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[2021] QCA 93
General information, not legal advice.
Court of Appeal (Qld)
2021-05-07
Holmes CJ and Mullins JA and Crow J
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Source: Queensland Judgments (Supreme Court Library Queensland) (www.queenslandjudgments.com.au). Converted to plain text by ZoeLaw. Not the official version.
SUPREME COURT OF QUEENSLAND
CITATION: Bax v Legal Practitioners Admissions Board [2021] QCA 93
PARTIES: CRAIG STEPHEN BAX / (applicant) / v / LEGAL PRACTITIONERS ADMISSIONS BOARD / (respondent)
FILE NO: Appeal No 6832 of 2020
DIVISION: Court of Appeal
PROCEEDING: Application for Admission
DELIVERED ON: 7 May 2021
DELIVERED AT: Brisbane
HEARING DATE: 2 December 2020
JUDGES: Holmes CJ and Mullins JA and Crow J
ORDERS: The application is dismissed.The parties are to file and serve any submissions as to costs by 5 pm on 21 May 2021.
CATCHWORDS: PROFESSIONS AND TRADES – LAWYERS – QUALIFICATIONS AND ADMISSION – FIT AND PROPER PERSONS – where the applicant was previously struck off the roll of solicitors for professional misconduct – where the applicant now seeks readmission to the legal profession under s 34 of the Legal Profession Act 2007 – where the Legal Practitioners Admissions Board opposes the application on the basis that the applicant is not a fit and proper person within the meaning of s 31(1) of the Act and therefore not suitable for admission – whether the applicant is a fit and proper person for admission / Corporations Act 2001 (Cth), s 9, s 251A, s 346A, s 347A, s 1274B(2) / Legal Profession Act 2007 (Qld), s 9, s 31(1), s 34 / Attorney-General v Bax [1999] 2 Qd R 9; [1998] QCA 89, considered / Barboutis v The Kart Centre Pty Ltd [No 2] [2020] WASCA 41, applied / Bax v Legal Practitioners Admissions Board (2020) 4 QR 156; [2020] QCA 71, cited / Dempsey v Legal Practitioners Admissions Board [2013] QCA 193, cited / Gregory v Queensland Law Society Incorporated [2002] 2 Qd R 583; [2001] QCA 499, cited / Janus v Qld Law Society Inc [2001] QCA 180, cited / Re Davis (1947) 75 CLR 409; [1947] HCA 53, cited / Re Harrison: Application for Readmission (2002) 84 SASR 120; [2002] SASC 335, cited
COUNSEL: P Dunning QC, with G Radcliff, for the applicant / A Crowe QC for the respondent
SOLICITORS: Legacy Legal for the applicant / Bennett and Philp Lawyers for the respondent
HOLMES CJ: The applicant seeks admission to the legal profession under s 34 of the Legal Profession Act 2007, having, in 1998, been the subject of an order that his name be struck off the roll of solicitors.1 The Legal Practitioners Admissions Board (“the Board”) recommends that his application be refused. The issue is one of suitability: s 31(1) of the Act provides that a person is suitable for admission only if he or she is a fit and proper person to be admitted. In determining that question, the Court must consider the “suitability matters” set out in s 9 of the Act and any other matters it considers relevant. Among the suitability matters specified in s 9(1) are: whether the applicant is “currently of good fame and character”;2 whether he or she has engaged in legal practice in Australia when not admitted to the legal profession;3 whether he or she has been the subject of disciplinary action in another occupation, involving a finding of guilt;4 and whether his or her name has been removed from the roll of practitioners.5
In Gregory v Queensland Law Society Incorporated,6 Thomas JA set out a useful collection of principles,7 derived from a number of authorities, applicable where a practitioner seeks readmission after having been struck off. The power to reinstate a person whose name has been removed from the roll
“...should be exercised with considerable caution and only upon solid and substantial grounds”.8
The Court’s role is protective; punishment plays no part in the exercise. The primary consideration is protection of the public interest and the interests of the profession. (Thus, it is relevant to consider whether the public confidence in the legal profession would be eroded were the applicant readmitted despite his past conduct.9) The applicant for readmission is in a more disadvantageous position than an applicant who seeks admission for the first time, because he must displace the prospect that he will again engage in conduct of the kind which caused his removal from the roll. The Court’s inquiry should focus on the applicant’s intrinsic character, without undue distraction by his good fame.
The circumstances and aftermath of the applicant’s striking-off
The conduct which led the Court of Appeal to make the order striking the applicant’s name from the roll occurred when he was 27 years old. He had then been admitted for about four years, but despite the brevity of that period, he had achieved the position of equity partner with a firm of solicitors. In that position, he undertook insolvency work, in which he acquired considerable experience. According to his affidavit, he convened more than 50 meetings under pt X of the Bankruptcy Act 1966 and conducted many pt X administrations. The conduct which led to his striking-off was that he backdated by six months a mortgage and deed of loan on behalf of a client so as to make it more difficult for the transactions to be challenged as preferences in the latter’s bankruptcy, and as chairman of the meeting of his client’s creditors falsely informed those present that the documents were executed on the date they bore.
In the Court of Appeal, Pincus JA delivered the leading judgment, with which the other members of the Court agreed. His Honour noted that there were three occasions when the applicant had been asked to explain those events. On the first, giving evidence in the Federal Court, he had suggested a lack of recollection, and then claimed privilege against self-incrimination; and on the second and third occasions, by letter and by evidence given at a hearing, he had suggested that the documents’ dates in some way related to the date of an earlier charge which they were intended to reflect. None of those positions was accepted by the Court as correct. It concluded that the applicant had
“…succumb[ed] to the temptation to assist, by fraudulent means, a client facing bankruptcy”;10
had not attempted to assist the Federal Court towards the truth; and had equivocated about the matter subsequently. His conduct generally demonstrated a persistence in deception. The fraudulent conduct, together with his later uncooperativeness and untruthfulness, indicated that striking-off was the proper remedy.
After being struck off, the applicant worked for a period as an hotelier. Unfortunately, in 2000, he developed transverse myelitis, which left him with paraplegia. Nonetheless, he obtained a commercial agent’s licence (subsequently becoming a licensed debt collector) and began work with a friend in a debt collection business. He was involved in three companies which undertook debt collecting and was appointed as a Commonwealth debt agreement administrator. He also became a Commissioner for Declarations (and possibly a Justice of the Peace11), obtained a licence as a real estate agent, acting as nominee for a company, and became a registered tax practitioner, again acting as a nominee for a corporate tax agent. The applicant referred collectively to the various companies with which he was associated in his tax agent, real estate agent and debt collection roles as the “Options Group”.
As a commercial agent, the applicant deposed, he had assisted clients appearing in the Queensland Civil and Administrative Tribunal in its minor civil dispute jurisdiction, issuing electronic claims, drawing submissions, drafting and settling affidavits and assisting with preparation for hearings. One of the debt collection companies with which the applicant was associated, Capital Options (Aust) Pty Ltd, was in the business of purchasing debts and pursuing recovery action in respect of them. As a director of that company, he deposed, he prepared pleadings and other court documents and appeared to represent the company.
The Legal Services Commission investigation
In February 2018, Capital Options commenced District Court proceedings against two defendants to recover a debt which had been assigned to it. The applicant had been appointed a director of that company in 2013, but ASIC records show that on 23 April 2015, he and another director, Mr Corleone (previously known as Noble), ceased to be directors, leaving one remaining director, Mr David McGrath. (Mr Corleone was, however, reappointed as a director on 9 September 2015, but removed once more in October 2016.) Mr McGrath had signed the statement of claim and the reply and answer in the litigation, filed respectively in March and May 2018. However, it was the applicant who corresponded with the defendants, who were unrepresented, about the action, writing on Capital Options letterhead and styling himself “Group Compliance Manager”.
At the end of May 2018, the applicant served the company’s reply and answer on each of the defendants and requested further and better particulars of the defence and counterclaim. Shortly after, on 3 June 2018, one of the defendants advised the applicant by email that he would correspond only with Mr McGrath or a lawyer representing him. (There was some question in this proceeding whether attached to that email was a copy of an ASIC search disclosing the current directorship of Capital Options. I am satisfied, for reasons to which I will return later in this judgment, that the document was attached.) The applicant replied by email on 5 June 2018, asserting that both he and Mr McGrath were directors of Capital Options; that the defendant did not “get to tell [them]” whom he would deal with; and that all communications were to be directed to him. The defendant answered by saying he would not acknowledge any further correspondence from the applicant, to which the latter replied that all communications for the company were to be with him and that if the defendant ignored correspondence he issued as its director, he would do so at his own risk.
In July 2018, both defendants made complaints to the Legal Services Commission that the applicant was illegally acting as a solicitor. By that time, the applicant had resumed the position of director of Capital Options. The ASIC records show that he was reappointed on 1 July 2018. On 20 August 2018, the Legal Services Commissioner advised the applicant that the complaints had been made and would be investigated, and sought an explanation of his conduct. The applicant’s response was that, as a director of the company, which was self-represented, he was entitled to act on its behalf. The primary complainant was, he asserted, motivated by dislike for him and a “willingness to divert attention from the legal proceedings”. People affected by Capital Options’ business activities had raised such allegations in proceedings on many occasions, but the applicant was
“…highly aware of the prohibitions and strictly ensure[d] that there [was] no breach of the legislation”.
The Commissioner, having performed a search of ASIC records showing the cessation of the applicant’s directorship on 15 April 2015, pointed out that he had not been a director for much of the time relevant to the complaints. When that position was put to him, the applicant responded by saying that the ASIC records were incorrect and that he was at “all material times” a director of the company. (He did not provide any particulars as to the times at which he occupied that position or any paperwork to support that claim.) Alternatively, he said, if he were wrong about that, he had an honest and reasonable but mistaken belief that he was a director. In any case, he had performed the functions of a director and would come within the definition of “director” in s 9 of the Corporations Act 2001, which was wide enough to include a de facto director or a shadow director. When it “came to [his] attention on 1 July 2018” that the ASIC register was wrong, he took immediate steps to rectify it. The applicant reiterated, in terms identical to those of his earlier letter, his awareness of the prohibitions on acting as a lawyer and strict adherence to the legislation.
Subsequent to that response, the applicant engaged a firm of solicitors to represent him. That firm requested the Legal Services Commissioner to provide an update on the progress of the complaint. A Commission investigator responded on 18 February 2019, advising of the request made to the applicant for information about his directorship. She pointed out that the answers given were evasive: they did not explain how the applicant ceased to be a director in 2015 and then resumed that role in 2018. The Commissioner was concerned at the explanation and the apparent lack of diligence on the applicant’s part before he engaged in legal practice, and sought a more direct answer in respect of those issues.
On 6 March 2019, the Legal Services Commissioner advised the solicitors that the investigation was complete. Not surprisingly, the Commissioner described himself as no better informed as to whether the applicant was a director of the company at the relevant time, or what the position was in relation to his directorship in 2015 and 2018. The applicant’s lack of clarity was “concerning”. His failure to ensure that he had a proper legal basis for representing the company was an issue; the Commissioner had formed the view that he had engaged in unlawful operation as a practitioner, contrary to s 24 of the Legal Profession Act. Nonetheless, he exercised his discretion against taking further action because the conduct in question was engaged in for period of only five months; the applicant had resumed his position as director; the litigation was unremarkable; and it was now being conducted by the firm of solicitors who were also representing the applicant.
The application for a declaration re suitability
Not long before the Legal Services Commission began its investigation, the applicant had, on 9 July 2018, applied to the Board for a declaration, pursuant to s 32 of the Legal Profession Act, that his striking-off would not adversely affect its assessment of his suitability. On 29 August 2018, the applicant advised the Board of the complaints to the Legal Services Commission, providing a copy. Consideration of the application was put on hold pending the outcome of the investigation. The results were eventually communicated to the Board in early 2019. On 28 May 2019, the Board resolved that it would not make the declaration sought, having regard to the misconduct which had originally led to the applicant’s striking-off and the lack of material which would show that his character had changed subsequently. Its decision, it said, was based solely on the suitability matters initially disclosed by the applicant; effectively disavowing any reliance on the Legal Services Commissioner’s investigation or conclusions.
The applicant appealed the refusal to this Court, without success: the Court held12 that it was not generally appropriate for an applicant who had been struck off to seek a declaration of the kind, and the present case was not an exception. The seriousness of the misconduct in question inevitably would adversely affect the applicant’s application for readmission, so there was no scope for a declaration to the contrary. That was not to say that the applicant could not apply for readmission.
The Tax Practitioners Board investigation
The judgment dismissing the applicant’s appeal was given on 15 April 2020. In the interim, on 23 March 2020, the Tax Practitioners Board advised the applicant that it was inquiring into his conduct as a registered tax practitioner. The subject matter of the inquiry was set out: the applicant was a director of two companies which had failed to lodge income tax returns over the preceding three or four financial years, and of four companies which had failed to lodge business activity statements on time. In respect of a further company, there was a small debt overdue. As well, on 26 July 2019, the applicant had submitted an annual declaration to the Tax Practitioners Board in which he answered in the negative a question as to whether he had any “overdue personal tax obligations.” At that time, there were overdue tax obligations in respect of three of the companies of which he was a director and about which the Tax Practitioners Board was now raising concerns.
The applicant had only become director of one of those companies, Tumble Weed Trading Co. Pty Ltd, in April 2019, after the death of his brother, its former director. When the Tax Practitioners Board wrote to him, the company’s income tax returns for the years ending 2017, 2018 and 2019 were overdue, as were business activity statements for three quarterly periods in 2019. The applicant seems, in the months before he made the declaration, to have been aware of potential problems: on 30 May 2019 he emailed his brother’s executor, asking him to provide the tax returns for the company and noting that he was in breach of his obligations as director because the business activity statement for the previous quarter had not been lodged; he did not wish to expose himself to prosecution.
The Options Group company which conducted the tax agent business (and was also responsible for the management of taxation affairs for the companies in the group) was Tax & Accounting Options Pty Ltd. The applicant’s fellow director in that company, Mr Singla, responded to the Tax Practitioners Board’s letter, saying that he was instructed to do so on the applicant’s behalf. He expressed regret for the inaccurate declaration, which, it was acknowledged, contained “some serious anomalies”. “Incomplete information” had been provided to the applicant when it was completed. An explanation was given in relation to the other matters, which in respect of two companies was to the effect that they had never traded; in relation to two others, that outstanding business activity statements had not been lodged on time because of an oversight, which was similarly the case with the company which had the small outstanding debt; while in respect of the remaining company, Tumble Weed, the applicant had had considerable difficulty in obtaining records from the accountant who had charge of his deceased brother’s affairs.
The outcome of the investigation was that the Tax Practitioners Board found that the applicant had failed to comply with subsection 30-10(2) of the contained in the 2009 (Cth), which requires a tax agent to
“…comply with the taxation laws in the conduct of [the agent’s] personal affairs”.
That failure in compliance related to six companies of which the applicant was a director. The applicant was late in lodging income tax returns for the three preceding financial years for Tumble Weed, and for another company for the four preceding years. Business activity statements had similarly been lodged late for four companies, including Tumble Weed, and the small debt outstanding in respect of another company had been paid late. Under the provisions of the Tax Agent Services Act, the Board cautioned the applicant for that conduct, noting that after its original letter, the applicant had responded appropriately and attended to the companies’ overdue tax obligations; that he had encountered difficulties with Tumble Weed’s accountant; and that he appeared to show appropriate contrition and a firm intention to make sure annual declarations were completed accurately and appropriately. That decision was communicated to the applicant by letter dated 28 May 2020.
The material filed on the application for readmission
At the end of June 2020, the applicant served his application for readmission and supporting material on the Board. On 10 August 2020, he filed an affidavit concerning the Tax Practitioners Board investigation, annexing the relevant documentation. On 1 September 2020, the Board resolved to oppose the applicant’s application for readmission.
In his application to this Court, the applicant relied on an affidavit which in turn annexed his earlier affidavit filed in support of his application for a declaration in relation to suitability, with, in addition, copies of the correspondence between the Tax Practitioners Board and Mr Singla, and the Tax Practitioners Board’s decision. The earlier affidavit dealt with the applicant’s striking-off, expressed his remorse for the conduct which occasioned it and set out his history from that point on. Neither affidavit dealt with the complaint to the Legal Services Commissioner, but an affidavit filed on behalf of the Board annexed the material in that regard.
References from various business people, annexed to the applicant’s earlier affidavit, were put into affidavit form and filed. Many of them said that the applicant had very early in their acquaintance advised them of his striking-off. Also exhibited to the applicant’s affidavit, but not put into affidavit form, was a reference from a local Queen’s Counsel who expressed the view that the applicant’s readmission would not constitute any threat to the public or the reputation of the profession. He expressed confidence that the applicant fully accepted that the actions leading to his striking-off were below the standard expected of a legal practitioner and officer of the court. The latter had, when briefing the silk, exhibited a “sound knowledge of the law with considerable litigation experience”. The value of the reference is considerably undercut, however, by the author’s acknowledgement that he had had very little contact with the applicant since 1998.
Finally, in this context, Mr Peter Stoker, a psychologist, provided an affidavit annexing his report. In that report, Mr Stoker gave his view that the applicant had no personality traits indicating that he would re-offend and expressed his “strong opinion” that the applicant was remorseful and contrite and would not “bring the law profession into disrepute ever again”. Remarkably, he also gave what was said to be his opinion that the applicant had led an exemplary life ever since his striking-off. Mr Stoker ended his report by saying, reassuringly, that he would “support any decision by the Court of Appeal” allowing the applicant’s readmission.
The matter was listed for hearing in October 2020. On that occasion, the Court pointed out the absence of material to explain the problem identified by the Legal Services Commissioner: that the applicant had not been a director of Capital Options for a period during which he had conducted litigation on the company’s behalf. In particular, there was no attempt to explain how he came to be removed as a director, nor any material by way of company returns or meeting minutes to support any contention that he was under the misapprehension that he remained a director. The applicant sought and was granted an adjournment in which to file further material in relation to those matters.
The evidence in relation to the Legal Services Commission complaint
In initial submissions, counsel for the Board contended that there were two conduct issues relevant to the Court’s consideration of whether the applicant was now a fit and proper person to be admitted. The first, it was said, was the view of the Legal Services Commissioner that he had engaged in legal practice while not a solicitor and his conduct in responding to the complaint, and the second was the finding by the Tax Practitioners Board that he had failed to comply with the Code of Professional Conduct for tax agents. But as to the first identified issue, as counsel for the applicant pointed out, the Commissioner’s powers did not extend to making adverse findings once he had decided (presumably under s 446(1)(d) of the Legal Profession Act) that he would no longer deal with the matter. There was no finding of guilt which could give rise to a suitability issue under s 9(1)(i)(ii) of the Act. The Legal Services Commissioner’s views were, accordingly, of no relevance.
The allegation underlying the Legal Services Commission investigation, that the applicant had practised while not a solicitor, was, however, relevant under s 9(1)(f) of the Act. In that context, the Court was concerned to explore the circumstances in which the applicant had ceased to be a director of Capital Options, while nonetheless continuing to act on the company’s behalf in litigation. What emerges from the material now provided is that a Form 484, “Change to company’s details”, was lodged electronically for Capital Options on 23 April 2015. The document bore the electronic signature of Mr McGrath and contained the name of Tax & Accounting Options as a contact. The form recorded that both the applicant and Mr Corleone ceased to hold office as directors of Capital Options on 23 April 2015. It also recorded a change of address for the company’s officeholders and members. On the same day, Forms 484 were lodged recording the removal of the applicant as director of another Options Group company, Fortified Group Pty Ltd, and making changes to the membership of Capital Options, substituting Mr Corleone for a company, Padrino Holding (Italy) Pty Ltd.
As to how he came to be removed as a director of Capital Options, the applicant deposed that it was the result of a mistake by Mr McGrath when the latter was updating addresses for the members and officers of all companies in the Options Group. The applicant’s recall was that it had been decided at the time that since Mr Corleone had no role in the day-to-day operations of the company, he should be removed as director. His own removal, however, was without his consent and he was unaware of it. The applicant surmised that since Mr Corleone’s name had formerly been “Craig Noble” there had been some confusion between them. (In his affidavit, Mr McGrath offered the same surmise in almost identical terms, as did Mr Singla.) The Form 484 would have been prepared by a junior Tax & Accounting Options employee; those employees, the applicant said, were Chinese accountants and interns seeking to obtain business immigration visas. Giving evidence, the applicant was unable to explain why Mr Corleone was re-appointed as a director in September 2015, remaining in that position until October 2016. Nor had he any recollection of the events surrounding his removal as director of Fortified Group Pty Ltd.
“…[could not] say that he was aware that [Mr Corleone] was not a director”
at that time. Questioned by the Court as to how that sat with the statement in his affidavit that he recalled a decision to remove Mr Corleone in April 2015 because he was not involved in the company’s day-to-day operations, the applicant said that he had been trying, in his affidavit, “to come up with” a reason for Mr Corleone’s removal.
The evidence in relation to the Tax Practitioners Board complaint
The applicant said that he relied on Mr McGrath and Mr Singla to ensure that the contents of the declaration to the Tax Practitioners Board that he signed, denying that he had any overdue tax obligations, were correct. He did not know that there were outstanding issues in relation to any of the companies which the Tax Practitioners Board had identified, other than Tumble Weed, in respect of which he was aware the returns were overdue. He had asked Mr Singla to seek an extension of time for lodgement of the returns for that company and assumed he had done so. The applicant deposed that he believed an extension had been given and that he had told Mr McGrath that it had (although Mr Singla had made no communication to him as to the granting of an extension, or lack thereof). He assumed, therefore, that he could properly declare his obligations had been complied with.
Mr Singla supported that account, saying that he had forgotten the instruction to request an extension of time to lodge Tumble Weed’s outstanding returns and had not told the applicant that the extension had not been given. He had the responsibility of ensuring that the Options Group companies and their office-holders met their tax obligations, while Mr McGrath took responsibility for lodging documentation in connection with renewal of licences, including the applicant’s registration as a tax practitioner. Mr McGrath had prepared the declaration asserting that the applicant had met his tax obligations, but he had informed Mr McGrath that all was in order and the declaration could properly be signed. He was unaware at the time that there was any issue in relation to the companies with outstanding tax obligations.
Mr McGrath, in more or less identical terms, said that he prepared the declaration on that information given by Mr Singla. He also added the additional detail that when the applicant signed the declaration, the latter informed him, Mr McGrath, that Mr Singla had arranged an extension in respect of Tumble Weed Trading Co. Pty Ltd, something which Mr McGrath “verily believe[d]” had occurred.
The drafting of the affidavits
The applicant’s submissions
In respect of the applicant’s drafting the affidavits, particularly those of Mr McGrath and Mr Singla, his counsel said that he had an obligation as a director of Capital Options to satisfy himself how the series of events involving his removal as a director had come about without his knowledge. It was necessary for him to speak to the other witnesses in order to satisfy himself as to what had happened. It was unfortunate that as a lay witness, he had done so in the course of preparing their affidavits, rather than allowing his solicitors to undertake that role; but there was nothing to suggest that the evidence was compromised by his doing so. The affidavits might have been infelicitously expressed, but it did not affect their accuracy as to what had happened. No applicant would be refused admission, nor any solicitor struck off, for conduct of the kind in preparing affidavits.
The applicant had no motive to cease to be a director, and his evidence, as well as that of Mr McGrath and Mr Singla (the latter unchallenged), was that there was no intention for that to occur. Section 1274B(2) of the Corporations Act had the effect that ASIC records were proof of the matters contained in them, in the absence of evidence to the contrary. The evidence that the applicant had acted as a director displaced the prima facie evidence provided by the ASIC records. Nothing in that set of events would justify the refusal of his readmission.
The email that the complainant to the Legal Services Commission had sent to the applicant simply said that the writer would correspond only with Mr McGrath as director of Capital Options; it did not positively assert that the applicant was not a director. The company search appeared next to that email in the material provided to the Court, but the email itself did not refer to it as an attachment. In any event, his counsel submitted, it was no fault of the applicant’s that he was removed as a director. When alerted to the error, he corrected it promptly. In his evidence, he might have been mistaken as to how he became aware of the issue, confusing the direct complaint by email with the complaints made to the Legal Services Commission.
The applicant was not to know that Mr McGrath was not checking the annual returns from ASIC. He had proceeded on the reasonable basis that there was a system in place. As to other oversights in the corporate arrangements, the Capital Options minutes had contemplated the recording of a consensus that the annual statement be approved and that company was solvent. The reference to it as a “floating minute” made it clear that it was not in fact a meeting as which all were present. Although the minutes had not been signed, they remained as a permanent record for the company. If it were the case that s 251A of the Corporations Act applied so that the failure to sign the minutes was a deficiency, that was essentially the failure of the chair of the meeting, Mr McGrath.
The Board’s submissions
Counsel for the Board contended that the circumstances in which both the applicant and Mr Corleone ceased to be a director on the same day, but Mr Corleone was reappointed, raised unanswered questions. Notwithstanding the Court’s adjourning the matter to give him the opportunity, the applicant had not produced any material to the hearing to demonstrate that he acted as a director of Capital Options until after the luncheon adjournment, and then had only produced two documents, an affidavit and submissions in a matter in which the pleading was signed by Mr Corleone. The Court could not place any weight on the applicant’s own assertion that there were many other documents he had signed as a director.
The conduct of the companies with which the applicant was associated was haphazard; there were no formal directors’ meetings and no minutes. There must have been decisions by directors without meetings to which s 251A would apply, but there was no evidence in that regard. The signature of the declaration to the Tax Practitioners Board exhibited recklessness, because the applicant knew that there was cause for concern in relation to Tumble Weed. It was accepted, though, that he was unaware of difficulties in relation to the other companies.
The applicant’s lack of insight into the inappropriateness of his preparation of the affidavit material for other witnesses was all the more troubling because on his own account he had been conducting substantial amounts of litigation over the last few years. Over the period between 2015 and 2018, he had, by his estimate, conducted between 20 and 40 proceedings, all of which must have been during a period when he was not a director of Capital Options.
It fell to the applicant to displace the effect of the finding of unfitness which had led to his removal; he had not done so.
Discussion
The applicant’s counsel initially posed the question for the Court as whether the events leading to the applicant’s removal from the roll had “so indelibly marked his character”14 that he could never be regarded as a fit and proper person for admission. But the conduct resulting in his striking-off, while unquestionably highly relevant to the issue of suitability, does not seem to me of such proportions that the applicant ought to be regarded purely by reason of it as irrevocably barred from practice. The question is whether he has shown that he is now a fit and proper person to practise, which must in turn entail satisfying the Court that he is unlikely to engage in conduct of the sort again.
The good character evidence furnished for the applicant in the form of references, sworn and unsworn, stands some way in his favour, although I do not think that the reference of the Queen’s Counsel to which I have referred can be given much weight, given the length of time since that person has had contact with the applicant. Indeed, it is remarkable that in those circumstances he thought fit to express a view on the appropriateness of the applicant’s readmission. In any event, there is a difference between good reputation and intrinsic character;15 and for the purposes of this enquiry, the latter is the more important.16 Mr Stoker’s report, having ventured well beyond his area of expertise, must also be regarded with some circumspection.
The first conduct issue is, of course, the applicant’s carrying on litigation as a director of Capital Options at a time when he had formally been removed from that office according to the ASIC documentation placed before the court. As to the ASIC records which were in evidence, s 1274B(2) of the Corporations Act provides:
“…In a proceeding in a court, a writing that purports to have been prepared by ASIC is admissible as prima facie evidence of the matters stated in so much of the writing as sets out what purports to be information obtained by ASIC, by using a data processor, from the national database. In other words, the writing is proof of such a matter in the absence of evidence to the contrary.”
In Barboutis v The Kart Centre Pty Ltd [No 2]17 the Western Australian Court of Appeal explained the operation of this section: it is less potent than a prima facie provision or a provision that a fact is taken to be established unless the contrary is proved. Its effect will be displaced by evidence, rather than proof, to the contrary; in other words, it ceases to operate where contrary evidence is adduced, and the question then becomes one for resolution by the Court, as for any other matter of evidence. In Barboutis, evidence to the contrary of a director’s having resigned (as the ASIC record showed) was adduced; it was held that the remaining evidence could not support a finding on the balance of probabilities that he had resigned his office and been replaced by another.
In the present case, there is, similarly, evidence to the contrary of what is contained in the ASIC records, so there is no presumption to be made as to their accuracy. The question is whether on the balance of probabilities one would conclude that the applicant had in fact ceased to be a director at the time he was conducting litigation on behalf of Capital Options.
The evidence as to what occurred is completely unsatisfactory. There appears to be have been some deliberation in the removal of the applicant as director of not one, but two, companies; in the change of membership of Capital Options to include Mr Corleone; and in the latter’s subsequent reinstatement as director. It seems very unlikely that it was all the frolic of an intern, and neither the applicant nor Mr McGrath was able to provide any convincing explanation for that series of events. But while the circumstances of the applicant’s removal are puzzling in the extreme, the evidence points to no advantage for him which would explain why he might have agreed to it.
To find that the applicant was not a director of Capital Options, and knew he was not, at a time when, for example, he filed an affidavit in the Federal Circuit Court swearing that he held that office, would, in effect, amount to a finding of perjury. Such a finding, requiring the application of the Briginshaw18 standard, could not be justified on the evidence here. There is evidence which, while unsatisfactory, points to a mistake’s having occurred, possibly because of the chaotic nature of the company’s attention to its regulatory obligations, rather than a considered decision by the applicant to cease to be a director. It follows that it cannot be concluded that the applicant conducted litigation for Capital Options when he was not entitled to do so.
There remains, however, considerable cause for concern in the applicant’s responses about the issue, both to the Legal Services Commission and in this proceeding. When the Commission contacted him about the matter, the applicant’s reaction was, essentially, one of bluster and denigration of the complainants. (Similarly, in this Court there was a willingness to besmirch the complainants, who were not involved in this proceeding and whose motivations were irrelevant; suggesting a lack of judgment.) He did not, as one might have expected, acknowledge to the Legal Services Commission that there had been an error. Even when the Commission returned to him, having performed a company search, he seems to have decided that the best form of defence was attack. He was not subject to the Australian Solicitors’ Conduct Rules, particularly r 43, which would have required him, had he been a practitioner, to co-operate with the regulatory authority. Nonetheless, the Court does not have the reassurance of a prompt and frank acknowledgement to the Legal Services Commission of the issue or any attempt to explain it.
Order
I would dismiss the application for admission to the legal profession. The parties should have leave to make any submissions as to costs, to be filed and served within 14 days of delivery of this judgment.
MULLINS JA: I agree with the Chief Justice.
CROW J: I agree with the reasons of the Chief Justice and the orders proposed by her Honour.
Attorney-General v Bax [1999] 2 Qd R 9. ↩
Section 9(1)(a). ↩
Section 9(1)(f)(i). ↩
Section 9(1)(i)(ii). ↩
Section 9(1)(j). ↩
[2002] 2 Qd R 583. ↩
At 587, [17] – [18]. ↩
At 587, [17]. ↩
Re Harrison: Application for Readmission (2002) 84 SASR 120 at 131; Dempsey v Legal Practitioners Admissions Board [2013] QCA 193 at [26]. ↩
Attorney-General v Bax [1999] 2 Qd R 9 at 20. ↩
Although the applicant deposed only to being a Commissioner for Declarations and annexed to his affidavit a certificate to that effect, when asked in cross-examination whether he was a Justice of the Peace, he said that he was, and in that context admitted that he had not, on application for the office, disclosed his striking-off. It is not really clear whether he appreciated the difference between the two roles. ↩
Bax v Legal Practitioners Admissions Board (2020) 4 QR 156. ↩
Bax
Legal Practitioners Admissions Board [2021] QCA 93
(1947) 75 CLR 409
(2002) 84 SASR 120
(1938) 60 CLR 336
When the hearing of the matter resumed on 2 December 2020, the applicant had filed, and relied on, his own further affidavit and affidavits by Mr McGrath, the director of Capital Options, and Mr Singla, as director of Tax & Accounting Options. Two other affidavits were filed, neither of any direct consequence. One of them was from Mrs Boe, who with her husband had assigned the cause of action on which Capital Options had sued the two defendants who made complaints to the Legal Services Commission. She claimed that one of those men had made unfounded complaints against her and her husband. The second, from a solicitor, Mr Carey, dealt with why he had advised the Board of the Legal Services Commissioner’s conclusion but not the latter’s observations; something which has not concerned the Court here.
What was striking about the respective affidavits of the applicant and Messrs McGrath and Singla was the amount of duplication between the three, to the point, at times, of absurdity. For example, Mr McGrath and Mr Singla each at times referred to himself in the third person, and each referred to the “circumstances which the Applicant finds myself in”; clearly because the relevant paragraphs had been cut and pasted from the applicant’s affidavit. Under cross-examination, the applicant conceded that he had drafted all three affidavits and also that of Mrs Boe. I will return to that subject later.
Mr Singla (who was not required for cross-examination) deposed that Mr McGrath had the task of updating the records of the Options Group of companies. Rather circuitously, he, Mr Singla, arranged for Mr McGrath to engage Tax & Accounting Options staff to prepare the electronic Form 484 and lodge it. He was unaware of the applicant’s removal as director.
Mr McGrath said in his affidavit that he had not intended that the applicant be removed as an officer of Capital Options and, as he recalled, he had not realised that it had happened. His recollection was that at the time he was to update addresses for the members and officers of the company. Staff at Tax & Accounting and Options, who were usually junior accountants and interns, would have prepared the document, which he would have signed and returned for lodgement. Usually, those employees acted on instructions from himself or Mr Singla. Like the applicant, Mr McGrath recalled a decision that Mr Corleone should be removed as a director of Capital Options because he had no role in the company’s day-to-day operations. And, again like the applicant, Mr McGrath was unable to shed any light on the latter’s removal as director of Fortified Group or the reinstatement of Mr Corleone as a director of Capital Options four and half months later.
The change of directorship in Capital Options was reflected in annual statements provided by ASIC in respect of the company. Section 346A of the Corporations Act 2001 requires ASIC each year, by reference to an annual review date, to give a company an extract of particulars which includes the names of its office-holders. The company must then, pursuant to s 346C(1), respond if any particular in the extract is not correct. Capital Options’ annual review date, by virtue of s 345A(1), was the anniversary of its registration, 15 May. The extracts of particulars provided by ASIC in annual statements for the years 2015 to 2018 correspond with the Forms 484 removing the applicant and Mr Corleone, reinstating Mr Corleone in September 2015 and removing him once more in October 2016. The particulars for 15 May 2015 show only Mr McGrath as a director; those for 15 May 2016 show Mr McGrath and Mr Corleone as directors; while those for 15 May 2017 and 15 May 2018 once again show only Mr McGrath as director. No correction was ever made on Capital Options’ behalf. Mr Singla deposed that he received the annual statements containing those particulars for Capital Options from ASIC each year. (He, of course, was not a director of Capital Options.)
The Corporations Act contains another requirement whose timing depends on the company’s annual review date. Section 347A requires directors of a company to pass a solvency resolution each year within two months after the review date. As to the documentation of such resolutions, s 251A of the Act requires a company to keep minute books recording resolutions of meetings of directors and of members, whether passed with or without a meeting. The company must ensure that meeting minutes are signed within a reasonable time by the chair and that minutes of the passing of a resolution without a meeting are signed by a director within a reasonable time after its passing. A minute recorded and signed is evidence of the resolution in the absence of evidence to the contrary. Under s 347C, the payment of a review fee is taken to be a representation by the directors of the company that it is solvent.
Mr Singla deposed that at the time the applicant was removed as director, it was the practice for the companies in the Options Group, including Capital Options, to prepare solvency minutes, but no other form of minute. He arranged for payment of the annual review fee and the preparation of the solvency minutes. The solvency minutes also dealt with the ASIC annual statements. Mr Singla said that he had simply copied those minutes from year to year, not checking them against the ASIC extract of particulars.
Unsigned copies of the minutes of meeting for the years 2015 to 2018 are annexed to the applicant’s affidavit. It is clear that Mr Singla is correct when he says that they were copied from year to year. Apart from a change of the year in the date on each set of minutes, they are identical. All record: that there was a meeting at 10.00 am on 15 May at which Mr Corleone, the applicant and Mr McGrath were present; that the minutes of the previous meeting were confirmed; that the business of the meeting was to approve the annual statement and confirm that the company was solvent; and that resolutions were passed approving the “annul” statement (a typographical error repeated year after year) and confirming that the company was solvent. The meeting is said to have closed at 10.10am. There are spaces for the signature of Mr McGrath as chairman and for the signatures of Mr McGrath, Mr Corleone, and the applicant as members to record their approval of the minutes as a “floating minute”. (All of this is puzzling, because s 347A requires the solvency resolution to be passed by directors, not by members, and what is described as a floating minute purports to record the passage of resolutions at a physical meeting.)
Mr Singla said that he continued to mention Mr Corleone in the annual solvency minutes as a member of the company because, through an oversight, the latter’s shares had not been transferred, although he had ceased involvement with the company in 2016. He submitted the solvency minutes each year to Mr McGrath for approval and signature. In his affidavit, Mr McGrath deposed that he had not seen or examined the ASIC annual statements and the minutes submitted to him for approval and signature were not checked against them. In cross-examination he said, instead, that he would have signed off on the annual statements but would not have looked at them closely. He had not realised there were changes of which ASIC should be advised. He could not say whether any signed copies of the minutes existed.
The applicant said in evidence that, although the minutes in each case contained a resolution approving the ASIC annual statement, he had no recollection of ever seeing them before. They would have been prepared under Mr Singla’s direction by very junior members of Tax & Accounting Options. He had not attended any meeting, nor had he seen the annual statements or felt any obligation to check them, because he assumed that the Tax & Accounting Options staff had done so. Annual statements for the various companies, he said, “came into the office like confetti”.
As to the Legal Services Commission complaints and his response to them, the applicant in his further affidavit expressed the view that, whatever the ASIC records said, since he carried out the duties of a director, he was to be regarded as one. He had written to the Legal Services Commissioner (pointing out that s 9 of the Corporations Act extended the definition of “director” so as to include de facto directors) and referring him to a number of cases in which shadow directors had been held liable for breaches of the Act.13 The Commissioner had ignored that case law, in consequence concluding that the applicant had engaged in unlawful operation as a practitioner; a conclusion with which the applicant did not agree. He explained that he did not intend to be evasive, but rather was cautious, in his responses to the Legal Services Commissioner, electing not to provide any evidence that he had been acting as a director because he anticipated that he might be charged with offences under the Legal Profession Act. He also deposed that Mrs Boe had informed him, and he “verily believe[d]”, that one of the complainants to the Legal Services Commission had made complaints against her as a means of extortion and had made scurrilous allegations against other people.
In his affidavit, the applicant asserted that neither complainant to the Legal Services Commission had raised any question in the litigation as to his entitlement to act for Capital Options or his directorship of the company. He was not aware that it was an issue, or that he had been removed as a director of the company, until he received the complaints from the Legal Services Commissioner. He had had himself reappointed as a director because of those complaints. In evidence, the applicant said that he did not appreciate that the complainant who emailed him on 3 June 2018 was suggesting that he was not a director of the company. However, when it was pointed out to him that he was reinstated as a director on 1 July 2018, and the complaints to the Legal Services Commission were not made until after that date, with the first contact from the Commissioner by letter of 20 August 2018, he accepted that the reinstatement must have been because of the complainant’s email to him. He was, he explained, “just going on recollection”.
Mr McGrath similarly deposed that he was unaware until the complaints from the Legal Services Commission arrived that the applicant had been removed as a director. In evidence, he elaborated that when the complaints arrived, so that it was apparent that the applicant was not a director, and the latter asked him about it, he was “stunned”. The applicant was then reinstated. However, asked about an email from one of the complainants, Mr McGrath conceded that it might in fact have been the trigger.
The applicant said under cross-examination that over the period during which the ASIC records showed he was not a director (between April 2015 and 1 July 2018) Capital Options had brought between 20 and 40 proceedings. The Board’s solicitors filed an affidavit which annexed the pleadings in the litigation which Capital Options brought against the complainants in the Legal Services Commission matter. The applicant said that he would have drafted the statement of claim in that action for settlement by counsel and approved the settled document for filing. Asked why, in that case, it was Mr McGrath who, as director of Capital Options, had signed the statement of claim, he responded that he could only guess that he must not have been present at the time it required signature. He did not have any explanation for why Mr McGrath, rather than he, had signed the reply and answer.
The applicant was challenged as to why he had provided no evidence in the form of documents signed by him as a director of Capital Options to support his claim that he understood himself to remain a director. He said that it had not occurred to him that that would be required, and his (presumably legal) advisers had not told him he should produce such documents. However, having completed his evidence, he was recalled to the witness box after the luncheon adjournment, and then produced copies of an affidavit sworn by him in November 2017 in a Federal Circuit Court proceeding, in which he described himself as director of Capital Options, and an outline of submissions in the same matter, also describing him in that way.
The statement of claim in the Federal Circuit Court proceeding was signed by Mr Corleone as a director, under the name Craig Noble, on 7 July 2015, although, like the applicant, he had recently been removed from that office. The applicant could not explain why Mr Corleone had signed it. He
Counsel for the applicant said that there was no basis to suppose that the declaration to the Tax Practitioners Board was deliberately false. The applicant had given instructions to seek an extension and expected that it would have been granted making the declaration accurate. He had not been informed about the other companies whose affairs were late. Mr Singla had told Mr McGrath that the declaration could properly be signed.
I am satisfied that when the applicant received the email from the Legal Services Commission complainant it was accompanied by the ASIC search. The applicant’s reaction, of asserting to the complainant that he himself was a director and then acting to rectify the ASIC record, is only consistent with his having received notice at that time, before the complaints were made to the Legal Services Commission, that there was a problem. He himself conceded as much in evidence. I would not, however, conclude that his statement in his affidavit and initially in the courtroom, to the effect that he had only become aware of the error once the Legal Services Commission brought the complaints to his attention, was a deliberate lie. But at best, it shows a willingness to give sworn evidence in circumstances where he could not have satisfied himself as to its accuracy.
Another concern arises from the applicant’s assertion in his affidavit that there had been a considered decision to remove Mr Corleone as a director, because of his lack of involvement with the company’s affairs. When he was confronted here with an apparent conflict between that statement and a later claim in evidence that he was uncertain whether he knew Mr Corleone was not a director as at July 2015, the applicant shifted position to having simply sought, in his affidavit, to offer an explanation for Mr Corleone’s removal. That does not accord with the clear statement on oath that there had actually been a decision which led to it.
There are, I think, some resemblances in the applicant’s current way of conducting himself to that exhibited prior to his striking-off. The Court of Appeal then described the applicant’s versions of how things had occurred as “equivocation”; the same noun seems apposite here. There was a lack of concern with whether the evidence he gave on oath was correct and a readiness to alter position as needed in the interests of self-justification.
And for someone who believed himself a director of Capital Options, the applicant exhibited a blithe disregard for the Corporations Act requirements in respect of the company. The evidence suggests that he, rather than Mr McGrath, was the guiding force behind the company, but he did not concern himself with whether the annual ASIC statement particulars for the company were correct or with the requirement to pass a solvency resolution each year, and to document it. Nothing in the evidence suggested that the applicant could have had any confidence that there was a reliable system in place to attend to these matters. The unsigned minutes produced by Mr Singla each year seem most unlikely to have reflected anything which actually occurred, and on the applicant’s own evidence they did not reflect events of which he was aware. The applicant seems to have exhibited no concern at all about the company’s record-keeping or compliance with legislation, despite occupying a critical role in conducting its business.
The applicant’s conduct in relation to the tax obligations of other companies with which he was associated was similarly cavalier, as the breach of the Tax Agents’ Code of Professional Conduct found by the Tax Practitioners Board demonstrates. His making of the Tax Practitioners Board declaration was, at best, reckless. He seems to have been ready to assume, not only that Mr Singla had applied for an extension of time in relation to Tumble Weed, but also, that it had been granted. To sign a declaration as true on such assumptions was irresponsible.
Another matter of concern is the applicant’s apparent inattention to the Court’s intimation on the first hearing date as to the need for evidence showing that he believed himself a director. That was the very basis on which an adjournment was granted. It is difficult to understand how somebody who sought to practise in law could manage not to take any note, literally or figuratively, of what the Court had indicated was required (nor apparently, make any enquiry of his solicitors, if he were unable to hear what was said), before setting about the preparation of material for the resumed hearing.
As to the preparation of that material, one of the most perturbing features of this case is the applicant’s willingness to prepare affidavits for other witnesses by cutting and pasting from his own. It was not merely a matter of infelicitous language. It did, contrary to submission, bear on the credibility of the evidence: the identical or close to identical expressions used in many instances by the applicant Mr McGrath and Mr Singla in their respective affidavits was such as to cast doubt on the genuineness of their recollections; and the wavering quality of Mr McGrath’s oral evidence on a number of points dealt with in his affidavit suggested that he had no clear idea of what had actually happened. If the applicant were, for example, an inexperienced first-time applicant for admission, this disregard for the need to ensure that witnesses gave their versions independently might be forgivable. But the applicant had practised as a lawyer at the level of partner and indeed had continued to litigate over recent years. If the inappropriateness of preparing evidence in that way had not become apparent to him in that time, his fitness to practise as a lawyer must, for that reason alone, be called into serious doubt.
The form of the applicant’s counsel’s submissions suggested an approach of focusing on each respect in which his conduct was called into question and considering whether it would of itself warrant a refusal of admission. The proper and rational approach, however, is to consider those issues not severally, but collectively, as they reflect on the applicant’s suitability. Having regard to the accumulation of matters, this Court can have no confidence that the applicant has developed any clear understanding of proper conduct. I am not satisfied that he has discharged the onus on him of showing that he would not again engage in conduct of the kind which caused his striking-off.
Nor do I consider that the public interest and the interests of the profession would appropriately be safeguarded were the applicant to be readmitted, whatever conditions might be applied. Indeed, it seems to me that if the public were made aware that an applicant were readmitted in circumstances where he had displayed an indifference to requirements of the Corporations Act and some of his obligations as a tax agent; had not only failed to follow proper procedure in the collection of evidence, but apparently had been oblivious to the need to do so; had generally behaved in an unforthcoming way in his dealing with a regulatory authority; and had been unable to grasp what it was that was required of him, notwithstanding the clear statement of the Court in his presence; their confidence in the profession would in fact be eroded.
As a matter of statutory construction, I doubt that the expanded definition of “director” in s 9 of the Corporations Act is intended as a source of authority as opposed to a basis of liability, but it is unnecessary to reach any conclusion on the soundness of the applicant’s view. ↩
Attorney-General v Legal Services Commissioner; Legal Services Commissioner v Shand [2018] QCA 66 at [57]. ↩
Re Davis (1947) 75 CLR 409 at 426. ↩
Janus v Qld Law Society Inc [2001] QCA 180 at [12]. ↩
[2020] WASCA 41. ↩
Briginshaw v Briginshaw (1938) 60 CLR 336. ↩