Tax Practitioners Board v Hacker (No 2)

Case [2020] FCA 1048

FEDERAL COURT OF AUSTRALIA

Tax Practitioners Board v Hacker (No 2) [2020] FCA 1048

File number: QUD 106 of 2019
Judge: RANGIAH J
Date of judgment: 27 July 2020
Catchwords: CONTEMPT OF COURT –– where respondents made undertaking not to provide tax agent services within meaning of s 90–5 of the Tax Agent Services Act 2009 (Cth) – allegation of breach of undertaking – second respondent admitted contempt – whether first respondent received reward for providing tax agent services – where first respondent was shareholder of company which charged for tax agent services –– breach of undertaking established
Legislation:

Federal Court of Australia Act 1976 (Cth) s 31

Judiciary Act 1903 (Cth) s 24

Tax Agent Services Act 2009 (Cth) ss 50–5 and 90–5

Cases cited:

Anderson v Hassett [2007] NSWSC 1310

Australasian Meat Industry Employees’ Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98

Australian Consolidated Press Limited v Morgan (1965) 112 CLR 483

Lade & Co Pty Ltd v Black [2006] 2 Qd R 531

Mallan v Lee (1949) 80 CLR 198

Metcash Trading Ltd v Bunn (No 5) (2009) FCA 16

Microsoft Corporation v Marks (No 1) (1996) 69 FCR 117

Tax Practitioners Board v Hacker [2020] FCA 1047

Witham v Holloway (1995) 183 CLR 525

Date of hearing: 10–13 February 2020
Registry: Queensland
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Regulator and Consumer Protection
Category: Catchwords
Number of paragraphs: 40
Counsel for the Applicant: Mr S Couper QC with Mr D Chesterman
Solicitor for the Applicant: Australian Government Solicitor
Counsel for the Respondents: Ms J Marr
Solicitor for the Respondents: Fisher Dore

ORDERS

QUD 106 of 2019
BETWEEN:

TAX PRACTITIONERS BOARD

Applicant
AND:

KENT SCOTT HACKER

First Respondent

ONE STOP GLOBAL STAFFING PTY LTD ACN 097 166 204

Second Respondent

NALEVIEW PTY LIMITED ACN 051 420 010

Third Respondent

JUDGE:

RANGIAH J

DATE OF ORDER:

27 JULY 2020

THE COURT ORDERS THAT:

1.By 4.30 pm on 21 August 2020, the applicant file and serve written submissions (not exceeding 15 pages) and any affidavits concerning penalties for contempt of court in respect of the interlocutory applications filed on 17 June 2019, 19 November 2019, 26 March 2020 and 30 June 2020.

2.By 4.30 pm on 11 September 2020, the first and second respondents file and serve written submissions in response (not exceeding 15 pages) and any affidavits.

3.By 4.30 pm on 18 September 2020, the applicant file and serve any written submissions in reply (not exceeding three pages) and any affidavits in reply.

4.The hearing of the question of penalties for contempt of court be set down for 10.15 am on 28 September 2020.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

RANGIAH J:

  1. By an interlocutory application and Statement of Charge filed on 17 June 2019, the applicant, the Tax Practitioners Board, seeks the imposition of penalties for contempt of Court upon the first respondent, Kent Scott Hacker, and the…

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AGLC
Tax Practitioners Board v Hacker (No 2) [2020] FCA 1048
Case
[2020] FCA 1048
Decision Date

CaseChat Overview and Summary

The case of Tax Practitioners Board v Hacker (No 2) involves the Tax Practitioners Board as the applicant seeking to enforce a contempt finding against the respondents, Mr Hacker, OSGS, and Naleview Pty Ltd. The central dispute revolves around allegations that Mr Hacker and the other respondents provided tax agent services while not being registered tax agents, thereby contravening the Tax Agent Services Act 2009 (Cth). The respondents had earlier given an undertaking to the Court to refrain from providing such services. The Court was tasked with determining whether Mr Hacker breached this undertaking and if he received any fee or reward for providing tax agent services.

The key legal issues before the court included the proper construction and scope of the undertaking given by the respondents, and whether the allegations of contempt were sufficiently proven. Additionally, the court needed to decide if Mr Hacker had directly or accessorially received any fee or reward for providing tax agent services, despite not being a registered tax agent. The court had to interpret the terms of the undertaking and the statutory provisions in question to resolve these issues.

In its reasoning, the court found that the undertaking given by the respondents was clear and unambiguous, prohibiting them from providing tax agent services for a fee or reward. The court held that the undertaking must be interpreted within the confines of the statutory provisions it sought to restrain. It further determined that Mr Hacker, despite not directly charging for the services, was still liable for contempt as he received a fee or reward through his position as a shareholder in the company that charged for these services. The court held that the first respondent admitted to the contempt, establishing the breach of the undertaking. Consequently, the court found that the allegations of contempt against Mr Hacker were proven beyond reasonable doubt.

The court ordered the parties to file written submissions and affidavits concerning penalties for contempt, with specific deadlines set for each stage. The hearing on the question of penalties for contempt was scheduled for a later date, indicating that the court intended to address the consequences of the contempt findings in a subsequent proceeding.

Orders

Orders of the court

1. By 4.30 pm on 21 August 2020, the applicant file and serve written submissions (not exceeding 15 pages) and any affidavits concerning penalties for contempt of court in respect of the interlocutory applications filed on 17 June 2019, 19 November 2019, 26 March 2020 and 30 June 2020.

2. By 4.30 pm on 11 September 2020, the first and second respondents file and serve written submissions in response (not exceeding 15 pages) and any affidavits.

3. By 4.30 pm on 18 September 2020, the applicant file and serve any written submissions in reply (not exceeding three pages) and any affidavits in reply.

4. The hearing of the question of penalties for contempt of court be set down for 10.15 am on 28 September 2020.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

I will describe some matters of background before considering the allegations made against Mr Hacker in the First Contempt Application. Background On 12 February 2019, the applicant commenced the Contravention Proceedings against Mr Hacker, OSGS and Naleview Pty Ltd (Naleview) alleging that each of them contravened s 50–5(1) of the TAS Act. That section provides:50–5 Providing tax agent services if unregistered(1) You contravene this subsection if:(a)you provide a service that you know, or ought reasonably to know, is a *tax agent service; and(b)the tax agent service is not a *BAS service or a *tax (financial) advice service; and(c)you charge or receive a fee or other reward for providing the tax agent service; and(d)you are not a *registered tax agent; and(e)if you provide the tax agent service as a legal service—either:(i)you are prohibited, under a *State law or *Territory law that regulates legal practice and the provision of legal services, from providing that tax agent service; or(ii)subject to subsection (3), the service consists of preparing, or lodging, a return or a statement in the nature of a return.Civil penalty:(a) for an individual—250 penalty units; and(b) for a body corporate—1,250 penalty units.… On 1 March 2019, in response to an application brought by the applicant for an interlocutory injunction, Mr Hacker, OSGS and Naleview gave the following undertaking to the Court:On a without admissions basis, until further order of the court or final disposition of this proceeding, each respondent (and in the case of the first respondent, either personally or on behalf of another entity) will not provide tax agent services within the meaning of s 90–5 of the Tax Agent Services Act 2009 (Cth) or BAS services within the meaning of s 90–10 of the Tax Agent Services Act 2009 (Cth) for fee or reward to any person or entity with the exception of those entities in respect of which the first respondent holds an officer position (being either director, company secretary and/or public officer), and, for the avoidance of any doubt, the undertaking does not prohibit the first respondent from receiving a fee or reward in respect of his officer role for those entities.(Emphasis added.) On 17 June 2019, the applicant filed the First Contempt Application. The hearing of that application commenced on 10 September 2019. In the course of the hearing it became apparent that there were issues of construction of s 50–5 of the TAS Act which substantially overlapped with the issues that would have to be determined in the Contravention Proceeding. I considered that it would be preferable to decide the Contravention Proceeding first. I adjourned the hearing of the First Contempt Application until immediately after the hearing of the Contravention Proceeding. On 30 September 2019, the applicant filed an Amended Statement of Charge in support of the First Contempt Application. The amendments allege, further or alternatively, that Mr Hacker is liable for contempt on an accessorial basis.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Each allegation of contempt set out in paras 2(a)-(c) is supported by an affidavit of the person to whom the tax agent service was allegedly provided, namely Palwinder Lore, Jeremy Park and Mohammed Rizwan Shaikh respectively. These witnesses have not been required for cross-examination. It may be noted that in the Contravention Proceeding, I found each of the tax agent services described in paras 2(a)-(c) to be a contravention of s 50–5(1) of the TAS Act.Consideration Proceedings for contempt Under s 31 of the Federal Court of Australia Act 1976 (Cth), the Federal Court has the same power to punish contempts of its power and authority as is possessed by the High Court in respect of contempts of the High Court. Section 24 of the Judiciary Act 1903 (Cth) confers on the High Court the same power to punish for contempt as was possessed at the commencement of that Act by the Supreme Court of Judicature in England. A breach of an undertaking is, like disobedience of a court order, a contempt of court, for which the contemnor is liable to punishment: Australian Consolidated Press Limited v Morgan (1965) 112 CLR 483 at 496–497. It is necessary to prove the contempt beyond all reasonable doubt: Witham v Holloway (1995) 183 CLR 525 at 534. A deliberate act committed in breach of an injunctive order or undertaking will constitute wilful disobedience unless it be casual, accidental or unintentional: Australasian Meat Industry Employees’ Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 113. However, it is not necessary for the applicant to prove that the contemnor intended to breach an order of, or an undertaking to, the Court: see Lade & Co Pty Ltd v Black [2006] 2 Qd R 531 at [57]–[58]; Anderson v Hassett [2007] NSWSC 1310 at [8]; Mudginberri at 112. Nor is it necessary to prove that the contemnor was aware that his or her conduct constituted a breach of the undertaking: Microsoft Corporation v Marks (No 1) (1996) 69 FCR 117 at 143; Metcash Trading Ltd v Bunn (No 5) (2009) FCA 16 at [9].The allegations against Mr Hacker Mr Hacker does not dispute the facts alleged against him. His defence against the direct allegations of contempt is based upon the proper construction of the undertaking, which he contends must be understood in light of the proper construction of s 50–5(1) of the TAS Act. Further, he submits that the allegations of accessorial liability in the Amended Statement of Charge are inadequate and should be struck out. Mr Hacker observes that his undertaking was given in the context of an application for an interlocutory injunction to restrain conduct which could contravene s 50–5(1) of the TAS Act. He submits that the undertaking cannot be given a broader meaning than s 50–5(1) itself, and must be construed within the confines of that provision. Mr Hacker submits that s 50–5(1) requires proof that he had the requisite knowledge and, critically, that he personally charged or received a fee or reward for providing tax agent services.