Tax Practitioners Board v Williams

Case [2023] FCA 63

FEDERAL COURT OF AUSTRALIA

Tax Practitioners Board v Williams [2023] FCA 63  

File number: SAD 95 of 2021
Judgment of: CHARLESWORTH J
Date of judgment: 8 February 2023
Catchwords:

CONTEMPT – breach by the respondent of an interlocutory injunction granted under s 70-5(1) of the Tax Agent Services Act 2009 (Cth) – contempt occurring in circumstances where respondent was conscious that his conduct contravened the Act – respondent aware of Court’s order – no adequate explanation for the contempt other than lack of appreciation that the Court would view the contravening conduct seriously – respondent generally cooperative in the proceedings – heightened need for general deterrence – imposition of a fine not appropriate – short term of imprisonment imposed

TAXATION – application for civil penalties to be imposed for multiple breaches of s 50-5(1) of the Tax Agent Services Act 2009 (Cth) – respondent conscious of wrongdoing – respondent continuing to breach the Act after becoming aware initial contraventions had been detected – lack of adequate explanation – weight to be given to cooperation in proceedings generally when assessing need for specific deterrence – need for specific and general deterrence in respect of future contraventions of critical provision of the Act – fine imposed commensurate with evidence of respondent’s financial means – risk of loss of assets and bankruptcy considered

Legislation:

Crimes Act 1914 (Cth) s 4AA

Evidence Act 1995 (Cth) s 191

Fair Work Act 2009 (Cth) s 546

Federal Court of Australia Act 1976 (Cth) s 31

Tax Agent Services Act 2009 (Cth) ss 2-5, 20-5, 30-20, 50-5, 50-35, 70-5, 90-5

Cases cited:

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68

Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; 399 ALR 599

Australian Competition and Consumer Commission v Employsure Pty Ltd (No 2) [2021] FCA 1488:

Australian Competition and Consumer Commission v Halkalia Pty Ltd (No 3) [2017] FCA 522

Australian Competition and Consumer Commission v Info4pc.com Pty Ltd (2002) 121 FCR 24

Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560

Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482,

Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; 194 IR 461

Construction, Forestry, Mining and Energy Union v Williams [2009] FCAFC 171; 191 IR 445

Cruse v Multiplex Ltd (2008) 172 FCR 279

Director of the Fair Work Building Industry Inspectorate v Cartledge (No 2) [2015] FCA 851

Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2016] FCA 413

Latoudis v Casey (1990) 170 CLR 534

Mill v The Queen (1988) 166 CLR 59

Pelechowski v Registar, Court of Appeal (NSW) (1999) 198 CLR 435

QR Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2010] FCAFC 150;  204 IR 142

Tax Practitioners Board v Hacker (No 3) [2020] FCA 1814

Tax Practitioners Board v HP Kolya Pty Ltd (2015)…

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AGLC
Tax Practitioners Board v Williams [2023] FCA 63
Case
[2023] FCA 63
Decision Date

CaseChat Overview and Summary

The case of Tax Practitioners Board v Williams involved proceedings against Mr Williams for breaches of the Tax Agent Services Act 2009 (Cth). The Tax Practitioners Board (the Board) brought an application for civil penalties and a final injunction against Mr Williams for multiple contraventions of section 50-5(1) of the Act, and an application for a finding of contempt and sentence for Mr Williams’ breach of an interlocutory injunction. The Federal Court was required to determine whether civil penalties should be imposed for the contraventions, the appropriate amount of those penalties, whether a final injunction should be made against Mr Williams, and whether a term of imprisonment should be imposed for the contempt.

The court found that Mr Williams was conscious of his wrongdoing, having deliberately contravened the Act after becoming aware that his initial contraventions had been detected. The court also found that Mr Williams did not have an adequate explanation for his conduct other than a lack of appreciation that the court would view the contravening conduct seriously. The court held that the need for general deterrence was heightened, and that a fine was not an appropriate penalty in the circumstances. The court imposed a short term of imprisonment for the contempt. In assessing the penalties for the contraventions, the court took into account the need for specific deterrence given Mr Williams' continuing breaches of the Act, as well as the need for general deterrence. The court found that a fine was appropriate given Mr Williams' financial means and considered the risk of loss of assets and bankruptcy.

The court imposed pecuniary penalties of $80,000.00 for the contraventions, a final injunction against Mr Williams providing tax agent services for fee or reward unless he is registered under the Act, and a term of imprisonment of 10 days for the contempt. The court also ordered that Mr Williams pay the Board's costs.

Orders

Orders of the court

1. Pursuant to s 50-35(2) of the Act, for the civil contraventions the respondent is to pay pecuniary penalties to the Commonwealth totalling $80,000.00. Such penalties to be paid on a date to be fixed.

2. Pursuant to s 70-5(1) of the Act, the respondent is restrained from providing or offering to provide any tax agent services (as defined in the Act) for fee or reward, unless the respondent is registered to provide those services under the Act.

3. The parties have liberty to apply to vary or revoke the order in paragraph 2, either:

(a) after the passage of 10 years from the date of the order; or

(b) in the event that s 50-5(1) of the Act is amended or repealed.

4. For the contempt described in paragraph 2 of the orders made on 13 October 2021, the respondent be imprisoned in a correctional facility for 10 days, commencing on a date to be fixed.

5. The matter be set down for further submissions at 10:00am (ACDT) on 22 March 2023 as to:

(a) the time by which the pecuniary penalties imposed by paragraph 1 are to be paid; and

(b) the time of the commencement of the sentence referred to in paragraph 4 and the manner in which the respondent is to be taken into custody.

6. The respondent is to pay the applicant’s costs, to be taxed on a party-party basis if not agreed.

7. Liberty to apply.

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

Background

Background to the litigation

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Evidence

Evidence Before The Court

The purpose of the adjournment granted on 15 December 2021 was to enable Mr Williams to obtain legal advice and I am satisfied that he has had every opportunity to address the Court about the quality and effect of his prior admissions and to make submissions to the effect that the orders adjudging him guilty of contempt ought not to have been made on the basis of them.Mr Williams’ evidence In his affidavit, Mr Williams said:82.I engaged in the tax returns for the financial year ending 30 June 2021, which is the subject of the Contempt Application, mainly out of desperation to look after my family financially. At the time, I was recently out of work as a result of stress and I was not receiving an income. Around this time, I had arranged for employment with my brother, but that employment fell through. I did not gain employment again until I was employed at my current job.83.I also felt pressure from the people who approached me to complete their tax returns for them. Annexed hereto and marked NLW-12 are two screenshots of text messages showing people approaching me and asking me to do their tax returns. He went on to say:84.I am extremely remorseful for engaging in the conduct in contempt of the Court’s orders. I did not fully appreciate the gravity of my conduct at the time I assisted with lodging the tax returns, but have now come to understand the seriousness of having breached the Court’s orders. That the Applicant is seeking that I be imprisoned scares me. Mr Williams referred to the circumstance that he had removed himself from the accountancy profession which had improved his mental health. He expressed an apology to the Court and repeated that he had not appreciated the gravity of acting in breach of the Court’s orders and that he now understand the seriousness of what he had done. Mr Williams expressed concern about the effect that any fine, penalties and costs orders would have on him and his family and asked the Court to be merciful and allow him an opportunity to “build on the recent progress” he had made. Mr Williams is the father of two children born in 2016 and 2020. He said that he feared a custodial sentence would impact on his employment and his relationship with family members, including by exacerbating marital difficulties (about which no detail was provided). He reiterated that he felt pressured to prepare tax returns and relied upon text messages with clients in support. One of the text message exchanges occurred on 9 July 2020 more than 12 months before the contempt and the other exchange is undated. In the text message exchanges the clients do not employ language applying pressure on Mr Williams. Rather, they ask whether he can prepare their tax returns and Mr Williams responds agreeably.Submissions and consideration The Board submitted that the Court should impose a short term of imprisonment of 14 days. I accept Mr Williams’ evidence that he did not fully appreciate that a breach of the Court’s orders was a very serious matter, notwithstanding that he received a copy of the orders with the Injunction after consenting to them, and notwithstanding that the order contained a penal notice in the terms set out above. That finding does not mean that Mr Williams was ignorant of the fact that the order was made or ignorant of its meaning. Mr Williams did not go so far as to suggest that he was unaware that his conduct on 5 July 2021, 22 July 2021 and 23 July 2021 was in breach of the order. I find that he did have that awareness. What he lacked was an appreciation of the seriousness with which the Court may view his conduct and an appreciation that a term of imprisonment may be imposed in respect of it. He now urges the Court not to impose a term of imprisonment because that is what he most fears.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

I have concluded that:(1)there will be an order that Mr Williams pay civil penalties in an amount totalling $80,000.00 for his contraventions of s 50-5(1) of the TAS Act;(2)there will be a final injunction in the terms sought by the Board, subject to Mr Williams having liberty to apply to vary or revoke the injunction not earlier than 10 years from today; and(3)for his contempt of this Court, Mr Williams will be sentenced to a term of imprisonment in a correctional facility for 10 days, such term to commence on a date to be fixed after the expiry of the period in which he may appeal from the Court’s orders.DECLARATIONS Mr Williams does not oppose the declaratory relief sought on the originating application. It is appropriate to make those declarations so as to formally record the Court’s findings constituting the contraventions based on the material before me: see Cruse v Multiplex Ltd (2008) 172 FCR 279 (at [53]) and the cases there cited.ASSESSMENT OF CIVIL PENALTIESPrinciples The object of the TAS Act is to ensure that tax agent services are provided to the public in accordance with appropriate standards of professional and ethical conduct: TAS Act, s 2-5. To advance that objective, the statute erects a regime relevantly comprising the establishment of the Board, the general prohibition of the provision of specified tax advisory or agency services, the requirement for the registration of tax agents and advisors (Part 2), the prescription of a Code of Professional Conduct regulating the behaviour of those who are registered (Part 3) and a disciplinary regime to address breaches of the Code, including provisions for the termination of registration (Part 4). Division 50 of Pt 5 of the TAS Act is titled “Civil Penalties”. It contains “civil penalty provisions”, including s 50-5(1). It provides: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…Civil penalty:(a) for an individual—250 penalty units; and(b) for a body corporate—1,250 penalty units. Subject to exclusions that do not apply, s 90-5 of the TAS Act defines the phrase “tax agent service” as any service:(a) that relates to: (i)ascertaining liabilities, obligations or entitlements of an entity that arise, or could arise, under a taxation law; or (ii)advising an entity about liabilities, obligations or entitlements of the entity or another entity that arise, or could arise, under a taxation law; or(iii)representing an entity in their dealings with the Commissioner; and (b)that is provided in circumstances where the entity can reasonably be expected to rely on the service for either or both of the following purposes:(i)to satisfy liabilities or obligations that arise, or could arise, under a taxation law;(ii)to claim entitlements that arise, or could arise, under a taxation law.