(i) a summary of the Board's reviewable decisions; and

(ii) news of the application for review and the stay order.

(b) The letter to the clients should be in a form agreed with the Board (or, in the absence of that agreement, in a form approved by the Tribunal) and each letter should be:

(i) written in what the applicants understand to be the first language of the client to whom the letter is addressed; and

(ii) despatched within seven days of the form of words being agreed or approved.

2. Subject to (3), the application for non-disclosure orders under s 35 of the AAT Act is refused.

3. The Tribunal shall not publish these reasons for decision (otherwise than to the parties) for 7 days from the date of these reasons.

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PRACTICE AND PROCEDURE - application for a stay and confidentiality orders under ss 41 and 35 of the Administrative Appeals Tribunal Act 1975 (Cth) - whether a conditional stay may be granted - whether the applicants should be compelled to inform clients of the these proceedings - whether confidentiality orders amounting to a private hearing, the substitution of the applicants' names with pseudonyms and the non-publication of orders are appropriate - conditional stay granted - application for confidentiality orders refused.

Administrative Appeals Tribunal Act 1975 (Cth)

Corporations Act 2001 (Cth)

Tax Agent Services Act 2009 (Cth)

Re Pochi and Minister for Immigration and Ethnic Affairs [1979] AATA 64; (1979) 26 ALR 247

Scott and Australian Securities and Investments Commission [2009] AATA 798

Williams and Members of the Companies Auditors and Liquidators Disciplinary Board [2019] AATA 504

Zivanovic v Australian Securities and Investments Commission [2017] FCA 1633

1. The applicants in these proceedings are registered tax practitioners. Mr Harnam is the controlling mind and the supervising tax agent of the corporate applicant which conducts the practice. I was told many of the clients of the practice came from a particular ethnic community, and many of the clients spoke English as a second language. The Board suggested the linguistic isolation of the clientele was a relevant consideration when deciding whether to impose a condition along the lines sought. The Board reasoned that members of that community might be less likely to come into contact with the Board's publication of news of the reviewable decision.

2. The reviewable decisions were contained in correspondence sent to the applicants dated 29 April 2021. The correspondence records the Board's finding that:

(a) Mr Harnam had contravened provisions of the Code of Professional Conduct in s 30-10 of the Tax Agent Services Act 2009 (Cth) (the TAS Act); and

(b) Mr Harnam was not a fit and person.

3. The registration of the corporate applicant was also terminated in the wake of Mr Harnam's termination. The Board also decided Mr Harnam should be prevented from seeking (re)registration for 12 months.

4. The Board's findings about Mr Harnam's transgressions are central to the review. The principal finding against him was that he failed to comply with the taxation laws in his personal affairs over a long period. There was also a finding that he failed to properly disclose those problems when he made declarations accompanying his application for renewal of his registration - although I note there was some controversy on the facts about whether he had incorrectly responded to the relevant form. There was also a finding of dishonesty in relation to a share transaction. The corporate applicant was also found to have failed to comply with its taxation obligations.

5. The findings regarding non-compliance with the taxation laws is no small thing. The Code of Professional Conduct provides (at s 30-10(2) of the TAS Act) that tax agents must comply with taxation laws in the conduct of their personal affairs for reasons that should be obvious. The allegations of dishonesty contained in the findings relating to the disclosure and the handling of the share transaction are also worrying.

6. Now is the not the opportunity to conduct a thorough-going review of the merits of the applicants' case. I assume at this point that the applicants will focus on the nature and extent of the regulatory action taken against them - in particular, whether deregistration is the appropriate response. But I acknowledge there may yet be disagreement on the facts.

The power to attach conditions to a stay under s 41(2) of the AAT Act

7. Section 41(1) of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) makes clear that a reviewable decision will come into effect according to its terms even though a person affected by the decision has filed an application with the Tribunal. Section 41(2) contains the Tribunal's stay power. That sub-section permits the Tribunal to make orders "staying or otherwise affecting the operation or implementation of the decision..." under review. As a practical matter, that means the Tribunal's power extends (in appropriate cases) to restraining the decision-maker from undertaking the usual administrative steps taken in furtherance of the decision, such as publicising the reviewable decision: see, for, example, Australian Securities and Investments Commission v Administrative Appeals Tribunal [2009] FCAFC 185 (ASIC v AAT) per Downes and Jagot JJ at [50]. But the use of the expression "otherwise affecting" points to the possibility of making stay orders that include limits on the applicants' freedom of action - most obviously through the imposition of conditions. If there was any doubt about the Tribunal's power to make stay orders on conditions, that is dispelled by s 41(6)(a) which provides any order made under s 41(2) "is subject to such conditions as are specified in the order".

8. The power to impose conditions is not open-ended. Conditions must be directed to achieving the purpose of the stay power. The applicants say the purpose is spelled out in the sub-section which says the orders may be made "for the purpose of securing the effectiveness of the hearing and determination of the application for review". The applicants argue that purpose is not furthered by including a condition requiring them to inform clients of the regulatory action and the review. Indeed, the applicants argue the effectiveness of the hearing and review would be compromised because informing clients of the regulatory action might exacerbate the irrecoverable reputational damage and financial harm the applicants are trying to avoid. In those circumstances, I was told, the Board's proposed condition was impermissible.

9. While the power to order a stay must be directed to the requisite purpose, one should not ignore the balance of the sub-section which says the power may only be exercised if the Tribunal forms the view "it is desirable to do so after taking into account the interests of any persons who may be affected by the review". While the provision is awkwardly worded, it plainly contemplates the inclusion of conditions which enable the Tribunal to achieve the purpose of the section in a way that accommodates the interests that the Tribunal is required to take into account.

10. The Board says the condition is appropriate because it helps achieve a more refined balance between the applicants' interest in being able to continue trading while the review proceeds with the interests of others who might be affected by the decision under review. The interests of the applicants' clients are of particular relevance in this regard. Those clients would almost certainly expect the opportunity to make an informed decision about whether they should continue to entrust their taxation affairs to the applicants after the Board's findings. The Board said the Tribunal should not presume to deprive those individuals of the opportunity to make a judgment about how they should react as consumers to information they would almost certainly regard as relevant. The Board also says the role of the regulator (and, I would interpolate, the Tribunal) would be compromised if news of the regulatory action were suppressed in the short term. If the reviewable decisions were affirmed in due course, clients of the applicants could be angry with the regulator once they realised they had been kept in the dark about adverse findings made against their service provider.

11. The Board's submissions about the interest of clients in being informed calls to mind the reasoning in ASIC v AAT. In that case, the Full Federal Court dealt with arguments about the operation of ss 35 and 41 of the AAT Act. In the course of remarks about public hearings, Downes and Jagot JJ observed that suppression orders were rarely made in courts and the AAT notwithstanding the reputational damage that an applicant might experience in a public hearing: at [75]. They continued (at [77]):

It is difficult to accept that harm (even serious harm) to the recipient's reputation resulting from public awareness of the banning order will be a sufficiently cogent reason to justify the grant of a stay in most cases. This is because the risk of harm of this type is inherent in the nature of a banning order.

12. That portion of the court's reasons related to the application for orders under s 35, but the reasoning is similarly relevant to s 41. Participation in a regulated occupation is a privilege that brings benefits, such as protection from a measure of competition. There are also obligations and costs. One obligation is the requirement to comply with the regulatory regime. One potential cost is the risk of embarrassment and loss associated with regulatory action. Whether or not the possibility of reputational damage and loss in connection with regulatory action is properly described as 'the price of being allowed to do (regulated) business', the reasoning in ASIC v AAT and other authorities suggests the prospect of reputational risk carries limited weight in the Tribunal's deliberations under ss 35 and 41.

13. The applicants urged me to distinguish some of the authorities dealing with stay decisions that were made in matters arising under the regulatory regime that applies to financial advisers, company directors and others in the Corporations Act 2001 (Cth) (Corporations Act). There is something to this. As Downes and Jagot JJ emphasised in ASIC v AAT, the Tribunal is required to decide whether it is desirable to make a stay order after considering the interests of all those who might be affected by the review. That deliberative process is necessarily informed by the objectives and scope of the regulatory regime in question. The objectives of the regulatory regime in Chapter 7 of the Corporations Act prioritise efficient and fully-informed markets. The applicants suggest the regulatory regime embodied in the TAS Act is less concerned with transparency insofar as it promotes market efficiency. They say the TAS regime does not prioritise informing consumers of tax agents' services in the same way.

14. While I accept there are differences in the two regulatory regimes, the regime in the TAS Act is clearly concerned with consumer protection. Tax agents are in a strong position relative to their clients. Clients (and the Commissioner of Taxation) depend on the Board to actively police the standards set out in the Code of Professional Conduct and the registration requirements of the TAS Act. The Board has a statutory responsibility for maintaining a register and publishing reports of sanctions it imposes: see s 60-135 of the TAS Act and Reg 12 of the Tax Agents Services Regulations 2009 (Cth). It is difficult to see how consumers do not have an interest in being provided with information about adverse findings made by the Board in relation to a tax agent, if only so the consumers of that agent's services can decide their appetite for risk and potentially take their business elsewhere. It is the consumer's business, after all, and the Tribunal should be slow to deny them access to information they may regard as relevant when ordering those business relationships.

15. I am satisfied the Tribunal has the power to order a stay that is conditioned on the applicants making disclosures to its clients about the regulatory action. The question is whether it should exercise the discretion to do so in this case.

16. The decision of Downes J in Scott and Australian Securities and Investments Commission [2009] AATA 798 is often referenced in stay applications. In that case, the President of the Tribunal (as he then was) set out a range of matters that would ordinarily be addressed when considering a stay. These included (at [4]):

2 The consequence for the applicant of the refusal of a stay.

4 The consequences for the respondent in carrying out its functions depending upon whether a stay is granted or not.

5 Whether the application for review would be rendered nugatory if a stay were not granted.

6 Other matters that are relevant, amongst which I would include the length of time that the ban has already been in place and the gap between today and the hearing of the application.

17. Hs Honour's discussion was not intended as a checklist to be substituted for the words of the statute, but it is conventionally regarded as a useful starting point in many of these cases. I agree.

18. I have already made some remarks about the prospects of success at the final hearing. Without conducting a mini-trial at this juncture - which would not be appropriate - it is unclear whether the applicants have a strong case. I was told there was disagreement on some factual matters and I expect there will be debate over whether deregistration is the appropriate response in any event. At this point, my assessment of the applicants' prospects does not weigh heavily in favour of ordering a stay, whether conditional or unconditional.

19. The applicants will experience serious consequences if they do not obtain a stay. The statement of Mr Harnam suggests the applicants will experience significant loss if their clients are forced to take all their business elsewhere. The firm may close if that occurs, which would presumably have a devastating impact on Mr Harnam and his family. The consequences are likely to be much less serious for the applicants if they receive a stay conditioned on disclosure of the regulatory action. Mr Harnam says he expects the applicants would still sustain loss in that event. He pointed out the applicants have already experienced loss as a consequence of the 'no new clients' condition they agreed to accept in order to obtain an interim stay by consent, but that condition is no longer being pressed or considered. There is no reason to suppose the applicants would lose all or even most of their clients in the short term if the disclosure condition were imposed. If the applicants are vindicated as they expect, the effect may be very short-lived.

20. The public interest militates strongly in favour of a stay being subject to a disclosure condition. For reasons I have already explained, the applicants' clients are entitled to expect they would be kept apprised of regulatory action and the review so they can make their own decisions. The applicants pointed out their clients were concentrated in a particular ethic community but I am not persuaded that makes a disclosure condition less desirable: indeed, it was argued there is a greater need for a disclosure condition which specifies the disclosure should occur in the relevant language.

21. I am satisfied the Board may be placed in a difficult position if I did not insist on the applicants disclosing news of the reviewable decision and the review to its clients. If many of the applicants' clients face linguistic challenges, it is all the more important to bring the regulatory action to the clients' attention through the imposition of a condition that required the applicants to communicate in the relevant language.

22. The applicants emphasised the review would be rendered nugatory if they did not receive an unconditional stay. They insisted any loss that followed from disclosure would not easily be recovered, and the review would be rendered nugatory at least to that extent. Even assuming such a loss was irrecoverable, I have already explained the prospect of such a loss does not weigh heavily in the circumstances.

23. The other matters that might be relevant to my deliberations include the length of time until the hearing. There is no reason to assume this review cannot proceed expeditiously.

24. On balance, after weighing all the considerations, I am satisfied it is appropriate to order a stay under s 41(2) so that the applicants may remain in business on condition they disclose to their clients (including any new clients that may deal with the firm while the review is on foot):

(a) A summary of the Board's reviewable decisions; and

(b) news of the application for review and the stay order.

25. The letter to the clients should be in a form agreed with the Board (or, in the absence of that agreement, in a form approved by the Tribunal) and each letter:

(a) should be written in what the applicants understand to be the first language of the client to whom the letter is addressed; and

(b) be despatched within seven days of the form of words being agreed or approved.

26. The applicants have asked for orders under s 35 that would provide elements of a private hearing (in particular, the use of pseudonyms) and non-publication orders that would protect the identity of the applicants. Given I have imposed conditions on the stay orders requiring disclosure of news of the reviewable decision to the applicants' clients, it is difficult to see how orders under s 35 would be appropriate. But while there is some overlap in the considerations that must be take into account under the two provisions, they are separate powers and their exercise should be considered separately.

27. Section 35(1) of the AAT Act makes clear that proceedings before the Tribunal are ordinarily conducted in public. The applicants said that does not necessarily mean they must be identified by name: they argued a hearing could still be open and public if the names of the applicants were suppressed in listing notices, in the reasons for decision, and in the public discourse as a result of orders forbidding publication of their identities. The applicants argued that approach was consistent with the spirit if not the letter of the Australian Privacy Principles. The applicants were effectively challenging the Tribunal's usual practice of listing hearings by reference to the names of the parties and referring to the parties by name in the reasons for decision.

28. There is no doubt the Tribunal has the power to modify the usual features of a public hearing and review contemplated in s 35(1). But it is also clear the Tribunal will not depart from the usual practice simply because an applicant might feel embarrassment or discomfort at the prospect of his affairs being exposed in public in the course of the review: see Zivanovic v Australian Securities and Investments Commission [2017] FCA 1633 at [29] per Gleeson J; see also Williams and Members of the Companies Auditors and Liquidators Disciplinary Board [2019] AATA 504 at [22]. While some reviewable decisions are dealt with differently, most applicants in the Tribunal are not entitled to expect the same level of privacy they enjoyed during the primary decision-making process. That may come as a shock, but it follows inevitably from the openness principle set out in s 35(5) which is the starting point for any discussion about orders under s 35. The application of the Australian Privacy Principles to the Tribunal's review must be understood in that context.

29. I accept there may be documents that disclose personal information about the applicants' clients or persons under the age of 18 or other evidence which is inherently confidential. It may be that orders in relation to individual documents are appropriate notwithstanding the openness principle. But it is unnecessary to make blanket orders about those matters at this early stage of the proceedings. I can also consider making orders about the transcript of the final hearing and any reasons I give at the appropriate time. It would be premature to deal with those matters now.

30. For present purposes, I will focus on the applicants' request for orders that would confer pseudonyms and prevent publication of their identities. I am not satisfied such orders would be appropriate.

31. There is a public interest in a transparent regulatory process. An open hearing allows scrutiny which increases confidence in the Tribunal's decision-making processes, and, incidentally, those of the primary decision-maker: see Re Pochi and Minister for Immigration and Ethnic Affairs [1979] AATA 64; (1979) 26 ALR 247 at 270 per Brennan J. While the substance of the dispute in this case can still be dealt with using pseudonyms, that would have the effect of appearing to draw the curtains over a process that should be open because of the public interests at stake.

32. The applicants argued the seriousness of the allegations - especially the allegations of misconduct in relation to the share dealings - militated in favour of orders under s 35. That does not follow.

33. I accept there might be circumstances where conducting a wide-open process might be so daunting that it is has the perverse effect of discouraging an applicant (or potential future applicants) from seeking a review, or from producing all of the evidence the Tribunal needs to make the correct or preferable decision. I am not persuaded that is a factor in this case. The applicants value their privacy but there is no reason to assume tax agents (including the applicants in this case) will be put off challenging the regulator or become reluctant to be open about evidence if they have to do so in an open process.

34. The applicants have failed to demonstrate a real possibility of injustice or serious injury if the proceedings were not conducted in the open in the ordinary way. They certainly have not established it would be appropriate to depart from the openness principle set out in s 35(5). I am not satisfied it is appropriate to make orders under s 35 at this juncture.

I certify that the preceding 34 (thirty - four) paragraphs are a true copy of the reasons for the decision herein of Deputy President Bernard J McCabe

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