Council is made available to the barrister.”
This evidence was, in my opinion, sufficient for the Court to regard the Committee Report as an indication of the Bar Council’s reasons for purposes of an interlocutory application. It is not, however, sufficient to treat the Report as if it were a complete statement of reasons under s38FC(6) or s38FD(2).
As noted above, in its communication to the Opponent of 24 September 2002 the Bar Association sought a statement under s38FB(2) and also served a further Notice under s38FI of the Act. These related to his conviction of a tax offence on 4 September 2002. The Opponent replied to these Notices under cover of letter of 9 October 2002. He noted that the transcript of the local court proceedings on that date was not yet available to him and that that conviction was the subject of an appeal. He also submitted that the conviction arose out of circumstances in which the ATO had accepted that the Opponent had complied with the relevant Notice that gave rise to the offence, although he had done so belatedly. He further said that in the context of the negotiations then underway between himself and the ATO he had believed mistakenly that he was not obliged to comply with that relevant Notice.
By further letter of 10 October 2002 the Opponent informed the Bar Association of the negotiations he had conducted with the ATO from 1996 concerning the possibility of him meeting his remaining obligations for income tax.
On 9 October 2002 the Professional Conduct Committee completed a report which repeated, as pars [1]-[33], its Draft Report. That Report consisted of extracts from documents including the responses on the part of the Opponent. It is pertinent here to note certain paragraphs of the Draft Report in addition to those set out above:
“2 He did not lodge any returns in the time prescribed for income tax for the years of income 1976 to 1996, inclusive (a period of 20 years). At the present time he is indebted to the Australian Taxation Office in an amount exceeding $1.6 million.
3 Prima facie, those facts alone, unless explicable by some extraordinary circumstances, compels the conclusion that the Barrister is not a fit and proper person to practise as a legal practitioner.
…
27 It is clear that the Barrister, for more than twenty years, failed to lodge any returns at all. Thereafter, and only when required to do so by demands from the Taxation Office, he lodged returns and is now, as would be inevitable, substantially in default of his income tax obligations. That state of affairs arises as a direct consequence of the Barrister’s failure to lodge tax returns.
28 The Barrister has not accepted that position and has defended, for a number of years, recovery proceedings by the Australian Taxation Office on grounds which, if not spurious, are, at the very best, obscure.
29 The Barrister’s original notification on his application for renewal of practising certificate was false and incomplete and must have been designed to keep the true facts from the Bar Council.
30 The Barrister’s most recent conviction (on 4 September 2002) would seem to be as a result of a deliberate attempt by him to thwart the Australian Taxation Office from recovering its debt. This conduct is but the last step in a continuous course of conduct that began in 1975.
32 In the Barrister’s favour it should be noted that he did lodge returns in 1996 albeit as a result of Notices served by the Australian Taxation Office.
33 It is also acknowledged and accepted that the Barrister has made significant contributions to the Bar over his career.”
The Final Report went on to consider the Opponent’s responses to the Draft Report. It also noted that he would respond to the Notices relating to the conviction of 4 September 2002 on 9 October and that any such response would be provided for the Bar Council to consider in conjunction with the Report.
The Committee noted the Opponent’s statements as to the payments he had in fact made and that the remaining amount owing related to penalty tax, interests and costs. The Report concluded:
“46 All of the above facts are accepted. However, the simple fact is that the Barrister is indebted to the Australian Taxation Office for the best part of $1 million. Whether or not that debt can properly be described as relating primarily to interest, penalty tax and costs (a doubtful legal proposition) begs the question as to why the Barrister came to be liable for such interest, penalties and costs in the first place.
47 For reasons set out later in this document, nothing the Barrister has said explains in any satisfactory manner why it is that he did not lodge tax returns nor pay any tax for at least 20 years.”
With respect to the submission of the Opponent made about the comment in par [29] of the Draft Report quoted above, to the effect that the Disclosure Statement in the Practising Certificate Application of 19 June 2002 was deliberately false, incomplete and designed to conceal the true facts from the Association, the Report noted the submission and said:
“49 The explanation put forward by the Barrister does not cause the Committee to change is preliminary view. The fact remains the Disclosure Statement should have disclosed all matters which the Barrister now appears to accept are relevant to the question of whether he is a fit and proper person to practise as a Barrister. They did not. He has offered no explanation for that failure other than to observe that in his opinion it was inevitable that the true facts would be uncovered upon investigation. That may or may not be the case, but it is no excuse for the Barrister’s lack of candour when dealing with the Bar Association.”
With respect to the Opponent’s submission that he had voluntarily paid his tax the Report said:
“51 The Barrister, in this part of his response, makes two points. The first is that he lodged returns in 1996 voluntarily and not in response to any notice issued by the Australian Taxation Office.
52 Strictly speaking, this is true. The Barrister was not under any compulsion of any particular notice at the time he lodge the returns in 1996.
53 However, on a careful analysis of the true facts as disclosed by the Barrister himself, the Barrister’s statement is disingenuous, to say the least. The fact is he received a notice from the Australian Taxation Office on 7 September 1995, which was subsequently withdrawn by the Australian Taxation Office and replaced by later notices, which required lodgement by 15 May 1996.
54 Accordingly, this fact does not cause the Committee to depart from its provisional opinion. It is clear on the facts that the Barrister only lodged tax returns when it was obvious that the Australian Taxation Office had ‘caught up with him’.
55 To suggest that such lodgement was ‘voluntary’ in those circumstances is simply an irrelevant observation.
…
57 On its own, however, that fact has not changed the Committee’s preliminary views. The fact remains that he did nothing at all from 1975 or 1976 until 1983.
58 The Barrister provides a lengthy explanation supported by a statutory declaration by his former accountant to the effect that from 1983 onwards he was relying on his accountant to prepare and lodge tax returns which did not happen until 1996, apparently because his accountant believed that the best way to deal with the matter was to lodge all returns at the one time and then ‘negotiate’ with the Australian Taxation Office.
59 He says that whilst he cannot recall why he did not lodge tax returns up to 1983, he puts forward a series of family tragedies around the period 1973 to 1977.
60 He then says that from 1983 until 1996 the matter rested with his accountant.
61 It is accepted that from 1983 onwards the Barrister was dealing with an accountant, but the Committee does not accept that such an explanation excuses or even really explains the conduct. It does not change the Committee’s view of the conduct. The fact is that the Barrister’s only explanation is that he was relying on advice from his accountant that the best way to deal with the Australian Taxation Office was to lodge all returns at once and thereafter attempt to negotiate with the ATO. Such an approach to one’s legal obligation is simply unacceptable. Moreover, the Barrister’s real complaint seems to be that he lost the benefit of an ‘amnesty’ put in place by the Deputy Commissioner once again as a result of his accountant’s default. If this is the case, then it is clear that the Barrister’s conduct would never have come to notice. However, it does not, in the Committee’s view, have any effect on the seriousness of the conduct itself.”
Other submissions were dealt with, including the personal position of the Opponent.
The Committee nevertheless recommended that the Council should proceed to adopt resolutions on each of three bases:
First, that it should resolve that pursuant to s38FC(1)(b) that each of the offences of 11 July 2002 and 4 September 2002 were committed in circumstances that show he was not a fit and proper person to hold a Practising Certificate and that the Practising Certificate should be cancelled.
Secondly, that the Council should resolve pursuant to s38FD(1) that the failure to notify the Bar Council of the 11 July 2001 conviction occurred without reasonable excuse and on that basis the Practising Certificate should be cancelled.
Thirdly, the Council should resolve to commence proceedings in inherent jurisdiction of this Court to remove the Opponent’s name from the Roll of Practitioners.
As advised to the Opponent by letter of 11 October 2002, the Bar Council considered the Report of the Professional Conduct Committee at a meeting on 10 October 2002 together with the further statements provided to the Bar Council by the Opponent. The letter said that the Council had not had the opportunity to consider the information provided in his letter of 9 October 2002 with respect to the conviction on 4 September 2002. Accordingly, it did not determine that matter.
The Bar Council adopted the resolutions pursuant to s38FC and s38FD proposed by the Committee, save insofar as the proposed resolution pursuant to s38FC(1)(b) relied on the conviction of 4 September 2002.
With respect to the proposal that the Council institute proceedings in the inherent jurisdiction of the Court to remove the Opponent’s name from the Roll, the Council resolved to ask the Opponent to show cause why it should not do so and indicated a number of matters that the Opponent should consider in any response to the Council in this regard. The Opponent subsequently made submissions to the Council. The Council later resolved to proceed with such an application.
Principles Governing Stays
The overriding principle to apply when determining an application for a stay is to ask what the interests of justice require. The Court’s jurisdiction exercised by Greg James J, which may fall to be re-exercised in this Court, is based on the inherent jurisdiction of the Court to protect the utility of proceedings brought in the Court, whether in its original jurisdiction or by way of a statutory appeal. This inherent power is confirmed by the express terms of s23 of the Supreme Court Act 1970:
“The Court shall have all jurisdiction which may be necessary for the administration of justice in New South Wales.”
The scope of the power to stay the effect of a decision subject to appeal or supervisory review was well expressed by Macfarlan J in Ex parte Farren; Re Austin (1960) 77 WN(NSW) 743 at 744: “the power extends to whatever may be necessary to prevent any injustice occurring with respect to matters which come within its cognizance”.
In Dwyer v National Companies & Securities Commission (1988) 15 NSWLR 285, a director who appealed from a decision of the National Companies & Securities Commission preventing him from taking part in the management of a corporation, sought a stay of the order pending appeal. McLelland J referred to Ex parte Farren; Re Austin and added at 287:
“Since it rests on necessity for the purpose of preventing injustice, the extent of the power is commensurate with the requirements of the necessity which calls it into existence.”
His Honour’s reasoning was applied to proceedings under the Legal Profession Act 1987 by Smart J in Veghelyi v Council of the Law Society of New South Wales (1989) 17 NSWLR 669 at 676.
This general approach is confirmed in the joint judgment of this Court in Alexander v Cambridge Credit Corporation Limited (1985) 2 NSWLR 685, a judgment in which this Court rejected the former approach to the grant of stays pending appeal to the effect that “special” or “exceptional” circumstances had to be established before the discretion to grant a stay pending appeal would be exercised. The Court said at 694:
“In our opinion it is not necessary for the grant that special or exceptional circumstances should be made out. It is sufficient that the applicant for the stay demonstrates a reason or an appropriate case to warrant the exercise of discretion in his favour.”
The Court went on to note a number of relevant principles:
“The onus is upon the applicant to demonstrate a proper basis for a stay that will be fair to all parties.” (694F)
“In the exercise of its discretion, the court will weigh considerations such as the balance of convenience and the competing rights of the parties before it.” (694G)
“… where there is a risk that the appeal will prove abortive if the appellant succeeds and the stay is not granted, courts will normally exercise their discretion in favour of granting a stay.” (695C)
“… where it is apparent that unless a stay is granted an appeal will be rendered nugatory, this will be a substantial factor in favour of the grant of a stay.” (695D)
“… although courts approaching applications for a stay will not generally speculate about the appellant’s prospects of success … this does not prevent them considering the specific terms of a stay that will be appropriate fairly to adjust the interests of the parties, from making some preliminary assessment about whether the appellant has an arguable case.” (695E)
The Court made a number of observations about terms relating to the payment of monies or security that was appropriate in the context of the case there under consideration. Additional and different considerations arise where a stay is sought in the context of regulatory proceedings taken in the public interest.
The general test identified in the joint judgment in Alexander v Cambridge Credit Corporation has been applied by Sheller JA in this Court in the context of an appeal from a decision of the Medical Tribunal of New South Wales to remove the name of a medical practitioner from the register (Sinha v Health Care Complaints Commission [2001] NSWCA 48 at [14]). It was also applied in the Federal Court by Finn J with respect to an appeal from a decision of the Full Court of the Supreme Court of the Australian Capital Territory to order the suspension from practice of a legal practitioner. (Robb & Rees v Law Society of the Australian Capital Territory, Federal Court of Australia, Finn J, unreported, 21 June 1996, at p5 of the Lexis print.)
The relevant authorities indicate that the protection of the public is a matter entitled to significant weight on an application for a stay once it appears that a professional person has acted improperly to a substantial degree.
In Bannister v Walton (Supreme Court of New South Wales, Court of Appeal, unreported, 30 April 1992) a bench of three was convened in this Court to consider an application for a stay of an order removing a medical practitioner from the register, pending an appeal to this Court. The Medical Tribunal made a number of findings adverse to the doctor. There were findings relating to his medical competence, which were held by the Tribunal not to have been such as to justify anything more than a reprimand. It was the findings relating to overcharging which determined the Tribunal’s decision that his name be removed from the register. The application for a stay was based on the necessity for Dr Bannister to continue to deal with patients then under his care; the loss of substantial income if it were not granted and irreparable damage to the doctor’s reputation. The applicant also emphasised that there had been no finding that the doctor was “unfit technically or clinically”.
Mahoney JA, with whom Sheller and Cripps JJA agreed, noted that the finding with respect to overcharging was such that if correct: “the doctor is clearly not a person of the character appropriate for the practice of medicine” (p7 of the Lexis print).
His Honour went on to emphasise the significance of character for the continuing conduct of medical practice at p7:
“… the ‘good character’ of a practitioner is important in determining whether he should be allowed to practice medicine in this State. The right to practice affords to a practitioner privileges and opportunities which are not available to others. He is expected to maintain a relationship with patients who are affected by his character. The relationship is one which touches matters such as trust, confidence, confidentiality and right conduct. Clinical capacity is by no means the only consideration to which regard is to be had in determining whether a person is appropriate to practice medicine. It is necessary that the public be protected against those who, though having the appropriate clinical skills, do not have the character appropriate for the opportunities and privileges which the right to practice gives.”
His Honour went on to acknowledge that issues of loss of income and adverse effect on reputation were pertinent to the decision. His Honour also took into account the likelihood of success of appeal. He concluded at p9 of the Lexis print:
“… taking into account the findings of the Tribunal after a long and exhaustive hearing and the careful judgment given, this Court must look to the possibility that, if the stay be granted, a right of practice will be preserved during the period of the stay to a person of the character indicated by the Tribunal. This is not a matter which lightly should be granted. This is not a matter which I think should be allowed to happen. I think, balancing the considerations one against the other, in the end the proper order is that the application for stay be refused.”
In Sinha v Health Care Complaints Commission, the Medical Tribunal had granted a stay of its original order up to a certain date on condition that the claimant did not practice during the period of the stay. That case involved a practitioner who had been removed from the register on the basis of findings that he had had improper sexual relationships with patients. Sheller JA noted that the appeal was arguable and also that the Health Care Complaints Commission would not object to the continuance of a stay on the condition originally imposed by the Medical Tribunal, i.e. that the practitioner did not practice during the period of stay. In substance, this is not dissimilar to the effect of the cancellation of a practising certificate pending the outcome for an application for the removal of a legal practitioner’s name from the Roll of Practitioners.
Sheller JA concluded that it was appropriate for the stay to be granted but only on such terms:
“[21] Accepting as I do for present purposes that apart from the complaint the person was a man of unchallenged good character and integrity, that the complaint was of one of misconduct in the form of a consensual relationship with a patient for a long period of time, that the opponent did not seek to have the claimant suspended from practice or any conditions imposed before the matter was decided by the Medical Tribunal and that pending the hearing of the appeal the claimant may suffer irreparable harm, I have come to the conclusion that the granting of a stay other than upon the condition imposed by the Tribunal is not appropriate. I say this in the context that I propose to order that the hearing of the appeal be expedited.”
In both Bannister and Sinha, the statutory appeal was limited to questions of law. The appeal under s38B of the Act is not so limited.
In Robb & Rees v Law Society of the Australian Capital Territory the practitioner had been found to have delayed, for unreasonably lengthy periods, the payment of trust monies to third parties, after such monies had been appropriated from the trust account for such payment and transferred to the solicitor’s office account. Finn J proceeded on the basis that there were reasonably arguable grounds of appeal. He noted the prejudice that would be suffered by the applicant for a stay if, in the event, he was successful but the suspension remained operative during that period.
An earlier application for a stay had been rejected by Miles CJ in the Supreme Court of the Australian Capital Territory and the Chief Justice said in that judgment that the orders of the court:
“… should take effect as ordered in the particular circumstances of a case of this nature in order to mark the seriousness of the misconduct which the court identified in its judgment.”
Finn J concluded, at p5 of the Lexis print:
“… it must remembered that this is not the usual instance of civil litigation in which the question is whether a reason is there to hold a successful party out of the benefit of a judgment obtained until the appeal is heard. Here Mr Robb’s ‘reason’ must be considered, not in the context of a judgment giving a benefit to a litigant, but rather as one designedly made to protect both the public and the reputation of the profession.
The Supreme Court clearly regarded Mr Robb’s professional misconduct as serious. Equally it found him to be ignorant of, or indifferent to, his fiduciary responsibilities. It is not for me to gainsay these conclusions.
Notwithstanding the appeal lodged, to allow Mr Robb a stay in the face of such findings would require the demonstration of a reason of some cogency. I do not consider that the prejudice asserted, given as I will indicate the prospect of its mitigation in some degree, outweighs the very distinct prejudice to the public interest which could be sustained if the stay were granted. …
It is the case whenever an order for suspension is made and an appeal is lodged on arguable grounds, that the practitioner affected can assert that prejudice will be suffered if, the suspension having begun to run, the appeal is successful. This circumstance could not in my view justify, in effect, a stay as of right in all the circumstances. The decision to stay a suspension order subject to appeal on arguable grounds must in my view involve an instance specific question.
There is a variety of factors of which account can or should properly be taken when considering a stay in such cases. Among these are (i) the seriousness of the misconduct found; (ii) the likely prejudice to public confidence both in the integrity of the disciplinary processes themselves and in the reputation of the profession if the practitioner is granted a stay; (iii) the means available to mitigate the prejudice alleged; and (iv) the expedition with which the appeal can be heard.”
His Honour went on to consider the application of these factors in that case. His Honour did not grant a stay but noted that it was possible for the practitioner to practice as an employed solicitor in the interim. This was the mitigating consideration to which he had referred.
The significance of the public interest dimension in the exercise of the discretion to grant a stay in such circumstances, was highlighted by Kirby J in Bryant v Commonwealth Bank of Australia (1996) 70 ALJR 306 at 309 where his Honour said:
“In the exercise of the jurisdiction to provide a stay, it has often been emphasised that cases involving a stay of the operation of the criminal law or of laws designed to protect the public (e.g. deregistration of a professional lawyer or medical practitioner) are in a class different from cases involving no more than the suspension of the operation of orders affecting two private litigants only.”
It is clear from this consideration of the authorities that each case must turn on its specific facts. The range of relevant considerations is broad. Nevertheless the fact that the issues involved in professional rights to practice concern the protection of the public, means that the public interest is always entitled to significant weight.
Leave to Appeal
The decision of Greg James J is an interlocutory decision on a matter of practice and procedure. This Court will rarely give leave to appeal in such matters. The Court must be convinced that the first instance judge committed an error of principle in the exercise of his discretion.
I have set out the whole of his Honour’s reasoning above. His Honour indicated that by reason of the urgency he would not give detailed reasons. Nevertheless, it is clear how he approached the matter before him. In my opinion, his Honour treated the matter as if it was a litigation between two private parties.
He referred to the Opponent’s “strongly arguable” case and concluded that the balance of convenience was in favour of the Opponent. He referred to maintaining the status quo. In my opinion, his Honour failed to give weight to the public interest dimension of the Bar Council’s decision.
Like the exercise of the inherent jurisdiction of the Court and the statutory power to remove a practitioner from the Roll, the statutory power to cancel a practising certificate is exercised not to punish the legal practitioner but to protect the public. (See Clyne v New South Wales Bar Association (1960) 104 CLR 186 at 201-202; New South Wales Bar Association v Evatt (1968) 117 CLR 177 at 183-184.) In such a context the exercise of the Court’s power to stay must give significant weight to the protection of the public and the public interest involved in ensuring that persons who practice the profession of law comply with the highest standard of integrity.
I said in New South Wales Bar Association v Cummins (2001) 52 NSWLR 279 at [20]:
“There are four interrelated interests involved. Clients must feel secure in confiding their secrets and entrusting their most personal affairs to lawyers. Fellow practitioners must be able to depend implicitly on the word and behaviour of their colleagues. The judiciary must have confidence in those who appear before the courts. The public must have confidence in the legal profession by reason of the central role the profession plays in the administration of justice. Many aspects of the administration of justice depend on the trust by the judiciary and/or the public in the performance of professional obligations by professional people.”
I went on to say:
“[22] … Neither the relationship of trust between a legal practitioner on the one hand, and his or her clients, colleagues and the judiciary on the other hand, nor public confidence in the profession, can be established or maintained, without professional regulation and enforcement.
[23] The most recent amendments to the scheme of professional regulation contained in the Legal Profession Amendment (Disciplinary Provisions) Act 2001 affirm this long standing tradition, by the introduction of detailed provisions for review of conduct by legal practitioners involving acts of bankruptcy, indictable offences and tax offences. Although this new legislation is not directly applicable to the present case, it does manifest the continued vitality of the professional tradition.”
It is these provisions which fall for consideration in the present proceedings.
I do, of course, make full allowance for the urgency with which his Honour was called upon to deliver his reasons. It is not his Honour’s omission to refer to the public interest which leads me to conclude that he failed to take these issues into account. What his Honour did say about “preserving the status quo”, the “strongly arguable case” and “balance of convenience” indicates, in my opinion, a failure to give weight to the public interest. In my opinion Greg James J approached the issue as if he had before him “orders affecting two private litigants only” (Bryant v Commonwealth Bank per Kirby P). His Honour failed to give weight to the public interest dimension of the decision of the Bar Council.
His Honour said that the Opponent’s case was “of substance” and “strongly arguable”. However, if he were considering the public interest it would be pertinent to look at the position from the perspective of the strength of the Bar Council’s case. There is no suggestion that his Honour did so.
His Honour referred to the “balance of convenience”. The injury to the public arising from the continuation in practice of a person unfit to do so is not comparable to the detriment to the practitioner from being prevented from practising. These matters are not measurable on the same scale, although they are both entitled to weight. Terminology such as “balance of convenience” is not apt. It is likely to lead to failure to consider the public interest.
Similarly, his Honour’s reference to preserving the status quo suggests an approach applicable to balancing private interests. Where the public interest is engaged, the status quo has no particular significance. There is no presumption in favour of the continuation of the status quo in such a context.
In his submissions to the Court, Mr P Brereton SC, who appeared for the Opponent, submitted that the second sentence of par [10] of his Honour’s judgment, as quoted above, was a reference to the public interest factors to be considered. That sentence was: “There are additional factors to be considered in a matter of this sort”. However, in the next sentence his Honour went on to say that “they”, clearly a reference to the “additional factors” in the previous sentence, “could all be appropriately subsumed” within a statement by Mahoney JA which his Honour proceeded to quote. That statement referred to the degree of likelihood of success being such as was “sufficient in the particular case to warrant preservation of the status”, presumably, “quo”.
Mr P R Garling SC, who appeared for the New South Wales Bar Association, submitted that this elaboration makes it clear that his Honour was not referring to public interest considerations. I agree. Perhaps more significantly, the repetition of reference to the status quo is itself indicative of an approach appropriate for private litigation, for the reasons I have given above.
In my opinion, his Honour’s failure to give consideration to the public interest dimension is an error of principle which justifies the Court granting leave to appeal from his decision.
There is a second matter which causes me concern in the judgment. His Honour said at the outset of the judgment:
“[2] It is common ground that the appeal under s38B is a de novo appeal. It is common ground that the plaintiff’s practising certificate was cancelled by the New South Wales Bar Council in consequence of its determination of its determination of the matters referred to by s38FC(1)(a) and (b) and arguably also by reason of determination of the matters referred to in s38FD(1).”
The reason for his reference to “arguably also”, in the fact of express reliance by the Court on s38FD, is explained in par [8] of his Honour’s judgment. In pars [6] and [7] of his reasons, as quoted above, his Honour dealt with the case concerning s38FC, he then said:
“[8] As regards the alternative basis of cancellation under s38FD, it is difficult to see the basis upon which the considerations in that section were addressed in the Bar Council’s decision.”
As I have said above, it is not appropriate to treat the Committee’s Report as if it were a statement of reasons under s38FD(2). His Honour’s reference to the “difficulty” in seeing the basis of the Council’s consideration was a reference to the absence in the Report of any reasoning linking the relevant factual findings to the issues raised by s38FD(1): the absence of reasonable cause and the exercise of the discretion to cancel. Nevertheless there are findings that are capable of being so linked. The fact that the link is not made express does not mean that the Bar Council’s alternative case based on s38FD could be set aside.
It does not appear to me that his Honour dealt with the case against the Opponent under s38FD. His Honour made no reference to the issues that arise in this regard. The Opponent bore the onus of establishing that a stay should be ordered with respect to both of the bases on which the Council acted. The Opponent’s task was not complete if, as it appears, attention was focused simply on the s38FC formulation, as his Honour appears to have done in his reasons.
This was not a matter that was fully considered in the submissions and I do not find it necessary to determine the application for leave on this basis.
There is an error of principle. Leave to appeal should be given and the discretion falls to be re-exercised in this Court.
Fitness and Propriety
The Bar Council determined pursuant to s38FC(1)(b), that the tax offence of 11 July 2001 was committed in circumstances that show that the Opponent was not a fit and proper person to hold a Practising Certificate.
The principal proposition which the Opponent advanced successfully before Greg James J, and maintains in this Court, is that there was a strongly arguable case that the Bar Council addressed and considered the wrong question for the purposes of s38FC or, alternatively, that it took irrelevant considerations into account. The Opponent submitted that, on the proper construction of s38FC(1), the Bar Council is confined to a consideration of the specific circumstances in which the particular offence of which the Opponent was convicted had been committed. The Bar Council was not permitted, relevantly in this case, to consider the circumstances relating to the non-lodgement of returns and non-payment of tax over the twenty years between 1976 and 1996.
Mr P Garling SC accepted that the Bar Council had taken into account the twenty year default when exercising its power under s38FC but submitted that it was entitled to do so. He submitted that if a barrister had had an exemplary history of filing tax returns that would be a pertinent consideration when deciding whether a particular offence was committed in circumstances demonstrating an absence of fitness. On the other hand if the offence was committed as part of a continuous course of conduct, relevantly for twenty years, that was also pertinent.
The first instance judge had to consider this matter on an interlocutory basis. This Court is in the same position. The terminology of s38FC(1)(b) directs attention to the “circumstances” in which the particular offence had been committed. The issue is whether the relevant “circumstances” are narrowly confined to the events of the offence itself.
Section 38FB(1) and (3) creates an obligation upon a practitioner who has, relevantly, been found guilty of a tax offence, to provide a written statement showing why, despite “any circumstances surrounding the … finding” of guilt, the practitioner considers that he or she is a fit and proper person to hold a practising certificate. The word “surrounding” may appear to direct attention more closely to the events of the offence itself, although the word “surrounding” is not necessarily narrow.
On the other hand, the very matter about which the Bar Council must make a determination under s38FC(1)(b) – the fitness and propriety of a practitioner – suggests that a wider ranging inquiry is appropriate. The judgement for which a test of fitness and propriety calls necessarily requires consideration of the full range of relevant circumstances.
Such a provision is designed to protect the public. The particular provisions of Div 1AA indicate that Parliament has formed the view that certain categories of conduct raise doubts about the fitness and propriety of a person who engaged in the conduct. There is no warrant in such a context, it may be thought, for construing a general word like “circumstances” narrowly.
Mr Brereton SC submitted that in the context of the extraordinary procedures under Pt 3 Div 1AA, without the safeguards applicable under Pt 10, s38FC is not a trigger for a general inquiry into fitness. That may be so, but that does not determine whether a history of non-compliance with respect to the subject matter of the offence is a pertinent “circumstance”, even for a narrower fitness inquiry. This is a matter that must be determined by giving appropriate weight to the full range of relevant considerations. In this regard the fact that the scheme of the regulation is designed to protect the public is of central significance and entitled to considerable weight.
It is undesirable to say more on an interlocutory application than that the contentions of the Opponent are arguable and they are entitled to weight in the exercise of the discretion to grant a stay. However, the contentions of the Applicant are also arguable and should not be ignored.
I have discussed above the interrelationship between the application for prerogative relief and the right of appeal under s38B as an alternative basis for an order for a stay. Insofar as the s38B right of appeal is concerned the Court on appeal can confine itself in the manner for which the Opponent contends the Council should have confined itself, if it accepts the legal argument of the Opponent in this regard.
Parliament plainly considered that a single tax offence could be such as to give rise to a conclusion that a person was not a fit and proper person to hold a practising certificate, even in the case of a practitioner who had prior to that time complied with his obligations with respect to taxation. It is accordingly open to the Court to conclude that in the circumstances of the offence, as narrowly confined in accordance with the Opponent’s submissions, that the Opponent is not a fit and proper person. However, if so confined the Opponent has a reasonable case on the merits.
There is a significant probability that the court, confining itself to the circumstances of the individual offence without any reference to the background of prior failure to lodge tax returns, would not come to the conclusion that the Opponent was not a fit and proper person. However, this Court, in determining a stay application, must give some weight to the possibility that the basic contention of the Opponent with respect to the narrow construction of the word “circumstances”, will not prevail.
Mr Brereton SC submitted that there was no suggestion that the Opponent was guilty of any “professional shortcomings save in respect of his taxation affairs”. He noted that the Bar Council did not itself believe the case was appropriate for an immediate cancellation. He submitted that there was no suggestion that any client’s interests, or the interests of the public, are in anything but the safest of hands.
The decision to defer the operative effect of the cancellation was an entirely appropriate way of balancing the relevant considerations. The Bar Council was understandably concerned to ensure that the interests of the Opponent’s clients should not be adversely affected
There is, in my opinion, a basis for reasonable apprehension that the interests of future clients and the public interest do arise in the circumstances. The significance of the integrity of legal practitioners has often been emphasised. (See e.g. Ziems v Prothonotary of the Supreme Court of New South Wales (1957) 97 CLR 279 at 298; Wardell v New South Wales Bar Association [2002] NSWSC 548 at [40]-[42].) I have quoted above my own views expressed in Cummins about the interrelated public interests that are involved. It is not correct to suggest, as the Opponent’s submissions do, that questions of competence and honesty are entitled to determinative weight. Relationships of trust and confidence require a higher standard of conduct.
It is not correct to submit, as Mr Brereton SC did, that there was no jeopardy to the public interest if the Opponent were permitted to continue in practice until the proceedings are resolved. Each of the public interests I identified in Cummins are engaged during this period.
Like Cummins and New South Wales Bar Association v Somosi (2001) 48 ATR 562 the Opponent failed to discharge his civic obligations over a long period of time. However, unlike Cummins and Somosi, the Opponent did make efforts to remedy his default and, in substantial measure, did so. How these matters should balance out is a matter for the final hearing, particularly in the strike off proceedings. If the narrow construction of s38FC(1)(b) is rejected, such issues will also arise in these proceedings.
Mr Brereton SC submitted that the only basis on which it would be said that there was any urgency to remove the Opponent from practice was the reputation of the profession. He submitted that that reputation was not so fragile that it could not tolerate the continuation in practice of a person who has an arguable case that his certificate was wrongly cancelled. However, in the present case the very seniority of the Opponent exacerbates the adverse effect on the reputation of the profession.
In my opinion, even after weighing the evidence which counts to his credit, particularly his long service to the bar, this is not a case in which a stay should be granted.
The discretion should not be exercised in favour of the practitioner in all the circumstances of the present case, even on the assumption that he has a reasonable case on appeal. The protection of the public and the maintenance of the reputation of the legal profession are entitled to determinative weight in the exercise of the discretion to grant a stay. I would allow the appeal.
My conclusion is reinforced by another consideration which, although not directly in issue in these proceedings is, in my opinion, relevant to the exercise by the Court of its discretion to grant a stay. I refer to the strike off proceedings.
When the Court is called upon to exercise its discretion to grant a stay it must consider all of the relevant circumstances as at the time of its determination. It is not confined to the range of circumstances relevant to, or present at the time of, the first instance decision.
In my opinion it is of significance that the Bar Council has instituted proceedings to have the Opponent’s name removed from the Roll of Legal Practitioners. Plainly in such proceedings the twenty year history of failure to file tax returns will be of substantial, if not determinative, weight. Decisions in this Court in New South Wales Bar Association v Hamman [1999] NSWCA 404, New South Wales Bar Association v Cummins and New South Wales Bar Association v Somosi indicate that the proceedings by the Bar are of substance. There are, of course, decisions upon which the Opponent will rely (see New South Wales Bar Association v Murphy).
It is undesirable to express any opinion as to the likely outcome of the Bar Association’s strike off proceedings against the Opponent. It is sufficient to note that they are proceedings of substance and they are proceedings which are set down for hearing in June of this year.
In his submissions to this Court Mr P R Garling SC suggested that this Court was able to exercise its inherent jurisdiction with respect to the regulation of legal practitioners in the context of hearing the stay application. I do not think that is so. Similar issues nevertheless arise within the scope of considerations relevant to the exercise of the discretion to grant the stay.
Where, as here, there are proceedings on foot to permanently remove a legal practitioner from the Roll of Legal Practitioners, which proceedings can be seen to have substantial prospects of success, this Court should be very slow to exercise its discretion in such a way as permits the practitioner to continue in practice pending the determination of such proceedings.
This Court must be anxious to protect public confidence in the legal profession. Such confidence is likely to be undermined if a practitioner whose right to practice is the subject of serious challenge is able to successfully call upon the Court to exercise a discretion in his or her favour permitting him or her to continue in practice pending the ultimate determination.
Failure to Notify
The Opponent does not contest the proposition that he did breach his obligation under s38FB(4) and r69D(1), by failing to notify the Bar Council of the fact of his conviction of a tax offence on 11 July 2002. Pursuant to r69D(3)(a), he was obliged to provide a written statement to the Council on or before 3 August 2001. Nothing was disclosed prior to the disclosure in his application for renewal of a Practising Certificate of 20 June 2002. He was then in default for over ten months. The fact that there was a contravention was not contested before Greg James J or in this Court.
It is clear that the Bar Council formed the requisite opinion under s38FD, by a resolution adopting the precise terms of the statutory provision that the failure to notify occurred without reasonable cause.
The submissions by Mr Brereton SC are twofold. First, he submitted that the Council failed to recognise, in terms, that it was exercising a discretionary power. Unlike s38FC, s38FD does not oblige the Bar Council to cancel a Practising Certificate. Mr Brereton SC submitted that there was nothing in the Report to suggest that any consideration was given to other factors that may be relevant to the exercise of the discretion and, indeed, that there was nothing to show that the Bar Council understood that in this respect it was exercising a discretion at all.
Mr Brereton’s second submission was that the decision to cancel the practising certificate on this ground was manifestly excessive and disproportionate. He submitted that the power was conferred in order to secure compliance with the obligation to notify. (Referring to my observations in New South Wales Bar Association v Murphy at [31].) The Opponent did notify, albeit belatedly, and it was manifestly unreasonable to cancel the practising certificate on this ground.
The first submission made on behalf of the Opponent proceeded on the basis that the Report of the Committee, in some sense, constituted a statement of reasons on the part of the Bar Council. That is not so. Pursuant to s38FD(2) an applicant or holder of a practising certificate can require the Council to state its reasons and the Council must comply “without delay”. There was no such request on the part of the Opponent in this case. The report of the Committee cannot be used as if it were a statement of reasons. At most it is an indication of the reasons, but that is not enough for a submission of this character.
It is true that the Report of the Committee does not contain any analysis directed to the particular elements of s38FB(4), s38FD and r69D. However, there are various statements and findings in the Report capable of supporting the conclusion that failure to notify “occurred without reasonable cause” and that it was appropriate for the Council to exercise the discretion to cancel the practising certificate by reason of that failure. The reasoning is not identified in any manner which logically links the findings of fact to either of these conclusions, or which separates relevant findings or reasons from those being made simultaneously with respect to the Committee’s consideration of the applicability of s38FC and/or the decision leading to the strike off proceedings. In these circumstances it is not possible to give the Bar Council’s consideration the weight which was given in both Bannister and Sinha to the careful and detailed consideration of factual matters by the Medical Tribunal in those two cases.
That, however, is not the end of the matter. The evidence set out by the Tribunal in its Report together with various statements, findings and expressions of opinion in the Report, are relevant to both the finding of no “reasonable cause” and to the exercise of the discretion to cancel.
Mr Brereton SC particularly relied on the proposition that the Council was influenced to a substantial, if not preponderant, degree by the Opponent’s twenty year failure to file income tax returns. He submitted that this was not a relevant consideration with respect to the exercise of this power. Mr P R Garling SC did not contest the proposition that this matter was of significant weight in the Bar Council’s decision-making process, but contended that it was permissible for the Council to take it into account.
Mr Brereton SC submitted that the emphasis in the Committee’s Report on the Opponent’s failure to disclose his twenty year default was impermissible. He referred particularly to the reference in pars [9] and [29] of the Report, set out above, that the Opponent’s non-disclosure of these matters in his letter of 20 June 2002 made the disclosure “false and incomplete”. He submitted that this was an irrelevant consideration because r69D did not impose any obligation to disclose the prior history.
The observations in the Committee’s Report were not, it appears to me, directed to the failure to notify an offence. They were directed to the Opponent’s failure to refer to the twenty year default in answer to a question, sworn to be true “in substance and in fact”, that save as may be contained in the letter of 20 June: “I have not done anything likely to affect adversely my good fame and character and am not aware of any circumstances that might affect my fitness to remain a legal practitioner”.
I note that this Court’s decision in Cummins was handed down on 31 August 2001, some ten months before the letter.
It was, in my opinion, open to the Council to consider that the Opponent’s disclosure was “false and incomplete” with respect to the question posed in the renewal form.
Mr Brereton submitted that the only thing that is required to be notified is the conviction for a particular offence. Regulation 69D(1)(b) requires only the provision of further information “relating to the finding or the commission of the offence”. Accordingly he submitted that the Council could not take into account, or at least not give determinative weight to, the twenty year failure to lodge returns.
A finding of a particular offence is unquestionably the trigger for the requirement to notify. That does not, however, mean that the Council or, on appeal, the Supreme Court, cannot take into account the full range of relevant circumstances when determining whether or not the particular failure to notify “occurred without reasonable cause” and, especially, whether or not, in the whole of the circumstances, the Council should exercise its power to cancel a practising certificate.
It is, in my opinion, reasonably arguable that the prior history is a relevant consideration on the finding of “without reasonable cause”. In his letter of 20 June 2002, the Opponent sought to explain his deferral of lodgement of returns on the basis of unresolved disputes about deductibility of expenditure on the agricultural project. The prior history puts that failure in a different light.
It is more strongly arguable that the prior taxation history is a material consideration for determining whether or not the failure to notify justifies the Council or the Court to act by cancelling the practising certificate. This is a discretionary power to be exercise for the protection of the public.
Insofar as the Opponent’s prospects of success are to be given weight in deciding on the stay, that involves an assessment, at a level appropriate for interlocutory proceedings of this character, of whether on a final hearing the Court may find that the failure to notify “occurred without reasonable cause” and whether, in all of the relevant circumstances, it is appropriate to cancel the practising certificate.
I have quoted the Opponent’s explanation for the failure to notify above. The Opponent asserts that he believed that there was not a “notifiable offence” because no penalty had been imposed and the terms of the order had already been complied with, i.e. the returns were filed. He said that it was only at the time of the renewal of his practising certificate “that I considered the possibility of a notifiable matter”. He explained that his lack of knowledge of the fact that a penalty had been imposed may have occurred because he did not live at the address referred to in the order of the Local Court.
The above passage was included in the lengthy extract from the Opponent’s letter of 16 September 2002 set out at par [20] of the Professional Conduct Committee’s Report. The Committee’s conclusion, to reiterate, was:
“30 The Barrister’s explanations for his failure to notify the 11 July 2001 convictions at the relevant time (apparently based on a change of address) and a misunderstanding as to the nature of the conviction is unsatisfactory and is not accepted as a reasonable excuse.”
The Opponent’s explanation will need to be considered by the Court in due course. I would not wish to express a view, on the basis of the material before this Court, with respect to a matter which may prove to be of significance for the credit of the Opponent in future proceedings. However, the Opponent could not but have been aware of the significant public debate that had arisen with respect to compliance by barristers with their income tax obligations. This debate had resulted in the Regulations and, subsequently, the legislation creating the scheme of notification.
Indeed just over a month before his obligation to notify the offence of 11 July 2001 had crystallised, he had made an application for the renewal of his Practising Certificate for the 2001/2002 year. He had signed a Statutory Declaration indicating that the information and particulars in the application were “true in substance and in fact”. In that context he had ticked the box which stated that he has not been found guilty of any offence in the past ten years and exercised the option to make a disclosure statement, limited as the letter 22 June 2001 was, to the circumstances of disputes arising as to the failed agricultural investment. These uncontested facts suggest that there are difficulties in his case that his failure to notify was occasioned by reasonable cause.
The second stage of the decision-making process in which the Court will have to engage on this issue is difficult to resolve on an interlocutory basis. Whether or not the whole of the circumstances justify cancellation of a practicing certificate invokes such a broad range of relevant considerations that it is a matter upon which reasonable minds will differ. Nevertheless, it is strongly arguable that the prior history of twenty year’s failure to lodge any income tax returns will, notwithstanding the subsequent efforts to remedy the failure and the payment of a substantial proportion of his debt, be entitled to weight in this regard.
The prior history of the Opponent is, in my opinion, relevant to the exercise of the discretion under s38FD.
Furthermore, my above analysis of the relevance of the strike off proceedings in the context of the s38FC(1)(b) case, applies equally to the alternative basis for cancellation under s38FD.
I would allow the appeal on the alternative ground.
Orders
The original resolution of the Bar Council was carried on 10 October 2002, but did not take effect until 29 November 2002. The reason for this delay was because of representations made on behalf of the Opponent with respect to his existing commitments to particular clients. The Opponent has, no doubt, conducted his practice since Greg James J stayed the effect of the Bar Council decision. Similar issues may now arise about the appropriate date on which the stay should be lifted.
This Court should make orders as follows:
1 The appeal is allowed.
2 Vacate Order 2 made in the Common Law Division of the Supreme Court on 2 September 2002.
3 Costs reserved.
These orders should come into effect on a date to be determined. When the matter was before the Bar Council, the Council accepted the submissions of the Opponent as to what the interests of his clients required, in all of the circumstances. No doubt such agreement can be reached again and the Court encourages the parties to do so. Failing agreement, the matter can be determined by a single judge of this Court, who would then formally proclaim the orders to take effect as and from a date so determined.
MEAGHER JA: I agree with Spigelman CJ.
SHELLER JA: I agree with Spigelman CJ.
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LAST UPDATED: 07/05/2003
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