Prothonotary of the Supreme Court of New South Wales v Livanes

Court of Appeal (NSW)|2012-07-13|Before: McColl JA, Campbell JA, Meagher JA, Coll JA

73 Prothonotary of the Supreme Court of NSW v Alcorn [2007] NSWCA 288 The Prothonotary of the Supreme Court of New South Wales v Kearns [2011] NSWCA 394 The Prothonotary of the Supreme Court of New South Wales v Sukkar [2007] NSWCA 341 Category: Principal judgment Parties: Prothonotary of the Supreme Court of New South Wales - Claimant George Livanes - Opponent Representation: P Griffin - Claimant No appearance - Opponent NSW Crown Solicitor's Office - Claimant No appearance - Opponent File Number(s): 2011/000412065

Judgment 1McCOLL JA: By summons filed on 22 December 2011 the Prothonotary of the Supreme Court of New South Wales, the claimant, moves the Court for the following orders:

A declaration that the opponent is guilty of professional misconduct.
A declaration that the opponent is not a person of good fame and character.
A declaration that the opponent is not a fit and proper person to remain on the Roll of local lawyers of the Supreme Court of New South Wales ('the Roll').
An order that the name of the opponent be removed from the Roll.
An order that the opponent pay the applicant's costs.
Such further or other order as the Court thinks fit. 2The claimant relies on the following particulars as supporting the relief sought in paragraphs 1 - 3 of the summons. "(a) On 1 April 2011 in the New South Wales District Court the Opponent was convicted of ten (10) counts of defrauding the Commonwealth and two (2) counts of obtaining a financial advantage by deception. (b) The convictions relate to the claiming of rental property deductions in his taxation returns for the financial years ending 30 June 1991 to 30 June 2002 inclusive, to which he was not entitled. (c) The Opponent was sentenced to a total term of imprisonment of six (6) years to commence on 3 June 2011 and expire on 2 June 2017. He is eligible to be released on parole on 2 December 2014." 3George Livanes, the opponent, was born in September 1951. He was admitted as a solicitor of the Supreme Court of New South Wales on 3 February 1975. He practiced as a solicitor from 1975 until 19 April 2011 when the Council of the Law Society of New South Wales suspended his practising certificate. From 1991 to 2003 he specialised in property law. From 1995 to 2003 he was a partner at Clayton Utz. His name remains on the Roll of local lawyers. 4The opponent does not oppose either the application or the orders sought by the claimant, save as to any order as to costs. He has not filed any documents with the Court in relation to the application. On 6 March 2012, he responded to a letter sent by the Crown Solicitor on 23 February 2012 advising him of the time and date of the call over before the Registrar, noting that if he maintained his "position of not opposing the orders" a costs order would not be sought against him and asking him to advise if he would be represented at the call over. His response stated: "I refer to your letter of 23 of February and advise.
I will not be represented at any call over.
Nor will I be represented at any hearing.
I consent to the Court making orders as per 1 - 4 (inclusive) in the Summons enclosed with your letter to me of 13 February 2012.
You may show this letter to the Court."

Findings of fact 5The Court has emphasised, in proceedings for removing the name of lawyers from the Roll of local lawyers, the need to make findings of fact in appropriate detail on significant matters concerning the conduct the subject of the application. Such findings could be of significance in the event that there is a subsequent application for readmission: New South Wales Bar Association v Cummins [2001] NSWCA 284; (2001) 52 NSWLR 279 (at [24]); Council of the New South Wales Bar Association v Power [2008] NSWCA 135; (2008) 71 NSWLR 451 (at [10] - [11]). This is of particular importance in an application for a strike off order where the contention that the practitioner is not a fit and proper person to engage in legal practice is, as in this case, based on a conviction occurring otherwise than in connection with the practice of law: see A Solicitor v Council of the Law Society of New South Wales [2004] HCA 1; (2004) 216 CLR 253 (at [18] - [19]). 6The claimant sought initially to rely upon three affidavits to support his claim for relief, one sworn by himself on 7 December 2011, the other two by Mr Geoffrey Boyd, the solicitor with the conduct of the matter, sworn on 25 May 2012 and 10 July 2012 respectively. 7The claimant's affidavit set out the details of the opponent's admission as a solicitor and information relating to the Law Society resolution to suspend his practising certificate, including his letter of 2 May 2011 advising the Society that he "[would] not oppose the Society, or any other proper legal authority, in due course removing [his] name from the roll of practitioners". Annexure D to the affidavit was a certificate of conviction given under s 178 of the Evidence Act 1995 setting out the particulars of the offences for which the opponent stood trial before Wells DCJ and the date of his conviction for those offences, 1 April 2011. Annexure E was the trial judge's sentencing remarks. Mr Boyd's affidavits went to formal matters concerning advice to the opponent of the state of the proceedings, service of the documents and submissions on which the claimant sought to rely, and the opponent's letter of 6 March 2012 set out above. The correspondence also established the claimant's agreement not to seek a costs order against the opponent in the event he did not oppose the orders sought. 8It is frequently the case in proceedings of this nature that the Prothonotary and the opponent legal practitioner agree on a statement of facts pursuant to s 191 of the Evidence Act. No such agreement was reached in this case. Mr P Griffin, who appeared for the claimant, said the opponent had been invited to participate in the formulation of an agreed statement of facts for the purpose of the present proceedings but had declined that invitation. 9The certificate of conviction is evidence of the particular offences in respect of which the opponent was convicted and of the sentences passed upon him as well as of the particulars of the offences: s 178(3) and (5) Evidence Act. However the sentencing remarks are in a different category. Prior to the hearing, the Court advised the claimant's solicitor that it would require submissions as to the use it could make of the sentencing remarks having regard to s 91 and s 92 of the Evidence Act and in light of the decisions in The Prothonotary of the Supreme Court of New South Wales v Sukkar [2007] NSWCA 341 and Gonzales v Claridades [2003] NSWSC 508; (2003) 58 NSWLR 188 (relevantly affirmed on appeal, Gonzales v Claridades [2003] NSWCA 227; (2003) 58 NSWLR 211 (at [16])). 10In The Prothonotary of the Supreme Court of New South Wales v Sukkar, Hodgson JA (with whom Tobias JA agreed) held (at [9]), applying Gonzales v Claridades, that "[t]he conviction of the opponent is evidence of the elements of the offence with which he was convicted, but not of the detailed facts found by the sentencing judge ... [and could not] support findings by [the] Court as to what the opponent actually did, beyond the bare elements of the offence with which he was convicted". 11There was no appearance for the opponent when the matter was called on for hearing on 13 July 2012. Mr Griffin accepted that in the light of s 91 and s 92 of the Evidence Act and the decisions the Court had drawn to his solicitor's attention, the Court could not admit the sentencing remarks as evidence of the truth of facts the trial judge stated in the course of those remarks. He did, however, seek to draw a distinction between those of the sentencing judge's remarks in which her Honour expressed her view as to such matters as the opponent's motive and factual matters which could be characterised as properly in dispute, as opposed to other matters referred to in the sentencing remarks which were "presumably matters and issues not in dispute". Examples of the latter were said to be the quantum of the deduction the opponent claimed in respect of the offences, the length of time over which the conduct the subject of the charges continued which was apparent from the certificate of conviction and, finally, the maximum penalty that applied in respect to those convictions - a matter of statutory reference. He also drew attention to the fact that the opponent had been kept informed at each stage of the proceedings of their progress, had been served with the materials upon which the claimant intended to rely and had been reminded he had the right to make submissions if he wished but had declined to do so. He accepted, however, that the fact the opponent had not elected to make submissions did not mean he necessarily agreed with the sentencing judge's remarks. 12The Court indicated that the claimant should ascertain whether he could pursue the issue of placing the facts before it in admissible form by serving a notice to admit facts on the opponent. The Court heard Mr Griffin's submission on principles of law on the premise that there would be material before the Court in admissible form concerning the circumstances in which the opponent committed the offences. 13The Court then adjourned the matter part heard. It directed the claimant to advise within seven days whether he proposed either to seek to rely upon the sentencing remarks in the manner Mr Griffin outlined at the commencement of the proceedings or to serve upon the opponent a notice to admit facts pursuant to Uniform Civil Procedure Rules ("UCPR") r 17.3. In the event the Prothonotary took the latter course, the Court extended the time referred to in UCPR r 17.3(2) for the admitting party to respond to the requesting party's notice from 14 to 28 days after service on him of that notice. The Court granted the opponent liberty to apply for any further order in relation to any such notice to admit facts and also gave him leave to inform the Court whether he sought a further hearing in public of the summons, such notice, if practicable, to be communicated to the Court in response to a request for such indication from the Crown Solicitor to him. In the event the opponent did not require a further hearing in open court, the Court said it would reserve judgment after the receipt of any further documentation from the claimant and/or the opponent in Chambers. 14On 20 July 2012, Mr Boyd advised the Court that he had received instructions to serve a notice to admit facts on the opponent. By affidavit sworn and filed on 22 August 2012, Mr Boyd attached a copy of a letter he wrote to the opponent dated 25 July 2012 (which attached a copy of the orders made on 13 July 2012) and the opponent's response of 19 August 2012. 15In his letter of 25 July 2012, Mr Boyd outlined briefly the nature of what had transpired at the hearing on 13 July 2012. He enclosed a copy of the Court's orders of that date. He also enclosed by way of service a notice to admit facts served in accordance with UCPR r 17.3. The letter referred to the fact that Mr Boyd had arranged for process servers to effect personal service of the notice to admit facts on the opponent on 1 August 2012. 16The matters the claimant required the opponent to admit are set out in the Schedule to this judgment. 17On 19 August 2012, the opponent wrote to the Crown Solicitor's office acknowledging receipt of Mr Boyd's letter of 25 July 2012 by way of service on 1 August 2012. The opponent advised as follows: "1. I admit the contents of the Notice to Admit Facts enclosed with your letter, 2. I do not seek a further hearing in public of the Summons. 3. As previously advised to you I consent to the orders sought by the Prothonotary in the Summons provided that no order for costs is sought or made against me. 4. You are at liberty to communicate the contents of this letter to the Court." 18The opponent has, accordingly, now admitted facts which may properly form the basis for this Court's findings in relation to the claimant's application. I would formally, therefore, find that the claimant has established each of the facts set out in the Schedule which, taken with the certificate of conviction, provide the evidentiary basis for the application and for the statement of the case to which I now turn.

Statement of the case 19On 1 April 2011, following a trial in the District Court at Sydney before Wells DCJ and a jury the opponent was convicted of twelve offences. Ten of those offences were for defrauding the Commonwealth contrary to s 29D of the Crimes Act 1914 (Cth). The other two offences were for dishonestly obtaining a financial advantage from the Commonwealth contrary to s 134.1 of the Criminal Code Act 1995 (Cth). The offences related to income tax returns the opponent lodged in respect of each of the twelve financial years from 30 June 1991 up to and including 30 June 2002. On 3 June 2011, the opponent was sentenced to a total of six years imprisonment with a non-parole period of three years and six months. He will be eligible for parole on 2 December 2014. 20The Certificate of Conviction is as follows: "PARTICULARS OF ACCUSED Name of Accused - George LIVANES Date of birth - 28 September 1951 PARTICULARS OF OFFENCE(S) Count 1 - 2009/183159 Crimes Act 1914 (Cth), s29D - Defraud the Commonwealth or Public Authority - Law Part Code 10836. Date of offence: Between 30 March 1992 and 10 April 1992. Place of offence: Sydney in the State of New South Wales Did defraud the Commonwealth, in that in his income tax return for the financial year ending 30 June 1991, lodged with the Australian Taxation Office, he claimed and received the benefit of, rental property deductions to which he was not entitled. Count 2 - 2009/113373 Crimes Act 1914 (Cth), s29D - Defraud the Commonwealth or Public Authority - Law Part Code 10836. Date of offence: Between 15 March 1993 and 27 March 1993. Place of offence: Sydney in the State of New South Wales Did defraud the Commonwealth, in that in his income tax return for the financial year ending 30 June 1992, lodged with the Australian Taxation Office, he claimed and received the benefit of, rental property deductions to which he was not entitled. Count 3 - 2009/20436 Crimes Act 1914 (Cth), s29D - Defraud the Commonwealth or Public Authority - Law Part Code 10836 Date of offence: Between 15 March 1994 and 25 March 1994 Place of offence: Sydney in the State of New South Wales Did defraud the Commonwealth, in that in his income tax return for the financial year ending 30 June 1993, lodged with the Australian Taxation Office, he claimed and received the benefit of, rental property deductions to which he was not entitled. Count 4 - 2009/161800 Crimes Act 1914 (Cth), s29D - Defraud the Commonwealth or Public Authority - Law Part Code 10836 Date of offence: Between 5 March 1995 and 12 March 1995 Place of offence: Sydney in the State of New South Wales Did defraud the Commonwealth, in that in his income tax return for the financial year ending 30 June 1994, lodged with the Australian Taxation Office, he claimed and received the benefit of, rental property deductions to which he was not entitled. Count 5 - 2009/109103 Crimes Act 1914 (Cth), s29D - Defraud the Commonwealth or Public Authority - Law Part Code 10836 Date of offence: Between 14 April 1996 and 10 June 1996 Place of offence: Sydney in the State of New South Wales Did defraud the Commonwealth, in that in his income tax return for the financial year ending 30 June 1995, lodged with the Australian Taxation Office, he claimed and received the benefit of, rental property deductions to which he was not entitled. Count 6 - 2009/108034 Crimes Act 1914 (Cth), s29D - Defraud the Commonwealth or Public Authority - Law Part Code 10836 Date of offence: Between 16 March 1997 and 26 March 1997 Place of offence: Sydney in the State of New South Wales Did defraud the Commonwealth, in that in his income tax return for the financial year ending 30 June 1996, lodged with the Australian Taxation Office, he claimed and received the benefit of, rental property deductions to which he was not entitled. Count 7 - 2009/81324 Crimes Act 1914 (Cth), s29D - Defraud the Commonwealth or Public Authority - Law Part Code 10836 Date of offence: Between 30 April 1998 and 9 May 1998 Place of offence: Sydney in the State of New South Wales Did defraud the Commonwealth, in that in his income tax return for the financial year ending 30 June 1997, lodged with the Australian Taxation Office, he claimed and received the benefit of, rental property deductions to which he was not entitled. Count 8 - 2009/103472 Crimes Act 1914 (Cth), s29D - Defraud the Commonwealth or Public Authority - Law Part Code 10836 Date of offence: Between 27 April 1999 and 7 May 1999 Place of offence: Sydney in the State of New South Wales Did defraud the Commonwealth, in that in his income tax return for the financial year ending 30 June 1998, lodged with the Australian Taxation Office, he claimed and received the benefit of, rental property deductions to which he was not entitled. Count 9 - 2009/20437 Crimes Act 1914 (Cth), s29D - Defraud the Commonwealth or Public Authority - Law Part Code 10836 Date of offence: Between 17 April 2000 and 29 April 2000 Place of offence: Sydney in the State of New South Wales Did defraud the Commonwealth, in that in his income tax return for the financial year ending 30 June 1999, lodged with the Australian Taxation Office, he claimed and received the benefit of, rental property deductions to which he was not entitled. Count 10 - 2009/97978 Crimes Act 1914 (Cth), s29D - Defraud the Commonwealth or Public Authority - Law Part Code 10836 Date of offence: Between 14 May 2001 and 23 May 2001 Place of offence: Sydney in the State of New South Wales Did defraud the Commonwealth, in that in his income tax return for the financial year ending 30 June 2000, lodged with the Australian Taxation Office, he claimed and received the benefit of, rental property deductions to which he was not entitled. Count 11 - 2009/26007 Crimes Act 1914 (Cth), s134.2(1) - Obtain a financial advantage by deception - Law Part Code 41497 Date of offence: Between 7 April 2002 and 16 April 2002 Place of offence: Sydney in the State of New South Wales Did by a deception, dishonestly obtain a financial advantage from the Commonwealth, in that in his income tax return for the financial year ending 30 June 2001, lodged with the Australian Taxation Office, he claimed and received the benefit of, rental property deductions to which he was not entitled. Count 12 - 2009/97979 Crimes Act 1914 (Cth), s134.2(1) - Obtain a financial advantage by deception - Law Part Code 41497 Date of offence: Between 14 May 2003 and 22 May 2003 Place of offence: Sydney in the State of New South Wales Did by a deception, dishonestly obtain a financial advantage from the Commonwealth, in that in his income tax return for the financial year ending 30 June 2002, lodged with the Australian Taxation Office, he claimed and received the benefit of, rental property deductions to which he was not entitled. Date of conviction 1 April 2011 ... Date of sentence 3 June 2011" (emphasis in original) 21The certificate of conviction also records the particulars of the sentence Wells DCJ imposed as follows: "In relation to each of Counts 1, 2, 3 & 4: Sentenced to a fixed term of imprisonment of 18 months to commence on 3 June 2011 and expire on 2 December 2012. Each sentence is to be served concurrently with each other. In relation to each of Counts 5, 6, 7 & 8: Sentenced to a fixed term of imprisonment of 2 years to commence on 3 December 2012 and to expire on 2 December 2014. Each sentence is to be served concurrently with each other. Each sentence is cumulative on other sentences being served by the offender. In relation to each of Counts 9, 10, 11 & 12: Sentenced to a fixed term of imprisonment of 2 years and 6 months to commence on 3 December 2014 and to expire on 2 June 2017. Each sentence is to be served concurrently with each other. Each sentence is cumulative on other sentences being served by the offender. Pursuant to s 19AB(1) of the Crimes Act 1914 (Cth), the offender is sentenced to a term of imprisonment which consists of a non-parole period of 3 years and 6 months to commence on 3 June 2011 and to expire on 2 December 2014. The balance of the sentence is 2 years and 6 months to date from the commencement of the sentence and to expire on 2 June 2017. The offender is sentenced to a total term of imprisonment for 6 years to commence on 3 June 2011 and to expire on 2 June 2017. The offender will be eligible for parole on 2 December 2014." (emphasis in original) 22The effect of the opponent's admission of the matters set out in the Schedule by way of background to his conviction, taken with the offences of which he was convicted, can be shortly stated. In his income tax returns lodged in respect of each of the twelve financial years from 30 June 1991 up to and including 30 June 2002, the opponent fraudulently claimed, and received the benefit of, rental expense deductions which deductions, in fact, represented the cost of owning and maintaining his family home. 23The amounts the opponent claimed by way of rental expense deductions total $3,391,528. Those amounts were, it is apparent from the sentencing remarks, the amounts which appeared in relation to each count on the indictment, although they were not set out in the Certificate of Conviction. However I note that in her sentencing remarks the sentencing judge stated that he received a total benefit over the twelve years of $1,640,604. Although those remarks are not, as I have said, evidence of the fact, in my view it is appropriate to record her Honour's remarks as they represent, I assume, the net benefit to the opponent from the claimed deductions after the application of the appropriate marginal taxation rate. This was one of the matters Mr Griffin invited the Court to take into account from the sentencing remarks. In my view it is appropriate to do so as it is in the opponent's favour and prevents the Court leaving on the record a suggestion that he received the gross amount set out in the notice to admit facts. This should not be understood as a criticism of the claimant which, I would infer, set out in the notice to admit facts the amounts as they appeared in the indictment.

Legal principles 24The claimant invokes the Court's inherent jurisdiction and powers with respect to the control and discipline of lawyers. That jurisdiction is not affected by the enactment of a statutory jurisdiction to deal with complaints about and the discipline of the legal profession: s 590 of the Legal Profession Act 2004. Where an order for removal from the Roll invoking the Court's inherent jurisdiction is sought, "the ultimate issue is whether the practitioner is shown not to be a fit and proper person to be a legal practitioner of the Supreme Court upon whose roll the practitioner's name presently appears"; that question must be determined at the time of the hearing: A Solicitor v Council of the Law Society of New South Wales (at [14] - [15], [21]). 25I note, however, that in The Prothonotary of the Supreme Court of New South Wales v Kearns [2011] NSWCA 394 (at [8]), Sackville AJA (Campbell and Young JJA agreeing) pointed out that as "s 590 of the [Legal Profession Act] does not use the expression 'professional misconduct', the statutory definition of that term in s 497 of the [Legal Profession Act] does not directly apply to an exercise of the Court's inherent jurisdiction to discipline legal practitioners". Nonetheless, his Honour considered it relevant to note that the statutory definition of that expression in s 497(1) includes: "...(b) conduct of an Australian legal practitioner whether occurring in connection with the practice of law or occurring otherwise than in connection with the practice of law, if established, justify a finding that the practitioner is not a fit and proper person to engage in legal practice." (Emphasis added) 26That definition confirms the common law position as explained in A Solicitor v Council of the Law Society of New South Wales (at [20]) that: "... even where it does not involve professional misconduct, a person's behaviour may demonstrate qualities of a kind that require a conclusion that a person is not a fit and proper person to practise. And there may be an additional dimension to be considered. It was explained by Kitto J in Ziems: 'It is not difficult to see in some forms of conduct, or in convictions of some kinds of offences, instant demonstration of unfitness for the Bar. Conduct may show a defect of character incompatible with membership of a self-respecting profession; or, short of that, it may show unfitness to be joined with the Bench and the Bar in the daily co-operation which the satisfactory working of the courts demands. A conviction may of its own force carry such a stigma that judges and members of the profession may be expected to find it too much for their self-respect to share with the person convicted the kind and degree of association which membership of the Bar entails. But it will be generally agreed that there are many kinds of conduct deserving of disapproval, and many kinds of convictions of breaches of the law, which do not spell unfitness for the Bar; and to draw the dividing line is by no means always an easy task.' " 27In exercising its inherent jurisdiction and powers, the Court must satisfy itself that it is appropriate to make orders removing the opponent's name from the Roll, even if he concedes that the orders should be made: Council of the New South Wales Bar Association v Hart [2011] NSWCA 64 (at [12]); Council of the New South Wales Bar Association v Einfeld [2009] NSWCA 255 (at [13]); Council of the New South Wales Bar Association v Power (at [9]); Prothonotary of the Supreme Court of New South Wales v McCaffery [2004] NSWCA 470 (at [12]). 28A lawyer's conduct in relation to the preparation and lodgement of taxation returns is sufficiently closely connected with legal practice as to justify, in an appropriate case, a finding of professional misconduct: New South Wales Bar Association v Cummins (at [66]) per Spigelman CJ (Mason P and Handley JA agreeing). 29The proposition in the previous paragraph was explicitly recognised in a succession of cases, for which a convenient starting point is New South Wales Bar Association v Hamman [1999] NSWCA 404; (1999) 217 ALR 553. That case concerned an application to strike off the Roll of legal practitioners the name of a barrister who had been convicted after pleading guilty to three charges of breaching s 29B of the Crimes Act in relation to his failure to declare all of his assessable income and two charges of breaching s 29D involving defrauding the Commonwealth. The five charges covered income tax returns in 1990, 1991 and 1992 that, in total, understated his income by $656,636: New South Wales Bar Association v Hamman (at [47]). 30Both the DPP and Mr Hamman appealed against his sentence. In the Court of Criminal Appeal (Director of Public Prosecutions v Hamman, New South Wales Court of Criminal Appeal, unreported, 1 December 1998) Sheller JA (with whom Levine J agreed) said: "General deterrence is a predominant consideration when sentencing for offences of defrauding the revenue. Appeal Courts have discussed and emphasised the seriousness of frauds committed to the detriment of the public revenue. Inevitably, the Australian system of tax collection depends upon the honesty of taxpayers and, in particular, upon their fully declaring in each year of income what their gross income is. In a free society, such as Australia, the tax collector cannot check that every taxpayer has done so. The effect of dishonesty and non-disclosure of income increases the burden on all other taxpayers and particularly those who have truly disclosed their gross income. This demonstrates the serious nature of the offences charged against the respondent and the importance when punishing such offences to put in the forefront of the principles to be applied that of general deterrence." 31In the Court of Appeal, Mason P referred (at [59]) to Sheller JA's remarks and (at [64]) expressed his agreement with those remarks and those of the other members of the Court of Criminal Appeal "as to the objective seriousness of the conduct for which the barrister stood convicted". His Honour then said: "[85] I emphatically dispute the proposition that defrauding 'the Revenue' for personal gain is of lesser seriousness than defrauding a client, a member of the public or a corporation. The demonstrated unfitness to be trusted in serious matters is identical. Each category of 'victim' is a juristic person whose rights to receive property are protected by law, including the criminal law in the case of dishonest interception. 'The Revenue' may not have a human face, but neither does a corporation. But behind each (in the final analysis) are human faces who are ultimately worse off in consequence of fraud. Dishonest non-disclosure of income also increases the burden on taxpayers generally because rates of tax inevitably reflect effective collection levels. That explains why there is no legal or moral distinction between defrauding an individual and defrauding 'the Revenue'. Indeed, the latter involves an additional element indicative of unfitness to practise. As Sheller JA pointed out in the Court of Criminal Appeal (par 59 above): '... the Australian system of tax collection depends upon the honesty of taxpayers and, in particular, upon their fully declaring in each year of income what their gross income is. In a free society, such as Australia, the tax collector cannot check that every taxpayer has done so.' [86] I agree with the following opinion of Justice Traynor, speaking for the Supreme Court of California in In re Hallinan 272 P 2d 768 (1954) at 771: 'The fraudulent acquisition of another's property is but another form of theft in this state. We see no moral distinction between defrauding an individual and defrauding the government, and an attorney, whose standard of conduct should be one of complete honesty, who is convicted of either offence is not worthy of the trust and confidence of his clients, the courts, or the public, and must be disbarred, since his conviction of such a crime would necessarily involve moral turpitude.' " Spigelman CJ referred to Mason P's statement with approval in New South Wales Bar Association v Cummins (at [18]). 32As the cases Mason P discussed in New South Wales Bar Association v Hamman (at [90] - [99]) make apparent, in a number of cases chronologically coinciding with the commencement of the opponent's offences, courts have considered the appropriate response to tax fraud found to constitute professional misconduct. Of these it is relevant, in particular, to note Mason P's agreement (at [97]), with Cox J's (dissenting) view in In the Matter of Mahoney (Full Court of the Supreme Court of South Australia, unreported, 11 December 1996) that a practitioner found to have deliberately understated his income, albeit not charged or convicted, should be struck off the Roll in circumstances where: "... he was guilty of serious crimes. There was nothing to mitigate their commission, and the impact of the practitioner's abundant character evidence is necessarily lessened by the long period over which his systematic acts of dishonesty took place." 33The fundamental principles concerning the opprobrium attached to the conduct of legal practitioners who commit offences in connection with the preparation and lodgement of taxation returns were reiterated in New South Wales Bar Association v Somosi [2001] NSWCA 285; (2001) 48 ATR 562; New South Wales Bar Association v Stevens [2003] NSWCA 261; (2003) 54 ATR 25; Davison v Council of the New South Wales Bar Association [2007] NSWCA 227; (2007) 69 ATR 402. 34As I have said, the question whether the opponent is a fit and proper person to remain on the Roll of local lawyers must be determined at the time of hearing. The same is true of the question of "good fame and character": Ex parte Tziniolis; Re The Medical Practitioners Act (1966) 67 SR (NSW) 448 (at 475) per Holmes JA. 35As to whether historic misconduct demonstrates present unfitness or absence of good fame and character, Walsh JA (with whom Wallace P agreed) said in Ex parte Tziniolis; Re The Medical Practitioners Act (at 461): "Reformations of character and of behaviour can doubtless occur but their occurrence is not the usual but the exceptional thing. One cannot assume that a change has occurred merely because some years have gone by and it is not proved that anything of a discreditable kind has occurred. If a man has exhibited serious deficiencies in his standards of conduct and his attitudes, it must require clear proof to show that some years later he has established himself as a different man." His Honour's remarks were also approved in Health Care Complaints Commission v Litchfield (1997) 41 NSWLR 630 (at 637) per Gleeson CJ, Meagher and Handley JJA. 36In Dawson v Law Society of New South Wales (New South Wales Court of Appeal, unreported, 21 December 1989, at 6 - 7) Mahoney JA said: "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 unlikely to be acceptable." 37In Prothonotary of the Supreme Court of NSW v P [2003] NSWCA 320 (at 17) Young CJ in Eq (with whom Meagher and Tobias JJA agreed) described the concept of good fame and character as having: "... a twofold aspect. Fame refers to a person's reputation in the relevant community, character refers to the person's actual nature: McBride v Walton (NSWCA 15.7.1994 per Kirby P); Clearihan v Registrar of Motor Vehicle Dealers (1994) 117 FLR 455, 459." 38Hoeben J (as his Honour then was) summarised the circumstances in which the Court may make a finding that a practitioner is not of good fame and character in Prothonotary of the Supreme Court of NSW v Alcorn [2007] NSWCA 288 as follows: "[58] In determining whether a person is of good fame and character, the Court is to consider 'matters affecting the moral standards and attitudes and qualities (of an applicant for registration) and not merely consider what is his general reputation' - see Ex parte Tziniolis; Re Medical Practitioners Act (1966) 67 SR (NSW) 448 at 451 and Incorporated Law Institute of NSW v Meagher (1909) 9 CLR 655 per Higgins J at 692. [59] However the notion of good character is not at large. It must relate to the qualities relevant to practice as a professional. Kirby P described the concept as follows: 'The 'good character' which is required, the absence of which may give rise to complaint leading to sanctions, must be a 'good character' relevant to the purpose for which the complaint is entertained, viz for the making of an order affecting the practice of the medical practitioner concerned as such ... The relevant function of the Tribunal is to protect the public from medical practitioners whose continued practice may cause harm to the public'. (McBride v Walton (NSWCA unreported, 15 July 1994 at [15]). [60] Dixon J described the concept of 'good fame and character' as follows: 'It would almost seem to go to without saying that conviction of a crime of dishonesty of so grave a kind as housebreaking and stealing is incompatible with the existence in a candidate for admission to the Bar of the reputation and more enduring moral qualities denoted by the expression 'good fame and character', which describes the test of his ethical fitness for the profession.' (In Re: Davis at 420)." 39In Alcorn, the practitioner had pleaded guilty to, been convicted of and sentenced in relation to six offences under the Crimes Act 1900, two of using a false document, a statutory declaration, and four of receiving a corrupt commission. He had been sentenced to two years imprisonment with a non-parole period of one year. All offences were committed in the course of his practice as a solicitor. The Prothonotary sought declarations and orders of the same nature as are sought in these proceedings. The solicitor consented to that relief. By the time of the hearing he had served his sentence. He filed an affidavit in which he expressed deep regret and remorse for his conduct. He was in employment outside the legal profession. He had fully co-operated with the Prothonotary and made all admissions asked of him. The hearing took place approximately five years after the criminal conduct. Hoeben J (Beazley and McColl JJA agreeing) held (at [61]) that in such circumstances "the sort of proof referred to by Walsh JA has not and could not at this time be forthcoming" and that the Prothonotary was entitled to a declaration that the opponent was not a person of good fame and character. 40The Court (Allsop P, McColl and Young JJA) took a different view in Prothonotary of the Supreme Court of New South Wales v Nikolaidis [2010] NSWCA 73. In that case the practitioner was convicted after a trial in 2007 of a crime of dishonesty which had been committed between 1996 and 1998. He was sentenced to imprisonment for two years with a one year non-parole period. Once again the Prothonotary sought the same declarations and order as are sought in these proceedings. The Court noted (at [23]) that the offence had been committed over ten years before. It referred to Walsh JA's views in Ex parte Tziniolis. It commented (at [25]): "...in the context of assessing whether reformation may or may not have occurred, in circumstances where the respondent does not give evidence, it is difficult to see how it can be concluded that the reflection upon the underlying character of the respondent by the commission of a planned offence of dishonesty does not reflect on him over ten years later." 41Nevertheless the Court held (at [27]) that "[w]hile there is no basis to conclude any change by way of reformation has occurred, we do not find it necessary to make an additional declaration as to present absence of good fame and character in the absence of contemporary evidence" being of the view that a declaration that the respondent was guilty of professional misconduct and was not a fit and proper person to remain on the Roll were sufficient.

Conclusion 42The maximum penalty for the offences of which the opponent was convicted under s 29D of the Crimes Act was, relevantly, 10 years imprisonment. Section 29D was in force from 1984 until its repeal in November 2000 by the Criminal Code Amendment (Theft, Fraud, Bribery and Related Offences) Act 2000 (Cth). That Act inserted s 134.1 into the Criminal Code Act. The maximum penalty for an offence under that provision is also, relevantly, 10 years imprisonment. 43The admitted facts surrounding the offences, taken with the sentences imposed on the opponent, demonstrate the objective seriousness of the criminality involved in the opponent's conduct. Over a long period of time he systematically claimed tax deductions to which he was not entitled for the purpose of obtaining a financial benefit. He was successful in obtaining a very large benefit of $1,640,604. The views Mason P expressed in Hamman (at [65]) are apt to characterise those offences. His Honour said: "The barrister's conviction and sentence are matters of public record in every sense of the word. They represent formal denunciation of conduct representing a high level of dishonesty. Whatever the origins of the barrister's conduct, it is impossible not to conclude that ... the predominant motivation was greed...." 44In my view it is appropriate in the circumstances of the opponent's convictions to declare that his conduct, albeit undertaken in relation to his personal affairs, was professional misconduct. His dishonesty demonstrated that he was guilty of moral turpitude "and is not worthy of the trust and confidence of his clients, the courts, or the public". 45The questions remain whether, at the present time, the opponent is shown not to be a fit and proper person to remain on the Roll of local lawyers and not to be of good fame and character. 46The opponent has not placed any explanation before the Court which would in any manner mitigate the objective seriousness of his offences. In Prothonotary of the Supreme Court of New South Wales v Nikolaidis the Court said of such silence (at [25]): "In circumstances where the respondent chooses not to come forward to assist by giving evidence in the disciplinary proceeding, the failure to provide an exculpatory statement or explanation means that inferences from proved facts can be drawn more safely because the defendant has failed to give any explanation of matters peculiarly within his knowledge: Azzopardi v R [2001] HCA 25; 205 CLR 50; Weissensteiner v R [1993] HCA 65; 178 CLR 217; Power at 463 - 467 [20] - [29]; and Einfeld at [23]. Similarly, in the context of assessing whether reformation may or may not have occurred, in circumstances where the respondent does not give evidence, it is difficult to see how it can be concluded that the reflection upon the underlying character of the respondent by the commission of a planned offence of dishonesty does not reflect on him over ten years later." 47The last of the offences was committed in 2002. The opponent contested the charges of which he was convicted. In other words, as recently as March - April 2011 he was denying that the conduct in which he had engaged constituted a fraud on the Commonwealth. This gives little comfort that the passage of time since 2002 has persuaded the opponent of his wrongdoing. In other words, there is no evidence of repentance. 48I would attach some, albeit slight, weight to the fact that the opponent consented to the orders sought. In the absence of an explanation to the Court or some evidence of contrition, I would conclude that there is no evidence that the opponent "has established himself as a different man" (Ex parte Tziniolis) to the person who committed the offences over twelve years. 49Having regard to that conclusion, as well as the fact that the opponent is currently serving the term of imprisonment for the offences which form the basis for the present application and will continue to be subject to that sentence until 2 June 2017 (albeit that the non-parole period expires on 2 December 2014), I conclude that as at the time of hearing, the opponent was, and is not, a fit and proper person to remain on the Roll maintained by the Supreme Court of New South Wales under s 32 of the Legal Profession Act. For the same reasons I would conclude that he is not a person of good fame and character. 50In my view the Court should make the orders the applicant seeks. Orders 51I propose the following declarations and orders: (1)Declare that the opponent is guilty of professional misconduct. (2)Declare that the opponent is not a person of good fame and character. (3)Declare that the opponent is not a fit and proper person to remain on the Roll of local lawyers of the Supreme Court of New South Wales. (4)Order that the name of the opponent be removed from the Roll of local lawyers of the Supreme Court of New South Wales. 52CAMPBELL JA: I agree with McColl JA. 53MEAGHER JA: The declarations and orders proposed by McColl JA should be made for the reasons that her Honour gives.

Professional Background.

I have been a solicitor since 1975. From 1991 to 2003 I specialised in property law.
During the period 1995 to 2003 I was a partner in the Sydney law firm of Clayton Utz.
During the period 1991 to 2003 the firm Borough Mazars were my accountants and John Scarfe, a partner of that firm, was responsible for supervising the preparation of my income tax returns from information I provided to him.

The purchase of Beatty Street. 4. In 1985 my wife, Kerrie Livanes, and I purchased a house at 7 Beatty Street, Balgowlah ("Beatty Street"). 5. During the period 1985 to September 19911 lived in the Beatty Street house with my family.

The purchase and renovation of West Street. 6. On 18 October 1989 I purchased a house at 17 West Street, Balgowlah Heights ("West Street"), for $1.3 million. The purchase was financed by a $1.37 million loan from the National Australia Bank. 7. In December 1989 I engaged an architect, Drew Dickson, and a builder, John Krey, to carry out substantial renovations and additions to West Street. 8. West Street was uninhabitable during the building work. 9. In September 1991 the building work to West Street was completed at a total cost in excess of $750,000. 10. My family vacated the Beatty Street house and moved into the West Street house in September 1991. 11 My family continued to live in the West Street house from September 1991 to December 2003. 12. During the period 1991 to 2003: (a) the West Street property was not rented; (b) the West Street property was not made available for rent; and (c) I took no steps to make the West Street property available for rent.

Attempts to sell Beatty Street. 13. Between October 1991 and October 1992 I made a number of unsuccessful attempts to sell the Beatty Street property. 14. During the period August 1993 to 17 October 1994 Beatty Street was leased at a weekly rental of $500. 15. In November 1993 I made another unsuccessful attempt to sell Beatty Street. 16. I sold Beatty Street on 20 December 1994.

Income Tax Return for the year ended 30 June 1991 (Count 1). 17. In the financial year ended 30 June 1991 did not receive any rental income nor did I make any property available for rent. In my income tax return for year ending 30 June 1991 I claimed a total of $348,666 in rental expense deductions all related to the cost of owning and maintaining my family home at West Street.

Income Tax Return for the year ended 30 June 1992 (Count 2). 18. In the financial year ended 30 June 1992 I did not receive any rental income nor did I make any property available for rent. In my income tax return for year ended 30 June 1992. I claimed rental expense deductions totalling $351,473. With the exception of the amount of $4,804.20, which represented the commission I paid to a real estate agent in relation to attempts to sell Beatty Street, the remainder of the rental expense deductions claimed in my income tax return for the year ended 30 June 1992 related to the cost of owning and maintaining my family home at West Street.

Income Tax Return for the year ended 30 June 1993 (Count 3). 19. In the financial year ended 30 June 1993 I did not receive any rental income nor did I make any property available for rent. In my income tax return for year ended 30 June 1993. I claimed rental expense deductions totalling $354,309. These rental expense deductions related to the cost of owning and maintaining my family home at West Street.

Income Tax Return for the year ended 30 June 1994 (Count 4). 20. In the financial year ended 30 June 1994 I did receive some rental income from the Beatty Street property but I did not declare this income in my tax return. In the financial year ended 30 June 1994 I did not receive any rental income from West Street nor did I make that property available for rent. In my income tax return for year ended 30 June 1994 I claimed rental expense deductions totalling $353,603. These rental expense deductions related to the cost of owning and maintaining my family home at West Street.

Income Tax Return for the year ended 30 June 1995 (Count 5). 21. In the financial year ended 30 June 1995 I did receive some rental income from the Beatty Street property but I did not declare this income in my tax return. In the financial year ended 30 June 1995 I did not receive any rental income from West Street nor did I make that property available for rent. In my income tax return for year ended 30 June 1995 I claimed rental expense deductions totalling $280,184. These rental expense deductions related to the cost of owning and maintaining my family home at West Street.

Income Tax Return for the year ended 30 June 1996 (Count 6). 22. In the financial year ended 30 June 1996 I did not receive any rental income nor did I make any property available for rent. In my income tax return for year ended 30 June 1996. I claimed rental expense deductions totalling $272,256. These rental expense deductions related to the cost of owning and maintaining my family home at West Street.

Income Tax Return for the year ended 30 June 1997 (Count 7). 23. In the financial year ended 30 June 1997 I did not receive any rental income nor did I make any property available for rent. In my income tax return for year ended 30 June 1997. I claimed rental expense deductions totalling $265,419. These rental expense deductions related to the cost of owning and maintaining my family home at West Street.

Income Tax Return for the year ended 30 June 1998 (Count 8). 24. In the financial year ended 30 June 1998 I did not receive any rental income nor did I make any property available for rent. In my income tax return for year ended 30 June 1998. I claimed rental expense deductions totalling $213,702. These rental expense deductions related to the cost of owning and maintaining my family home at West Street.

Income Tax Return for the year ended 30 June 1999 (Count 9). 25. In the financial year ended 30 June 1999 I did not receive any rental income nor did I make any property available for rent. In my income tax return for year ended 30 June 1999. I claimed rental expense deductions totalling $214,156. These rental expense deductions related to the cost of owning and maintaining my family home at West Street.

Income Tax Return for the year ended 30 June 2000 (Count 10). 26. In the financial year ended 30 June 2000 I did not receive any rental income nor did I make any property available for rent. In my income tax return for year ended 30 June 2000. I claimed rental expense deductions totalling $258,880. These rental expense deductions related to the cost of owning and maintaining my family home at West Street.

Income Tax Return for the year ended 30 June 2001 (Count 11). 27. In the financial year ended 30 June 2001 I did not receive any rental income nor did I make any property available for rent. In my income tax return for year ended 30 June 2001. I claimed rental expense deductions totalling $249,800. These rental expense deductions related to the cost of owning and maintaining my family home at West Street.

Income Tax Return for the year ended 30 June 2002 (Count 12). 28. In the financial year ended 30 June 2002 I did not receive any rental income nor did I make any property available for rent. In my income tax return for year ended 30 June 2002. I claimed rental expense deductions totalling $233,885. These rental expense deductions related to the cost of owning and maintaining my family home at West Street.

Amended Assessments and the Federal Court proceedings. 29. In August 2003 the ATO issued amended assessments for the financial years ended 30 June 1991 to 30 June 2002. 30. I challenged these amended assessments by commencing proceedings in the Federal Court of Australia in April 2005. 31. The Federal Court hearing commenced on 24 October 2006. During that hearing an affidavit which I swore on 28 October 2005 was tendered and I gave evidence on 24 October 2006. 32. On 25 October 2005 I agreed to discontinue the Federal Court proceedings and pay the ATO's costs.

Personal Circumstances. 33. I was born on 26 September 1951. I am sixty (60) years old. 34. I was declared bankrupt in 2006. 35. My wife and I separated in 2007. We have four children.

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: 09 October 2012

Criminal Code Amendment (Theft, Fraud, Bribery and Related Offences) Act 2000(Cth)

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