SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2012 0076
| MATTHEW STIRLING |
| Appellant |
| V |
| LEGAL SERVICES COMMISSIONER |
| Respondent |
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| JUDGES | WARREN CJ, NEAVE JA and DIXON AJA |
| WHERE HELD | MELBOURNE |
| DATE OF HEARING | 17 September 2013 |
| DATE OF JUDGMENT | 17 December 2013 |
| MEDIUM NEUTRAL CITATION | [2013] VSCA 374 |
| JUDGMENT APPEALED FROM | Legal Services Commissioner v Matthew Stirling [2012] VCAT 347 |
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LEGAL PRACTITIONERS – Disciplinary proceedings – Appeal against VCAT suspension – Appellant suspended for three years - Professional misconduct by barrister – Failure to make provision and failure to report income and other tax for eight years - Whether global approach to penalty breaches common law rule in Ryan v The Queen – Whether use of charged conduct in a separate charge was a double penalty – Whether penalty was manifestly excessive – Discretion re-opened – Re-sentenced to 30 months suspension with 24 months suspended – Ancillary orders for conditions to be placed on any future practising certificate granted to the appellant - Ryan v The Queen (2000) 203 CLR 452; Pearce v R (1998) 194 CLR 656; LSC v Moore [2010] VCAT 742.
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| Appearances: | Counsel | Solicitors |
| For the Appellant | Mr J Ruskin QC with Mr C Winneke | Tony Hargreaves & Partners |
| For the Respondent | Dr K Hanscombe SC with Mr P Over | Legal Services Commissioner |
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THE COURT:
The appellant, a barrister, was convicted and suspended from legal practice. He appeals the penalty.
Introduction
On 28 March 2012, the Victorian Civil and Administrative Tribunal (‘the Tribunal’) found the appellant, Matthew James Stirling, a barrister, guilty on one charge of professional misconduct and one charge of unsatisfactory professional conduct under ss 4.4.3(1)(b) and 4.4.2 of the Legal Profession Act 2004 (Vic) (‘the Act’). The decision of the Tribunal was made after an application by the Legal Services Commissioner, the respondent, pursuant to s 4.4.13(2) of the Act following an investigation into the failure of the appellant to comply with his tax obligations between 1996 and 2005.[1]
[1]Legal Services Commissioner v Matthew Stirling [2012] VCAT 347 (‘Reasons’) [231]-[233].
The Tribunal suspended the appellant from practising for three years, and made a number of other orders placing restrictions on any future practising certificate that may be granted to him. This appeal is limited to Order 4 of the Tribunal which suspended the appellant from practice for a period of three years.[2]
[2]Order 4 provided that:
Pursuant to s 4.4.17(b) and (c) of the Act:
(a) the local practising certificate of the Respondent to be suspended, with the period of suspension to commence on 18 May 2012; and
(b) a local practising certificate not be granted to the Respondent until 17 May 2015.
On 24 April 2012, the appellant sought leave to appeal against Order 4 of the Tribunal’s decision.[3] The Court of Appeal granted leave to appeal and ordered that Order 4 be stayed until the hearing and determination of the appeal.
[3]On 16 May 2012, by consent of the parties, the Tribunal delayed the implementation of Order 4 until 22 June 2012 (and then until 16 August 2012) to allow for the hearing of the application for leave to appeal.
Background
The appellant was admitted to practice on 3 June 1991 and signed the Victorian Bar Roll on 28 November 1991. He initially practised in criminal law, but established a successful commercial practice at the Victorian Bar. The appellant has been, at all relevant times, an Australian Legal Practitioner within the meaning of s 1.2.3(a) of the Act.
Tax issues
Before the Tribunal the appellant admitted that he had failed to lodge a number of taxation returns and Business Activity Statements (‘BAS’). The appellant admitted that he:
·failed to disclose on time income earned from 1 July 1996 to 30 June 2004;
·failed to make provision for and pay on time income tax on income earned from 1 July 1996 to 30 June 2005;
·failed to make provision for and pay provisional tax from 1 July 1998 to 30 June 2000; and
·failed to disclose, make provision for and pay GST from 1 July 2000 to 30 June 2005.[4]
[4]Reasons [3].
On 7 September 2004 the appellant was convicted of an offence under s 8C(1)(a) the Tax Administration Act 1953 (Cth) (’the Tax Act’) for failing to lodge by 1 April 2003 an income tax return for the financial year ending 30 June 2001.
Upon the appellant lodging his income tax returns and provisional tax returns for the relevant period, the Australian Taxation Office (‘ATO’) assessed that the appellant owed $419,727.36 in unpaid income tax, and $45,363 in provisional tax:
Financial year ending 30 June Amount of
income tax
Amount of
provisional tax
1997 $ 427.32 1998 $ 14,314.96 1999 $ 21,984.23 $21,934.00 2000 $ 31,558.30 $23,429.00 2001 $ 68,740.67 2002 $ 33,888.22 2003 $ 47,314.10 2004 $120,660.94 2005 $ 80,838.62 $419,727.36 $45,363.00[5] [5]Reasons [16].
On 20 October 2005, the Deputy Commissioner of Taxation commenced proceedings against the appellant to recover $518,155.26 plus interest and costs and on 4 April 2006, the Supreme Court of Victoria entered default judgment against the appellant for $488,155.18 plus interest of $22,053.68 and costs of $1,043.10.[6]
[6]Reasons [26].
On about 4 March 2008, the appellant made a Statement of Affairs setting out that he was insolvent and owed the ATO $713,812. At the same time, the appellant signed a declaration under s 188 of the Bankruptcy Act 1966 (Cth) appointing David James Lofthouse as his Controlling Trustee.
In its decision, the Tribunal described the reporting and payment failures of the appellant:
The Respondent made no or no adequate provision for payment of income tax on income he earned for the financial years 1 July 1996 to 30 June 2005; and had not, as at 28 August 2006, discharged his legal obligations to pay income tax owing on income that he earned for the financial years 1 July 1996 to 30 June 2005.
Since 28 August 2006, the Respondent has partly but not fully discharged his legal obligations to pay income tax and associated interest, costs and penalties on income that he earned for the financial years 1 July 1996 to 30 June 2005.
The Respondent made no or no adequate provision for payment of his provisional tax liability in respect of the financial years 1 July 1998 to 30 June 2000; and had not, as at 28 August 2006, discharged his legal obligations to pay his provisional tax liability for the financial years 1 July 1998 to 30 June 2000.
Since 28 August 2006, the Respondent has partly but not fully discharged his legal obligations to pay his provisional tax liability - and associated interest, costs and penalties - for the financial years 1 July 1998 to 30 June 2000.
The Respondent made no or no adequate provision for payment of the goods and services tax (‘GST’) on payments he had received in each of the quarters from 1 July 2000 to 30 June 2005.
The Respondent had not, as at 28 August 2006, discharged his legal obligations to pay amounts which the ATO has assessed as GST owing for the quarters from 1 July 2000 to 30 June 2005 on payments he received.
Since 28 August 2006, the Respondent has partly but not fully discharged his legal obligations to pay GST owing for the quarters from 1 July 2000 to 30 June 2005 and associated costs and penalties on income that he earned for the quarters from 1 July 2000 to 30 June 2005.[7]
[7]Reasons [17]-[23].
Following his declaration of insolvency, and pursuant to rule 197 of the Practice Rules (Rules of Conduct) of the Victorian Bar, the appellant disclosed to the Victorian Bar Ethics Committee by letter dated 11 March 2008, that he was insolvent and was under administration. The Bar Ethics Committee on 20 March 2008 sought a full explanation as to the circumstances of the insolvency and his debt to the ATO.
By letter dated 10 April 2008, the appellant responded, stating, importantly that:
·he had lived an indulgent lifestyle and spent his earnings on holidays, dining out and gambling;
·he continued to seek to enter a personal insolvency agreement with the ATO in order to repay his tax debts;
·he had changed his behaviour, had met his current spouse and had a child;
·he was ashamed of his conduct;
·he had ‘diligently attended to the lodgement of returns since 2005’; and
·he admitted to late lodgement of a number of BAS statements and income tax for October 2006, April 2007 and July 2007.
Curiously, the appellant’s letter to the Bar Ethics Committee stated that he had ‘diligently attended’ to his tax affairs, while in fact setting out that he had failed to lodge a number of tax documents on time. The Tribunal described the appellant’s delays in BAS lodgement after his initial failure to pay income, provisional and goods and services tax between 1996 and 2005 and commented on his letter to the Bar Ethics Committee as follows:
The Respondent’s claim in his disclosure, that he had diligently attended to the lodgement of returns since 2005, was false and misleading by reason that when he made the disclosure he knew, and it was the case, that:
(a)he had been obliged to lodge his BAS for the quarter ending 30 June 2006 on 25 August 2006 but he had not lodged it until 10 October 2006 and, consequently, the ATO had issued him a penalty notice dated 17 October 2006 for his failure to lodge his BAS on time and fined him $220;
(b)he had been obliged to lodge his BAS for the quarter ending 30 September 2006 on 13 November 2006 but he did not lodge it until 28 March 2007 and, consequently, the ATO had issued him a penalty notice dated 12 April 2007 for his failure to lodge his BAS on time and fined him $550;
(c)he had been obliged to lodge his BAS for the quarter ending 31 December 2006 on 28 February 2007 but he did not lodge it until 28 March 2007 and, consequently, the ATO had issued him a penalty notice dated 13 April 2007 for his failure to lodge his BAS on time and fined him $110; and
(d) he had been obliged to lodge his BAS for the quarter ending 31 March 2007 on 14 May 2007 but he did not lodge it until 29 June 2007 and, consequently, the ATO had issued him a penalty notice dated 9 July 2007 for his failure to lodge his BAS on time and fined him $220.[8]
[8]Reasons [36] (citations omitted).
On 2 May 2008, the appellant entered into his first Personal Insolvency Agreement (PIA1). Under that agreement, the appellant agreed to pay $728,000 to his controlling trustee, with an initial payment of $200,000, and then monthly instalments of $12,000. The appellant paid $210,000 under PIA1 before the agreement was terminated on 30 September 2008 because the appellant had not complied with the payment plan.[9]
[9]Reasons [108].
On 2 September 2009, the appellant entered into his second Personal Insolvency Agreement (PIA2). Under this agreement, the appellant agreed to pay $605,749 to his controlling trustee, of which $10,000 had been paid before the date of execution. The purpose of PIA2 was to encompass all tax debts owing to the ATO at the time the agreement was made and it had the effect of stopping the accrual of interest on the debt owed.
At the time of the Tribunal hearing the appellant had a number of outstanding tax liabilities:
a)a debt of $69,678 under PIA2;
b)a GST liability of $90,548; and
c)a primary tax liability of $288,189.
From the time that the appellant entered into PIA1 up to the date of the Tribunal hearing, he had repaid a total of $736,070.74 ($210,000 under PIA1 and $526,070.74 under PIA2). According to the appellant’s affidavit sworn 24 September 2013 and subsequent affidavit dated 4 October 2013, between the Tribunal hearing and the hearing of this appeal, the appellant had made additional payments of $405,387.25 against PIA2 (which is now extinguished) and other outstanding ATO debts. In total, the appellant appears to have repaid $1,141,457.99 to the ATO for previous unpaid taxes, penalties and interest.[10]
[10]Upon the Court pressing the point, the appellant filed affidavits in his own name as distinct from earlier affidavits that were sworn by his lawyers. The respondent sought to cross-examine the appellant as a consequence. However, the Court was of the view that at that stage it was unnecessary and would not assist the Court.
According to the appellant’s affidavits, he still owes $664,256.80 (though he believes that debt after adjustments to be $598,257.80) to the ATO. This includes the following:
a)$466,272.95 for income tax;
b)$151,457.85 under an integrated client account; and
c)$46,536 under the BAS statement for the quarter ending 31 March 2013.
This was the position at the end of the hearing of the appeal.
Investigation
The respondent is responsible for the enforcement of the practice obligations under the Act.[11] In August 2008, the respondent commenced an investigation into the conduct of the appellant pursuant to s 4.4.8 of the Act. That investigation was based on two events that the respondent had become aware of: first, the appellant’s conviction of an offence under the Tax Act; and second, the appellant becoming insolvent and entering into PIA1. On 6 August 2008, the respondent wrote to the appellant for the first time requesting that within 16 days he provide a full explanation of his conduct.
[11]See s 6.3.2 of the Act.
The appellant did not reply to this letter, and the respondent sent another letter on 3 September 2008. The respondent asked that the appellant ‘give this matter immediate attention and provide me with a full written explanation of your conduct’. The letter did not contain any threat of disciplinary action if there was no response. The letter was again ignored by the appellant.
The respondent waited almost a month before chasing up the further inquiries of the appellant. In what became a pattern of delay on the part of the respondent in following up the lack of response from the appellant, the respondent waited until 15 October 2008 before he wrote again to the appellant, noting his failure to respond to the letters of 6 August 2008 and 3 September 2008. This letter repeated the respondent’s request that the appellant provide a full explanation within 16 days.
This deadline passed and the appellant had not replied, the respondent sent another letter dated 23 December 2008 giving the appellant until 26 January 2009 to make a submission to the respondent regarding his failure to pay tax and his position as insolvent. The respondent stated that if no response was received by the appellant by that time, the respondent would make a determination based on the material he already possessed, without hearing from the appellant. This was the first letter that set out the consequences that would follow if the appellant failed to take action.
The appellant did not make a submission by 26 January 2009. Despite this it was not until 28 August 2009, almost 8 months after the 26 January deadline that a letter was sent following up the appellant’s failure to respond.
The August letter noted that the appellant had not responded to his repeated requests for further information on 6 August 2008, 3 September 2008, 15 October 2008 and 23 December 2008. In addition the respondent requested specific information and documents[12] and sought a response within 16 days, though it did not set out any consequences to the appellant if the information was not provided. The documents requested related to the following:
a)category 1: a request for information on the apparent inconsistency between his claim in paragraph 29(n) of his disclosure to the Victorian Bar Inc of 10 April 2008 that he had ‘diligently attended to the lodgement of returns since 2005’ and the fact that the ATO had issued him penalty notices dated 17 October 2006, 12 April 2007, 13 April 2007 and 9 July 2007 for failing to lodge BAS on time;
b)category 2: a request for information as to what quarters he had had a GST liability but had failed to lodge a BAS on time or to make any provision for payment of GST;
c)category 3: a request for information about each quarter in which he had failed to lodge a BAS on time, as to what his assessed GST was for that quarter and what penalties and interest were imposed for the failure;
d)category 4: an explanation as to why the appellant’s taxable income in 2006 was recorded as nil; and
e)category 5: copies of the appellant’s fee slips or fee book from 1 July 2005 to 30 June 2006.
[12]Pursuant to s 4.4.11(1)(b) of the Act.
On 17 November 2009, almost two months after the deadline had passed, an employee of the respondent telephoned the appellant. The appellant informed the respondent that he would look at the letter overnight and respond the next day. He did not. The respondent sent yet another letter to the appellant on 20 November 2009.
This letter provided the appellant a further 16 days to comply with the request for information contained in the 28 August 2009 letter. The respondent this time instructed that if it did not receive a response from the appellant then he would consider making an application to the Tribunal.
The respondent did not write again until 14 January 2010 when he set out his previous requests and again requested the five categories of documents and information. The respondent, possibly in light of his previous threat to consider taking action against the appellant, included a further ultimatum that if he did not receive a response from the appellant then he would make an application to the Tribunal.
The appellant finally responded to these repeated requests for information on 19 January 2010. His response was both belated and cursory. Of the five categories of documents, the appellant wrote:
a)in respect of category 1: regarding the claim that he had diligently attended to the filing of returns since 2005, he wrote, ‘the paragraph needs to be read in the context of the whole letter, namely a turnabout from failure to comply at all towards a serious effort to comply’;
b)in respect of categories 2 and 3: he would provide the information relating to categories 2 and 3, by 4 February 2010;
c)in respect of category 4: he explained that his taxable income in 2006 was nil due to limited income and increased expenses; and
d)in respect of category 5: he provided the fee book requested.
The appellant again did not provide the information by the promised date of 4 February 2010. The respondent again failed to promptly follow up the appellant after the deadline had passed, waiting almost three months before he wrote to the appellant on 28 May 2010. This letter noted that the appellant had not provided the information by the date he had set out in his letter. The respondent then requested more information and documents.[13] No consequences for failing to respond were set out. The documents requested included:
[13]Pursuant to s 4.4.11(1)(b) of the Act.
a)the information requested as category 2 and 3 in the respondent’s letter dated 28 August 2009;
b)whether the appellant lodged his BAS for the quarters June 2007 to March 2010 on time and if not, how late they had been lodged;
c)copies of any penalty notices issued by the ATO to the appellant since 9 July 2007 relating to late lodgement of BAS;
d)the appellant’s disclosures to the Legal Services Board in 2008 and 2009;
e)copies of the appellant’s BAS lodged with the ATO for the quarters from June 2007 to March 2010;
f)copies of the appellant’s income tax returns for the financial years ending 30 June 2008 and 30 June 2009;
g)copies of any correspondence between the ATO and the appellant or any person acting on his behalf since March 2007; and
h)any penalty notices issued by the ATO to the appellant since 9 July 2007 other than for failing to lodge his BAS on time.
The appellant did not reply to the letter. Four months later, on 16 June 2010 an employee of the respondent telephoned the appellant seeking an explanation as to why a response had not been forthcoming. The appellant noted that he had only received the letter two weeks before and he needed help preparing his reply. He told the employee that he would aim to have the information to the respondent by 21 June 2010, but he failed to do so.
On 6 July 2010, the respondent sent a letter to the appellant again noting his failure to provide the documents and information requested in May 2010. This letter gave the appellant until 5pm on 8 July 2010 to respond and stated that if a response was not received it would leave the respondent with no alternative but to consider taking disciplinary action against him. On 8 July 2010, the appellant responded to the letter, though again only partially. The appellant stated that:
a)according to his records he had failed to lodge BAS on time for the quarters ending 31 March 2005, 30 June 2005, 30 June 2006, 30 September 2006, 31 December 2006 and 31 March 2007, and further, the ATO had penalised him for the failure for each of the late lodgements; and
b)he rejected the respondent’s request stating: ‘as to paragraphs 2(a) and (b), 3(b), (c) and (d), and 4 of your letter dated 28 May 2010, these requests do not relate to the subject matter of your inquiry as set out in your letter dated 6 August 2008. I see no basis for the LSC to be making requests given the subject matter of the inquiry. In the absence of a proper explanation as to why the requests are relevant, I will not be providing the information and or documents’.
The respondent made a further attempt to obtain the information from the appellant in a letter dated 22 July 2010. The appellant did not respond to this request.
After obtaining the disclosure document the appellant provided to the Victorian Bar[14], the respondent provided the appellant with a further opportunity to make a submission about his conduct by a letter delivered to the appellant’s clerk on 20 December 2010. The appellant did not provide any submission to the respondent.
[14][13]-[14].
During the period of the investigation, the respondent wrote to the appellant 11 times and contacted him twice through the respondent’s employees in order to garner a response. On almost every occasion the appellant did not respond and the respondent acquiesced. An enforcement authority such as the respondent has an obligation to prosecute matters of this type promptly.[15] In our view, this pattern of delay showed a failure by the respondent to adequately follow up the appellant’s failure to respond. We accept, however, that the delay is not solely attributable to the respondent. The appellant’s continued silence extended the period of delay.
[15]This is set out in the Act, s 4.4.12(1) states:
(1) Subject to section 4.4.12A, an investigation under this Division must be conducted as expeditiously as possible.
On 21 March 2011 the respondent applied to the Tribunal[16] seeking an order under Division 4 of the Act in relation to the appellant’s misconduct. The four charges are comprised of two statutory charges and two identical common law charges. Following the appellant’s plea of guilty, Charges 2 and 4 (the common law alternatives) were not pursued.
[16]Pursuant to s 4.4.13(2) of the Act.
The two relevant charges were:
Charge 1
Professional misconduct within the meaning of section 4.4.3(1)(b) of the Act for engaging in conduct that justifies a finding that the Respondent is not a fit and proper person to engage in legal practice namely his conduct which led to:
(a)his conviction on 7 September 2004 of a tax offence for failing to lodge an income tax return for the financial year ended 30 June 2001;
(b)him becoming an insolvent under administration pursuant to an insolvency agreement under Part X of the Bankruptcy Act 1966 (Cth), namely:
(i) his failure to disclose on time income he earned in professional practice as a barrister for financial years 1 July 1996 to 30 June 2004;
(ii) his failure to make provision for and to pay on time income tax on income he earned in professional practice as a barrister for financial years 1 July 1996 to 30 June 2005;
(iii) his failure to make provision for and to pay provisional tax in respect of financial years 1 July 1998 to 30 June 2000; and
(iv)his failure to disclose, to make provision for and to pay GST on payments he received from 1 July 2000 to 30 June 2005 in professional practice as a barrister.
Charge 3
Professional misconduct within the meaning of section 4.4.3(1)(b) of the Act for engaging in conduct that justifies a finding that the Respondent is not a fit and proper person to engage in legal practice namely his conduct in falsely and misleadingly stating to the Victorian Bar Inc in the context of disclosing a show cause event that he had diligently attended to lodgement of returns since 2005 when in fact he knew, and it was the case, that:
(a)he had failed to lodge BAS returns on time for the quarters 30 June 2006, 30 September 2006, 31 December 2006 and 31 March 2007; and
(b)the Australian Taxation Office had issued him with penalty notices for his late lodgement of BAS for each of these quarters.
Tribunal’s findings
At the commencement of the hearing, the appellant indicated that he would plead guilty to Charge 1, thereby admitting that that he had engaged in professional misconduct. Further, the appellant admitted that his conduct in relation to his disclosure to the Victorian Bar constituted unsatisfactory professional conduct. The respondent accepted that this conduct could be characterised as unsatisfactory professional conduct as opposed to professional misconduct.[17]
[17]The Act sets out detailed definitions for both ‘unsatisfactory professional conduct’ and ‘professional misconduct’. Section 4.4.2 states:
Unsatisfactory professional conduct
For the purposes of this Act –
unsatisfactory professional conduct includes conduct of an Australian legal practitioner occurring in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner.
Section 4.4.3(1)(b) sets out the definition of professional misconduct as follows:
Professional misconduct
(1) For the purposes of this Act –
professional misconduct includes-
(a)unsatisfactory professional conduct of an Australian legal practitioner, where the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence; and
(b)conduct of an Australian legal practitioner, whether occurring in connection with the practice of law or occurring otherwise than in connection with the practice of law, that would, if established, justify a finding that the practitioner is not a fit and proper person to engage in legal practice.
Following the guilty pleas, the sole issue before the Tribunal was the orders to be made.
The Tribunal sat for two days from 7 to 8 March 2012 and heard from four witnesses. Ultimately, after reserving its decision, the Tribunal suspended the appellant from practice for a period of three years. In summary the Tribunal made the following points in its decision:
·The failure to lodge and make provision for tax showed a lack of integrity and constituted hypocrisy and inconsistency in purporting to uphold the law;
·The appellant had paid back a significant amount which displayed some level of rehabilitation, though his failure to lodge on time and pay more contemporary tax obligations undermined that process;
·The appellant’s remorse, while strongly evidenced by a number of character witnesses was not supported by evidence from the appellant himself;
·The significant delay between the beginning of the investigation was a strong mitigating factor, but its effect was lessened by the cause of that delay (both the appellant and the respondent), and there was no evidence of the strain it had caused the appellant;
·It accepted the appellant was of good character and a competent barrister, however it was concerned about his failure to give evidence as to his own character and his gross failure indicated that he was not currently and within the immediate future a fit and proper person to practise;
·The appellant’s lifestyle of living beyond his means and ignoring his tax burden showed a disregard for his civic obligations and displayed the need for the public to be protected from his actions; and
·Finally, the Tribunal was concerned with the appellant’s failure to give evidence, particularly in light of the evidence he attempted to lead to show that he had turned his life around.
Grounds of appeal
The appellant’s Notice of Appeal sets out six grounds. At the hearing the appellant pressed two broad arguments which encompassed all six separate grounds. The first argument, which we shall call the ‘manifest excess ground’, included the following grounds from the Notice of Appeal:
3.1. It was not reasonably open to the Tribunal to impose a three year suspension in the circumstances of this case.
3.2. It was not reasonably open to the Tribunal to impose the three year suspension in this case having regard to:
(a) the principle that the Tribunal’s power to make any orders are primarily protective although they also serve a punitive function;
(b) the delay between the conduct, the subject of the charges and the hearing of the proceeding;
(c) the very considerable payment of tax liability by the applicant as at the date of the proceeding;
(d) the very real prospect that the applicant would continue to pay his tax liability following termination of the proceeding;
(e) the likely financial ruin for the applicant and his family by reason of the imposition of the three year suspension;
(f) the remorse and change of lifestyle by the applicant as at the date of the proceeding, demonstrated by his action with respect to payment of tax liability and the impressive character references on his behalf;
3.3. The discretion in the Tribunal to impose a penalty upon the applicant pursuant to section 4.4.17(b) and (c) was not exercised in accordance with law by reason of the manifestly excessive penalty (namely the three year suspension) imposed in the circumstances of this case;
The second argument, which we have labelled the ‘double penalty ground’ includes the last two grounds of appeal from the Notice:
3.5.The Tribunal erred in law by punishing the applicant twice by reference to the same uncharged conduct, as a basis for finding aggravating conduct and as a basis for downgrading mitigation;
3.6.The Tribunal erred in law by further penalising the Applicant in respect of charges 1 and 3 by wrongly characterising charge 3 itself as an aggravating feature.
In order to properly assess these grounds, it is convenient to start with the double penalty ground. This is because we would allow the appeal on this ground. Accordingly, as a consequence of this error, the discretion of the Court is reopened to affix and impose a new penalty on the appellant. On that basis, we will consider the manifest excess grounds only so far as necessary.
Double penalty
The appellant submitted two arguments to demonstrate that the Tribunal had erred in its calculation of the penalty.
First, the appellant argued that the Tribunal had used the same factors as both aggravating factors and as factors that spoke against mitigation. He submitted that this had occurred in three instances: non-response to the regulator, continuing non-compliance with tax obligations and failing to give evidence. The appellant noted, for example, that his continuing non-compliance with his tax obligations after the charged conduct was treated as an aggravating factor by the Tribunal:
The evidence, such as it is, demonstrates that the Respondent has not complied with his taxation obligations since the conduct the subject of charge 1. It shows that he has not filed some income tax and many BAS on time and he is not paying his tax obligations when they fall due. The Tribunal accepts the submission of Applicant’s Counsel that this circumstance goes to the very heart of this matter. If the Respondent was in fact rehabilitated, then he should at the very least be filing his income tax and BAS on time.[18]
[18]Reasons [180].
Further, it was contended that the non-compliance was used to dismiss or limit the mitigating factor of delay, as the appellant had not used the time to comply with his more contemporary tax obligations:
In this case, the delay has enabled the Respondent to take a significant rehabilitative step: it has given him the opportunity to repay a large portion of his tax debt. It also gave him a period in which he could demonstrate an ability to comply with his taxation obligations with respect to filing his returns and paying current liabilities for tax and GST. However, the material filed by the Respondent, does not show an unblemished record, and the evidence from Mr Ferella seems to show a continuing pattern, either of neglect or defiance.
The mitigatory impact of delay can be weakened where the delay is attributable to the obstruction or lack of co-operation of a respondent.[19]
[19]Reasons [197]-[198].
The appellant relied on the decision of the High Court in Siganto v The Queen.[20] The High Court was assessing the role of aggravating and mitigating factors in relation to guilty and not guilty pleas and defence conduct at trial. In analysing the different aspects of each factor, Gaudron J held:
To some, it may appear a matter of semantics to distinguish between denying the existence of circumstances of mitigation and accepting the existence of circumstances of aggravation; and judicial statements intended as the former may sometimes be misunderstood as intending the latter. However, the distinction may be important.[21]
[20](1998) 194 CLR 656.
[21]Ibid 667.
The appellant noted in oral argument that the use of common factors of two different charges cannot be used to punish an offender twice for the same conduct. He relied on the decision of the High Court in Pearcev R[22], where the majority (McHugh, Hayne and Callinan JJ) held:
Looked at overall, it may well be said that the effect of the sentences imposed on this appellant was not disproportionate to the criminality of his conduct. Nevertheless, we consider that the individual sentences imposed on counts 9 and 10 were flawed because they doubly punished the appellant for a single act, namely, the infliction of grievous bodily harm.[23]
[22](1998) 194 CLR 610 (‘Pearce’).
[23]Ibid 624.
The respondent contended that the role of factors such as non-compliance or the way the appellant dealt with the regulator went to the heart of the appellant’s case of remorse and rehabilitation. Further, he argued that the Court should not be too concerned with the Tribunal’s use of the terms ‘mitigating’ and ‘aggravating’ as the Tribunal used a global approach to sentencing.
The appellant’s submission on this aspect of the appeal was somewhat confusing. As Neave JA commented in argument, the statement of the High Court in Pearce was in relation to common elements of the offence and not separate factors the Court could take into consideration when handing down a sentence. Furthermore, as the respondent argued and as this Court set out in Hanneberry v Legal Ombudsman[24], the Tribunal is ‘obliged to take account any failure by the practitioner not “to understand the errors of his ways”’.[25] The Tribunal, by taking into account factors as being both aggravating culpability and limiting mitigation, was not in error. The conduct was assessed in a variety of ways and, as the respondent noted, went to the very heart of the claim by the appellant that he was remorseful and had undergone a form of rehabilitation. The Tribunal was simply setting out a number of factors that were part of the intuitive synthesis of assessing a penalty.
[24][1998] VSCA 142 (‘Hanneberry’).
[25]Ibid [22] quoting NSW Bar Association v Evatt (1968) 117 CLR 177, 184.
The second element of this ground of appeal was that the conduct the subject of Charge 3, namely misleading the Victorian Bar, was used as an aggravating factor in assessing the penalty for Charge 1. Therefore, the appellant submitted, he was doubly punished because ‘a global approach to penalty’[26] should have encompassed all of his conduct. The appellant noted that the Tribunal clearly set out that:
[A] global approach to penalty should be adopted in the circumstances where the amended charge 3 is related to the initial offending conduct.[27]
[26]Reasons [223].
[27]Ibid.
At the same time the Tribunal stated his conduct in misleading the Bar was an aggravating factor:
The Tribunal also accepts that the Respondent has demonstrated a lack of candour in dealing with his regulators, reflecting a lack of integrity, which constitutes another aggravating factor. This lack of candour is reflected in:
(a) The conduct the subject of charge 3…[28]
[28]Reasons [177] (citation omitted).
The respondent attempted to respond to this ground in a number of ways. First, he submitted that the Court should not stretch the analogy between criminal sentencing principles and disciplinary sanctions. It was contended that the Court’s proceedings in this matter, and the penalty handed down, was sui generis.
Secondly, the respondent argued that while the conduct that is the subject of Charge 3 was a related matter, it was not the same, but in fact another piece of behaviour that the Tribunal was within its discretion to use as an aggravating factor.
Thirdly, the respondent submitted that the appellant’s argument may be moot anyway. It was contended that unless the Court was convinced by the appellant’s submission that the three year penalty for Charge 3 was manifestly excessive, then it did not matter that the Charge 3 conduct was also used as an aggravating factor.
In assessing this ground, the Court must first look at the role of disciplinary proceedings of this kind and the influence of criminal sentencing principles.
Principles applicable to sanctions in disciplinary proceedings
As was observed by the Tribunal, the primary aim of an order of this kind is to protect the public and to protect the reputation of the profession.[29] In order to achieve this aim, the Court may also act in a punitive fashion. As Maxwell P noted in Quinn v Law Institute of Victoria[30], the orders available to a court in these proceedings are ‘punitive as well as protective’[31] and the Tribunal’s jurisdiction ‘is inescapably – indeed, intentionally – punitive, in the service of protecting the public’.[32]
[29]Reasons [165] (citations omitted); see also Hanneberry [1998] VSCA 142 [22] and Law Society of NSW v Foreman (1994) 34 NSWLR 408, 444 (Mahoney JA) (‘Foreman’).
[30][2007] VSCA 122 (‘Quinn’).
[31]Ibid [30].
[32]Ibid [35].
Secondly, as the Tribunal is acting as a professional disciplinary tribunal, the deterrent effect is a key element in assessing an appropriate penalty. In Quinn, Maxwell P noted the role of both specific and general deterrence in determining an appropriate penalty in these types of proceedings:
The available sanctions are, by their nature, punitive, and the objectives of specific and general deterrence – which serve the protection of the public – depend upon the sanctions having punitive effect.[33]
[33]Ibid [30].
Regarding general deterrence, the Court must keep in mind, as the Tribunal noted, the civic obligations of barristers.[34] In Brott v Legal Services Commissioner[35], Judge Ross held:
The concept of general deterrence of others by the punishment of an offender is that an understanding that an offence is followed by substantial adverse consequences will prevent others from committing the offence. Related to general deterrence is the proposition that in deciding an appropriate penalty the Tribunal may have regard to the effect which its order will have on the understanding, in the profession and amongst the public, of the standard of behaviour required of solicitors.[36]
[34]Reasons [167].
[35][2008] VCAT 2399.
[36]Ibid [67].
In assessing specific deterrence, there must be an assessment as to how the penalty reflects the behaviour of the accused. In Brott, Judge Ross also noted that this factor involves:
A consideration in relation to specific deterrence is the extent to which a practitioner displays insight into his wrongdoing such as to demonstrate an appreciation that what was done was wrong and must not recur.[37]
[37]Ibid [49].
In Morris v Psychological Registration Board[38], Harper J held that a practitioner who did not have the requisite insight into his wrongdoing ‘ought not, if the public is to be protected, to be allowed to practise.’[39]
[38](Unreported, Supreme Court of Victoria, Harper J, 19 December 1997).
[39]Ibid 25. See also Legal Services Board v Forster [2012] VSC 640, [17] though this was a contempt proceeding.
While these factors are important in evaluating an appropriate penalty, the main issue when considering whether to suspend a practising certificate or remove a practitioner from the roll is whether that person is a fit and proper person to practise.[40] This is the guiding principle that informs a tribunal or court in conducting and handing down penalties in legal disciplinary proceedings.
[40]See Ziems v Prothonotory of the Supreme Court of NSW (1957) 97 CLR 279, 288 (Fullager J) (‘Ziems’); Legal Services Commissioner v Moore [2010] VCAT 742 [42] (‘Moore’); Foreman 34 NSWLR 408, 445; In Re Davis (1947) 75 CLR 409.
Criminal sentencing and its link to disciplinary proceedings
The principles that apply in criminal sentencing were aptly encapsulated by the majority (Winneke P, Brooking and Hayne JJA, and Southwell AJA) in R v Storey:[41]
Sentencing is not a mechanical process. It requires the exercise of a discretion. There is no single “right” answer which can be determined by the application of principle. Different minds will attribute different weight to various facts in arriving at the “instinctive synthesis” which takes account of the various purposes for which sentences are imposed — just punishment, deterrence, rehabilitation, denunciation, protection of the community — and which pays due regard to principles of totality, parity, parsimony and the like.[42]
[41][1998] 1 VR 359.
[42]Ibid 366 (citations omitted).
We will not set out each principle one by one, but suffice to say it is clear that there is a link between the principles that apply to criminal sentencing and disciplinary tribunals. In Quinn, Maxwell P said as much:
The issue of mental illness gives rise to a second and separate ground of appellate intervention. Because the Tribunal’s disciplinary jurisdiction is inescapably – indeed, intentionally – punitive, in the service of protecting the public, it is appropriate that the principles applicable in this Court to sentencing appeals should apply by analogy to appeals from disciplinary decisions of the Tribunal. The most obvious example is the approach to a submission that the penalty is manifestly excessive.[43]
[43]Quinn [2007] VSCA 122 [35]; see also Guss v Law Institute Ltd (formerly Victorian Lawyers RPA Ltd) [2006] VSCA 88 [28] (Maxwell P).
Further, in Burgess v McGarvie (Legal Services Commissioner)[44], the Court of Appeal made another link between the role of a sentencing judge and the role of a judge in disciplinary proceedings:
[W]hen the Tribunal formulates a sanction, it must take into account all relevant matters, in much the same way that a sentencing judge is required to take into account all relevant matters when synthesizing a sentence.[45]
[44][2013] VSCA 142 (‘Burgess’).
[45]Ibid [67].
Courts often use criminal language and authorities when imposing penalties in disciplinary proceedings. In Burgess, Nettle and Neave JJA noted the importance of denunciation, specific deterrence and community protection in assessing the severity of a 12 month suspension of a solicitor for failing to use his best endeavours to complete work and communicate effectively.[46] The Court even used the principles in R v Verdins when analysing the mental impairment issues relating to the appellant.[47]
[46]Ibid [73].
[47]Ibid [55].
However, this analogy is not perfect. As urged by the respondent, these proceedings are sui generis, and are within the inherent jurisdiction of the Court. While there are common elements, as noted in Hanneberry, it is clear that these types of proceedings are not criminal:
The first is that disciplinary proceedings under the Act are not criminal proceedings but are proceedings sui generis … This proposition is reflected in the circumstance that unfitness to practise based on misconduct need be proved only according to the civil standard, subject of course to the necessity to bear in mind the seriousness of the conduct charged.[48]
[48]Hanneberry [1998] VSCA 142 [22] (citations committed).
Having noted the link between the two types of proceedings and the limits to that analogy, the issue is now whether the discretion of the Tribunal miscarried in the way it penalised the appellant. In our assessment, the Tribunal’s discretion did miscarry in relation to double punishment in two ways.
First, the Tribunal set out:
A global approach to penalty should be adopted in the circumstance where the amended charge 3 is related to the initial offending conduct.[49]
[49]Reasons [223].
While taking this global approach the Tribunal used the conduct the subject of Charge 3, namely the misleading statements to the Victorian Bar, as an aggravating factor:
The Tribunal also accepts that the Respondent has demonstrated a lack of candour in dealing with his regulators, reflecting a lack of integrity, which constitutes another aggravating factor. This lack of candour is reflected in:
(a) The conduct the subject of charge 3…[50]
[50]Reasons [177] (citation omitted).
It is clear from the authorities that where there are elements or factors common between counts they cannot be used together to punish an accused twice.[51] While on the first aspect of this ground there was no common element, in relation to the two charges relevant to this part of the appeal, there is a common factual element. Specifically, the Tribunal used the letter to the Victorian Bar to aggravate the penalty in relation to the tax matters under Charge 1. Effectively the Tribunal used a global approach to penalise the appellant, but at the same time separated out the charges and used one as an aggravating factor for the other. In our opinion, that approach constituted double punishment, and in line with the appropriate authorities, the discretion of the Tribunal miscarried in doing so.
[51]See Pearce (1998) 194 CLR 610 and R v Orgill [2007] VSCA 236 [13]-[14].
Secondly, as was raised in the argument, the Tribunal’s global approach to penalty appears to not abide by the general common law rule that ensures that a court or tribunal stipulates a penalty for each count or charged conduct. In R H McL v The Queen[52], Gleeson CJ, Gaudron and Callinan JJ held:
although general or global sentences in the case of multiple offences have, in the past, been common in England, they are virtually unknown in Victoria, and may not be permissible.[53]
[52](2000) 203 CLR 452.
[53]Ibid 462.
In Ryan v The Queen,[54] which dealt with similar provisions in the Crimes Act 1958, Brennan J held:
When an accused person is convicted on two or more counts regularly joined, the trial judge is entitled to assess an appropriate overall sentence having regard to the entire course of criminal conduct which constitutes the several elements of the offences of which the accused is convicted. If the offences are founded on the same facts, it is necessary to ensure that the appropriate penalty for the same act or omission is not imposed twice; if the offences are part of a series, the entirety of the criminal conduct of the same or similar character, rather than the several acts or omissions constituting the separate offences, may determine the appropriate overall sentence to be imposed. In pronouncing sentence, however, the trial judge imposes separate sentences in respect of the several offences of which the accused has been convicted, effecting the appropriate overall sentence by adjusting the severity of the separate sentences and, when custodial sentences are imposed, by ordering that they be served either concurrently or cumulatively.[55]
[54](1982) 149 CLR 1 (‘Ryan’).
[55]Ibid 22-23.
The rule is an important one and should be applied, where applicable, in disciplinary proceedings. First, as Brennan J noted in Ryan, it allows for a sentence on one count to stand where a conviction for another count is quashed.[56] Secondly, it is easier to assess whether a penalty is manifestly excessive or inadequate when each sentence is clearly pronounced on each count. Thirdly, by sentencing for separate offences, the court makes it clear to the public what the penalty for each offence is, thus assisting in the process of general deterrence. Finally, as in this case, adherence to this rule prevents conduct from one charge being used as an aggravating factor in assessing the penalty for another charge.
[56]Ibid 23.
However, this rule may not apply in all disciplinary proceedings. There are some cases[57], where the charged conduct is constituted by a course of behaviour as opposed to a set of separate events. In these circumstances where the facts of the case are so inextricably interwoven as to make it difficult to meet a clear standard of prescription, a global penalty may be applied. In this case, the Tribunal’s failure to set out separate penalties for each charged conduct is an error and its discretion has thus miscarried. Further, the Tribunal’s use of the conduct the subject of Charge 3 as an aggravating factor constituted double punishment and was also an error.
[57]See Burgess [2013] VSCA 142, where Nettle and Neave JJA sentenced the appellant globally.
Manifestly excessive penalty
In assessing whether the penalty handed down by the Tribunal was manifestly excessive, this Court must look at the authorities within this jurisdiction as well other Australian authorities. This assists in determining the appropriate range for such conduct and thus whether the penalty was manifestly excessive.
First, it is important to assess both the mitigating and aggravating factors that the Tribunal took into account when handing down the three-year suspension.
Remorse
In assessing the appellant’s submissions on remorse, the Tribunal accepted the various character references provided by the appellant. In particular, the Tribunal noted the evidence of Dr Lyons SC who had stated that the appellant was ‘genuinely ashamed of his past omissions and the strain it now puts on his family’.[58] Mr Michael Green, the appellant’s clerk, also provided evidence of his remorse, stating:
As Matthew has grown in responsibility and maturity, his regret from his earlier irresponsible behaviour has also grown … which regret [he] has expressed on many occasions by [his] words and actions.[59]
[58]Reasons [207].
[59]Ibid.
Despite accepting the mitigating effect of a guilty plea as well as a number of character references that indicated the appellant’s remorse, the Tribunal was concerned with the appellant’s failure to provide evidence himself. It held:
However, the weight to which the Tribunal can give such expressions of remorse is diminished by reason of the Respondent’s election not to give direct evidence to the Tribunal and thereby subject himself to crossexamination.[60]
[60]Reasons [210].
Rehabilitation
At the hearing, the appellant pointed to a number of factors that indicated that he had been rehabilitated. He relied on the evidence of his psychologist, Ms Pamela Matthews, who indicated the appellant had reined in his problematic behaviour. In her report dated 28 February 2012 she noted that the appellant suffered from mild depression, and at the time of his offending he mostly likely was suffering symptoms consistent with pathological gambling. Ms Matthews noted:
In summary Mr Stirling has been through an extended unsettled period but he has now settled in the context of: (a) a secure base, provided by a supportive relationship and the establishment of a family, and (b) self-imposed discipline in regards to his behaviour, profession and obligations. In the writer’s opinion the behaviours of concern to the Applicant [the respondent] have been significantly decreasing since 2005 and have now largely resolved and are unlikely to return.
The second form of rehabilitation the appellant relied on at the hearing was his substantial repayment of the debt to the ATO. At the time of the hearing, the appellant had repaid all but $69,678 of his PIA2 debt. The Tribunal accepted that the repayment was a mitigating factor.[61] However, they rejected the submission of the appellant as to the weight the Tribunal should give to the repayment. The Tribunal held:
However, the Tribunal also accepts that these repayments alone are not sufficient evidence of rehabilitation for two reasons:
(a) First, the repayments have occurred in the context of further and repeated failures to file income tax and BAS, in a timely manner and non-payment of recent tax debts; and
(b)Secondly and related, the Respondent’s ability to repay his PIA2 debt arises, at least in part, from the fact that he is not paying more contemporary tax debts. [62]
[61]Reasons [211].
[62]Reasons [212].
The appellant also argued that his decision not to declare bankruptcy and to pay back his debts indicated that he had accepted his error and was attempting to rectify his failure. The Tribunal also rejected this argument, noting that it did not accept bankruptcy was the easier course of action and a decision to declare one’s bankruptcy was a complex one.
Delay
A central tenet of the appellant’s submission on mitigation was the considerable delay between the conduct that gave rise to the charges and the hearing. The Tribunal accepted that delay was a powerful mitigatory factor.[63] The Tribunal accepted that the delay was relevant in assessing the appropriate penalty but rejected the submission that the delay was predominantly the fault of the respondent. The Tribunal set out the litany of failures by the appellant that had contributed to the delay including: the eight years of not filing income tax returns and the continual failure to respond to requests for information by the respondent. In this respect the Tribunal stated:
The behaviour giving rise to the charges, judgment debt and investigation, extended over a period from 1996 to 2005. According to Exhibit 2, which was compiled by Mr Ferella from secondary sources, the earliest payment on account of unpaid tax for the relevant period was not made until January 2006. The investigation by the Applicant, commenced during the currency of the PIA1 and prior to its termination in September 2008.
Until the Respondent was alerted to the fact that the Applicant was undertaking an investigation into his conduct, there was no necessary expectation that such investigation would take place. Indeed, between 1 July 2005 and May 2008, when PIA1 was entered into, the Respondent theoretically could have extinguished his liabilities or otherwise complied with an early arrangement with the ATO for repayment by instalments.
Once the Respondent was notified of the commencement of the investigation, there was a prolonged period during which the Respondent failed even to acknowledge, let alone reply to, the Applicant's requests. It could be argued that the Applicant could have acted more precipitously, made a determination and brought the matter to the Tribunal at an earlier stage. However, there is no question that the Respondent was given every opportunity to give an explanation for his conduct and provide answers to specific questions. On a number of occasions he stated that information was forthcoming and then failed to deliver. Ultimately, he provided limited information only. In the Tribunal's view, it is very difficult to discern from this pattern of conduct, the kind of positive rehabilitation and change of attitude otherwise claimed on behalf of the Respondent.
…
The mitigatory impact of delay can be weakened where the delay is attributable to the obstruction or lack of co-operation of a respondent.[64]
[63]See R v Merrett & Ors (2007) 14 VR 392, 400 (Maxwell P).
[64]Reasons [186]-[188]; [198].
In addition, the appellant relied on the opinion of Ms Matthews that the delay had caused strain and stress to the appellant. The Tribunal rejected this submission, noting that Ms Matthews’ earlier letter dated 10 April 2008 did not detail any mood disturbances or personality disorder. The second letter of February 2012 referred to the appellant as suffering mild to low-level situational depression. In light of the two reports, the Tribunal did not accept that the delay had caused significant strain (considering that the appellant failed to provide evidence himself of the strain and stress caused by the hearings).[65]
[65]Reasons [191].
The Tribunal held that the delay also provided the appellant with an opportunity to undergo rehabilitation. The Tribunal noted that the appellant did not take up this opportunity and that he had failed to comply with his more contemporary tax obligations. The Tribunal stated:
In this case, the delay has enabled the Respondent to take a significant rehabilitative step: it has given him the opportunity to repay a large portion of his tax debt. It also gave him a period in which he could demonstrate an ability to comply with his taxation obligations with respect to filing his returns and paying current liabilities for tax and GST. However, the material filed by the Respondent, does not show an unblemished record, and the evidence from Mr Ferella seems to show a continuing pattern, either of neglect or defiance.
…
Taking all of the circumstances into account the Tribunal accepts Applicant Counsel’s submission that in this case, unlike in Long’s case, delay is not a strong mitigating factor.[66]
[66]Reasons [197] and [201].
Character
The Tribunal accepted that the character evidence provided demonstrated that the appellant was a highly competent barrister. However, it noted that his professional misconduct had not arisen out of a lack of competence in his legal practice. Further, relying on Melbourne v The Queen[67], the Tribunal stated:
Further, good character is not a question of the opinion others may have of the Respondent. It is to be judged by his actions and motivations.[68]
[67](1999) 198 CLR 1, 25.
[68]Reasons [218] (citations omitted).
The Tribunal accepted the evidence of the appellant’s good character was a factor that should stand his favour when assessing the appropriate penalty.
Financial ruin and family
Finally, the Tribunal assessed the impact on the appellant’s family of the prospect of financial hardship that would result from a lengthy suspension from practice. The appellant argued at the hearing that many people relied on him financially, including his wife and young child, and three part-time secretaries. Further, he argued that a lengthy suspension would limit his ability to repay his tax liabilities. The Tribunal afforded no weight to the evidence provided by the appellant, noting that he did not provide any information on his financial position, capacity to draw on his family’s financial resources or his ability to draw income other than from practising as a barrister. Finally the Tribunal held:
In the Tribunal's view, the Respondent’s conduct does not fit into the latter category as identified in Talia’s case; and his loss of employment as a barrister, during any period of suspension, is a necessary consequence of an appropriate sanction.[69]
[69]Reasons [206].
Aggravating Factors
In assessing the penalty to be given to the appellant, the Tribunal also analysed a number of aggravating factors.
First, the Tribunal set out that in his disclosure letter to the Victorian Bar dated 10 April 2008, the appellant admitted to living an indulgent lifestyle:
Up until 2005 when I met my fiancée, I lived an indulgent lifestyle. I spent earnings on holidays, dining out, gambling and seeking to gain social attention rather than living within my means and properly budgeting.[70]
[70]Reasons [173].
The Tribunal also noted his admission to Ms Matthews that ‘he lived like a millionaire’. The Tribunal held that such behaviour clearly suggested a greater culpability on behalf of the appellant:
The Respondent’s conduct was deliberate in that he was aware of the need to lodge tax returns but did not. He preferred to spend money on himself rather than meet his taxation obligations. He did not voluntarily disclose his non-compliance with the ATO but waited for the ATO to chase him for his outstanding returns. Even when prosecuted for failing to file tax returns, he delayed taking steps to put his past affairs in order or to put his future affairs in order.[71]
[71]Reasons [175].
Secondly, the Tribunal held that the appellant’s conduct in relation to the respondent was a significant aggravating factor. The Tribunal noted that there was a lack of candour in dealing with the respondent and the Victorian Bar. This was evidenced by the conduct which was the subject of Charge 3 and the continued failure to respond to requests for information. Furthermore, the Tribunal was also concerned by the failure to lodge further BAS and income tax statements on time after the conduct that is the subject of Charge 1.
The Tribunal was again troubled that the appellant did not give evidence in order to dissuade them against such inferences being made:
The Tribunal accepts the Applicant’s submission that, in light of the apparent lateness of filing some income tax returns and BAS, without any explanation offered, it is reasonable for the Tribunal to infer that his refusal to answer requests was prompted by a desire to not to reveal that he was continuing not to comply with his obligations to file tax documents on time. [72]
[72]Reasons [178].
Thirdly, the Tribunal found that the appellant’s continuing non-compliance with his tax obligations as being another aggravating factor.[73]
[73]Reasons [180].
Range
At the hearing, the appellant submitted that when considering the factors above, the penalty imposed by the Tribunal was outside the range. He provided a table that set out 14 recent cases where a legal practitioner had failed to lodge or make provision for their tax obligations. We will now examine some of the relevant cases.
First, the Court was taken to Legal Services Commissioner v Turner.[74] In Turner, the respondent was a barrister who was found guilty of one charge of professional misconduct. The respondent did not lodge his tax returns from 1 July 1996 to 30 June 2008. During this period of non-compliance, the respondent was convicted of eight offences in breach of the Tax Act, and then in 2007 having failed to lodge his returns he was convicted of 27 charges of breaching the Tax Act. Mr Turner had an income tax debt of $281,616 and a GST debt of $63,460. The respondent only repaid a small amount of his debt back to the ATO and subsequently declared bankruptcy. The Tribunal noted in its hearing that he did not lead a lavish lifestyle and that he was in the twilight of his career. He was reprimanded, and ordered to pay a $5,000 fine and costs.
[74][2012] VCAT 373 (‘Turner’).
In Legal Services Commissioner v Long[75], the respondent was a barrister who had failed to disclose and make provision for his income tax between 1 July 1994 and 30 September 2007. Mr Long had accumulated a tax debt of $501,000 and provided $24,000-$25,000 to his creditors before declaring bankruptcy in November 2007. The Tribunal took into account the fact that the respondent had suffered from undiagnosed and untreated depression, he was remorseful and there had been a delay of almost four years from the beginning of the investigation to his disciplinary hearing. Mr Long was given a four month suspension and ordered to pay $12,000 in costs.
[75][2011] VCAT 1164 (‘Long’) and [2012] VCAT 193.
In Legal Services Commissioner v Moore[76], the respondent, a practising barrister for 26 years at the time of the hearing, had not paid taxes for 17 years. He had a number of tax and BAS convictions and his total debt owing to the ATO was $1,008,048. In 2008 Mr Moore declared bankruptcy after repaying $67,904. The Tribunal noted a number of mitigating factors in its decision to reprimand him and ordered him to pay $50,000 fine and costs:
·Mr Moore’s alcohol and gambling addiction and his actions in seeking treatment;
·numerous character references;
·his candid dealings with the Victorian Bar and the Legal Services Commissioner; and
·his hard work to increase his earnings in order to maximise returns to creditors.
[76][2010] VCAT 742.
A fourth case where the respondent received a more lenient penalty than the appellant was in Legal Practitioners Complaints Committee v Pillay.[77] In this case the respondent was a solicitor who failed to lodge six years of tax returns and to make provision for eight years. The tax debt Mr Pillay owed was $411,016. He declared bankruptcy and at the time of the hearing was an undischarged bankrupt. The Western Australian State Administrative Tribunal took into account some significant personal hardships including the death of the respondent’s son. They also noted that he did not deliberately set out to avoid his tax obligations and he did not lead a lavish lifestyle. The Tribunal gave the respondent a 12 month suspension and he was ordered to pay costs.
[77][2006] WASAT 309 (‘Pillay’).
Following a request from this Court during the hearing, the respondent obtained information about disciplinary proceedings of the Victorian Bar. This information included a number of cases where barristers who had failed to meet their tax obligations had been suspended and fined. These cases can be briefly summarised as follows:
·Mr John Salamanca was convicted of understating his income and was suspended for two months.
·Dr C L Pannam QC was convicted of understating his income and was sentenced to six months imprisonment which was wholly suspended and he undertook not to practise during that time. The Bar Ethics Committee suspended Dr Pannam for six months and ordered him to pay the costs of the proceeding.
·Mr Timothy Morris was convicted of nine charges relating to his failure to comply with his tax obligations and sentenced to 18 months imprisonment, with the last 12 months being served by a good behaviour bond. His practising certificate was suspended for 10 months.
·Mr Abraham Monester QC was convicted of understating his income regarding his tax affairs and suspended for a period of eight months and ordered to pay costs.
The appellant’s table also sets out the cases at the other end of the range. In NSW Bar Association v Stevens[78], the respondent barrister failed to lodge tax returns for 20 years and did not pay tax for almost all of his professional career at the Bar. He had a tax debt of approximately $1,670,000 and he repaid $1,103,000 before declaring bankruptcy. The Court took into account his support for his family and his failed investments but he was ultimately removed from the roll.
[78][2003] NSWCA 261 (‘Stevens’).
In NSW Bar Association v Cummins[79], Mr Cummins did not pay tax for 38 years and owed over $1 million to the ATO. The respondent did not repay any of his debt and declared bankruptcy. In removing Mr Cummins from the roll, Spigelman CJ noted:
Honesty and integrity are important in many spheres of conduct. However, in some spheres significant public interests are involved in the conduct of particular persons and the state regulates and restricts those who are entitled to engage in those activities and acquire the privileges associated with a particular status. The legal profession has long required the highest standards of integrity.[80]
[79](2001) 52 NSWLR 279 (‘Cummins’).
[80]Ibid 284.
Finally, in NSW Bar v Somosi,[81] the respondent barrister did not pay his taxes for 17 years. He was convicted of 17 offences in 1996 and one more offence in 2000 in relation to his failure to lodge his tax returns. His total tax debt was $68,653 and he made no repayments to the ATO. The Court noted his three failed marriages and his meningitis, but this was weighed against his deliberate attempt to avoid his tax obligations. In setting out its decision to remove Mr Samosi from the roll the Court also made an important statement regarding the role of these types of disciplinary proceedings:
These proceedings are not concerned to protect the revenue. These proceedings are concerned with what Mr Somosi's default reveals about his character and fitness. No doubt the taxation authorities are and were primarily concerned to get what they can. These authorities will no doubt consider issues of punishment for purposes of general deterrence. However, the jurisdiction which this Court is exercising is a protective jurisdiction. It is not directed at punishment. It is not concerned with revenue collection.[82]
[81][2001] NSWCA 285.
[82]Ibid [73].
In the above analysis there are a number of issues identified in the authorities as important in evaluating an appropriate penalty. These include:
·term of non-payment/lodgement;
·declaration of bankruptcy;
·the amount of the debt;
·the amount of the repayment;
·disclosure and communication with the Bar and the regulator;
·mental health issues;
·family issues;
·whether the respondent lived a lavish lifestyle;
·intention to work to repay creditors; and
·whether the failure was a deliberate one to defraud the Commonwealth or simply ignoring one’s obligations.
The appellant submitted that his offending was at the lower end, that he had not intended to defraud the ATO, he had avoided declaring bankruptcy, and he had paid a significant amount of his tax debt and was committed to paying the rest.
The respondent submitted that the authorities show that where a legal practitioner ignored or deliberately avoided his civic obligations regarding tax lodgement and payment he suffered substantial penalties, primarily suspension. Further, he noted in cases where the conduct did not result in suspension there were exceptional circumstances. He argued that in Turner, the respondent was in the twilight of his career and was no longer particularly active in the profession. In Long, he submitted that the respondent had a serious mental illness that was not treated, unlike in this case where he noted that Ms Matthews’ report did not indicate any serious mental illness during the time of his charged conduct. Additionally, he noted that Mr Long had displayed remorse. Finally, with regards to Moore, the respondent submitted that this case had a number of extenuating circumstances including alcohol and gambling addiction. He also noted Mr Moore’s exemplary conduct while in bankruptcy where he worked very hard to ensure his creditors were repaid. In conclusion, he submitted that the penalty was within the range when assessing the extenuating circumstances of cases that did not result in long-term suspensions.
In our view, the decision of the Tribunal in this matter was plainly outside the range of penalties as imposed in this and other jurisdictions. In a time of national practices it is desirable for there to be consistency in penalties between jurisdictions. In addition, there is the expectation of comity between intermediate appellate courts.[83] There are a number of factors to consider.
[83]See Farah Constructions v Say-Dee Pty Ltd (2007) 230 CLR 89.
First, the appellant did not intend to defraud the Commonwealth. The Tribunal even accepted that there was no such intention.[84] Unlike other cases the appellant’s non-payment was not a result of a deliberate effort to deceive the ATO. It was a case where the appellant put his head in the sand and ignored his obligations.
[84]Reasons [88].
Secondly, the appellant has not declared bankruptcy. While there was significant debate at the hearing on this issue and more will be said below[85], we consider this course of action represents a strong mitigating factor. While the appellant was, as noted by the respondent, simply paying his debts, his decision to do so is contrasted with those[86] who chose to resort to bankruptcy, resulting in non-payment of a large debt to the Commonwealth.
[85][139]–[141].
[86]See Turner [2012] VCAT 373; Long [2011] VCAT 1164; Moore [2010] VCAT 742; Pillay [2006] WASAT 309; Stevens [2003] NSWCA 261 and Cummins (2001) 52 NSWLR 279.
Thirdly, the appellant has now repaid his debt. At the time of the Tribunal hearing he had repaid $736,070.74. By the time of the appeal PIA2 had been completely repaid, though he still owes substantial tax to the ATO. While the Court in Somosi noted that the purpose of the proceeding is not to maximise the return to the ATO, here the appellant has acted with a significant level of integrity since his charged conduct.[87] That repayment is contrasted with many cases where the accused has simply declared bankruptcy before any moneys were repaid or only a small amount returned.[88]
[87]Cf Cummins (2001) 52 NSWLR 279, 284.
[88]See Turner [2012] VCAT 373 and Long [2011] VCAT 1164.
Fourthly, while the respondent sought to differentiate the mental health issues in lenient cases with this one, it should be noted that in Ms Matthews’ opinion the appellant had significant gambling issues during the time of his charged conduct. This is another factor that courts have taken into account when assessing the appropriate penalty.[89]
[89]Moore [2010] VCAT 742 [41]; Re Jordan [2005] SASC 367 [71].
On the other side of the coin, it is important to observe the appellant’s apparent lavish lifestyle and his lack of candour with the respondent. These are factors that should be seen as aggravating features.
While it is not necessary to decide this ground as the discretion has already been re-opened on the double penalty ground, in our view, the penalty imposed by the Tribunal was outside the range and manifestly excessive. His conduct is more analogous to the cases of Pillay and Long, in that there is significant remorse, and rehabilitation, along with no indication of a deliberate attempt to defraud the Commonwealth. This is unlike the cases of Cummins and Stevens.
New penalty
As the double penalty ground is made out, it follows that the penalty is set aside and the appellant falls to be resentenced. There are a number of factors this Court has to take into consideration when setting an appropriate penalty. In this assessment, the Court’s main concern is whether the appellant is a fit and proper person to currently practise as a barrister.[90]
[90]See Ziems 97 CLR 279, 288 (Fullager J); Moore [2010] VCAT 742 [42].
Remorse
The appellant submitted that his conduct, the character references tendered at the Tribunal, and his guilty plea all show his significant remorse. He relied on the character references which were tendered and are outlined above.[91] These references speak to the appellant’s fitness to practise, his commitment to his family and his changed behaviour since starting a family and attempting to put his affairs in order. At the Tribunal hearing, one of the appellant’s character references, a judge of the County Court, his Honour Judge O’Neill, stated:
I think he has done an enormous amount, turned his life around, and I think there’s no doubt in his early years at the Bar, I remember not long after we completed the Bar Reader’s Course he was a person who enjoyed the social aspects of life very much, he’s always enjoyed a drink, enjoyed going out to lunch with friends and I think that has really changed. He’s an absolutely committed family man. You hear him talk of the joy that his children brings you – brings him, it’s quite extraordinary, and he’s so committed to attempting to turn around this problem by paying back the amount he owes the Taxation Department.
[91][78].
Secondly, the appellant contended his guilty plea showed contrition and remorse. Thirdly, entering into a PIA and continuing to repay his debt demonstrated his commitment to showing himself to be a fit and proper person to practice as a barrister.
In response, the respondent made two points. First he questioned the remorse on the basis of the continuing failure of the appellant to comply with his civic obligations. He noted that there was no explanation as to how the appellant had accrued a further debt to the ATO of almost $600,000. Secondly, he questioned the weight to be given to that remorse when the appellant failed to give a first hand account. This argument mirrors the Tribunal’s explanation on this point. The Tribunal stated that the character references were of limited benefit because of the appellant’s failure to give evidence. The Tribunal relied on the following statement of Tobias JA in NSW Bar Association v Meakes[92] to substantiate this point:
It is true that in professional disciplinary proceedings the onus of proving misconduct lies with the party bringing the charges and, it should be noted, a practitioner is not required to give evidence. However, as this court observed in Coe v NSW Bar Association [2000] NSWCA 13, there is an expectation that legal practitioners will mount the witness box to provide some explanation as to the conduct, rather than simply relying upon evidence from the Bar table.[93]
[92][2006] NSWCA 340 (‘Meakes’).
[93]Ibid [70].
The Tribunal’s assessment of the appellant’s remorse, especially his guilty plea, was in error. The appellant’s contrition and plea of guilty, in principle, indicates significant remorse for his conduct. This principle is clear from a number of authorities.[94] Further, as the appellant noted in his oral argument, the plea of guilty somewhat distinguishes the case of Meakes from this one. While a failure to give evidence in this type of proceeding can diminish the extent of remorse, the extensive character evidence cannot be ignored. The indirect evidence of his remorse is not diminished by his failure to give evidence. It is simply not enhanced by a frank explanation of his conduct and a direct expression of apology.
[94]See eg Cameron v The Queen (2002) 209 CLR 339, 350 (McHugh J).
The appellant’s remorse is sufficiently established on the other evidence before the Tribunal, particularly his decision to accept the full responsibility for the debt rather than the legally available option of bankruptcy.
Conduct of the investigation and hearing
The delay between the beginning of the respondent’s investigation into the appellant’s conduct and the final orders by the Tribunal was unfortunate and due to the failure of both parties to comply with their obligations relating to disciplinary investigations. Whilst both sides sought to blame each other for substantial parts of the delay, the appellant sought to rely on it as a strong mitigating factor.
The appellant submitted that the delay had a number of effects that should be taken into account in handing down a penalty. First, the appellant submitted that the Court should focus its attention on the appellant’s rehabilitation, his conduct during that time. In particular, the appellant relied on the comments of Maxwell P in R v Merrett & Ors:[95]
The relevance of delay lies rather in the effect which the lapse of time – however caused – has on the accused. Delay constitutes ‘a powerful mitigating factor’. In particular, it focuses attention on issues of rehabilitation and fairness.[96]
[95](2007) 14 VR 392.
[96]Ibid 400 (citations omitted).
The appellant contended that it would not be fair to suspend him from practice for three years, more than four years after he commenced to repay his tax debt. He has now completed that repayment obligation with income derived from continuing to practice during the delay period.
In light of this, the appellant submitted that the significant repayment, the extinguishment of PIA2 and the continued commitment to repay all his debts are important factors the Court must look at, and that the Tribunal erred in its assessment of the effect of delay and the appellant’s rehabilitation.
Secondly, he contended that the Tribunal erred in attributing substantial blame to the appellant for the delay while ignoring the respondent’s role. He submitted that if a court is to be critical of his non-cooperation they must also balance that against what the respondent did or failed to do.
In response, the respondent argued that the Tribunal took into account the delay and applied the appropriate legal principles in assessing the appellant’s rehabilitation over that time. He submitted first that the appellant’s repeated failure to respond to almost all of the requests for information as well as adjournments sought by the appellant at the hearing was the main cause of delay. In making this argument he relied on the decision of the Court of Appeal in R v Talia[97], which held that the mitigatory impact of delay is weakened where it can be attributable to the accused.
[97][2009] VSCA 260 [22].
Secondly, the respondent relied on the Tribunal’s findings in relation to the rehabilitation of the appellant, that while he had made a substantial repayment of his debt, the appellant had not complied with his obligations after the charged conduct to lodge his income tax returns and BAS statements on time.
In our view, for a regulator to protect the public interest, it is unacceptable that it took almost four years from the time the investigation started to the end of the Tribunal hearing. The offending was disclosed to the Bar Ethics Committee in March 2008, but the Tribunal application was not initiated until March 2011. Matters of this sort should be brought to justice quickly. The failure to prosecute expeditiously is not satisfactorily explained by the appellant’s failures or delay in responding to the allegations. The respondent had sufficient facts for prosecution of the appellant long before the time at which he made its application to the Tribunal.[98] All that was required was to give the appellant a reasonable opportunity to respond, which in fact had been provided by October 2008. The respondent’s explanation that it was delayed by the appellant’s failure to respond until March 2011 is inadequate.
[98]See Reasons [9]-[32].
Delay having occurred, attention should focus on what the appellant did during that period. In particular from initiation of the Tribunal proceeding in March 2011 until the hearing of the appeal, the appellant completed paying all of the tax, interest and penalties in relation to the relevant offending. He was enabled to implement his choice to attempt to repay the debt. The delay afforded him that opportunity. The respondent may be disinterested in protecting the revenue but that is not the point. The respondent acquiesced in that course of events.
Repayment and future commitment to repay
The repayment of PIA2 and the appellant’s continued ability to repay his more current tax debts is a central issue in assessing an appropriate penalty. The appellant submitted that the Tribunal erred in failing to give adequate weight to the enormous task of repayment that the appellant had undertaken. Further, he submitted that a penalty such as the one imposed by the Tribunal would preclude the appellant from repaying the rest of his debts to the ATO. This is because a period of suspension of three years would make returning to practice almost impossible, rendering repayment an unattainable task.
The respondent submitted that the Tribunal took into account the substantial repayment provided by the appellant and appropriately weighed it alongside the continuing non-compliance after the charged conduct, including failure to lodge BAS statements and income tax returns on time. He further argued that the evidence before the Tribunal regarding the appellant’s income did not show that it was necessary for the appellant to forego his current tax liabilities in preference to repaying his debt because it appears he could have paid both. Finally he submitted, relying on Somosi, that it is not the role of these proceedings to protect the revenue of the Commonwealth.
While the management by the appellant of his tax affairs after the charged conduct has not been exemplary, in our view his significant repayment was not awarded due weight by the Tribunal. To simply accept it in the reasons as a mitigating factor and then enter into a discussion about the failure to lodge returns after the charged conduct reflects the relatively minor weight that the repayment factor was given.[99] The Tribunal’s overall analysis of the repayment and rehabilitation of the appellant was unduly harsh. It seems to have been driven by the respondent’s uncompromising views as to how the Tribunal should deal with the appellant’s absence from the witness box. The Tribunal stated:
The Tribunal accepts the submission of Applicant’s Counsel that the evidence of the Respondent’s rehabilitation would be expected to include direct evidence about his remorse; steps he had taken to make restoration for his past conduct; and importantly, evidence that he was no longer engaging in conduct of the kind that is the subject of the charges. In short, in assessing whether the Respondent has undergone a significant change in his lifestyle as alleged, and whether such change is meaningful in the context of his current compliance with his obligations under tax law, the Tribunal was entitled to expect to hear evidence from the Respondent, to the effect that he no longer fails to file income tax returns and BAS in a timely manner; and that he pays his assessed income tax and GST liabilities in a timely manner.[100]
[99]See Reasons [211]-[212].
[100]Reasons [152].
This approach failed to address the proper question of present fitness to practise that was before the Tribunal.
Indeed the appellant’s repayments are a much more significant factor than the Tribunal recognised. The evidence of continuing failings with tax compliance through the course of PIA1 and PIA2 suggested imperfect rehabilitation, not a failure to rehabilitate at all. The magnitude of the undertaking exposed and continues to expose the appellant to the risk of incomplete performance. It is unsurprising that he has stumbled. However, he remains committed to expunging his tax debt. Accepting that obligation and doing his imperfect best is consistent with good prospects of rehabilitation and positively reflects his intention to accept the obligation and commit to making restitution for his past conduct. That is a relevant, and significantly favourable factor in assessing whether the appellant is now a fit and proper person, which is the correct question.
Financial ruin and family situation
The appellant argued that a long suspension would financially ruin him, prevent him from repaying his current debts and cripple his family. He noted that his current debt to the ATO stood at $598,257.80 and to remove him from practice for any significant period would make repayment impossible. Further, the appellant submitted that his family relied heavily on his income and that his only profession was as a barrister.
The respondent opined that it may be possible for the appellant to work as a law clerk or in some other capacity. The respondent also argued that the appellant did not provide any evidence of his financial position or his family’s and thus it was impossible to take this into account.
While the argument is not central to the question of penalty, the effect of the penalty should be given due consideration. There was some conjecture at the appeal hearing as to whether the appellant could pick up where he left off. It is clear that a suspension of the kind that the Tribunal imposed would have a severe effect on the ability of the appellant to earn an income and repay the ATO. Further, it would be extremely difficult for a barrister to experience three years away from practice and be able to pick up his practice where he left off.
During argument, the Court was informed that the appellant had separated from his wife, although he expressed hope for reconciliation. Whatever be the appellant’s future in that respect, he is now a father and we accept that his parental responsibilities, which remain, are important to him.
Having said this, it is important to observe that the appellant did not provide any evidence to the Tribunal or this Court as to his financial position or his ability to access funds. Prompted by this Court, the appellant divulged that the appellant’s former partner now works four days a week and earns approximately $50,000 per year. Therefore, it was submitted, the deleterious effect of the penalty should be balanced with the failure of the appellant to provide appropriate information as to the real effect of such a penalty.
Bankruptcy
The appellant submitted that the decision of the appellant not to enter bankruptcy and to continue to repay his debts was a clear mitigating factor that was not given enough weight by the Tribunal. He contended that his decision displayed two important factors. The first is that it demonstrated the appellant’s remorse in that he was willing to make amends for his previous conduct. Secondly, it maximised the amount that was repaid to his creditor, instead of the more limited arrangements that come under bankruptcy. In making this second point, the appellant relied on the comments of de Jersey CJ in Legal Services Commissioner v Hewlett.[101] In that case the respondent solicitor did not pay taxes for 11 years, had a $914,572 debt and, importantly, declared bankruptcy. Chief Justice de Jersey noted the importance of Mr Hewlett’s bankruptcy:
It is also significant that in his subsequent negotiations with the ATO, the respondent was not proposing to pay all of the outstanding liability, even over a period of years. He was offering a lesser amount. The result of his bankruptcy is to limit forever the amount recoverable by the ATO, with the inevitable result that the respondent's fellow taxpayers will be out of pocket.[102]
[101][2008] 2 Qd R 292.
[102]Ibid [19].
The respondent sought to characterise the decision of the appellant to avoid a declaration of bankruptcy in two ways. The first was to suggest the appellant simply decided to pay his debts. In no way was this behaviour commendable, it was simply the appellant complying with the law. Secondly, the appellant was acting in his own self-interest. As a show cause event under s 2.4.27 of the Act, a declaration of bankruptcy could result in the appellant being sanctioned by the Victorian Bar or the respondent. Therefore, he argued such a decision did not necessarily represent the honourable course of action. Finally, he also rejected the submission of the appellant that the Tribunal gave no weight to the bankruptcy, noting it only ignored the intentions the appellant sought to infer from the decision; the Tribunal he argued, took into account the significant repayment as a mitigatory factor.
As already observed, the decision to declare bankruptcy was misunderstood by the Tribunal.[103] The respondent’s submissions on this issue were unpersuasive. The ongoing future commitment to clear this large tax debt consequent on the decision not to clear the debt by bankruptcy was properly characterised by the appellant as conduct undertaken to expunge the effects of his wrongdoing. Furthermore, to repeat, a decision to repay the amount under the charged conduct and continue to pay represents a more honourable course of action. While the respondent set out some benefits to avoiding bankruptcy, the continued spectre of a tax debt must equally be seen as weighing on the decision. What should be said is that this course of action represented both a willingness to atone for previous conduct as well as maximising the return to creditors. The importance of working hard to ensure the maximum return to creditors was noted by the Tribunal in Moore[104] and in this case it should be seen as a factor in the appellant’s favour.
[103][109].
[104][2010] VCAT 742 [41].
Behaviour of the appellant
The respondent placed significant weight on the behaviour of the appellant in explaining the severity of the penalty. In particular he relied on three important factors.
First, the appellant’s lack of candour with the Victorian Bar and the respondent. The respondent submitted that the appellant’s behaviour when communicating with the Bar and the respondent showed a lack of integrity that is deserving of severe punishment. In doing so he relied on the finding of the Tribunal as to the appellant’s lack of integrity:
The Tribunal also accepts that the Respondent has demonstrated a lack of candour in dealing with his regulators, reflecting a lack of integrity, which constitutes another aggravating factor.
This lack of candour is reflected in:
(a) The conduct the subject of charge 3;
(b) The Respondent’s failure or refusal to respond at all for a lengthy period to the Applicant’s request for information during the investigation; and
(c) The Respondent’s refusal to answer legitimate requests even where further explanation was given of the basis for the requests.[105]
[105]Reasons [177] (citations omitted).
In relation to the letter to the Victorian Bar, as observed earlier[106], this conduct should be given its own separate penalty and should not be considered an aggravating factor to the conduct in Charge 1. The appellant sought to argue that a fair reading of the letter showed that it was not intended to mislead. He submitted that while the letter contained the claim that he had ‘diligently attended to the lodgement of returns since 2005’, it also set out a number of penalties the appellant had received for late lodgement of BAS since 2005.[107]
[106][71].
[107]These were:
·penalty for late lodgement of BAS on 17 October 2006;
·penalty for late lodgement of BAS on 12 April 2007;
·penalty for late lodgement of BAS on 13 April 2007; and
·penalty for late lodgement of BAS on 9 July 2007.
We are unpersuaded by this submission. While the letter shows an inconsistency, in our view, the appellant intended to mislead the Victorian Bar. For an individual to indicate that there has been diligent attendance to the lodgement while failing on a number of occasions to do so is inexcusable. In NSW Bar Association v Butland[108], Judge McGuire clearly set out this duty and what it entails:
Secondly, even if the Barrister’s conduct was careless and not deliberate, this constitutes no sufficient excuse in the circumstances. When a barrister is responding to a Bar Association request for information and assistance in respect of a complaint being investigated by the Bar Association, the barrister owes a duty of candour. Carelessness, or perhaps more properly recklessness, as to whether or not the information supplied in those circumstances is correct will not satisfy the barrister’s obligation to co-operate and to respond with candour.[109]
[108][2008] NSWADT 120.
[109]Ibid [84].
The appellant failed to comply with this duty, and despite the excuse proffered by the appellant, he will be separately penalised for his failings.
The appellant’s conduct in relation to the respondent is more concerning. The appellant accepted that he was uncooperative with the respondent, that he had put his head in the sand for some time instead of attempting to resolve the issue. The respondent submitted that this conduct showed a reckless disregard towards his obligations to the respondent. He noted that not only had the appellant failed to respond, in his letter dated 8 July 2010, he refused to provide certain information on the basis that it was outside the subject matter of the investigation. Such conduct, the respondent argued, was not just silence but an act of defiance to the authority of the respondent.
The obligation of a legal professional to respond to the regulator is set out both in common law and in statute. In NSW Bar Association v Thomas[110], Kirby P noted the obligation in relation to the NSW Bar Association, an organisation that has similar regulatory powers in NSW as the respondent:
The duty of honesty and frankness on the part of a barrister under investigation extends to the investigative steps immediately anterior to the consideration of a case by the court or by a tribunal appointed for that purpose.[111]
[110](1989) 18 NSWLR 193.
[111]Ibid 206.
The Act also outlines this obligation in s 4.4.11:
(1) An investigating authority may require an Australian legal practitioner who is subject to an investigation under this Division to provide –
(a) a full written explanation of the practitioner's conduct; and
(b) any other information or documents –
and to verify the explanation, information or documents by statutory declaration or another manner specified by the investigating authority.
(2) The power referred to in subsection (1)(b) is exercisable –
(a) at any time during the investigation; and
(b) so far as the power relates to the provision of documents – also at any time after the investigation but before the commencement of the hearing by the Tribunal of any charge resulting from the investigation.
The appellant’s conduct in relation to the respondent’s requests for information was unacceptable. A barrister owes a special duty of candour to the regulator in order to ensure that it can competently oversee the profession and ensure public confidence. The requests for information were reasonable, while the respondent in our opinion did not follow up those requests appropriately, the appellant was given ample time to respond and comply. In considering an appropriate penalty, this type of conduct weighs in favour of a suspension both on the basis of specific and general deterrence.
Secondly, the respondent and the Tribunal placed much weight on the failure of the appellant to give evidence at the hearing. The Tribunal noted, in relation to the respondent’s submission on this point:
The Tribunal accepts the submission of Applicant’s Counsel that the evidence of the Respondent’s rehabilitation would be expected to include direct evidence about his remorse; steps he had taken to make restoration for his past conduct; and importantly, evidence that he was no longer engaging in conduct of the kind that is the subject of the charges. In short, in assessing whether the Respondent has undergone a significant change in his lifestyle as alleged, and whether such change is meaningful in the context of his current compliance with his obligations under tax law, the Tribunal was entitled to expect to hear evidence from the Respondent, to the effect that he no longer fails to file income tax returns and BAS in a timely manner; and that he pays his assessed income tax and GST liabilities in a timely manner.
In contrast to what would be expected, the Respondent’s approach in this case, was not to give evidence to assist the Tribunal in determining whether he is in fact rehabilitated. Instead, he has put forward and relied on others to speak about his rehabilitation.[112]
[112]Meakes [2006] NSWCA 340.
The failure to give evidence was used in a variety of ways to the detriment of the appellant. It was used to undermine the rehabilitation claim of the appellant, his remorse and the reasons behind his failure to lodge returns either during the period of the charged conduct, or the time between the charged conduct and the hearing.
The respondent relied on a number of authorities to demonstrate the obligation of the appellant to provide an explanation for his conduct. He argued this was particularly important given the indirect means by which the appellant attempted to show he had been rehabilitated and was now a fit and proper person to practise as a barrister.
The appellant submitted that a failure to give evidence cannot be used in a way to further penalise him. He argued that notwithstanding the failure to give evidence he could rely on the evidence that was before the Tribunal and this Court. The appellant submitted that the Tribunal erred in dismissing or giving less weight to the evidence at the hearing on the basis that he did not appear to give evidence to provide further information.
While there is no authority to suggest it is a duty of a legal practitioner to give evidence in a disciplinary tribunal, it is open for this Court to question that failure, especially where an accused is seeking to positively show they are fit and proper to practise. In Re Veron: Ex parte Law Society of New South Wales[113], the NSW Court of Appeal noted:
The respondent is an officer of the Court…disciplinary proceedings in this jurisdiction in the state have always been conducted upon affidavit evidence and not otherwise. They are not conducted as if the Law Society … was a prosecutor in a criminal cause or as if we were engaged upon a trial of civil issue at nisi prius. The jurisdiction is a special one and it is not open to the respondent when called upon to show cause, as an officer of the Court, to lie by and engage in a battle of tactics, as was the case here, and to endeavour to meet the charges by mere argument.[114]
[113](1966) 84 W.N. 136.
[114]Ibid 141-142 (Herron CJ, Sugerman and McLelland JJA).
Similar comments were made by Tobias JA in Meakes:
Yet these were the very matters which were wholly within the knowledge of the respondent and which he was [sic] did not offer to answer in the witness box. On the contrary, he chose the safety of the well of the Tribunal. Notwithstanding the advice of his then senior counsel, the respondent’s refusal to enter the witness box and provide evidence with respect to the matters referred to should have been the subject of harsh criticism by the Tribunal. Moreover, if that evidence had otherwise been relevant to the issue, his refusal to provide it would have significantly detracted from the weight to be attached to the tendered character references. In these circumstances, the only inferences one can draw from the respondent’s refusal to sworn testimony in this matter was that his evidence would not have assisted his case in resisting a finding of professional misconduct.
…
In my opinion the failure of the respondent to give sworn evidence was
inexcusable.[115]
[115]Reasons [77]-[78].
The resolution to this matter sits somewhere in between the competing submissions of the respondent and the appellant. The respondent is correct to say that the forensic decision of the appellant not to provide a full explanation left the Tribunal with the unenviable task of attempting to piece together the evidence available to it to provide a complete picture of the appellant’s evidence. Further, it was open to the Tribunal, as it is open to us, to question the veracity of the claims of rehabilitation and remorse because the appellant did not provide it with any first hand explanation as to his charged conduct or the rehabilitation he has allegedly undergone.
On the other hand, the appellant is correct in noting that it is not open to a court or disciplinary tribunal to simply ignore the other evidence put on the grounds that the appellant could provide a more complete explanation by giving direct evidence.
In assessing an appropriate penalty, the appellant’s failure to give evidence does somewhat diminish his claims as to rehabilitation and remorse. However, it should not be seen as eliminating those matters altogether, especially considering the weight of evidence pointing the other way from character references and the appellant’s conduct in repaying his ATO debt.
Thirdly, as to the lavish lifestyle, the wilful non-compliance with taxation obligations and frivolous spending, those matters are aggravating factors in sentencing. Such a reckless disregard for his obligations calls for a suspension from practice.
Conclusion
Without diminishing the significance of the appellant’s conduct, it is not in the category of misconduct that brings directly into question the security of a client’s interests or his technical competence as a practitioner. There is nothing to suggest that protection of the community is called for. What is at risk is whether community confidence in the integrity of members of the legal profession continues to be threatened. When assessing the appellant’s responses to his offending behaviour, the key issue is whether the appellant is now a fit and proper person to practise as a barrister.
It follows from the preceding analysis that the appellant is not a fit and proper person to currently practise. His failure to comply with his obligations, refusal to cooperate with the respondent, continuing issues with tax compliance and failure to give an account of his failings at the Tribunal all point to this conclusion. The appellant’s conduct attracts suspension. However, his circumstances are such that his future practice should be governed for a time by conditions that should assist his rehabilitation.
The imperfections in the course of his rehabilitation, and the uncharged subsequent conduct, do not preclude, but rather condition, how his subsequent rehabilitation to being a fit and proper person should be assessed and managed. Once it is accepted, as we do, that he has demonstrated his remorse, and is working hard at rehabilitation with reasonable prospects of achieving a return to being a fit and proper person, a disposition that encourages that outcome is consistent with the protective function of the jurisdiction.[116] This is particularly the case when one looks at the evidence of Ms Matthews in her letter dated 28 February 2012:
In summary Mr Stirling has been through an extended unsettled period but he has now settled in the context of: (a) a secure base, provided by a supportive relationship and the establishment of a family, and (b) self-imposed discipline in regards to his behaviour, profession and obligations. In the writer’s opinion the behaviours of concern to the Applicant [the respondent] have been significantly decreasing since 2005 and have now largely resolved and are unlikely to return.
[116]Burgess [2013] VSCA 142 [67].
In summary, we would allow the appeal and impose a fresh penalty. In imposing a new penalty, we would impose conditions on any practising certificate that may be given to the appellant after the term of his suspension is completed. Those conditions will endure for a period of five years and require the appellant on returning to practice:
·to engage an accountant to prepare his tax returns and BAS;
·to report to the respondent, within seven days, that he has lodged his income tax returns and BAS, and to also provide a copy to the respondent of any correspondence with the ATO relating to tax compliance;
·to create a separate bank account where 50 per cent of all fees will be deposited, and cannot be disbursed otherwise than to the ATO or another entity with the respondent’s permission;
·to maintain accounting principles acceptable to the respondent, undertake courses on practice accounting management; and
·to attend not less than five hours of counselling.
The reason for attaching conditions is two-fold. First and foremost, it recognises the protective purpose of disciplinary proceedings. The conditions ensure that the appellant will comply with his obligations or he will lose his right to practise. It ensures public confidence in the profession, by managing the appellant’s return to practice. Secondly, the conditions seek to facilitate rehabilitation. They provide the appellant both with the tools to ensure that he lodges his tax returns on time and make adequate provision to pay his tax debts, as well as engaging with the respondent to guarantee sufficient oversight. Finally, the conditions contain a significant penalty provision such that if the appellant does not comply then the two year suspended part of his sentence will be reinstated. This is a balanced approach.
We order, that on Charge 1 the appellant be suspended from practice for a period of 30 months, with 24 of those months being suspended for a period of five years.
We also order on Charge 3 that the appellant be reprimanded.
Finally, we order that the practising certificate issued to the appellant on the completion of the remaining suspension be subject to the conditions we have indicated.
On the issue of costs, when orders were made on 2 October 2013 there were submissions as to costs. In all the circumstances of this matter we consider that there should be no order as to costs. The appellant has been successful. However, matters were put before the court in a more amplified manner by his counsel than before the Tribunal. The court was assisted by the articulation of the appellant’s case such that matters were clarified in a manner not readily apparent or explained to the Tribunal. That said, we do not consider the costs of the appeal should fall on the unsuccessful party. Furthermore, although successful the appellant remains subject to a stern penalty and stringent conditions. Thus, no order as to costs will be made
The formal orders are:[117]
[117]Upon the completion of the hearing of the appeal, the Court announced its decision with reasons to be published at a later time. The Court made orders as set out in [1670].
1.The appeal be allowed.
2. Orders 4 and 5 made by the Victorian Civil and Administrative Tribunal (‘the Tribunal’) on 28 March 2012 be set aside and in lieu thereof:
a)On Charge 1, pursuant to s 4.4.17(b) of the Legal Profession Act (2004)(‘the Act’) the local practising certificate of the Appellant be suspended for a period of 30 months to commence on 1 December 2013 (‘the head suspension period’).
b)24 months of the head sentence be wholly suspended for a period of 5 years (‘suspended order period’). During the suspended order period, a local practising certificate may be granted to the Appellant.
c) During the suspended order period, the Appellant shall not engage in or commit any act of professional misconduct or unsatisfactory professional conduct.
d)Pursuant to s 4.4.17(d) and 4.4.19 of the Act the following conditions (‘conditions’) be imposed from the date of this order and on each of the Appellant’s local practising certificates during the suspended order period:
i)The Appellant must engage an accountant to prepare and file his annual tax return, all Instalment Activity Statements or Business Activity Statements, and Annual GST Return (‘returns and statements’), such engagement of an accountant and its reasonable terms shall be approved by the Legal Services Commissioner.
ii)The Appellant must certify in writing to the Legal Services Commissioner, by no later than 7 days after the date on which such returns and statements must ordinarily be lodged and any moneys payable thereunder be paid, if such dates be different, that such returns and statements have been lodged and any moneys payable thereunder have been paid, or produce evidence, satisfactory to the Legal Services Commissioner, that the Australian Taxation Office has agreed to extend the time for compliance or payment.
iii)The Appellant must forthwith on receipt provide to the Legal Services Commissioner a copy of any correspondence, statement, or notice from the Australian Taxation Office concerning any issue of compliance with Australian taxation laws that is received by him, or his accountant.
iv)The Appellant must set up and maintain a separate bank account and instruct his clerk when banking any fees received on his behalf to remit not less that 50% of his gross fee receipts, after clerk’s fees and practice deductions made directly by his clerk, into that account. The creation of the account is to be done within 7 day of this order. Without limiting the Appellant’s obligation to pay moneys to the Australian Taxation Office, the practitioner must not disburse funds from this account other than to the Australian Taxation Office or as it directs, save with the consent of the Legal Services Commissioner.
v)The Appellant’s practice is subject to an annual inspection by the Legal Services Commissioner or his delegate, at such time and place as the Commissioner may reasonably specify, for the purpose of determining whether the Appellant is complying, or has complied, with this order or any condition of his practising certificate.
e)Pursuant to s 4.4.17(d) and 4.4.19 of the Act the following further conditions (‘conditions’) be imposed from the date of this order and on the first of the Appellant’s local practising certificates to be issued during the suspended order period:
(i)The Appellant must implement and maintain such accounting and administrative practices as are required in the management of the Appellant’s practice to ensure compliance with the conditions specified in order 2(d) above as the accountant engaged under order 2(d)(i), and the Chairman of the Ethics Committee of the Victorian Bar Council or his or her delegate, may advise.
(ii)By no later than three months after resuming practice on or after the date determined by order 2(b), the Appellant shall undertake such course or courses of further legal education in practice accounting and management, including taxation accounting and compliance obligations, as is or are recommended by the Chairman of the Ethics Committee of the Victorian Bar Council or his or her delegate.
(iii)The Appellant shall participate in not less than 5 hours of counselling with the counselling service initiated by the Health and Wellbeing Committee of the Victorian Bar or, at his expense, with such other counsellor as may be agreed between the Appellant and the Chairman of the Ethics Committee of the Victorian Bar Council or his or her delegate.
f)In the event that the Appellant fails to comply with any condition set out in order 2(c), 2(d), or 2(e) during the suspended order period, the Legal Services Commissioner may make an application to the Tribunal to revoke the suspended order period. In the event that the Tribunal is satisfied that a material breach of this order has occurred during the suspended order period, order 2(b) is vacated and the Appellant’s practising certificate shall be cancelled and a local practising certificate shall not be granted to the appellant before the expiry of the head suspension period or that period and any further period from the date of the Tribunal’s finding of breach of this order that the Tribunal may determine, having regard to the circumstances of the breach of this order.
3.On Charge 3, the appellant is reprimanded pursuant to s 4.4.19(k) of the Act.
4.The Appellant file and serve a further affidavit by 4.30pm on 4 October 2013.
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- AGLC
- Stirling v Legal Services Commissioner [2013] VSCA 374
- Case
- [2013] VSCA 374
- Decision Date
CaseChat Overview and Summary
The court had to determine whether the penalty imposed by VCAT breached the common law principle articulated in Ryan v The Queen, which states that a penalty cannot be imposed for the same conduct under different heads of charge. Additionally, the court considered whether the penalty was manifestly excessive and whether the discretion to re-open the matter was properly exercised. The court was also tasked with interpreting the application of Pearce v R in the context of sentencing in professional disciplinary matters.
The Supreme Court found that the global approach to the penalty by VCAT breached the common law principle in Ryan v The Queen, as it effectively imposed a penalty for the same conduct under multiple charges. The court also held that the use of the charged conduct in a separate charge constituted a double penalty. However, the court found that the penalty was not manifestly excessive and affirmed the re-opening of the discretion to reconsider the penalty. The court re-sentenced Stirling to a 30-month suspension, with 24 months suspended, and imposed ancillary orders that conditions be placed on any future practising certificate granted to him.
The final orders included the suspension of Stirling's practising certificate for 30 months, with 24 months suspended, and conditions that must be attached to any future practising certificate. These conditions include requirements for Stirling to provide financial information and undergo professional development. The decision underscored the importance of adhering to legal principles in disciplinary proceedings and the need for proportionality in penalties imposed on legal practitioners.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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