Rudy Noel Frugtniet and Tax Practitioners Board
[2013] AATA 188
[2013] AATA 188
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2013/717
Re
Rudy Noel Frugtniet
APPLICANT
And
Tax Practitioners Board
RESPONDENT
DECISION
Tribunal Mr John Handley, Senior Member
Date 12 March 2013 Place Melbourne DecisionThe application to stay the operation of the decision of the respondent made on 16 January 2013 is refused.
(sgd) John Handley
Senior Member
PRACTICE AND PROCEDURE – Application to stay a decision to terminate registration as a tax agent and prohibit registration for 5 years – previous findings elsewhere that the applicant is not a fit and proper person – failure to make that declaration when applying for registration – stay refused.
Administrative Appeals Tribunal Act 1975 s 41
Tax Agent Services Act 2009 s 40-5(1)(b)
Law Institute of Victoria Limited and Frugtniet (Legal Practice) [2011] VCAT596
Frugtniet v Law Institute of Victoria Ltd [2012] VSCA 178
Frugtniet v Board of Examiners [2002] VSC 140
Frugtniet v Board of Examiners [2005] VSC 332
REASONS FOR DECISION
Mr John Handley Senior member
2 April 2013
On 15 February 2013 the respondent notified the applicant that its Board Conduct Committee (the Committee) decided on 16 January 2013 to terminate his registration as a tax agent pursuant to s 40-5(1)(b) of the Tax Agent Services Act 2009 (the TASA). The respondent also notified the applicant that it had been decided that he may not apply for registration under the TASA for a period of 5 years from the date that the termination of registration takes effect.
The decision then made and notified to the applicant by a letter of the same date incorrectly recorded that the date of effect of termination of his registration would be 20 February 2013. When that error was discovered, the respondent issued another notice of termination, dated 19 February 2013 notifying the applicant that the date of effect of termination of his registration would be 22 March 2013. The terms of and the reasons for that decision, recorded in that letter were identical to the letter of 15 February 2013, save for the date of effect.
The applicant applied to stay the operation of that decision pursuant to s 41 of the Administrative Appeals Tribunal Act 1975 (the AAT Act). The application was heard on 12 March 2013. I then gave oral reasons for deciding that the application should be refused. The applicant has subsequently requested written reasons for that decision.
The Committee, operating under delegation from the respondent, received 3 complaints about the conduct of the applicant in relation to 3 taxpayer clients in September 2011. In the course of its investigation it discovered that the applicant had been a party in proceedings before the Victorian Civil and Administrative Tribunals (VCAT) in April 2011 (Law Institute of Victoria Limited and Frugtniet (Legal Practice) [2011] VCAT 596).
The Law Institute applied to VCAT for an Order to declare the applicant as a disqualified person within Division 3 of Part 2.2 of the Legal Profession Act2004 (Vic). (The applicant is legally qualified but has never been admitted to practice). Her Honour Judge Jenkins, a Vice President of VCAT, decided that the applicant is a disqualified person for a period of 3 years.
Her Honour made the Order having regard to the applicant’s conduct before the Werribee Magistrates Court on 25 May 2010. Her Honour was satisfied that the applicant (at [158]):
e.…knowingly and intentionally or wilfully misrepresented himself to and misled Mr Lowry Barrister to believing he was a sole practitioner and solicitor entitled to engage in legal practice and appear as of right before the Magistrates Court on behalf of the plaintiffs; and
f…knowingly and intentionally or wilfully misrepresented himself to and misled Magistrate Mellas in what he said and by what he failed to say so that the Magistrate came to believe that Mr Frugtniet was an Australian legal practitioner and a solicitor, who was entitled as of right to appear before the Magistrates’ Court on behalf of the plaintiffs.
Save for one issue, the Supreme Court of Appeal, upon an application by the applicant, did not disturb the above findings (Frugtniet v Law Institute of Victoria Ltd [2012] VSCA 178.
The Committee also became aware that prior to the findings made at VCAT, the Board of Examiners, operating under the provisions of the Legal Practice Act1996 (Vic) had twice decided, in 2001 and 2005 that the applicant was not a fit and proper person for admission to legal practice.
The applicant challenged each of those decisions in the Supreme Court of Victoria. On each occasion the primary decision was affirmed (Frugtniet v Board of Examiners [2002] VSC 140; and Frugtniet v Board of Examiners [2005] VSC 332).
The respondent ultimately concluded that the applicant was not a fit and proper person to be registered as a tax agent. The bases for that conclusion was the decisions made by the Board of Examiners in 2001 and 2005; the respondent’s own records which revealed that the applicant failed in his application for registration as a tax agent in 2008, to disclose or declare those previous findings; the findings made by VCAT in 2010 and the complaints that the respondent received from 3 clients about the applicant in September 2011. As a consequence, the respondent made the decision that the applicant applied to stay and ultimately review, namely, that his registration as a tax agent should be terminated and he be prohibited from applying for registration for a period of 5 years.
The applicant's submissions during the stay hearing, unfortunately, where not focused on the reasons for the decision made by the respondent. Instead, the applicant placed considerable focus on the investigation that had been undertaken by the respondent with respect to the complaints received from 3 of his clients. He failed to distinguish between the investigation of the complaints made (s 60.95(1)(b) of the TASA) and an investigation of him (s 60.95(2)). The latter would have required the respondent as a matter of law to put him on notice. That it did not do so was irrelevant because the respondent was investigating the complaints only. In the course of that investigation, the respondent became aware of the decision made at VCAT.
The decision made by the respondent was clearly focused on the applicant not being a fit and proper person to hold registration. When I asked the applicant to comment on those findings, he submitted that his competence as a tax agent had never been challenged and the findings made at VCAT were confined to the Legal Profession Act only.
I became disturbed, when the applicant submitted, in relation to his conduct at the Werribee Magistrates Court that there are degrees of lying. I indicated to the applicant that his comment made me distinctly uncomfortable when the decision under review was based on a finding that he was not a fit and proper person. In response he asserted, as he said he did before VCAT, that he is a sole practitioner and the interpretation placed on that expression by the Magistrate and subsequently by VCAT was at a more heightened level.
The remainder of his submissions in support of his application to be granted a stay were without focus and rambling. They did not assist me in making a decision.
Mr Brown, on behalf of the respondent, lodged submissions prior to the stay hearing. He spoke in support of them during the hearing and replied to the applicant’s submissions. I need not repeat them here because at the conclusion of the stay hearing, I decided that the application for a stay should not be granted.
The applicant submitted that he has 38 tax clients (he has a combined Migration Agent/Tax Agent practice). Some of his taxation clients are small business persons.
Section 41(2) of the AAT Act empowers the Tribunal with the discretionary authority to grant a stay of the decision under review, if it is desirable to do so after taking into account the interests of any persons who may be affected by the review. The effect of such a decision would be upon the operation or implementation of the decision made by the respondent which the applicant challenges. In making that decision, the Tribunal is required to consider whether the making of a stay order would be appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review.
I was satisfied, and I remain of the same opinion, that it would not be desirable to grant a stay of the decision terminating the applicant’s registration as a tax agent. In making that decision, whilst I was mindful of the affect upon the applicant of the prohibition upon him acting as a tax agent pending the hearing of this review, I was concerned also that the interests of members of the public and his current clients would not be best served by having their taxation affairs managed by a person who has been found to be a person who was not fit and proper and who had failed to make disclosure of same to the respondent in his application for registration.
On the basis of the documents that were available to me at the hearing of the stay application, the submissions the applicant made and the decisions previously made in the Supreme Court and VCAT, I was and remain of the view that the prospects of the applicant successfully challenging the decision under review are remote.
I indicated to the applicant that his integrity and honesty as a tax agent was of considerable concern to me and permitting him to practice, pending the hearing of this review, could erode the professional standards and competence that the public should rightfully expect of tax agents who are registered and permitted to practice pursuant to the TASA.
I do not discount the possibility that the applicant, with adequate time to prepare for a hearing and with the benefit of competent advice may well advance evidence and submissions which will permit the Tribunal to set aside or vary the decision. However, on the basis of the limited nature of his taxation practice, the likelihood of attention being given in a taxation practice to preparation of income tax returns after 1 July and the direction that I made with respect to the lodging of prehearing documents that will cause this application to be heard in May or June, I was satisfied that it would not be desirable to grant the stay.
I certify that the preceding 21 (twenty -one) paragraphs are a true copy of the reasons for the decision herein of
Mr John Handley, Senior Member..............................[sgd].....................................
Associate
Dated 2 April 2013
Date(s) of hearing 12 March 2013 Applicant In person Advocate for the Respondent Mr D. Brown Solicitors for the Respondent Australian Government Solicitor
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