Kolya v Tax Practitioners Board

The Judgment of the Primary Judge 8 The Tax Practitioners Board made two decisions adverse to the interests of the appellant. The first decision was that which was taken on 29 September 2010 to reject the appellant's application for transitional registration as a tax agent and the second was that which was taken on 24 November 2010 to terminate his registration as a BAS agent. The appellant sought review by the AAT of both of those decisions. That review was, of course, a merits review. The AAT concluded that the appellant was not a fit and proper person to be registered either as a tax agent or as a BAS agent and affirmed the decisions which had been taken by the Tax Practitioners Board in relation to the appellant (Re Kolya v Tax Practitioners Board [2011] AATA 804). 9 At [16]-[22] of his Reasons for Judgment, the primary judge explained the legislative scheme that governed the two registrations with which the AAT was concerned. It is not necessary to traverse that material in detail. 10 The primary judge drew the appellant's attention to the difficulties with the way in which he had framed his case before his Honour. This much is apparent from [4]-[15] of the primary judge's Reasons for Judgment. 11 The primary judge also drew the attention of the appellant to the fact that he had not challenged the fundamental finding made by the AAT that the appellant was not a fit and proper person to hold either of the registrations in question and that his failure to challenge this finding would very likely be an insurmountable difficulty for the appellant in the case which he sought to run before the primary judge. That is not to say, however, that a challenge to that finding could have been brought before the primary judge or, if brought, would have been successful. 12 His Honour rejected the appellant's contention that the AAT had failed to comply with s 43(2B) of the AAT Act which provides: (2B) Where the Tribunal gives in writing the reasons for its decision, those reasons shall include its findings on material questions of fact and a reference to the evidence or other material on which those findings were based. 13 His Honour also rejected the appellant's argument that he was deemed to be a registered tax agent by dint of the operation of the Tax Agent Services (Transitional Provisions and Consequential Amendments) Act 2009 (Cth). 14 Finally, the primary judge considered the appellant's assertion that he had been denied procedural fairness by the AAT. His Honour said that this argument had not been developed by the appellant beyond asserting that the AAT was biased against him. Having himself read the transcript of the AAT hearing, the primary judge saw no evidence of bias. His Honour therefore rejected this argument.

Consideration 15 For reasons which I explained in Dunghutti Elders Council (Aboriginal Corporation) RNTBC v Registrar of Aboriginal and Torres Strait Islander Corporations (No 3) [2011] FCA 1019, at [6]-[9], in a case such as the present, even if the circumstances of the case justified the grant of some interlocutory relief, a stay or suspension of the order for dismissal made by the primary judge is not the appropriate order. Staying a dismissal of an appeal under s 44 of the AAT Act would be of no use to the appellant in the present case because the AAT's decision would still stand. In substance, in my view, what the appellant needs to show is that he is entitled to an interlocutory injunction if he is to achieve the outcome which he desires. In order to justify the grant of an interlocutory injunction in the present circumstances, the appellant would need to demonstrate that he has a serious question to be tried or a prima facie case and that the balance of convenience and justice requires that an injunction be granted. These principles were explained in considerable detail by the Full Court in Samsung Electronics Co. Limited v Apple Inc. [2011] FCAFC 156 (see also Stirling Harbour Services Pty Ltd v Bunbury Port Authority (No 2) [2000] FCA 87 at [13]-[14[ (per French J, as he then was)). 16 The status quo prior to the Tax Practitioner's Board's decisions was that the appellant was not a registered tax agent (although he was an applicant for registration as such an agent) and the appellant was a registered BAS agent. In the present case, therefore, any interlocutory injunction would be confined to preserving the appellant's registration as a BAS agent. He has no prima facie or other entitlement to be registered as a tax agent. 17 The Amended Notice of Appeal is a somewhat confused document which does not enable a reader to identify the error or errors which the appellant contends were made by the primary judge. For this reason, it is rather difficult to assess whether there is a serious question to be tried or a prima facie case on the appeal. As matters presently stand, I do not think that there is such a case. I express that opinion rather diffidently because, as I have already mentioned, it is difficult to discern from the Amended Notice of Appeal any clear specification of the error or errors allegedly made by the primary judge which the appellant contends should be corrected by the Full Court. 18 However, as far as the balance of convenience and justice is concerned, it seems to me that the relevant considerations militate heavily against the grant of the injunction which is sought. 19 The critical finding made by the AAT to the effect that the appellant is not a fit and proper person to hold either registration was arrived at on evidence and, as I have already mentioned, was not challenged before the primary judge. Almost certainly, it cannot now be challenged before the Full Court. There is a very strong public interest in ensuring that those who hold registrations of the type under consideration in the present case are persons of honesty and integrity and are "fit and proper persons" within the meaning of that expression as understood and explained in the authorities (as to which see the Reasons for Judgment of the primary judge at [31]-[32]). 20 Second, as I have already mentioned, the appellant has never been registered as a tax agent so that this is not a case where that registration has been taken away from him but rather is a case where it has been denied to him. There is, therefore, no existing business or group of clients affected by that part of the AAT's decision. 21 The impact upon his existing business as a BAS registered agent is obvious but that impact must be weighed in the balance against the public interest. The relevant aspects of the public interest are the need to protect existing and future clients of the appellant from his apparent lack of honesty and competence and the need to protect the Commonwealth's revenue. Given the serious adverse findings made by the AAT against the appellant, the continued conduct by the appellant of tax-related business activities would constitute a serious risk both to the public and to the revenue. 22 In a very similar case (Phillip Same Accountants Pty Ltd v Tax Practitioners Board (2011) 122 ALD 97 at [15]-[17] (pp 101-102)), Ryan J addressed the factors which he considered were relevant to a claim for an interlocutory injunction in the case before him. Most of those factors discussed by Ryan J at [17] (pp 101-102) are also relevant to my consideration of the present case. In Phillip Same Accountants Pty Ltd, Ryan J considered that the appellant's case was at least arguable. That is not the present case. At [15]-[17] (pp 101-102), his Honour said: 15 In the present case, since the primary order of Middleton J did no more than dismiss the applicant's application by way of appeal from the AAT, there was nothing in that order to execute or enforce. 16 In my view, the application for a stay in the sense of a suspension of Middleton J's order, and the alternative claim for an interlocutory injunction requiring the board to treat the applicant as the holder of a renewed tax agent's licence are each to be resolved in the light of similar discretionary factors. Those in favour of the grant of relief including the following: (a) if the appeal succeeds and the applicant ultimately persuades the tribunal, or the board to renew its licence, the applicant will have been deprived, in the meantime, of the opportunity to conduct its practice as a tax agent and derive remuneration therefrom. Correspondingly, the applicant's clients will be forced to go elsewhere to obtain the services of a tax agent during the interim which will include the end of the 2011 tax year. (b) the appeal is to be regarded as at least arguable. As Middleton J observed, at [37] of his reasons: … if the applicant can show that the Tribunal did not properly consider Mr Same's past conduct and likelihood of future conduct, including a proper evaluation of his character and reputation, then the Tribunal would have made an error of law and the matter should be remitted to a differently constituted Tribunal for redetermination. Whether the tribunal properly took into account the matters identified by his Honour depends on the proper interpretation of the tribunal's reasons as to which minds may reasonably differ. 17 The factors which weigh against exercising the discretion favourably to the applicant include: (a) the grant of a stay or suspension of a final order is, as Mason J pointed out in Re Marks (above), an exceptional course. A similar observation can be made of the grant of a mandatory interlocutory injunction against a statutory body which has the same effect. (b) it is doubtful whether a suspension of an order which finally determines an appeal means that the appeal has no longer been "determined" so as to bring to an end a stay brought about by operation of s 43(5C) of the AAT Act. (c) there is a strong presumption that, the decision of the board and its affirmation by the tribunal were correct, as Middleton J has held. In those circumstances, there is a public interest in excluding from practice a tax agent whose nominee is considered by those statutory bodies not to be a fit and proper person for the purposes of registration. (d) the applicant has, in fact, not practised as a tax agent since 31 January 2011. On 27 April 2011, the solicitor for the board wrote to the solicitors for the applicant contending that the applicable legislative provisions precluded "your client from legally providing tax agent services after 31 January 2011, the date that his Honour Justice Middleton affirmed the … Tribunal's decision of Deputy President McDonald". That letter concluded with these paragraphs: 3. We seek confirmation that your client has not been providing tax agent services since 31 January 2011. 4. Our client now opposes your client's application for a further stay, given the period of time that has elapsed since 31 January 2011. Your client should not have been providing tax agent services since its appeal was determined by Justice Middleton, and as a result this part of its practice should already have been discontinued for the last 3 months, which means that your client would not be prejudiced by a further stay application being refused. On 28 April 2011 the applicant's solicitors replied advising that: We are instructed by our client that our client has not provided any Taxation or Bass Services since 31 January 2011. There is no evidence as to what the applicant has done since 31 January 2011 to preserve the continuity of its tax agent's practice or to retain the goodwill of its clients. Nor has the court been apprised in any specific terms of how a stay from now until the hearing of the appeal would be used to change the situation which has existed since 31 January 2011. I indicate parenthetically that the court has indicated that it could accord the applicant's appeal a speedy hearing in the May Full Court sittings. However, the applicant has declined that invitation because of the unavailability of counsel retained by it for the appeal. (e) If the Full Court is persuaded in the course of hearing the appeal that the applicant has a strong case for setting aside Middleton J's order it can itself, if necessary, frame appropriate interlocutory relief to give effect to that view. 23 It seems to me, therefore, that as far as the balance of convenience and justice is concerned, there is a strong case in favour of refusing the interlocutory injunction which has been sought, even if I were to be satisfied (which I am not) that the appellant had established a serious question to be tried or a prima facie case in respect of his appeal. 24 For these reasons, I refuse the appellant's application for interlocutory relief. 25 The appellant has again requested that I make a referral under r 4.11 and r 4.12 of the Federal Court Rules 2011. The appellant has not sought to support this request with any evidentiary material. In my view, there is nothing before me that would justify such a referral. Therefore, I again refuse to make the requested referral. 26 Accordingly, the Interlocutory Application filed by the appellant on 3 April 2012 must be dismissed. I will order that the costs of that Application be costs in the appeal. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.