Tax Agent Services Act 2009 (Cth)

Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321

Chick v Grosfeld [2012] NSWSC 1166

Kerin and Tax Agents' Board of South Australia [2009] AATA 974

Re Carbery and Associates and Tax Agents' Board of Queensland [2001] AATA 107

Stasos v Tax Agents' Board [1990] FCA 379; (1990) 21 ALD 437

Su v Tax Agents' Board of South Australia [1982] AATA 127

1. Mr Grosfeld has been a registered tax agent since about 1988. Following complaints made against him by clients, the Tax Practitioners Board (the Board) commenced an investigation into his conduct on 13 December 2012.
2. After identifying a number of potential breaches of the Code of Professional Conduct (the Code) for tax agents, the Board provided Mr Grosfeld with an opportunity to respond to the allegations of breach, which he did through correspondence with the Board and a submission dated 16 April 2013. The Board was nonetheless satisfied Mr Grosfeld had failed to comply with provisions of the Code relating to the management of his own tax affairs, the competency of his tax agent services to clients, the requirement to maintain professional indemnity insurance and his failure to respond to requests and directions from the Board in a "timely, responsible and reasonable manner". He was notified about the Board's findings by a letter dated 16 May 2013, but was also notified the Board was concerned he was not a fit and proper person to be registered as a tax agent because of findings made against him in Supreme Court proceedings concluded in September 2012. He was given further opportunity to respond, which he did, but on 12 June 2013 the Board determined Mr Grosfeld was not fit and proper and decided not to renew his registration.
3. Mr Grosfeld applied for review of this decision on 23 July 2013. The Tribunal granted a stay of the implementation of the decision pending the hearing, as a result of which Mr Grosfeld's registration continued. Mr Grosfeld requested an adjournment of the hearing a short time before the scheduled commencement. Given the stay of the decision, the opposition by the Board to any delay in determining that matter, and the history of previous directions made by the Tribunal, this request was refused.
4. There was no significant dispute about the facts in this matter but rather their application to the relevant principles regarding, first, whether there had been non-compliance with the Code and, secondly, whether this meant Mr Grosfeld was not a fit and proper person to continue to be registered as a tax agent. There was no dispute Mr Grosfeld had failed to comply with tax laws in relation to the management of his own financial affairs and had, because of financial and business difficulties, delayed in finalising tax returns for some clients. Nor was there any dispute that Mr Grosfeld had failed to communicate adequately with each of the complainants for an extended period during 2012, that he did not have professional indemnity insurance in place until April 2013 or that he failed to respond to certain Board correspondence at all and, in some cases, after a delay. Furthermore, it was common ground that Mr Grosfeld was involved in Supreme Court proceedings where adverse findings were made against him in respect of his role as executor of a deceased estate.
5. The Board contended that the breaches of the Code were serious and these breaches, together with the findings of the Supreme Court, established that Mr Grosfeld was not a fit and proper person. The Board, and therefore the Tribunal standing in its shoes, was obliged to reject the application for renewal of registration. Mr Grosfeld contended his failings arose from special circumstances, precipitated by the financial stress caused by the global financial crisis in 2007. The circumstances were extreme but temporary and have since been resolved. These matters, and the court ruling about his role as the executor of a highly contentious estate, do not support a finding that he is not fit and proper. The matters were aberrations in what has otherwise been an incident free career of over 25 years as a tax agent.
6. The issue for determination by the Tribunal was whether, having regard to the largely undisputed facts in the case, Mr Grosfeld is a fit and proper person for the purposes of the relevant tax agent legislation.

1. The relevant legislation is the Tax Agent Services Act 2009 (Cth) (the TAS Act), which provides for the regulation of tax agents through a regulatory regime of registration, a statutory Code of Professional Conduct (backed by sanctions) and a flexible regime of remedies, which includes civil penalties. The Board has oversight of the scheme.
2. The registration of tax agents is governed by Part 2 of the TAS Act. Section 20−5(1) provides that an individual is eligible for registration as a tax agent if the individual is aged 18 years or more and the Board is satisfied that:

(a) the individual is a fit and proper person; and

(b) the individual meets the requirements prescribed by the regulations (including, but not limited to, requirements relating to qualifications and experience) in respect of registration as a registered tax agent.

Criteria for determining whether an individual is a fit and proper person

In deciding whether it is satisfied that an individual is a fit and proper person, the Board must have regard to:

(a) whether the individual is of good fame, integrity and character; and

(i) whether an event described in section 20-45 has occurred during the previous 5 years; and

(ii) whether the individual had the status of an undischarged bankrupt at any time during the previous 5 years; and

(iii) whether the individual served a term of imprisonment, in whole or in part, at any time during the previous 5 years.

1. There is no dispute that none of the matters referred to in s 20−15(b) is relevant in this case.
2. Section 20−25(1) requires the Board to grant an application if the applicant is eligible for registration, but otherwise to reject the application. Section 20−50(1) provides that the Board may renew registration under s 20−25 if an agent makes application for renewal at least 30 days before the day on which registration expires or within such shorter time as the Board allows. The individual's registration is taken to continue until the application has been decided (s 20−50(2)).
3. Section 30−5 of the TAS Act establishes a "Code of Professional Conduct" and provides that the Code applies to registered tax agents. The Code is set out at section 30−10 of the TAS Act It is alleged Mr Grosfeld failed to comply with subs 30−10 (2), (7), (13) and (14) TAS Act, which state, inter alia, as follows:

(2) You must comply with the taxation laws in the conduct of your personal affairs.

............

(7) You must ensure that a tax agent service that you provide, or that is provided on your behalf, is provided competently.

............

(13) You must maintain professional indemnity insurance that meets the Board's requirements.

(14) You must respond to requests and directions from the Board in a timely, responsible and reasonable manner.

1. The Board may impose sanctions on a registered tax agent for failure to comply with the Code comprising a written caution, an order under s 30−20 requiring the agent to do the things set out in the order (which may include education or training) and suspension or termination (s 30−15 of the TAS Act).
2. If the Board conducts an investigation under s 60−95 of the TAS Act (which it did in this case), it must either take no further action or take one or more of the actions set out in s 60−125(2)(b) to impose sanctions, terminate registration or apply to the Federal Court for payment of civil penalties or for an injunction (s 60−125(2)(b)).
3. The Board conducted an investigation but before concluding the investigation Mr Grosfeld applied to have his registration renewed under s 20−50 of the TAS Act. On 8 May 2013 the Board determined to defer the outcome of the investigation and any decision in relation to Mr Grosfeld's renewal application pending Mr Grosfeld being given the opportunity to make submissions and explain his conduct. On 12 June 2013 the Board decided to reject Mr Grosfeld's application for renewal of his registration on the grounds he was not a fit and proper person but decided to take no further action in respect of the investigation.

1. Mr Grosfeld said that he was originally a corporate accountant in public companies. He commenced private practice about 30 years ago and over the years has worked both by himself and with partners, but has worked on his own account for the past 10 years. Mr Grosfeld worked from offices in Pymble, his home in Terrigal and an office in Picton. His accounting practice has grown over the years. Mr Grosfeld was a financial adviser for about 25 years through the Count Financial Advisory group. His practice comprised tax, accounting and financial advisory services. Mr Grosfeld supervised staff and lodged tax returns on behalf of clients. According to Mr Grosfeld, he had about 8 to 10 employees at the height of his business.
2. On Mr Grosfeld's account, his financial advisory business was seriously impacted by the global financial crisis. This also had an impact on his accounting and tax practice, with a reduction in general business activity, especially small business, which was an important part of his client base. Mr Grosfeld found it increasingly difficult to pay rent on his three offices and to pay staff. He could not meet his mortgage payments, and by 2009 Mr Grosfeld defaulted on his mortgage. The mortgagee, Bluestone, sued him for his default and obtained judgement for possession of his Terrigal property. Mr Grosfeld claims he was unaware of the court proceedings, or that Bluestone had obtained judgement for possession, until he was given a notice to vacate the premises in about July 2013. Mr Grosfeld said he was initially not willing to accept the decision but had no money to challenge the judgement and reluctantly vacated the premises. This was a very traumatic time for him and he needed to move from the Terrigal property urgently. By this stage Mr Grosfeld was in arrears on his rental for the Pymble and Picton offices and decided to relocate his business, and home, to Thirlmere, south of Sydney. This took time. There were further delays because Mr Grosfeld could not access his computer records.
3. Mr Grosfeld was locked out of the Pymble and Picton premises where his clients' files remained until they were collected, with the assistance and under the supervision of the Board, in February 2013.
4. There were 14 complaints made against Mr Grosfeld by his clients from March to December 2012. Mr Grosfeld was provided with details of the complaints and he was given an opportunity to respond. The Board, after investigating the complaints and considering Mr Grosfeld's response, were satisfied Mr Grosfeld had failed to comply with s 30−10(7) by:
   • (a) not providing the 14 complainants with a means of contact, and by being inaccessible to them for extended periods;
   • (b) causing inappropriate delays in the preparation lodgement of income tax returns for seven complainants;
   • (c) failing to provide tax agent services requested by seven complainants after accepting payment of fees for these services;
   • (d) failing to return clients documents when requested to nine clients; and
   • (e) failing to forward notices of assessment tax refunds received from the Australian Taxation Office to two complainants.
5. It is useful and relevant to provide the detail of some of those complaints, and Mr Grosfeld's response, to provide context about their seriousness.
6. On 13 March 2012, the Board received a complaint from a registered tax agent raising concerns on behalf former clients of Mr Grosfeld. The complaint alleged that Mr Grosfeld was locked out of his rented Picton office where client records and working papers were kept. It was further alleged that all telephone numbers were disconnected and Mr Grosfeld was not returning emails or telephone calls. The Board wrote to Mr Grosfeld on 8 June 2012 recounting the complaint and asked Mr Grosfeld to provide a response. Mr Grosfeld did not respond at that stage and was sent a second copy of the complaint requesting a response by 10 July 2012. Mr Grosfeld denied he had received any telephone calls and emails and stated that he could not respond to the complaint because was unclear for whom the tax agent was acting. The Board attempted to contact Mr Grosfeld between 28 August and 5 October 2012 in respect of this, and other, complaints but was unable to do so. The Board finally made contact on 5 October 2012, at which time Board staff were notified of Mr Grosfeld's new address at Thirlmere. Notwithstanding Mr Grosfeld's assertion that documents and information would be provided, the tax agent advised that as at 21 December 2012 her clients had still not received documents from Mr Grosfeld.
7. On 27 June 2012 the Board received a complaint from a former client who alleged that Mr Grosfeld had not returned the complainant's receipts and records in relation to the 2011 financial year, and she was unable to obtain access to these documents despite repeated requests of Mr Grosfeld. There were a further eight complaints received by the Board in August to September 2012 about the failure of Mr Grosfeld to complete tax services as requested, the failure of Mr Grosfeld make contact with clients, his failure to return documents to them as requested and the denial of access to their records. In one case, a complainant paid a fee to Mr Grosfeld to lodge an income tax return for his self managed superannuation fund. Mr Grosfeld did not lodge the return and this resulted in a late payment penalty fee. Furthermore, it was alleged Mr Grosfeld failed to return taxation documents relating to the previous 20 years for this client and related family entities, despite repeated requests.
8. Mr Grosfeld responded to these complaints by letter dating 30 October 2012. He advised that his Picton and Pymble offices had been closed for financial reasons, that he had moved to new offices, and that he was in the process of advising all clients of his new location contact details and would return the documents requested. Notwithstanding this assurance, the complainants were not provided with their documents and had still not received the return of original receipts and worksheets by 13 February 2013.
9. There were complaints from four more complainants received by the Board in October, November and December 2012. The complaints were of a similar nature to the earlier complaints, namely that Mr Grosfeld had failed to complete income tax returns as promised, and failed to contact the clients about the delay or to advise them of the progress of their claims. One complainant raised issues of concern about the conduct of the tax affairs for his self managed superannuation fund, his wife, his son-in-law, a trust and two companies. In the complaint dated 10 December 2012, it was alleged Mr Grosfeld failed to lodge returns in a timely manner when all information had been provided to him two years ago and that Mr Grosfeld failed to remit a refund from the Australian Taxation Office (ATO) to the complainant. The complainant raised further issues of incompetence and concern, in particular, that Mr Grosfeld failed to advise of late lodgement penalties or to seek remission of those penalties, failed to provide important correspondence from the ATO to him, failed to lodge company returns causing one of the companies to be deregistered from the goods and services scheme and failed to communicate with him about any of these issues. The conduct which was the subject of some of these complaints arose from as early as 2011.
10. Mr Grosfeld responded to the first three complaints and further complaints raised by some of the earlier complainants by email dated 3 December 2012. In summary, Mr Grosfeld stated he would lodge certain income tax returns, would return documents and would make contact with a number of the clients. He responded to the complaint of December 2012 by letter dated 12 February 2013. Mr Grosfeld blamed a former staff member for some of the issues, stated there had been delays in obtaining an auditor and referred to the difficulties in accessing his documents.
11. Review of Mr Grosfeld's various responses to these complaints revealed that he did not deny the majority of the complaints but rather sought to explain the reason for the delay. He promised to complete tasks and to arrange for the complainants to collect their documents. Some complaints were long-standing and were clearly the result of delays commencing well before 2012. In all cases, the complainants were unable to get access to their records and in some cases complainants were not able to properly complete outstanding returns for several months. As already noted, the Board was unable to make contact with Mr Grosfeld until after 5 October 2012. Mr Grosfeld was sent letters dated 5 and 17 October 2012 outlining complaints from nine complainants and requesting certain information. Mr Grosfeld responded by letter dated 30 October 2012. Given the gravity of the issues raised, Mr Grosfeld's responses were surprisingly brief. Relevantly, Mr Grosfeld concluded as follows:

Ass (sic) can be seen, practically all of the issues listed by our clients is the result of a very troubled and complex re-location process, which we are now seeing the end of. We have been a registered tax agent for a number of decades and we do not suddenly turn our practice into a neglectful and incompetent practice. Our problems have been mainly been of an electronic technical nature, which were must unfortunately not foreseen prior to our relocation.

There also appears to be an extreme shortage of super fund auditors, which in turn is resulting in lodgement delays of super fund returns.

As indicated in our comments above, we are in the process of rectifying the issue raised by the above-mentioned clients.

1. As already noted, Mr Grosfeld was provided with further details of complaints by letters dated 5 and 16 November 2012. His email response dated 3 December 2012 was brief, gave an assurance that certain matters would be attended to and referred to his "technical" difficulties. He did not dispute the claims made.
2. In correspondence to the Board dated 12 February 2013, Mr Grosfeld stated that he was seeking to renegotiate in relation to the Pymble lease, and that access to the premises and removal of documents was "now being negotiated". He also noted "this process was delayed" pending a decision as to whether he would reoccupy the Pymble premises. He addressed a number of other issues raised in correspondence with the Board and concluded his letter as follows:

I'm sincerely sorry for the inconveniences certain clients had to suffer. However, as explained in my letter of 30 October last, these inconveniences were not the result of wilful negligence or unprofessionalism. I have practically been a registered tax agent for over four decades, with a reasonably good record. I would not suddenly become negligent or unprofessional.

As explained earlier, we experienced many problems as a result of our relocation of our offices. Many of these problems were of a technical, electronic and communication nature. And the urgent and sudden need for these relocations was a direct result of a severe downturn in our practice income caused by the global financial crisis. The downturn was so severe that I could no longer afford the mortgage payments of our home in Terrigal, which was also our Terrigal office.

I'm now rebuilding my practice in Thirlmere, at a much lower cost structure than before. I do need to carry on my practice here in Thirlmere, so that within the medium term I will be in a position to retire.

I would respectfully like to ask the Board, if these circumstances could be taken into account when considering the complaints made by various clients. These complaints were clearly of an administrative nature and the incidents were brought about by the massive and unforeseen sudden relocations of our offices and home, coupled with the many technical and communication issues associated with the moves.

1. By letter dated 2 April 2013, the Board provided Mr Grosfeld with a copy of a Final Submission made to the Board by investigators, which comprised details of the complaints made against Mr Grosfeld, his various responses, the complainants' replies, details of Mr Grosfeld's failure to maintain professional indemnity insurance and his failure to lodge income tax and business activity statements as well as details of the difficulties investigators had experienced in dealing with Mr Grosfeld.
2. Mr Grosfeld responded by letter dated 16 April 2013. It was clear from Mr Grosfeld's letter that he did not have a professional indemnity policy prior to making arrangements to establish the policy on 10 April 2013. Similarly, there was no dispute Mr Grosfeld failed to lodge his income tax returns for 2009 and 2010 by their due date. These returns were lodged on 27 October 2011, approximately a year late. His returns for 2011 and 2012 were lodged at the same time Mr Grosfeld responded to the submission, making the 2011 return nearly a year overdue (time had been extended to 15 May 2012) and the 2012 return overdue by about six months. Mr Grosfeld lodged seven of his business activity statements in the period 31 December 2009 to 30 September 2011 late, and failed to lodge his statements for 31 December 2011 to 30 September 2012 until 16 April 2013. There was no explanation provided by Mr Grosfeld in his response of 16 April 2013 or at the hearings as to why he failed to comply with the relevant tax legislation in respect of these various returns and business activity statements.
3. At the hearing, Mr Grosfeld was questioned about the delay in responding to the client complaints and, in particular, his failure to provide clients with timely access to their documents. Mr Grosfeld repeated the assertion that these problems were unforeseen and unavoidable. However, when pressed about this issue, Mr Grosfeld conceded that the delay in getting access to the client documents was at least partially brought about by his desire to renegotiate the Pymble lease. He could have paid the arrears to get access to the files, but he wanted to negotiate the arrears as part of the discussion about a new lease for Pymble. Mr Grosfeld was also asked about how his financial position had become dire so quickly and, on his account, without notice. Mr Grosfeld said that he knew his financial position was deteriorating and he had unpaid rent but could not explain why he had not taken action to remedy his position sooner.
4. In addition to the above, the Board relied on the findings of White J in Chick v Grosfeld [2012] NSWSC 1166. Mr Grosfeld was the executor of the Will of the late Barry Ian Chick. Mr Grosfeld made a claim to be entitled to charge for work done as executor of the estate and paid himself from the estate the sum of $180,394.40 as remuneration for his work. Two of Mr Chick's children commenced proceedings against Mr Grosfeld seeking his removal and seeking orders that he repay fees or charges paid to him out of the estate. His Honour, Justice White, found that Mr Grosfeld transferred $85,040 from the estate bank account to his working business account. This was a "serious breach" of Mr Grosfeld's duties as executor. His Honour also found that the amounts charged to the estate by Mr Grosfeld were excessive. According to his Honour, the breach of duty, which was in relation to the withdrawal of these monies, was exacerbated by the fact that the withdrawals were concealed in the description of the payments contained in Mr Grosfeld verified statement of account. He observed as follows [at 87 - 90]:

These are the most serious matters established against Mr Grosfeld and by themselves require his removal as executor and trustee. I can have no confidence that if Mr Grosfeld remained as trustee of the education find that he would faithfully execute the trusts. There is a real risk that he would use the trust funds for his own purposes as he has used the estate monies for his own purpose in the past. In reaching this conclusion as to the risk of future breaches, I also take into account matters going to Mr Grosfeld's credit that emerged in the course of cross-examination.........

A further matter going to Mr Grosfeld's credit arose when he was being cross-examined about the late lodgement of tax returns. As part of his explanation for not lodging tax returns until sometime in 2011, Mr Grosfeld said that no one was asking them to be lodged. That answer led to Mr Grosfeld giving evidence that he was unaware in June and July 2010 that Mr Chick's solicitor was proposing to commence proceedings against him. He said that he first became aware that Mr Chick or anyone else had sought an order that he file accounts in February March 2011. He said he did not receive the summons was filed in August 2010. He said he was unaware that the matter was before the court on 17 December 2010.

Mr Grosfeld's solicitor, Ms Anthony, gave evidence, which I accept, that on 5 August 2010 she forwarded to Mr Grosfeld an email she had received from Mr Chick's solicitor enclosing the summons, an affidavit of Mr Chick an affidavit of Mr Azzopardi (Mr Chick's then solicitor). She filed an appearance for Mr Grosfeld on 25 October 2010. She had instructions to do so. Ms Anthony and Mr Lakeman of counsel had foreshadowed to Mr Grosfeld proceedings might be commenced before they were instituted (T187-188).

I am also satisfy that on the commencement of the trusts of the will in favour of the education fund the trust estate would be put in jeopardy by Mr Grosfeld making excessive charges for his time in relation to the administration of the estate. ..... For these reasons I conclude that the grant of probate to Mr Grosfeld should be revoked.

1. Mr Grosfeld responded to these findings, as expressly invited by the Board, by letter dated 31 May 2013. In his letter, the substance of which was repeated in his evidence at the hearing, Mr Grosfeld stated "I took particular care to ensure that I work very closely with my legal advisers and ask for advice for practically every step of the way". He noted that the executor was given very wide powers under the terms of the Will, and he therefore believed he could invest the assets "in any way he/she thought fit". He also said the transaction was "fully disclosed", there was "no misappropriation of any finds at any time" and that he had considered an appeal against this decision but did not have sufficient funds. Mr Grosfeld again expressed regret about the "inconveniences caused to the clients".

1. The comments of Hill J in Stasos v Tax Agents' Board [1990] FCA 379; (1990) 21 ALD 437, which were made with reference to the former regime, remain authoritative in light of the continuing relevance of the fit and proper test. In that case, his Honour observed that the legislature chose to confer on registered tax agents "a virtual monopoly in the preparation for reward income tax returns and objections and in relation to the transaction of any business on behalf of the taxpayer in income tax matters for reward". Hill J stated as follows:

The conferral of this privilege upon registered tax agents carries with it a consequent set of obligations and responsibilities. A person is required, before being registered as a tax agent to demonstrate that he is a fit and proper person to prepare income tax returns and transact business on behalf clients in tax matters and, inter-alia, that as at the date of the application he is of good fame, integrity and character.

The words "fit and proper person" are, as the High Court pointed out in Hughes and Vale Pty Ltd v The State of New South Wales (No 2) [1955] HCA 28; (1955) 93 CLR 127 at 156, words traditionally used in relation to persons holding offices or vocations:

But their very purpose is to give the widest scope for judgment and indeed for rejection. `Fit' (or `idoneus') with respect to an office is said to involve three things, honesty, knowledge and ability: `honesty to execute it truly without malice, affection or partiality; knowledge to know what he ought duly to do; and ability as well in estate as in body, that he may intend and execute his office, when need is, diligently, and not for impotency or poverty neglect it' - Coke."

1. According to Hill J, basic attributes such as diligence and professionalism, including "the putting of the interests of one's clients before one's own self interest", are also part of the "catalogue" of matters to be considered in the evaluation process of whether a person is fit and proper.
2. As noted by the High Court in Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 at 349, a person "who lacks a proper appreciation of their responsibilities or does not discharge them is, may be adjudged not to be, a fit and proper person".
3. The assessment is to be made at the time of the decision, not the time of the wrongdoing, and a person who has been shown to be other than a fit and proper person must establish he appreciates the significance of his wrongdoing, regrets it and has rehabilitated himself to such an extent that it is "truly unlikely that there will be any lapse in the future of the standards which are required of him" (Stasos v Tax Agents' Board [1990] FCA 379; (1990) 21 ALD 437 at 445).
4. According to Davies J in Su v Tax Agents' Board of South Australia [1982] AATA 127, "incompetence in relation to one's own affairs more often than not has an effect sooner or later in relation to the affairs of a client" and non-compliance by an agent with their personal tax obligations may be considered relevant in determining whether an agent is fit and proper (Re Carbery and Associates and Tax Agents' Board of Queensland [2001] AATA 107). Complaints and proceedings unrelated to registration as a tax agent may also be relevant, particularly where a finding of misconduct demonstrates the presence of qualities that are inconsistent with fitness and propriety to practice as a tax agent (Kerin and Tax Agents' Board of South Australia [2009] AATA 974).
5. Having regard to these principles and the evidence, I am not satisfied Mr Grosfeld is a fit and proper person to continue to act as a registered tax agent.
6. Mr Grosfeld has demonstrated a number of failures where his conduct has not only fallen short of the Code, but where he has also failed to appreciate the significance of his non-compliance or to provide adequate explanation or assurance he will not breach in the future. The cumulative effect of these breaches, Mr Grosfeld's lack of insight into their significance, the clear findings of the Supreme Court and Mr Grosfeld's somewhat dismissive response to those findings are all matters that have led me to conclude he is not fit and proper for the purposes of the TAS Act.
7. Mr Grosfeld has failed to comply with tax laws and his failure has been repeated and sustained over a period of at least two years. This failure is unexplained and does not engender confidence that Mr Grosfeld knows or appreciates the significance of complying with tax laws and has the potential to undermine confidence in the scheme of registration. His conduct is in breach of subs 30−10 (2) of the Code.
8. Mr Grosfeld failed to maintain professional indemnity insurance as required by the Board. This is in breach of subs 30−10 (13) of the Code. According to the unchallenged documentary evidence contained in the Final Submission to the Board, Mr Grosfeld was notified of the Board's requirements for professional indemnity insurance on 29 April 2011. He was required to notify the Board of his arrangements to obtain insurance by 1 July 2011 but did not do so. Mr Grosfeld was again directed to notify the Board of his insurance cover by 29 February 2012 and was requested to provide a certificate of insurance by letters dated 5 October and 6 November 2012. Mr Grosfeld failed to provide any such certificate at this time and furthermore did not respond to the correspondence and emails. It was not until his letter of 12 February 2013 that Mr Grosfeld advised he would arrange cover, which was further delayed until 10 April 2013. The breach was persistent and sustained over a period of two years. Mr Grosfeld was notified of the requirement on five separate occasions but he failed to act or to respond to the Board. This breach is serious and has the potential to undermine confidence and credibility in the regulatory regime. The requirement to maintain professional indemnity insurance is for the protection of clients in the event they are found liable to pay tax or penalties through the fault of the tax agent. This is an important protection and it is in the public interest that tax agents are adequately insured. Again, this breach is unexplained and cannot be described as a "one off" aberration.
9. The Board investigated 14 complaints by clients against Mr Grosfeld over a period of nine months. The Board found Mr Grosfeld breached subs 30−10 (7) of the Code by failing to ensure that tax agent services provided to these clients were provided competently. Mr Grosfeld attempted to categorise these breaches as failures or delays in communication that were "inconveniences". In his letter of 12 February 2013, Mr Grosfeld described the problems as "technical difficulties". He sought to minimise and trivialise the complaints in his letters, and thereby exacerbated the problems by failing to promptly and frankly address the serious issues raised.
10. Based on the complaints made, Mr Grosfeld's responses and the further replies by the complainants, I am satisfied Mr Grosfeld breached subs 30−10 (7) of the Code in respect of these clients. The most serious complaints were about Mr Grosfeld's failure to prepare returns in a timely manner or at all. In some cases, the clients were penalised by the Australian Taxation Office or their tax refunds were delayed. In all of the cases, there is evidence Mr Grosfeld did not respond to the reasonable queries of his clients, was uncontactable for several months and did not return client documentation, despite repeated requests from the clients and, even more significantly, the Board, until late February 2013. While I accept that a number of these problems were caused by Mr Grosfeld's eviction from his home and his Picton and Pymble offices, they were his own making and cannot be attributable to the global financial crisis. A prudent and careful tax agent would, and should, have taken steps to ensure his clients were adequately serviced, regardless of his own financial problems. At the very least, Mr Grosfeld should have communicated with his clients about his difficulties to give them the opportunity to seek alternative services. Mr Grosfeld should not have delayed making arrangements with his clients until after his eviction and the inevitable crisis that would follow that event. Closing down a business for months and not having access to client files or contact numbers is not a "technical" difficulty. These are matters Mr Grosfeld could and should have anticipated and it does not reflect well on his character, competence and insight that he described the problems with clients as technical or administrative matters.
11. Furthermore, Mr Grosfeld could have taken steps to retrieve the client files earlier from the Pymble office but chose not to pay the arrears in the hope he could re-negotiate the lease. Mr Grosfeld preferred his own interests to those of his clients and only seemed to recognise this when questioned about the issue during the hearing, when he conceded this may have been the case.
12. Mr Grosfeld's dire financial circumstances may have been exacerbated by the downturn in the economy and the reduction in business activity, but he could have taken steps to reduce his overheads and manage his finances more prudently. He did not do so and, in his own words, failed to accept the judgement of the court or that he was unable to pay his rent on the Picton and Pymble offices. These are serious matters that call into question Mr Grosfeld's judgement, business acumen and competence to conduct a tax agent business.
13. Mr Grosfeld did not engage openly or on a timely basis with the Board, and I am satisfied he thereby breached 30−10 (14) of the Code. This breach was most serious in relation to his failure to respond to the correspondence about his professional indemnity insurance, where his failure to respond was sustained and repeated. Although Mr Grosfeld's failure to respond to queries raised by investigators from August to October 2012 can be explained by the difficulties caused by his eviction, his responses to later requests were not sufficiently detailed, and in a number of cases the matters he raised were refuted by clients. Relevantly, one of the key ongoing complaints was that the clients wanted access to their documents but Mr Grosfeld did not follow through with several promises made to return documents to clients and it was not until the Board investigators intervened that the documents were returned.
14. Finally, the findings and detailed reasons of his Honour, Justice White are compelling and highly relevant to the question of whether Mr Grosfeld is a fit and proper person to continue as a registered tax agent. Mr Grosfeld was found not to be a fit and proper person to continue to act as executor of the estate or as trustee for an education trust established under the will (paragraph 82). According to Justice White, the estate funds were thereby in jeopardy. Mr Grosfeld's creditability as a witness was rejected on a number of significant matters, and his evidence was found to be inconsistent with the evidence of his lawyer that he was on notice that proceedings would be commenced before they were instituted. Mr Grosfeld has made a similar assertion in these proceedings that he did not know about the judgement for possession and was not on notice of the impending evictions. This is highly improbable and I do not accept his evidence in this regard. At the very least, Mr Grosfeld must have been on notice that there would be serious consequences in failing to pay his rent and his mortgage and was wilfully blind.
15. The decision and findings in Chick v Grosfeld are unequivocal yet Mr Grosfeld continued to deny the findings, sought to shift blame to his lawyers and justified his position on the basis that "the estate suffered no loss as a result of my actions". These breaches relate to the management of financial affairs for others in circumstances where the executor must discharge duties with integrity, trust and competence. This is not dissimilar to the obligations on a registered tax agent under the TAS Act. As such, these findings are highly relevant to the question of whether Mr Grosfeld is a fit and proper person to continue to be registered as a tax agent.
16. While I accept that, in most part, Mr Grosfeld did not seek to raise unmeritorious arguments when responding to the complaints and expressed his regret at his failures, he did not properly and, in my view, appropriately, use his best endeavours to effect a return of the client documents at the earliest opportunity or offer to compensate clients for losses. Delays in the preparation of returns or the failure to remit refunds were not explained. Relevantly, Mr Grosfeld did not provide evidence to either the Board or this Tribunal as to how he would ensure compliance in the future.

1. Having regard to the findings in Chick v Grosfeld, the breaches of the Code, which I find have been established, and Mr Grosfeld's failure to accept the seriousness of these breaches or to satisfy me they will not reoccur, I find Mr Grosfeld is not a fit and proper person to continue to be registered as a tax agent. Given this finding, Mr Grosfeld's registration cannot be renewed and I affirm the decision of the Board

I certify that the preceding 51 (fifty-one) paragraphs are a true copy of the reasons for the decision herein of Ms J L Redfern, Senior Member

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