Pleno v Tax Practitioners Board

Case [2010] FCA 1196

FEDERAL COURT OF AUSTRALIA

Pleno v Tax Practitioners Board [2010] FCA 1196

Citation: Pleno v Tax Practitioners Board [2010] FCA 1196
Appeal from: Mario Pleno v Tax Agents Board [2010] AAT 526
Parties: MARIO PLENO v TAX PRACTITIONERS BOARD
File number(s): NSD 1022 of 2010
Judge: BENNETT J
Date of judgment: 4 November 2010
Catchwords: ADMINISTRATIVE LAW – applicant registered tax agent and registered nominee of tax agent – breach of undertaking by applicant – whether Tribunal required to find breach of undertaking was wilful in order to make finding that applicant engaged in misconduct and was not “a fit and proper person”
Legislation: Administrative Appeals Tribunal Act 1975 (Cth) s 44(1)
Income Tax Assessment Act 1936 (Cth) ss 251BC(1)(d), 251K(2), 251KE(1), 251N(1)
Cases cited: Adamson v Queensland Law Society Incorporated [1990] 1 Qd R 498 cited
Australian and Broadcasting Tribunal v Bond (1990) 170 CLR 321 cited
Australian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 cited
Briginshaw v Briginshaw (1938) 60 CLR 336 cited
Ellendale Pty Ltd v Graham Matthews Pty Ltd (1986) 11 FCR 347 cited
Roylance v General Medical Council [2000] 1 AC 311 cited
Stasos v Tax Agents’ Board (1990) 21 ALD 437 cited
Date of hearing: 27 October 2010
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 24
Counsel for the Applicant: Mr P Carver
Solicitor for the Applicant: Star Carver & Sons
Counsel for the Respondent: Ms J Gleeson
Solicitor for the Respondent: Australian Government Solicitor

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 1022 of 2010
ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL
BETWEEN:

MARIO PLENO
Applicant
AND:

TAX PRACTITIONERS BOARD
Respondent

JUDGE:

BENNETT J

DATE OF ORDER:

4 NOVEMBER 2010

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The application be dismissed with costs.  

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 1022 of 2010
ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL
BETWEEN:

MARIO PLENO
Applicant
AND:

TAX PRACTITIONERS BOARD
Respondent

JUDGE:

BENNETT J

DATE:

4 NOVEMBER 2010

PLACE:

SYDNEY

REASONS FOR JUDGMENT

  1. The applicant (Mr Pleno) was registered as a tax agent and as a nominee of a tax agent under the Income Tax Assessment Act 1936 (Cth) (the 1936 Act).  The Tax Agents Board of New South Wales (the TAB) (now known as the Tax Practitioners Board) cancelled Mr Pleno’s registration as a tax agent under ss 251K(2)(b)(ii) and 251K(2)(d) of the 1936 Act and cancelled his registration as a nominee of a tax agent pursuant to s 251KE(1) of the 1936 Act. Appeals against each of those decisions were heard and determined together by the Administrative Appeals Tribunal (the Tribunal).  The Tribunal affirmed each decision (Mario Pleno v Tax…

Continue reading Pleno v Tax Practitioners Board

Sign in free to access the full text

Details
AGLC
Pleno v Tax Practitioners Board [2010] FCA 1196
Case
[2010] FCA 1196
Decision Date

CaseChat Overview and Summary

The case of Pleno v Tax Practitioners Board involved Mr Pleno, a registered tax agent, who was found to have breached his professional obligations by associating with an unregistered tax preparer, Mr Sebastian. The Tax Practitioners Board (TAB) sought to suspend Mr Pleno's registration, and the Tribunal upheld the decision, concluding that Mr Pleno's actions constituted misconduct and that he was not a fit and proper person to continue as a tax agent. Mr Pleno appealed against the Tribunal's decision, challenging the basis on which the Tribunal found him to be not a fit and proper person.

The primary legal issue was whether the Tribunal was required to find a wilful breach of the Undertaking for it to conclude that Mr Pleno engaged in misconduct and was not a fit and proper person. Mr Pleno argued that the Tribunal needed to find a wilful breach, rather than a casual or accidental one, to make such findings. However, the TAB contended that the Tribunal’s findings were adequately supported by the evidence and that a wilful finding was not necessary.

The Tribunal concluded that the breach of the Undertaking by Mr Pleno was sufficient to establish misconduct and that he was not a fit and proper person, irrespective of whether the breach was wilful or not. The Tribunal emphasised that the concept of a fit and proper person encompasses qualities of character and integrity, and that serious breaches of professional standards could lead to sanctions. The Tribunal found that Mr Pleno’s actions seriously departed from these standards, thus justifying the decision to suspend his registration.

Ultimately, the court dismissed Mr Pleno's appeal, affirming the Tribunal's decision. It held that the Tribunal's conclusion on both grounds – misconduct and unfitness – was valid. Even if the finding of misconduct was debatable, the Tribunal's finding that Mr Pleno was not a fit and proper person, based on the admitted breach of the Undertaking, was sufficient to uphold the decision under section 251K(2) of the 1936 Act. Consequently, the application was dismissed with costs.

Orders

Orders of the court

1. The application be dismissed with costs.

Note:

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Section 251N(1) of the 1936 Act relevantly provided:A registered tax agent or a person exempted under section 251L shall not allow any person, not being his employee, a registered tax agent or, in the case of a partnership which is registered as a tax agent, a member of that partnership:(a)to prepare on his behalf, either directly or indirectly, his own or any other income tax return or objection; or(b)to conduct on his behalf, either directly or indirectly, any business of himself or any other person relating to any income tax return or income tax matter…THE TRIBUNAL DECISION It is not necessary to set out the whole of the reasons for the Tribunal’s decision. The facts before the Tribunal centred around admissions by Mr Pleno that a Mr Sebastian, who was not employed by Mr Pleno, maintained his own office and prepared tax returns in his own time. Mr Sebastian was not a registered tax agent. Mr Pleno lodged returns prepared by Mr Sebastian for a fee of $25 per return, not knowing how much Mr Sebastian charged his clients. Mr Pleno allegedly supervised Mr Sebastian’s work, although he did not work in the same office and did not know Mr Sebastian’s work hours. Mr Pleno lodged 190 returns in 2007 and 252 returns in 2008 prepared by Mr Sebastian. The returns were lodged from Mr Pleno’s computer as if prepared by him using his individual agent’s number. This was a breach of Clause 2 of the Undertaking, which specified:(a)I will not operate a branch without written approval from the Tax Agents Board;(b) I will not associate myself with [sic] unregistered tax agent.Those facts are not in dispute. The finding that Mr Pleno had engaged in misconduct The Tribunal concluded that the facts provided ample proof of Mr Pleno associating with an unregistered tax preparer. The Tribunal found that this constituted misconduct and was in breach of the 1936 Act. The Tribunal nominated the breach in terms of s 251K of the 1936 Act. This should have been a reference to s 251N(1) of the 1936 Act.The finding that Mr Pleno was “not a fit and proper person” The Tribunal considered the phrase “fit and proper person” and observed that the phrase takes meaning from its context. The Tribunal said that the concept ‘comprehends matters other than the financial, technical and management capabilities necessary to provide an adequate and comprehensive service’ and that it must extend to any aspect of fitness and propriety that is relevant to the public interest (citing Mason CJ in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 348-349, considering a “fit and proper person” to hold a commercial broadcasting licence). The Tribunal also referred to Stasos v Tax Agents’ Board (1990) 21 ALD 437, where Hill J noted, inter alia, that a fit and proper person to prepare tax returns and transact business on behalf of clients in tax matters should be a person of good fame, integrity and character and, as a person who will almost invariably have dealings with officers of the Australian Tax Office, must be a person able to carry on those dealings in an atmosphere of mutual trust. The Tribunal stated at [8]:The decided cases show a consistent approach that, as well as competence and knowledge, qualities of character and ability to meet obligations of truthfulness and respect for the law are required of a tax agent, given his privileged position. Serious departures from those standards may be met with sanctions including a refusal to re-register or cancellation of registration.

Ratio Decidendi

Legal Principle Established

However, whether at an evidentiary level the TAB established professional misconduct within the tests in Roylance and Adamson does not form a basis of Mr Pleno’s appeal. In any event, s 251K(2) of the 1936 Act provides that a board may suspend or cancel the registration of any tax agent upon the alternative grounds of misconduct as a tax agent, or that the tax agent is not a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters. The Tribunal affirmed the TAB’s decision on each of those grounds. It follows that, even if the Tribunal’s finding of misconduct as a tax agent was erroneous, unless the finding that Mr Pleno was not a fit and proper person could be overturned, the affirmation of the TAB decision under s 251K(2) of the 1936 Act would stand.CONSIDERATION OF THE QUESTION OF LAW ADVANCED BY MR PLENO Mr Pleno submits that the admitted breach of the Undertaking cannot form the basis either for the finding of misconduct or the finding that Mr Pleno is not a fit and proper person. He submits that there must be a finding of a wilful breach of the Undertaking, rather than a casual, accidental or unintentional breach. Mr Pleno was unable to find any authority in support of that proposition. Rather, he pointed to discussions concerning a finding of contempt (Australian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 and Ellendale Pty Ltd v Graham Matthews Pty Ltd (1986) 11 FCR 347). The TAB submits that the Tribunal’s conclusion that Mr Pleno is not a fit and proper person was clearly open to it on the basis of the findings of fact which it set out, including:·Mr Pleno himself asserted the giving of the Undertaking not to associate with unregistered tax agents.·Mr Pleno’s explanations to the TAB and to the Tribunal constituted admissions of breach of the Undertaking.·Mr Pleno gave evidence which was ‘ample proof of associating with an unregistered preparer’. Mr Pleno assisted a person, whom he knew to be unregistered, in conducting a business as though he were a tax agent, with at least 190 returns for one year and 252 the next.·Mr Pleno’s evidence that he was assisting the unregistered Mr Sebastian and that he breached the Undertaking was not disputed.·The Tribunal expressly stated that it was satisfied to a Briginshaw v Briginshaw (1938) 60 CLR 336 standard of the facts making up the allegations, which the Tribunal considered to be ‘serious and with serious consequences’ at [19].·The Tribunal found that Mr Pleno ‘did not understand or perhaps did not care to comply with his personal obligations and the relationship of trust that should exist between himself as tax agent, and the Commissioner of Taxation’ (at [19]).·The Tribunal found that Mr Pleno ‘engaged in conduct calculated to subvert the tax agent system, repeated that conduct, and offered no exculpatory explanation beyond a wish that the law were otherwise’ (at [24]).