Davison v Legal Profession Admission Board

Supreme Court of NSW|2018-06-21|Before: McCallum J, Samuels JA, Hall J, New South J

Judgment

HER HONOUR: William Davison was one of a number of "bankrupt barristers" dealt with by the New South Wales Bar Association in 2001 after a series of articles published in The Sydney Morning Herald described them as tax evaders. Mr Davison had by then failed to meet his income tax obligations over many years and had entered bankruptcy twice. In his professional life, he was otherwise successful and respected. He had a busy practice and had been appointed senior counsel in 1994. His personal life, however, was chaotic. He had endured marital difficulties, failed investments and the tragedy of a son's suicide.
In November 2001, the Bar Association cancelled Mr Davison's practising certificate. In July 2004, the Bar Association brought professional misconduct proceedings against him in the Administrative Decisions Tribunal seeking to have his name removed from the Roll. Before that application was heard, Mr Davison entered bankruptcy for a third time, on the petition of the Australian Taxation Office. During the hearing of the application in the Tribunal, Mr Davison gave evidence as a result of which the Bar Association brought proceedings in this Court alleging that he had continued to practise as a barrister without holding a practising certificate for a period of almost four years.
In November 2005, the Tribunal ordered that Mr Davison's name be removed from the Roll: Council of the New South Wales Bar Association v Davison [2005] NSWADT 252. In February 2006, Hall J made a declaration that Mr Davison had practised without a practising certificate and granted an injunction to restrain that conduct: Council of the New South Wales Bar Association v Davison [2006] NSWSC 65. In July 2006, Hall J made a further declaration that Mr Davison was guilty of professional misconduct on that account: Council of the NSW Bar Association v Davison [2006] NSWSC 699. In August 2007, Mr Davison's appeal against the decision of the Tribunal was dismissed by the Court of Appeal: Davison v Council of the New South Wales Bar Association [2007] NSWCA 227.

Legislative scheme

The admission of lawyers in New South Wales is governed by the Legal Profession Uniform Law. Under s 16(1) of the Law, the Supreme Court has authority to admit a person to the Australian legal profession as an Australian lawyer provided the Legal Profession Admission Board has provided the court with a "compliance certificate" in respect of that person which remains in force.
Section 17 of the Law sets out the prerequisites for the issue of a compliance certificate, as follows: 17 Prerequisites for compliance certificates (1) The prerequisites for the issue of a compliance certificate in respect of a person are that he or she-- (a) has attained the academic qualifications specified under the Admission Rules for the purposes of this section (the "specified academic qualifications prerequisite" ); and (b) has satisfactorily completed the practical legal training requirements specified in the Admission Rules for the purposes of this section (the "specified practical legal training prerequisite" ); and (c) is a fit and proper person to be admitted to the Australian legal profession. (2) In considering whether a person is a fit and proper person to be admitted to the Australian legal profession-- (a) the designated local regulatory authority may have regard to any matter relevant to the person's eligibility or suitability for admission, however the matter comes to its attention; and (b) the designated local regulatory authority must have regard to the matters specified in the Admission Rules for the purposes of this section.
There was no issue in the present case concerning the satisfaction of the requirements of academic qualifications and practical legal training. The only issue is whether Mr Davison is a fit and proper person to be admitted to the Australian legal profession.
Section 17(2)(b) of the Law provides that, in determining whether someone is a fit and proper person, the Board must have regard to the matters specified in the Legal Profession Uniform Admission Rules 2015 (NSW). The relevant rule is r 10(1), which provides: 10 Determining whether someone is a fit and proper person (1) For the purposes of section 17 (2) (b) of the Uniform Law, the following matters are specified as matters to which the Board must have regard: (a) any statutory declaration as to the person's character, referred to in rule 16, (b) any disclosure statement made by the person under rule 17, (c) any police report provided under rule 18, (d) any student conduct report provided under rule 19, (e) any certificate of good standing provided under rule 20, (f) whether the person is currently of good fame and character, (g) whether the person is or has been a bankrupt or subject to an arrangement under Part 10 of the Bankruptcy Act or has been an officer of a corporation that has been wound up in insolvency or under external administration, (h) whether the person has been found guilty of an offence including a spent offence in Australia or in a foreign country, and if so: (i) the nature of the offence, and (ii) how long ago the offence was committed, and (iii) the person's age when the offence was committed, (i) whether the person has been the subject of any disciplinary action, howsoever expressed, in any profession or occupation in Australia or in a foreign country, (j) whether the person has been the subject of disciplinary action, howsoever expressed, in any profession or occupation that involved a finding adverse to the person, (k) whether the person is currently unable satisfactorily to carry out the inherent requirements of practice as an Australian legal practitioner, (l) whether the person has a sufficient knowledge of written and spoken English to engage in legal practice in this jurisdiction.
The matters specified in that rule are mandatory considerations for the Board. The rule does not apply in terms to a decision of this Court in an appeal under s 26: Hilton v Legal Profession Admission Board [2017] NSWCA 232 at [15]. Having regard to what the Court there said, I accept the submission of the Bar Association that the matters listed in r 10 are permissible (not mandatory) considerations but that the ultimate test to be applied by this court is whether Mr Davison is a fit and proper person to be admitted to the Australian legal profession. In Hilton, the Court of Appeal described that test as one which is "peculiarly evaluative": at 49.
Rule 14 of the Uniform Admission Rules specifies matters which must be set out in an application for a compliance certificate by a person whose name has previously been removed from the Roll. Those matters include the circumstances which led to the applicant's name being removed from the Roll, the applicant's views about those circumstances and the decision to remove the applicant's name from the Roll and events which tend to establish the applicant's good fame and character.
Mr Davison addressed those matters in a statutory declaration made on 23 November 2016 provided in support of his application to the Board. That statutory declaration had a number of attachments including a report from a consultant psychologist, Mr Diment.
In a second statutory declaration of the same date addressing the disclosure requirements referred to in r 10(1)(b), Mr Davison disclosed his three prior bankruptcies, two prior offences contrary to ss 8C(1)(a) and 8C(1)(f) of the Taxation Administration Act 1953 (Cth) for which he was dealt with in the Local Court; the decision of the Tribunal ordering that his name be removed from the Roll; the two decisions of Hall J in the injunction proceedings and the decision of the Court of Appeal dismissing his appeal against the decision of the Tribunal. Each of those decisions was included as an attachment to the statutory declaration. That material is addressed below.
Section 28(1) of the Law provides that an appeal to this Court from a decision of the Board is to be by way of "rehearing" and that fresh evidence may be adduced. In addition to his statutory declarations, Mr Davison swore an affidavit and also relied on an affidavit sworn by his wife. That material is also addressed below.

Nature of the onus borne by Mr Davison

The Bar Association's written submissions provided a helpful summary of the principles concerning the onus borne by Mr Davison. It is important to bear in mind that the test applied by the Tribunal was an assessment of permanent unfitness as at that point in time. The test was whether, at the time of the Tribunal's determination, the barrister "must be regarded, at the present time, as permanently unfit to practise": at [100], applying the decision of New South Wales Bar Association v Cummins [2001] NSWCA 284 at [26] (Spigelman CJ). In that context, I accept the submission of the Bar Association that the onus borne by Mr Davison is to be understood as requiring him to establish that he has changed since the time of that finding. Expressing the same proposition in different terms, it has been held that, in order to discharge the heavy onus that exists in such an application, an applicant must "displace the decision as to probable permanent unfitness which was the basis of his removal": Ex parte Dennis; Re The Legal Practitioners Act (Court of Appeal (NSW), Samuels JA, 23 December 1988, unrep). In that case, Samuels JA also said that, in reaching its decision, the Court should act with the greatest caution and only on solid and substantial grounds. Mr Davison accepts that is the correct approach.
The Bar Association also relied on the decision of Prothonotary of the Supreme Court of New South Wales v Montenegro [2015] NSWCA 409 at [78] approving the statement of Walsh JA in Ex parte Tziniolos; Re Medical Practitioners Act (1966) 66 SR (NSW) 448 at 460-461 where it was observed that change cannot be assumed to have occurred "merely because some years have gone by and it is not proved that anything of a discreditable kind has occurred".
Similarly, in Hilton, the Court of Appeal said at [76] that the mere fact that three decades had passed during which the evidence disclosed Mr Hilton's conduct to have been blameless did not predetermine the evaluative decision required to be made by the Court. The burden is to displace a decision as to probable permanent unfitness by positively demonstrating rehabilitation.
That said, as submitted by Mr Davison, the determination of that question takes place in the context that, as made plain by s 17, the Law plainly contemplates the possibility of change in a person who has previously been found not a fit and proper person to remain on the Roll: cf Saunders v Legal Profession Admission Board [2015] NSWSC 1839 at [61] (Schmidt J). The focus must be on the present capacity of the person to satisfy that test: Hilton v Legal Profession Admission Board [2016] NSWSC 1617 at [101] (Beech-Jones J).
Mr Davison also submitted that his conduct should be considered against the context of the profound and sustained personal tragedy he has suffered and the fact that he has learned from his tragedies. The evidence on those matters is considered below.

Use of prior decisions in establishing the facts

As already noted, r 14 of the Uniform Admission Rules requires an applicant whose name has previously been removed from the Roll to address the circumstances which led to the applicant's name being removed from the Roll, the applicant's views about those circumstances and the decision to remove the applicant's name from the Roll, and events which tend to establish the applicant's good fame and character. The obvious purpose of that requirement is to provide a proper basis on which the Board can assess whether the applicant has displaced the previous finding of probable permanent unfitness by positively demonstrating rehabilitation in accordance with the principles explained above.
Mr Davison tendered the material disclosed to the Board, including the adverse decisions of the Tribunal, Hall J and the Court of Appeal, as part of his case at the hearing before me. Senior counsel for the Bar Association noted that, as those decisions were tendered by Mr Davison without qualification and not objected to by the Bar Association, s 91 of the Evidence Act 1995 (NSW) is not engaged, for the reasons explained by Basten JA in Hilton at [55] and following; and see King v Muriniti [2018] NSWCA 98 at [35]. It follows that the findings of fact made in the prior decisions concerning Mr Davison are admissible to prove those facts in this appeal. Mr Davison did not contend otherwise; indeed his counsel made it clear that he accepted that was the basis on which this Court would proceed.
During the hearing, I raised a concern in relation to the Bar Association's reliance on what were referred to for the purpose of argument as "adjectival findings", such as the findings of the Court of Appeal that Mr Davison lived an "affluent" lifestyle or that he made only "desultory" tax payments during a particular period. Mr Davison was cross-examined at some length concerning his acceptance of such findings. The Bar Association submitted that such findings are not in any different category in that they are findings of fact which are admissible in the present application to prove those facts. It submitted that many fact-finding exercises involve an element of evaluative judgment. So much may be accepted. The difficulty was one of an absence of precision. The cross-examination of Mr Davison by reference to the findings of previous decision-makers was directed to the Bar Association's submission that the authorities "prima facie require an applicant to accept the conduct as found if he or she is then to demonstrate rehabilitation, contrition and an insight into previous ethical defects". The extent to which Mr Davison truly accepted the findings of the earlier decision-makers is considered below. For present purposes, the point is that, in some instances, the cross-examination assumed a fixed meaning for subjective or adjectival phrases that in truth admit a range of meaning. While I accept that it is appropriate to proceed on the basis of the findings made in the previous proceedings, the meaning and significance of some findings relied on in the present case can only be assessed contextually, with close regard to the material on which they are recorded as having been based.
Subject to that qualification, I accept that the findings made in the previous decisions concerning Mr Davison are the facts on which I can and should act in the present application.

Circumstances which led to the applicant's name being removed from the Roll

The Bar Association provided a chronology drawn from those previous decisions. That document was helpful but in some respects tendentious. Where appropriate, I have set out the relevant findings in full. The following summary is otherwise drawn primarily from the chronology.
Mr Davison was admitted to practice as a solicitor on 28 May 1965. He commenced practice as a barrister in March 1980.
There was no real dispute that, as from the end of the 1990 financial year, Mr Davison had difficulty paying his income tax. The Court of Appeal stated that the problems "continued and increased and were not resolved at the time of the hearing before the Tribunal (in 2005)": at [5]. The Court noted at [20] that it had been difficult to ascertain precise details of Mr Davison's taxable income, tax assessed and amounts paid for each year between 1989 and 2004. The Court summarised the position at [6] as follows: "The appellant's taxable income in the financial years from 1989 to 1999 was not less than $3,500,000. The appellant's income tax liability, disregarding penalties and interest (referred to as his 'primary tax liability'), for the financial years from 1989 to 1999 was not less than $1,500,000. Of the sum of $1,500,000, the appellant did not pay more than $420,000. The Tribunal found that as at June 2004, the total amount of unpaid tax, including interest and penalties, was in the vicinity of $1,324,570."
In 1990, Mr Davison invested $100,000 in a dairy cattle project promoted by Geneva Finance Ltd that was intended to provide him with significant tax benefits: CA at [24] and [84]. In that same year, Mr Davison separated from his wife for a period of time: ADT at [152].
On 30 March 1992, judgment was entered against Mr Davison in favour of the Deputy Commissioner of Taxation for $566,957.30: CA at [23]; ADT at [10]. Mr Davison's first bankruptcy commenced shortly afterwards, on 9 April 1992, pursuant to a creditor's petition filed by Geneva Finance Ltd (the promoter of the dairy cattle project): ADT at [11]; CA at [26].
The Court of Appeal said at [89]: "As the facts set out above indicate, in the period after the failure of the Geneva Finance investment, and, in particular, after the appellant's bankruptcy on 9 April 1992, he made only desultory payments of tax (save for the financial year ending 30 June 1994), despite maintaining what appears to have been an affluent lifestyle with a high standard of living. By 30 June 1995, the appellant was again in arrears in respect of his tax in an amount of more than $290,000. He had not paid tax in 1993 and had paid little tax in 1995. The appellant's taxable income over this period appears to have been something in the vicinity of $900,000 of which he made contributions to his trustee in bankruptcy of approximately $163,000. The inference to be drawn from these facts is that the appellant should have been able to pay far more in respect of tax during this period than he did."
Mr Davison took silk during that period, in 1994.
On 9 May 1995, Mr Davison was discharged from his first bankruptcy.
From 11 October 1995 until his second bankruptcy commencing June 1999, Mr Davison paid less than $12,000 in tax: ADT [23]. Within that period, Mr Davison's personal expenditure in a single year (the tax year 1996-1997) was $450,000.
The Court of Appeal found at [32]: "From a date not later than April 1996, the appellant used a company called 'Comserv (No 1482) Pty Limited' to operate as a service company for his practice. This company paid the appellant's expenses relating to his practice and charged the appellant for the services rendered by it. From the time that Comserv entered the picture, the appellant did not deposit the cheques he received from his practice into his personal bank account but banked those cheques into the Comserv bank account, his wife's bank account or his brother's bank account. The appellant was the only source of income for Comserv. He took these steps notwithstanding that he had insufficient cash or other assets to meet his tax obligations."
Comserv paid Mr Davison's wife $5,000 per month for typing services provided by her of, as she recalled, between one and five hours per week. The trustee in bankruptcy later brought proceedings contending, among other things, that she had been paid more than the commercial value of those services. She ultimately agreed to repay $150,000 to the trustee: ADT at [48].
On 10 January 1997, Mr Davison's son committed suicide. It goes without saying that this caused him great distress and the Court of Appeal accepted that to be the case. The Tribunal found at [162] that Mr Davison was affected by depression after his son's death.
In July 1997, a house was bought in Mrs Davison's name, to which Mr Davison made a substantial contribution and in which they both lived: ADT at [53], [153]; CA at [63].
Between 1996 and 1998, Mr Davison made weekly payments to his brother of $1,500 or $2,000 to support his work on a Y2K venture in which Mr Davison held an equal share: ADT at [51]. That venture failed in February 1998: ADT at [51], [155]. Mr Davison initially maintained that the failure of this joint venture should have been taken into account to explain his default in tax but did not press that ground in the Court of Appeal.
On 10 March 1999, consent judgment was entered in the Supreme Court of New South Wales against Mr Davison in favour of the Deputy Commissioner of Taxation for $517,770: CA at [35].
On 7 April 1999, charges were brought against Mr Davison in the Local Court alleging offences against s 8C of the Taxation Administration Act (refusal or failure to provide information or documents or to attend before the Commissioner as required). Mr Davison was convicted of both of those offences: ADT at [10].
On the same day, Mr Davidson filed a petition for his second bankruptcy: CA at [36]. His income in the year before filing the petition was $637,566: CA at [37]. The Tribunal found at [55] that, shortly before this second bankruptcy, Mr Davison caused fees from his practice to be paid into the bank accounts of his wife, other family members and Comserv. The Tribunal also found at [62] that, in the period between the filing of the bankruptcy petition and the commencement of the bankruptcy, Mr Davison and his wife incurred debts of approximately $65,000 on their credit cards. Mr Davison admitted to the Tribunal that none of this expenditure was used on assets that his trustee could sell for the benefit of his creditors. Upon bankruptcy the value of the assets he disclosed was $5,000.
The second bankruptcy commenced on 16 July 1999. Mr Davison's indebtedness to the Deputy Commissioner of Taxation by then was approximately $1.5 million: ADT at [11], [30]; CA at [6], [37].
On 5 September 2000, an auction was held for the sale of a wine collection maintained at Mr Davison's home which realised the proceeds of $45,163 and included the sale of many bottles of wine of a vintage after 1992: ADT at [63]. An affidavit sworn by Mr Davison on 10 December 2004 claimed that most of the wine was bought prior to his first bankruptcy and "mostly in the 1980s": ADT at [63]. In his evidence in the proceedings, Mr Davison explained that he was drawing a distinction between his wine collection and wine purchased for daily consumption.
The Court of Appeal found at [42] that, by 28 May 2001, Mr Davison had accumulated a debt to the ATO of approximately $425,000.
On 17 September 2001, Mr Davison wrote to the Bar Association acknowledging that his conduct was "deserving of severe censure": ADT at [133]. On 9 November 2001, the Bar Association cancelled his practising certificate. As later determined by Hall J, on about 10 November 2001 (the following day) he began practicing as a barrister without holding a practising certificate: Council of the New South Wales Bar Association v Davison [2006] NSWSC 65 at [4].
From 23 November 2001, a company of which Mrs Davison was the sole director and secretary commenced trading under the name Sydney Development Services. In December of that year, Sydney Development Services began to issue invoices in respect of professional services rendered by Mr Davison: Council of the New South Wales Bar Association v Davison [2006] NSWSC 65 at [12]-[13].
The Tribunal found at [89] that for most of the time from October 2002: "SDS had been paid a monthly retainer, apparently of $10,000, by a company called Walker Corporation, in respect of services to be provided by the Barrister to SDS and by SDS to Walker Corporation. There was also correspondence between the Barrister and a representative of Walker Corporation, in which the Barrister proposed that Walker Corporation pay a 'success fee' to SDS if it succeeded in certain litigation in relation to which he, on behalf of SDS, was providing consultancy services."
Justice Hall later found that, through those contractual arrangements, Mr Davison provided legal advice and services and that, in undertaking that work, he practiced as a barrister without being the holder of a current practising certificate contrary to s 25(1) of the Legal Profession Act 1987 (NSW): Council of the New South Wales Bar Association v Davison [2006] NSWSC 65 at [149]-[150].
As at June 2004 Mr Davison's total unpaid tax including interest and penalties was in the vicinity of $1,324,570.
The disciplinary proceedings brought by the Bar Association were commenced on 1 July 2004. In those proceedings, Mr Davison conceded professional misconduct but contested whether his name should be removed from the Roll.
On 6 August 2004, the Deputy Commissioner of Taxation obtained judgment against Mr Davison in the District Court in Newcastle for $612,370 for unpaid tax: CA at [56]; ADT at [31]. This led to Mr Davison's third bankruptcy, which commenced on 23 March 2005.
At a point towards the end of the hearing before the Tribunal in 2005, Mr Davison gave evidence that, since April that year, he had been employed by Walker Corporation on a "trial basis", for an annual base salary of $110,091.74. He tendered two pay slips showing that group tax had been deducted. The Tribunal noted at [92] that those matters "had not been mentioned previously, either in evidence to the Tribunal or indeed in communications between the Barrister and his trustee in bankruptcy" and accepted the Bar Association's submission that this was one of a number of aspects of Mr Davison's evidence that "reflected most adversely on his credit": at [149]-[150].
The information disclosed during the proceedings before the Tribunal prompted the Bar Association on 15 August 2005 to commence the proceedings in the Supreme Court contending that Mr Davison had practised as a barrister without holding a practising certificate. The period alleged was between 10 November 2001 and 14 September 2005. On 14 September 2005, Mr Davison consented to interim interlocutory relief in the Supreme Court: Council of the New South Wales Bar Association v Davison [2006] NSWSC 65 at [6] (Hall J).
On 7 November 2005 the Tribunal ordered that Mr Davison's name be removed from the Roll and that he pay the Bar Association's costs: Council of the New South Wales Bar Association v Davison [2005] NSWADT 252.
On 28 February 2006, Hall J granted the declaratory and final injunctive relief sought by the Bar Association preventing Davison from practising without a practising certificate: Council of the New South Wales Bar Association v Davison [2006] NSWSC 65. Justice Hall found at 160 that there was a "significant and present risk" that Mr Davison would continue to practise if not restrained.
On 19 July 2006, Hall J made a further declaration that Mr Davison's conduct was done wilfully and without reasonable excuse with the result that he was found guilty of professional misconduct: Council of the NSW Bar Association v Davison [2006] NSWSC 699. Mr Davison was ordered to pay the Bar Association's costs which were determined on 7 February 2007 at $5,058.81.
On 29 August 2007, the Court of Appeal dismissed Davison's appeal from the Tribunal decision striking him off the roll: Davison v Council of the New South Wales Bar Association [2007] NSWCA 227.
On 23 October 2008, Mr Davison was referred by a general practitioner to see psychologist Anthony Diment for depression. In December of that year, Mr Davison applied for the age pension.
In September 2009, Mr Davison began working at Dan Murphy's as a customer assistant (part-time until July 2012 and full-time from then on).
Mr Davison was discharged from his third bankruptcy on 13 April 2012.

Adverse findings with which Mr Davison must contend

As already explained, Mr Davison faces the burden of displacing the decisions of the Tribunal and the Court of Appeal as to his probable permanent unfitness by positively demonstrating rehabilitation. That question is of course also informed by the findings of Hall J referred to above, although his Honour was not specifically charged with the task of determining the question whether Mr Davison was a fit and proper person to remain on the Roll.
In order to assess whether that burden is discharged, it is necessary to be clear as to the basis for those decisions. In the proceedings in the Tribunal, the Bar Association specified four grounds for seeking to have Mr Davison's name removed from the Roll: 1. That he had been guilty of long standing non-compliance with, and reckless disregard for, his legal and civic obligations to: 1. pay tax by reference to his returns in a timely fashion; and 2. pay penalties and interest imposed as a result of late payment of tax. 1. That he had failed to comply with his legal and civic obligations to: 1. pay such of the amounts claimed by statements of claim filed on behalf of the Deputy Commissioner of Taxation as he did not reasonably dispute prior to entry of judgment; 2. comply with judgments of courts requiring payment to the Deputy Commissioner of Taxation; 3. comply with notices pursuant to s 264 of the Income Tax Assessment Act 1997 (Cth); and 4. make timely contributions to his trustee in bankruptcy in accordance with s 309P of the Bankruptcy Act 1966 (Cth). 1. That he had arranged his affairs in such a manner that his income as a barrister and assets purchased therefrom were placed beyond the reach of the Deputy Commissioner of Taxation and his trustees in bankruptcy from time to time, and that the income and assets would therefore not be available to be used to discharge his legal obligation to pay income tax and pay penalties and interest imposed as a result of late payment of tax. 2. That, since a date not later than 1989, he had used monies which would otherwise have been available to discharge his indebtedness to the Deputy Commissioner of Taxation to fund a lifestyle for himself and his family in excess of that which he could have afforded had he complied with his legal and civic obligation to pay tax.
Detailed particulars were provided of each ground. Mr Davison denied, or effectively denied, all of the grounds except 2(c) and 4. However he admitted a number of the particulars. He also admitted that he was guilty of professional misconduct but disputed the Bar Association's contention that he was not a fit and proper person to remain on the Roll of legal practitioners.
The Tribunal explained Mr Davison's position in respect of those grounds as follows at [13]-[15]: "In relation to all the Grounds in the Information, the Barrister stated in his Amended Reply that he accepted that 'individuals have a legal and civic duty to pay tax and to pay other debts as they fall due'. But he stated also that he did not admit the allegation of a breach of civic obligation, since, as he expressed it, 'he does not know and cannot therefore admit that which may be the asserted legal impact of the civic obligation contended for by the informant in these proceedings'. In relation to Ground 2, he stated in his Amended Reply that he denied (i) the allegation of a breach of a civic obligation, since he did not admit the existence of such an obligation; (ii) the existence, as alleged in paragraph 2(a), of 'a legal obligation in the course of litigation to pay a sum of money not disputed when the claimant's demand in the proceedings is substantially more than is its lawful entitlement and that claim remains disputed'; and (iii) the allegation that he failed to comply with the legal obligation referred to in paragraphs 2 (b) and (d). He admitted, however, his failure to comply with notices issued pursuant to section 264 of the Income Tax Assessment Act, as alleged in paragraph 2 (c). In admitting Ground 4 in the Amended Reply (except as to the alleged breach of a 'civic obligation'), the Barrister added that from about 1996 his indebtedness to the Deputy Commissioner of Taxation was always greater than could have been discharged from his income as a barrister. In the Respondent's Statement of Facts, he claimed that his use of monies as alleged in Ground 4 commenced 'not later than 1991', not, as alleged, at a time 'not later than 1989'."
Subject to some qualifications as to the amount of unpaid tax particularised, the Tribunal found that ground 1 was established: at [32].
The Tribunal found that ground 2(a) was not made out so far as the legal obligation was concerned, accepting Mr Davison's argument that there is no legal obligation in the course of litigation to pay a sum of money not disputed when the claimant's demand exceeds its lawful entitlement and remains disputed: at [34]. The Tribunal otherwise found ground 2 was established: at [45].
As to ground 3, although Mr Davison admitted particulars (a) and (b) (relating to the establishment of Comserv), the Tribunal accepted his submission that such service companies are often established and maintained by barristers. Mr Davison admitted particular 3(c), which alleged that he had alienated income to his wife through Comserv causing her to be remunerated at a rate in excess of the commercial value of the services she provided. The Tribunal noted that Mr Davison's trustee in bankruptcy had commenced proceedings on that basis which had been resolved by requiring Ms Davison to pay the sum of $150,000 to the trustee.
Two of the particulars of ground 3 were found not proved: at [54].
As to particular (f), which alleged that, shortly prior to his second bankruptcy, Mr Davison caused fees from his practice as a barrister to be paid into bank accounts of his wife, other family members and the service company, the Tribunal noted at [56] that Mr Davison admitted paying income from his legal practice into those accounts. It was noted that he "sought to explain his decision not to use his own account by the fact that the bank had requested the return of his debit card" which he took to mean that the account was closed. Without making any determination in respect of that explanation, the Tribunal found the particular proved.
Ground 4 was admitted by Mr Davison, subject to a qualification as to when the conduct commenced (on which the Tribunal thought little turned) and a further qualification that, from about 1966, Mr Davison's indebtedness to the Deputy Commissioner of Taxation was always greater than could have been discharged from his income as a barrister: at [59].
The Tribunal gave three illustrations of amounts spent which substantiated ground 4. First, in the tax year 1996 to 1997, according to a letter from Mr Davison's accountant to his trustee in bankruptcy, his personal expenditure was $450,671.17. Secondly, in the two months before going into bankruptcy in 1999 on his own petition, Mr Davison and his wife incurred debts of approximately $65,000 on their credit cards. The third illustration given by the Tribunal related to the wine acquired Mr Davison which was sold by the trustee in bankruptcy: at [61]-[63].
One of the particulars of ground 4 was that, during his second bankruptcy, notwithstanding that he appreciated that his personal expenses were excessive, Mr Davison thwarted attempts by his accountants to curb his expenditure by banking income received from his practice as a barrister into his personal account rather than into an account controlled by the accountant as had previously been agreed. Mr Davison's response to that particular recorded at [64] of the Tribunal's decision was to the effect that he had banked income from his practice as a barrister into his personal account rather than the account controlled by his accountant but he denied that he appreciated at that time that his personal expenses were excessive and denied that through this conduct he "thwarted attempts by his accountants to curb his expenditure". The Tribunal did not accept those denials and found the conduct alleged and particularised by ground 4 established: at [69].
Against those findings, the Tribunal proceeded to make an assessment of Mr Davison's culpability by reference to whether his conduct amounted to a failure to comply with his "civic obligations" with regard to taxation and whether he was guilty of "reckless disregard" of both legal and civic obligations. The Tribunal noted (with a tone of criticism) in that context that Mr Davison had persistently said that he "wrongly" managed his financial affairs and had denied that his conduct was "reckless".
The Tribunal recorded that, in his affidavit, Mr Davison had asserted that he had made substantial contributions to his first bankruptcy and had made substantial contributions to his second bankruptcy until his income source was "massively affected by the publicity associated with the 'bankrupt barristers' and after [he] ceased to practise due to the cancellation of [his] practising certificate in November 2001".
In light of that assertion, the Tribunal granted leave to the Bar Association to put questions to Mr Davison regarding the level of any income earned by him since 2001. As already noted, the further evidence revealed the matters that evidently prompted the Bar Association to bring the proceedings heard by Hall J. It established that, after his practising certificate was cancelled, Mr Davison was engaged as a consultant on matters of environmental law by a company registered in late 2001 at an annual salary of $50,000, which meant that he was not liable to make contributions to his bankruptcy. The Tribunal found that the financial management of that company, although established with Mr Davison's wife as the sole director and shareholder, was effectively in his hands.
The Tribunal concluded at [93]-[95]: "In assessing whether the Barrister's proven conduct was accompanied by culpability as alleged in the Information, we treat as especially relevant the allegations made and particularised in Grounds 3 and 4. With reference particularly to the events preceding the second bankruptcy and during the early years of that bankruptcy, they describe acts and omissions which, taken collectively, constituted a deliberate strategy for ensuring that the Barrister did not fulfil his civic obligations with regard to very substantial tax liabilities. The conduct of the Barrister since 2001, as disclosed at the hearing, similarly amounts to a deliberate strategy precluding any discharge of his civic obligations (and possibly also his legal obligations) to make appropriate contributions to his second bankruptcy and thereby to reimburse the Commissioner of Taxation for some at least of the unpaid tax. In the light of all this evidence, taken together with the statements acknowledging some element of wrongdoing by the Barrister and (on his behalf) by Mr Ellicott, we are comfortably satisfied that the allegations of breaches of civic obligations in the Information are fully made out. We find that the conduct outlined in the two preceding paragraphs was intentional. The remaining conduct that has been alleged and proved either was intentional or involved 'reckless disregard'."
The Court of Appeal upheld that conclusion, saying at [95]: "The evidence amply bears out the findings of the Tribunal that over the period 1989 to 2004 the appellant's conduct constituted a deliberate strategy for ensuring that he did not fulfil his civic obligations with regard to his very substantial tax liabilities."
Finally, it should be noted that the Tribunal at [150] accepted a submission put by senior counsel for the Bar Association that Mr Davison's evidence in the proceedings "fell significantly short of consistent truthfulness" and that that was a matter the Tribunal should take into account in determining what order should be made.
In the Court of Appeal, Mr Davison argued that the Tribunal was wrong to conclude that his breach of civic obligation was sufficient to require his name to be struck off the Roll absent an element of dishonesty or fraud. The Court of Appeal rejected that argument, holding that dishonesty is only one means of determining whether a broader set of criteria are met. The Court summarised the relevant factors at [105] as follows: "(a) A barrister holds a special position of trust in the system of administration of justice; the position carries exceptional privileges, obligations and responsibilities. (b) Whether a barrister is not a fit and proper person to be a member of the Bar of New South Wales depends on the minimum standards demanded by a due recognition of that special position. (c) Only persons worthy of public confidence as meeting those standards should remain on the roll. (d) Both conduct leading to convictions for criminal offences and other forms of conduct can lead to removal from the roll. (e) Conduct showing a defect of character incompatible with membership of the Bar is relevant; or short of that, conduct showing unfitness to co-operate with the profession and the judiciary in the working of the courts."
A critical finding by the Court of Appeal was the following at [107]: "Confining the issue at this stage only to the appellant's failure to pay his tax liabilities and contributions to his trustees in bankruptcy, focus must be directed to the Tribunal's unchallenged findings that the appellant deployed a deliberate strategy for avoiding his civic obligations. The strategy involved the means by which, over a period of many years, he earned large sums of money, paid very little tax, made few contributions to his trustees in bankruptcy, and used the money that should have gone towards his tax liabilities to fund his lifestyle and make donations to members of his family."
The Court expanded upon that finding at [110], comparing Mr Davison's conduct with that for which another barrister was struck off: "But the barrister's failure in Cummins to lodge his taxation returns and [Mr Davison's] deliberate strategy that he adopted in order to enjoy his entire taxable income for his own personal ends and those of his family were aimed at the identical purpose, namely, avoiding the lawful tax liabilities that were accruing each year."
The Court noted that, like the other barristers dealt with during that period, by his conduct Mr Davison "increased the burden on taxpayers generally" and that the "ultimate evil" in the two respective situations (failure to pay compared with failure to lodge returns at all) is the same.
The finding that Mr Davison deployed a deliberate strategy for avoiding his civic obligations was critical to the conclusion that he was not a fit and proper person to remain on the Roll. It is difficult to see how such a finding can be displaced without its premise first being accepted and engaged with by Mr Davison. That is reflected in the remarks of Mahoney JA (Meagher JA concurring, Kirby P dissenting in the result) in Dawson v Law Society of New South Wales [1989] NSWCA 58 at [13] relied upon by the Bar Association that: "Repentance is relevant, at least in the ordinary case, because it assists the conclusion that the applicant has left his previous standards or values and adopted more appropriate ones. Without that, his conduct in the future is likely to be unacceptable."
While the Bar Association put that as a matter of legal authority, it is (in my respectful opinion) simply a logical aspect of the fact-based assessment required to be undertaken.

Mr Davison's evidence

Mr Davison has addressed those matters in his statutory declaration, his affidavit and his oral evidence. It is also relevant to have regard to the evidence of Mr Diment in this context.
The cross-examination of Mr Davison during the hearing was directed to establishing, based primarily on the content of the statutory declaration, that he does not truly accept the nature of his wrongdoing as found by the Tribunal. On that issue, counsel for Mr Davison drew my attention to the decision of Thomas JA in Gregory v Queensland Law Society Incorporated [2002] 2 QDR 583; [2001] QCA 499 where his Honour said at [28]-[29]: "During the hearing of this appeal the applicant was subjected to cross-examination by Mr McKenna. The cross-examination was designed to show that he does not understand or accept the nature of his wrong-doing. The Applicant had difficulty in explaining his transgression other than through a combination of the circumstances of inexperience, stress, stupidity and error of judgment. He agreed with Mr McKenna that he had never really regarded himself as someone who lacked honesty, objectivity or respect for the court. Mr McKenna then submitted that such answers were fatal to the application because they showed that he does not truly accept the quality of what he did wrong. With due respect for the subtlety of the exercise conducted by Mr McKenna, there is a risk that such questioning was a better test of the applicant's capacity for moral discourse than of lack of character. The court, of course, needs to be satisfied that the applicant understands what he did wrong, that there is genuine remorse and that he has the will and fibre to avoid further misconduct. That, however, is not necessarily measured by an applicant's capacity for abasement or for producing the best self-analysis of the nature of his guilt. Such exercises may be a better test of intellect than of rehabilitation. I did not consider the applicant's performance under cross-examination was particularly impressive, but neither did I see anything to raise proper grounds of concern. On the whole, I did not derive much assistance from the cross-examination other than discerning a changed attitude along with the adoption of a disciplined and more professional approach since 1997, and a perception that he is a sadder and a wiser man than he was formerly."
Those remarks provide important guidance. I certainly accept that the task of demonstrating fitness after removal from the Roll is not an exercise in self-abasement. The critical question is whether an applicant has demonstrated an understanding of the wrongness of the prior conduct and why it was found to have been such as to warrant removal from the Roll.
Two features of Mr Davison's evidence struck me in that context. One, identified in the submissions of the Bar Association, was his persistence in explanations which have already been rejected or found not to have excused his conduct to the extent he claimed. The second was his use of language that tended to qualify his purported acceptance of the findings of the Tribunal.
The statutory declaration provided to the Legal Profession Admission Board Legal Profession Admission Board was divided under headings reflecting the terms of r 14. Mr Davison was aware of that rule when he prepared his statutory declaration.
In order to understand the Bar Association's submissions on this issue, it is appropriate to set out the relevant sections of the statutory declaration in full. Part A was as follows: "A. The matters and circumstances that led to my name being struck from the roll of lawyers 1. Within a year or so of my practice as a barrister I was working many nights and weekends. This caused tensions in my marriage leading to a separation in 1990 for about 18 months. I wrongly tried to compensate for my dedication to work by spending and not paying attention to my tax obligations. 2. I borrowed to invest in a dairy project which failed. The finance company sent me bankrupt on 9 April 1992. 3. After paying contributions to my Trustee I used the balance of my income to support my family. 4. As a result when I was released from bankruptcy I had a liability for tax which I could not pay. 5. I supported my brother in a venture to develop software to deal with the expected year 2000 crisis which passed without the feared consequences. Thus my intention of paying my tax debt from the profits of the venture was not realised. 6. My home and chambers were sold by the mortgagee. 7. I endeavoured to keep my family together through successive moves to rental houses."
The Bar Association submitted that part A of the statutory declaration essentially contains the same explanations and excuses that were rejected by the Tribunal and the Court of Appeal. There is force in that submission.
In that part of the statutory declaration, Mr Davison goes little further than to recite (in the briefest terms) things that went wrong during that period of his life and the efforts he made to overcome them. The closest he comes to acknowledging the nature of the conduct found against him is in saying "I wrongly tried to compensate for my dedication to work by spending and not paying attention to my tax obligations". Such information as is provided tends to portray Mr Davison's decisions in a positive light ("my dedication to work"; "I supported my brother"; "I used the balance of the income to support my family"; "I endeavoured to keep my family together") with no recognition or acceptance of responsibility for the deliberate conduct found proved by the Tribunal and affirmed by the Court of Appeal.
In his evidence in the proceedings, Mr Davison explained that he did not think it was necessary in part A of the statutory declaration to describe the misconduct on the strength of which his name was removed from the Roll because he knew that the Board was aware of those decisions. He said what he had set out in the statutory declaration was the circumstances that led to his "getting into the trouble that [he was in]". While there is some logic in that approach, even so, the statutory declaration wholly fails to capture the critical feature of those circumstances, namely, excessive expenditure and a failure to pay his tax as assessed. The statutory declaration gives an exculpatory account with no recognition of any wrongdoing. Certainly, it falls short of setting out his acceptance of the finding that he deployed a deliberate strategy for avoiding his civic obligations to pay tax and make contributions to his bankruptcy.
The Bar Association's written submissions addressed each separate passage of the statutory declaration at length. I do not think it is necessary to address every argument. I have confined my attention in the discussion that follows to the main points concerning Mr Davison's acceptance and understanding of the reasons he was struck off.
First, the statutory declaration cites marital difficulties up to and including 1990. The Bar Association made the point that Mr Davison's strategies to avoid paying or making appropriate contributions to his tax liabilities went on well beyond that point, until at least 2004. I understood Mr Davison's point to be rather that the marital difficulties set in train a period of living beyond his means in order to maintain happiness in the home whilst disregarding his tax liabilities. However, it is true that Mr Davison's version fails to grapple with the finding of the Court of Appeal at [121] that his "marital difficulties" did not "detract significantly from the egregiousness of his conduct over the very long period in which he failed to meet his tax obligations".
Secondly, Mr Davison explains his failure to pay tax as a consequence of his "not paying attention to his tax obligations". As submitted by the Bar Association, this wrongly suggests that Mr Davison's failure to meet his tax obligations was a matter of inadvertence. Both the Tribunal and the Court of Appeal held otherwise.
Thirdly, in part A of the statutory declaration, Mr Davison cites an investment that failed. However, the promoter of that investment was the petitioner in Mr Davison's first bankruptcy. That debt no longer existed after that time and so could not have been a cause contributing to Mr Davison's failure to pay tax after 1995: see the decision of the Court of Appeal at [24]-[26]; [86]-[89]; [113].
The fourth reason offered in part A of the statutory declaration is that after paying contributions to his trustee in bankruptcy Mr Davison used his remaining income to support his family. However, in cross-examination, Mr Davison accepted that during that period he was choosing to live an "affluent" lifestyle that would have been unaffordable had he paid his taxes. The Bar Association submitted that, in characterising his conduct as "supporting" his family, Mr Davison reveals that he does not in fact acknowledge any culpability for his decision to engage in extravagant discretionary spending at the expense of paying his tax. I agree.
The fifth matter relied upon in the statutory declaration is that when released from his first bankruptcy Mr Davison had a tax liability he could not pay. He explained in evidence that he was there referring to the tax that accrued and remained unpaid during the three years of his first bankruptcy. The Bar Association noted that this account, suggesting that the tax liability carried over from the first bankruptcy was the reason for the second bankruptcy, ignored a number of features of that period. Most significantly, in the period from 11 October 1995 until the second bankruptcy, Mr Davison paid less than $12,000 in tax even though his annual income averaged about $350,000. As already noted, in a single tax year his personal expenditure was $450,000 (about $8,650 a week). His total earnings for the four-year period between bankruptcies were $2.24 million but he paid only 10% of his primary tax liability: see the Court of Appeal decision at [37]-[38].
Separately, the Bar Association noted that Mr Davison made substantial contributions to the purchase of a house in his wife's name after the discharge of his first bankruptcy. However, the submission did not extend to contending there was anything wrong with Mr Davison's providing for his wife in that way. I am not inclined to place any great significance on that matter.
The sixth matter identified in the statutory declaration is the support Mr Davison gave to his brother for the "Y2K crisis" software venture that failed. Between 1996 and 1998 Mr Davison paid his brother weekly amounts of between $1,500 and $2,000 to work on that project in which they held equal shares. Both the Tribunal and the Court of Appeal were critical of Mr Davison's choice to provide that support rather than meeting his tax obligations: ADT at [51]; CA at [39] and see Tcpt, 23 May 2018, p 25(20)-(40).
The Bar Association submitted that the way in which Mr Davison framed those matters in the statutory declaration indicates that he lacks insight into the fact that, during that period, he chose to live an "affluent" lifestyle and to make significant financial gifts to his wife and his brother while making desultory payments of tax, instead framing his conduct in a positive light as providing necessary support for his family. As already indicated, I am not persuaded that the purchase of a house for his wife is to be placed in the category of extravagant or discretionary spending. However, it is clear that the total extent of personal expenditure and the extent of Mr Davison's support for his brother should not have taken priority over his tax obligations. The treatment of that issue in the statutory declaration is, at best, avoidant and tends to indicate a lack of insight as to what must be demonstrated in order to justify readmission as a legal practitioner.
Part B of the statutory declaration stated: "B. My views as to those circumstances and the decision to strike my name from the roll 1. It was entirely wrong of me to allow my financial affairs to become as hopeless as they were. 2. My primary responsibility should have been to pay my tax. 3. The short term stability I provided by my actions led to long term suffering for my family. 4. My failure to pay tax brought the profession I love into disrepute. 5. I am deeply sorry for what I have caused. 6. I accept entirely the decision to strike my name from the roll."
Mr Davison clearly understood that that part of the statutory declaration should address his views in respect of the impugned conduct. The Bar Association submitted that nowhere in that part of the statutory declaration did Mr Davison address the adverse findings concerning his integrity and moral character made by the Tribunal, the Supreme Court (in the decisions of Hall J) or the Court of Appeal.
Part B opens by acknowledging wrongdoing but again does so in terms tending to qualify the force of that concession. Mr Davison says "it was entirely wrong of me to allow my financial affairs to become as hopeless as they were". In fact, as already explained, the finding of the Tribunal with which Mr Davison had to contend was that he intentionally or recklessly avoided his tax obligations over many years. Throughout the hearing, while acknowledging that there was "more than that", Mr Davison still persisted in the characterisation of his finances as "hopeless" rather than being the construct of his deliberate strategy. He said that was still his perception at the time he wrote the statutory declaration.
The Bar Association relied on three illustrations to support the contention that Mr Davison did more than merely allow his affairs to become "hopeless". The first was his use of the service company Comserv from April 1996 to put his income beyond the reach of the Deputy Commissioner of Taxation and his trustee in bankruptcy: ADT at [46]-[57] and [103]. That included prioritising payment of monies to Comserv so that it could meet the arrears in lease payments in respect of Mrs Davison's Mercedes Benz: ADT at [44]; CA at [41] and [58].
The second was the $65,000 expenditure on credit cards referred to above. As already explained, the Tribunal relied on that as an instance of count 4, which was found to be deliberate conduct. Mr Davison's evidence on that issue did not grapple with the burden of that finding. The cross-examination included the following exchange: "Q. Are you suggesting, Mr Davison, that spending $65,000 on a credit card 20 years ago in a two month period was reflective of ordinary expenditure on your part? A. No. Q. So there was something unusual about it? A. I am sorry. I don't know. I really don't know. I can't recall what happened 20 years ago. But what I did take issue with at the beginning of this line of questioning was that we went out and did it deliberately. We didn't.
In the context of the previous questions the answer is to be understood as a denial that Mr Davison spent that money because he knew he was about to go into bankruptcy. Senior counsel for the Bar Association made it clear that she was not putting it to him that he did. However, he accepted that he knew at that time that he was in a perilous state in terms of his tax obligations. At the same time, he said it was not on his mind that he may have to file for bankruptcy in the imminent future. He also knew that he had a very large tax debt towards which he was making "desultory" payments (indeed, payments that were dwarfed by what he put on his credit card).
That is the kind of conduct that not only brings the legal profession into disrepute; it is the kind of conduct that causes members of the public to hold lawyers in contempt. And yet, in his cross-examination, Mr Davison could only say that he didn't go out and incur $65,000 in credit card debts "deliberately". It is impossible to imagine there was not a moment where he paused to think he should not be incurring such indebtedness in the circumstances he was in. And yet his evidence indicated he still had not reflected upon how he allowed himself to do that.
The third and perhaps most significant was the conduct by which Mr Davison thwarted his accountant's attempts to curb his personal expenditure by banking income received from his practice into his personal account rather than into the account controlled by his accountant as previously agreed. Mr Davison said in his affidavit at para 75.3 and in evidence at Tcpt, 25 May 2018, pp 115(25)-117(35) that this arrangement failed because of a "lack of commitment" on his part. He ultimately accepted that the true position is that he had to some extent deceived his accountant: Tcpt, 23 May 2018, p 75(25); p 144(10). Some $133,000 was diverted in breach of that agreement, which contemplated that Mr Davison would spend only $2,500 per month. Mr Davison's prevarication on that issue, even in the context of endeavouring to persuade the Court that he has come to appreciate what was wrong with that conduct, was telling.
The Bar Association further noted Mr Davison's acknowledgment that his failure to pay tax brought the profession into disrepute. That, however, did not address the further disrepute that resulted from his continuing to practise without a practising certificate. The Bar Association tendered articles by Kate McClymont and Vanda Carson addressing those matters. The article by Ms Carson said: "Within a month of the cancelation of his certificate in 2001, Davison was charging up to $500 an hour as a planning consultant. While developer Walker Corp and other clients paid his substantial fees, Mr Davison's salary remained fixed at $50,000 - the threshold at which he would not be obliged to make any contribution to his trustee in bankruptcy. 'There is no evidence to suggest that the $50,000 "salary" was other than a ruse to ensure that the trustee in bankruptcy did not endeavour to exact further contributions from Mr Davison,' the Bar Association argued in the tribunal."
The Tribunal's findings ultimately accepted the burden of that submission. The Bar Association submitted that the statutory declaration did not offer any "meaningful evidence" capable of displacing the weight of those matters. I agree.
Part C of the statutory declaration addressed re-establishment of good fame and character, as follows: "C. The events which have tended to re-establish my good fame and character 1. Since ceasing practice I have paid my tax and so far as I can remember lodged my returns on time. 2. I am no longer bankrupt. 3. I no longer suffer from clinical depression. Annexed and marked "A" is a report from my Psychologist Anthony Diment. I have had no reason to see Mr Diment otherwise and only need to see my GP for work related matters principally 2 events of a repetitive strain injury known as trigger finger which required surgery on 2 occasions. 4. I am confident that my experience since my name was struck from the roll ensure that I will not allow my failures to recur. In paragraph D16 I set out the procedures I will follow should I be permitted to return to practice."
As submitted by the Bar Association, that explanation appears to proceed on the assumption that the establishment of a period of blameless, law-abiding conduct is sufficient to establish fitness to be restored to the Roll. The authorities which provide otherwise are discussed above.
Section C opens with the tentative claim: "since ceasing practice I have paid my tax and so far as I can remember lodged my returns on time". At the outset of his evidence Mr Davison qualified that statements as follows (Tcpt, 23 May 2018, p 5(37)): "Q. What do you wish to say about that please, Mr Davison? A. What I intended to say by that, and I can see that it was an incomplete statement, was that the tax I was referring to was the tax from my income from employment outside my practice as a barrister and I understand there is a complication with that too in terms of… Q. What is the complication? A. Justice Hall's decision which I hadn't turned my mind to when I made that statement."
It is not the case that since ceasing practice in November 2001, Mr Davison has paid his tax. The Tribunal noted that Mr Davison did not file tax returns for the financial years 2002 to 2003 and his evidence established that he did not pay tax up to 2004. The Court of Appeal found that he generated income in the order of $230,000 for Sydney Development Services but did not pay tax on that amount: Tcpt, 25 May 2018, p 137(35); CA at [52]. Further, he did not provide for group tax to be deducted from the $50,000 salary paid to him by Sydney Development Services: ADT at [137].
Mr Davison sought to provide further explanation in his affidavit sworn 16 May 2018. The affidavit was framed by reference to matters apparently raised by the Legal Profession Admission Board when it rejected his application. First, Mr Davison addressed the issue of outstanding costs owed to the Bar Association as a result of the earlier proceedings. He stated that he was unaware of the quantum of costs claimed until served with an affidavit relied upon by the Bar Association sworn 23 March 2018 which indicated that the outstanding amount was $490,296.65. Mr Davison indicated his preparedness to accept that amount as the quantum of the claim and stated that he proposed to enter into a binding agreement to pay 10% of his income to the Bar Association by way of reduction of the monies owed. On that basis he would need to earn almost $5 million before the debt would be repaid.
In respect of the findings of the Tribunal, the affidavit says: "I acknowledge the criticism made of me by the Administrative Decisions Tribunal at [103] of the judgment referred to in [73] of the judgment of the NSW Court of Appeal that I intentionally and recklessly breached my responsibilities to pay tax."
The Bar Association submitted that to "acknowledge" the Tribunal's decision is different from accepting it. While that may sound like a technical distinction, the criticism is borne out by a consideration of the totality of Mr Davison's evidence.
The Tribunal's finding at [103] referred to by Mr Davison was as follows: "In a nutshell, our principal reasons [for concluding removal from the Roll is justified] are these. First, over a period of about 15 years, the barrister has intentionally or recklessly breached his civic responsibilities with regard to the payment of income tax, with the consequence that a very substantial sum of money has been lost to the revenue. Secondly, his conduct in recent years provides good grounds for believing that the ethical shortcomings that underlie these breaches have not been remedied."
The Bar Association noted that that passage includes two discrete findings. The affidavit addressed only the first, being the finding of intentionally or recklessly breaching his civic responsibilities with regard to the payment of income tax. Mr Davison's response in the affidavit to that "criticism" is in the main simply a fuller version of the exculpatory account set out in the statutory declaration. In particular, in the affidavit, Mr Davison repeats the refrain that he "got into a hopeless mess" with his taxation. He says: "I attempted to speak to relevant officers in the taxation office but could not get anyone to speak to me and they would not discuss my matter with my accountant either". That is not the language of acceptance of responsibility. The responsibility of solving the problem Mr Davison had created for himself did not lie with the taxation office. He needed to curb his personal expenditure and start paying his tax.
Paragraph 75.6 of the affidavit responds to the Tribunal's finding that Mr Davison adopted a deliberate strategy to preclude the making of appropriate contributions to the second bankruptcy. The explanation Mr Davison offers is that he took advice from his accountant and acted on that advice. It may be noted that the accountant has not been heard on this issue. It seems unlikely that he would have given such advice unsolicited but in any event it is appropriate to proceed on the assumption asserted by Mr Davison. He says: "I agree that such arrangement was a deliberate strategy which had the effect of reducing my tax but at all times I acted on the advice of my accountant".
In his evidence at the hearing, Mr Davison adhered to the explanation that his financial arrangements were set up on the advice of his accountant. He openly distanced himself from exercising his own judgment on that issue (Tcpt, 23 May 2018, pp 87(80; 119).
It is clear from Mr Davison's evidence on this issue that he still sees no vice in having structured his affairs in that way. That is shown by the following exchange at Tcpt, 23 May 2018, pp 92-93: "HER HONOUR Q. In short, the effect of it was to channel your income to a company of which your wife was the sole shareholder and keep that money away from the trustee, wasn't it? A. That was the effect of it, yes. Q. Were you not concerned about structuring it that way? A. That was the advice we received, and I believed it. Q. From the accountant? A. Sorry. Q. From the accountant? A. Yes. RICHARDSON Q. Mr Davison, you knew in this period that you had had your practising certificate as a senior counsel withdrawn, correct? A. Yes. Q. You knew, didn't you, that if you ever had a chance of being readmitted as a barrister, that your conduct post losing your PC would be under intense scrutiny. You accept that? A. Yes. Q. And you accept that the effect of interposing SDS was that, from very soon after you lost your PC, you were generating significant income, but the income was declared in the hands of SDS which put it beyond the reach of your trustee in bankruptcy. Would you agree with that? A. Yes. Q. I want to suggest to you that that was a deliberate and intentional structuring on your part to avoid making contributions to your second trustee in bankruptcy. Do you accept that? A. I accept that was the consequence, yes. HER HONOUR Q. No, you were not asked whether it was a consequence. You were asked whether that was the intention, a deliberate intention, in structuring it that way? A. Yes. RICHARDSON Q. Sorry, you accept it was deliberate? A. Yes. Q. You agree when I asked that question a few questions ago, you did not answer my question that it was deliberate. Rather, you drew a distinction and just said it was a consequence? A. Yes. Q. So are you saying that, after your PC was withdrawn as a senior counsel, you accept that you deliberately structured your affairs to interpose SDS as a vehicle, whereby you would generate significant income, but that income would be declared in the hands of SDS, and that it was deliberately structured that way so it would be put beyond the reach of your second trustee in bankruptcy. Is that your evidence? A. That, and the fact that the ‑ it was a corporate income earned in a corporation. That was the accountant's advice, and we accepted it. The setting of the salary had ‑ was deliberate in that respect. But otherwise, the formation of the company was something that any ‑ well, I was advised that formation of the company was something that anybody would do in those circumstances."
To say that it was a step taken on the accountant's advice or was something "anybody would do in the circumstances" fails to grapple with the real issue. In my assessment, that exchange illustrates a problem that permeated much of Mr Davison's evidence, namely, a failure to identify what a barrister should be able readily to identify as the moral dimension of the impugned conduct.
The Bar Association submitted that was a "complete and naive deference of responsibility" which showed a lack of insight both now and at the time those arrangements were put in place. I agree. In order to discharge the heavy onus he bears on the present application, one would have expected to see Mr Davison explain that, whereas he saw no difficulty putting such arrangements in place at the time, he now understands that his conduct in adopting financial arrangements that facilitated his continued breach of his civic responsibilities with respect to tax and his bankruptcy fell short of the standard of conduct the public expects of barristers. One sees nothing of that kind of analysis in Mr Davison's affidavit or in his evidence at the hearing. Putting his evidence at its highest, he gave a glib acknowledgment that he must accept the findings that have been made. In my view, he did not demonstrate any real understanding of the appropriateness and correctness of those findings and their implications for his fitness to be readmitted to the legal profession.
In his closing submissions, counsel for Mr Davison asserted that he "fully accepts that he intentionally and recklessly breached his responsibilities to pay tax", citing his affidavit at 75.1 and Tcpt, 25 May 2018, p 110(34). It is necessary, however, to consider what this acceptance meant. The Bar Association submitted that Mr Davison appeared to understand it to mean that he accepted that he was legally obliged to abide by the orders previously made as opposed to having reached "a genuine or reflective acceptance of the findings and reasons issued in support of those orders". It was noted in that context that Mr Davison said a number of times that he accepted a finding because he had to or because he "must" (for example, Tcpt, 23 May 2018, pp 47(24); 83(1)).
Counsel for Mr Davison gave the following examples of matters accepted by Mr Davison in his evidence: 1. his treatment of his finances was "wrong" (Tcpt, 25 May 2018, p 113(4)); 2. his spending was excessive (Tcpt, 23 May 2018, pp 12(8); 14(48); 15(12); 20(5); 21(16) and Tcpt, 25 May 2018, p 114(2)) 3. he did not learn the lessons of the first bankruptcy (Tcpt, 23 May 2018, p 16(23)); 4. he preferred the interests of his brother to those of the Australian Taxation Office (Tcpt, 23 May 2018, p 25(31)); 5. it was reckless to engage in conduct that resulted in the loss of his home (Tcpt, 25 May 2018, p 110(34)); 6. his payment of tax from 1992 was desultory (Tcpt, 23 May 2018, p 17(26)); 7. he did not give proper and appropriate attention to his tax affairs (Tcpt, 23 May 2018, p 62(23)), and he disregarded his legal and civic obligations (Tcpt, 23 May 2018, p 65(6)); 8. his conduct brought the profession into disrepute (Tcpt, 25 May 2018, p 119(35)); 9. the decision to remove him from the Roll was right (Tcpt, 25 May 2018, p 120(13)); and 10. his conduct in structuring payments through Sydney Development Services was deliberate (Tcpt, 23 May 2018, p 92(46)).
However, those passages are to be compared with Mr Davison's repeated rejection of the critical finding that he had intentionally adopted a deliberate strategy to avoid meeting his taxation obligations. For example there was the following exchange (Tcpt, 23 May 2018, p 64(1)-(9)): "Q. Do you say, Mr Davison, that you didn't pay attention to your tax obligations and that your affairs were hopeless, you've said, but that you did not adopt a deliberate strategy whereby you did not make appropriate contributions to your tax liabilities? A. No I didn't. I didn't have a strategy at all. Q. So you say that it wasn't deliberate and intentional, is that correct? A. Well, it was the result, I accept that. But no, it wasn't intended but it was the result."
Similarly, at p 68(1)-(5): "Q. What I want to suggest to you is that structuring your affairs through a company such as Comserv and transferring or depositing cheques into your wife's or brother's and Comserv is not not paying attention or being hopeless, it's in fact indicative of a deliberate design or strategy. Do you accept that? A. No, I don't."
And, concerning the payments on the lease of Mrs Davison's Mercedes (at p 72(11)-(33): "Q. Do you agree with me that that's a choice made by you, instead of meeting your tax obligations to pay moneys to Comserv, so your wife could continue to drive a luxury car? A. Yes. Q. Do you agree that that is not an example of not paying attention or being hopeless, it is a deliberate choice that you have made? A. No, it was - this is still in the choices of how to meet obligations. And that was an obligation and it was met that way and that's part of the hopelessness, I am afraid, and I am sorry for that. Q. So you see it as hopelessness, do you? A. Yes, I - the debt was there. They - the finance company were threatening to repossess it and I paid the moneys to prevent that occurring. Q. So that was a deliberate design on your part? A. Well, sorry, it was deliberate that I did it, yes. Q. But you knew, when you did it, that that was money that would thereafter not be available to meet your tax obligations? A. Well, I didn't think of it but, yes, that's the consequence."
The Bar Association submitted that Mr Davison's evidence on those issues reveals that he has not only failed to address the "defects of character" revealed by that conduct; he effectively denies that the defects exist. There is much force in that submission. It is difficult not to feel a measure of sympathy for Mr Davison because his conduct of his affairs has ultimately brought such abject misery to him and his family. But this is not a decision that can be driven by sympathy. Given his other professional strengths, it was frustrating to hear time and again in Mr Davison's evidence an almost stubborn persistence in a benign or passive characterisation by which he absolves himself of ultimate responsibility for the choices that led to his being struck off. I do not accept that Mr Davison "fully accepts" the conduct found against him other than in a relatively formal sense of accepting that those findings were made and that he is required to acknowledge them.
As acknowledged by Mr Davison, the touchstone of the jurisdiction is the protection of the public interest and the interest of the profession. Mr Davison cited a number of authorities for that principle including the decision in Gregory at [18]: "The Court exercises a protective, not a punitive role, having primary regard to the protection of the public interest and the interest of the profession. One useful way of dealing with the matter is to ask whether in all the circumstances the Court is justified in putting the applicant before the public as a fit and proper person to follow the honourable calling of solicitor. It is recognised that a solicitor applying for reinstatement is in a different and more disadvantageous position than an original applicant, because he must displace the prospect of continuance of conduct of the kind which resulted in his removal. I also agree with de Jersey CJ's further comments in Janus that 'one should in this inquiry focus on the applicant's intrinsic character, and not be unduly distracted by his good fame, whether within the legal profession or the wider community'." (citations omitted)
Counsel for Mr Davison submitted that, in addition to accepting what he did was wrong, Mr Davison accepts that his conduct damaged the legal profession, as the passage set out above indicates he must. He relied on Mr Davison's answer given in the following exchange (after a discussion as to whether Mr Davison had put a positive case in the Tribunal that he had no civic duty to pay his tax) (Tcpt, 25 May 2018, p 146(46)): "Q. Do you now accept that barristers should pay their tax? A. I do, your Honour, yes. Q. Why? Why do you think barristers should pay their tax? A. Because failure to do so will bring the profession into disrepute. Q. Why do you think it brings the profession into disrepute? A. You only have to read the newspaper reports, your Honour, which I painfully did at the time."
Even that answer shows a relatively naïve appreciation of the nature of the duty to pay tax. It must now be accepted without question, if it was ever doubted, that acceptance of a civic duty to pay tax is an essential attribute of a person fit to be held out to the public as a barrister: cf Cummins at [29]. While the case of Cummins also involved illegal conduct, the Court's condemnation in that case clearly extends to disregard of the civic obligation to pay tax.
Mr Davison submitted that the focus of the present inquiry as to whether he has shown good fame and character (as contemplated by r 14), while properly approached with caution, should acknowledge the legislative context which comprehends the possibility of change, as discussed by Schmidt J in Saunders at [61]. He relied on six matters that are important in that context.
First, Mr Davison gave evidence that his wife was now involved in his financial affairs and would serve as a check on his decisions. While at one level that might serve as a prudent measure, it offers little by way of comfort as to change on the part of Mr Davison himself.
Secondly, it was submitted that Mr Davison had downplayed if not omitted matters relevant to the personal pain he had endured, particularly concerning his son's suicide. It is clear that the Tribunal did consider that those matters had a mitigating effect and I accept that analysis without hesitation. Nonetheless, there is a limit to the extent to which personal tragedy can be accepted as the explanation for the number and persistence of Mr Davison's financial decisions in his own self-interest to the detriment of the revenue. Even after having his practising certificate cancelled, he not only continued to practice; he continued to do so in a way that avoided the payment of tax. His evidence has not grappled with the significance of that conduct.
Thirdly, Mr Davison's counsel relied on the fact that, for reason of personal tragedy, Mr Davison effectively shut down and attended to his work and nothing else. Support for that submission was found in the evidence of Mr Diment, Mr Davison's treating psychologist. He provided four reports which were tendered by Mr Davison. He also placed some reliance on earlier reports from a psychiatrist, Dr Fisher, dated 2005. Mr Diment saw Mr Davison 20 times for a period of an hour each time over about a seven year period, treating him for depression with cognitive behavioural therapy and supportive counselling. He expressed the opinion that, following the tragedy of his son's suicide, Mr Davison became "paralysed" in several areas of functioning and that he "fell back into the area of more relative 'comfort' for him ie his legal practice to the detriment or other obligations - a form of pathological procrastination in relation to tax matters". Mr Diment further expressed the opinion that Mr Davison's depression has now stabilised and that there is "no psychological impediment (cognitively or emotionally) to his readmission".
In cross-examination Mr Diment expanded on that evidence at Tcpt, 20 June 2018, p 163(23): Q. Did you have an understanding, based on what Mr Davison told you, that the reason or the cause of the non-payment of tax was a form of procrastination? A. That was my - my opinion. I was trying to elaborate, you know, the way he maybe put it in more lay terms in the sense that, talking about depression and so forth, there's paralysis in some areas which is - comes from depression at times. When I say a form of pathological procrastination, he was burying himself. It's really a coping mechanism to help him with his depression. And in behavioural terms it's sort of put things off, put things off, put things off. There's no actual disorder of pathological procrastination.
However, Mr Diment had obtained such information as he had about the facts of the case from Mr Davison. He not read the decisions of the Tribunal, the Court of Appeal or Hall J.
It was submitted on behalf of Mr Davison that he had likely unintentionally understated the past effects of these stresses on his life. I accept that is likely. It appears that he did not receive appropriate treatment for his depression in a timely way. Nonetheless, as already indicated, one must weigh that against his persistent arrangement of his affairs over a very lengthy period in a manner that avoided meeting his civic duties. It is not as though he was completely immobilised during the whole of the relevant period. He was capable, for example, of taking steps to avoid the repossession of his wife's car. He was capable of taking advice from his accountant to structure his affairs in the way in which he did after his practicing certificate was cancelled. The suggestion that he was completely immobilised by depression for the lengthy period of his misconduct overlooks a number of deliberative acts calculated to serve his own financial interests.
Fourthly, it was submitted that Mr Davison's evidence concerning his mental illness was not closely tested in cross-examination, the focus of the cross-examination being on testing his appreciation of his past conduct. In particular, it was noted that there was no challenge to his evidence that at the time of his transgressions he was not in an emotional or mental state to be able to deal with his difficulties. However, the evidence concerning Mr Davison's mental state could not explain the persistence and duration of his "transgressions".
The fifth matter relied upon was Mr Davison's unchallenged evidence that he did not bring this application lightly and without careful consideration as to whether he could meet the strict requirements imposed on a practising barrister; that he believed he had much to offer clients and that he loves the law and wishes to help people. As indicated at the outset of this judgment, I have no hesitation in accepting that Mr Davison is sincere in his resolve. However, the authorities make plain that the Court must also have regard to a broader question of public confidence: Cummins at [20]. I have not been persuaded by Mr Davison's evidence that I can hold him to be a person in whom the public can have confidence having regard to the central role the profession plays in the administration of justice.
Finally, Mr Davison relied on the fact that the pain he experienced through being struck off remains with him, as indicated by an exchange during his evidence. Again, I do not have any hesitation accepting that Mr Davison continues to remain acutely aware of the consequences of his conduct. When asked why the Court could have confidence in his integrity despite the chances he had been afforded in the past, he said: "I have been through the fires of hell and I know what the - in graphic detail what the consequences are of not doing what I am required to do and my wife would skin me if I didn't." (Tcpt, 25 May 2018, p 144(45))
I have not found the assessment of this issue easy. I accept that Mr Davison is entitled to hold his own view as to the decisions about him. Particularly in respect of the decisions of Hall J, Mr Davison was frank in saying that, at an intellectual level, he did not agree with his Honour's decisions. Mr Davison's position on that issue was that he believed he was entitled to act as he did by reference to the decision in The Council of the Law Society of NSW v Seymour [1999] NSWCA 117. It was in that context that he acknowledged, nonetheless, that for present purposes, he "must" accept what Hall J found.
It is neither necessary nor appropriate to embark upon a consideration of the merits of Mr Davison's view on that issue. I accept it was and is genuinely held by him. However, Hall J's judgment to the contrary stands as a highly relevant consideration in determining whether in all the circumstances the Court is now justified in putting Mr Davison before the public as a fit and proper person to follow "the honourable calling" of an Australian legal practitioner.
Further, what is more troubling is the Tribunal's finding at [94], which was not challenged on appeal, that Mr Davison's conduct during that period after 2001 amounted to "a deliberate strategy precluding any discharge of his civic obligations…to make appropriate contributions to his second bankruptcy and thereby to reimburse the Commissioner of Taxation for some at least of the unpaid tax". In the result, whether or not Mr Davison agrees with the finding, the burden of what he must grapple with is that, after his practising certificate was cancelled, he continued in the same line of work with the same deliberate strategy of ensuring that he did not fulfil his civic obligations with regard to "very substantial tax liabilities". The onus in the present hearing is to establish that he has a proper understanding as to how that conduct fell short of the standard of behaviour required of barristers. I am not persuaded that he does.
Mr Davison's evidence tended rather to emphasise the personal toll of the disciplinary proceedings on him and his family. His wife's evidence (which I do not suggest reflects his views) went further, conveying a degree of bitterness at what she perceived to have been a lack of support for Mr Davison from the profession when he was vulnerable.
At one level, sentiment of that kind is understandable. Certainly, Mr Davison has endured family tragedy beyond comprehension. I accept that depression played a role in his failure to address his tax problem as it grew worse over the years. The consequences of the previous proceedings have been devastating for him.
In re-examination, Mr Davison gave the following evidence (Tcpt, 25 May 2018, pp 144-155): "Q. In light of your evidence about your prior deception of your accountant in the late 1990s, what can you tell her Honour as to why things would be different today if her Honour granted your application? … A. I have been through the fires of hell and I know what the ‑ in graphic detail what the consequences are of not doing what I am required to do and my wife would skin me if I didn't. Q. What are the consequences to which you refer? A. All of what has occurred, everything. Q. Well, tell her Honour what you mean by that? A. Bankruptcies; the bringing of the loss of not one house but two houses; the alienation of our daughter; the inability, as I mentioned earlier, to provide for accommodation for my adult children which my wife would dearly love to be able to provide. I'm sorry. Q. Take your time. A. It is all of those things that ‑ in addition to that is the pain and disrespect that I've caused to the Bar, to the profession that I love. I could not allow anything like that to occur again. Q. But, Mr Davison, on the issue of insight, you went bankrupt three times? A. Yes. Q. You had three chances? A. Yes. Q. Why should her Honour accept that this time is different? A. The first time ‑ well, it's probably not an answer to go through the circumstances of all three bankruptcies and it is different this time because I could not endure that again. I know what the consequences are and, throughout all that time, I didn't involve my wife in my personal finances and, had I done so, we wouldn't have been in this situation. She's now totally involved in anything that I do and I've been extraordinarily lucky that she has stood by me and will continue to stand by me and I know that I ‑ I just couldn't go through all this again; I just couldn't."
Counsel for Mr Davison submitted that, if I were to accept that evidence, I would be satisfied that Mr Davison is a fit and proper person to be admitted to the legal profession. With great respect, I think that submission misconceives the Court's task. It is not only a question of whether the Court can have confidence that there will probably be no repeat of the conduct that led to the decision to remove the person's name from the Roll. The Court must reach a positive state of satisfaction that there has been such a change in the character of the person that the reason for his or her removal from the Roll no longer obtains. I have not been persuaded that is the case.
For those reasons, I have concluded that the appeal must be dismissed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 August 2019

Legal Profession Act 1987(NSW)

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