Practice and Procedure - Whether use by Tribunal of rule in Jones v Dunkel correct - content of rule.

Administrative Law - Criteria for person being "fit and proper person" where person formerly guilty of misconduct - comment on role and conduct befitting tax agent.

Income Tax Assessment Act 1936: s.251L

Counsel and Solicitors Dr G Flick instructed by for Applicant: Messrs Gordon and Johnstone

Counsel and Solicitors Mr R B Wilson instructed by for Respondent: the Australian Government Solicitor

2. The applicant pay the respondent's costs of the proceedings.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

On 19 September, 1989 the Tax Agents' Board of New South Wales, ("the Board") the respondent to the present proceedings, acting pursuant to s.251K(2) of the Income Tax Assessment Act, 1936 (Cth) ("the Act") cancelled the registration of the applicant, Mr Stasos, as a tax agent. Thereupon, Mr Stasos applied to the Administrative Appeals Tribunal, ("the Tribunal") pursuant to s.251K(5) of the Act for review of the cancellation of his registration.

2. The application for review was heard by a Tribunal constituted by Mr Roach, a senior member, and two members, Messrs Stevens and Taylor, which confirmed the decision of the Board. The present appeal to this Court from the decision of the Tribunal is brought in the original jurisdiction of the Court pursuant to s.44 of the Administrative Appeals Tribunal Act, 1975 (Cth) and is an appeal limited to a question of law.

3. It seems that Mr Stasos became a tax agent in around 1975, and from that time on commenced the development of his own practice as a tax agent, while working contemporaneously with Qantas on a full time basis. By the date of the hearing before the Tribunal, his practice had grown, such that he had 3,988 clients and generated 3,988 returns, of which 3,262 returns were returns for salary and wages earners.

4. At some time during the year of income ended 30 June 1980 the Tribunal found that Mr Stasos embarked upon a course of tax evasion, by understating his income from his practice as a tax agent. As a means to that end he commenced to open bank accounts in names other than his own, to which he deposited the moneys which he did not return as income, those monies being, it may be assumed, largely, if not entirely, paid in cash by his clients.

5. As part of his tax evasion activity Mr Stasos did not claim in the returns of a large number of his clients his fees for the preparation of their returns, notwithstanding that those fees are made an allowable deduction pursuant to s.69 of the Act. The Tribunal found that this course of conduct was "a matter of common practice" by Mr Stasos, albeit not maintained on "any orderly basis which could be explained".

6. In the course of investigating other matters, officers of the Australian Taxation Office came to inquire into certain bank accounts. In September 1985 an officer contacted Mr Stasos and arranged an interview, making it clear that the interview was to relate to the income tax affairs of the applicant rather than of his clients. The Tribunal found that upon receiving this call Mr Stasos was well aware of, and had to the forefront of his mind, the possibility that his evasion had been detected. The Tribunal expressed the view that it "appears more probable than not that, prior to the interview which followed, he became aware that the Commissioner had seized the moneys in the account maintained by the Applicant in the name of `Michelle Stacey'".

7. At the interview Mr Stasos initially denied that he held an account in the name "Michelle Stacey". He denied that he held other accounts in false names. He attributed the funds to gambling winnings. However, on being confronted with names and other information by the tax officers who interviewed him, he ultimately acknowledged that he had maintained bank accounts in six names other than his own. The Tribunal found that at no time did Mr Stasos volunteer to the officers any name that they had not previously mentioned to him.

8. The officers also questioned Mr Stasos as to the remuneration from his practice and as to amounts of cash kept by him. At first Mr Stasos acknowledged only that he had on hand a sum in the order of $220. However, subsequently he produced a bundle of $20 notes, estimated by the officers to contain $3,000 to $5,000. He initially admitted gross receipts from his practice of about $30,000 in the 1985 year, (sic) although the officers interviewing him suggested a current income of some $48,000 was more appropriate. When asked the whereabouts of funds which had been withdrawn from one account in a false name, he acknowledged that the funds were held in cash under his control but did not say precisely where.

9. The Tribunal found that Mr Stasos had been anxious and agitated at this interview but that his concern had been not that he was confronted by what he had referred to in his affidavit before the Tribunal as his "misdemeanours" but rather "at the fact that the investigators were so well informed as to his misconduct."

10. It was the finding of the Tribunal that at no time since that interview had Mr Stasos sought to deceive investigators with stories about gambling winnings, or by denial of any accounts in false names. However, the Tribunal qualified this finding in the following terms:

"But that finding must be placed in its context. There

has been no need for deception. That is not to say

that either the Commissioner or this Tribunal is

persuaded, or should have been persuaded, that there

has been a total disclosure of all that was material."

11. On the next day Mr Stasos called at the offices of the Commissioner and paid a sum of money ($24,000). He supplied, also a list of names of accounts, said to have been compiled from memory. That list did not disclose any account or name which had not been mentioned in the interview the day before.

12. The Commissioner's investigation apparently continued until 18 July 1986 when agreement was reached between the tax officer conducting the investigation and the solicitors for the respondent for the issue of amended assessments for the income years 1980 to 1984 inclusive. The total omitted income shown on those assessments was $89,550, which compares with the amount of $99,261 which had been initially returned in the five years in question. Total tax avoided was $43,128 and additional tax was imposed in the assessments for the failure to disclose income of $38,083. The tax and additional tax so assessed had been paid before October 1989.

13. The proceedings in the Board, which culminated with the cancellation of Mr Stasos' registration commenced in April 1989 when Mr Stasos was called upon to show cause inter alia why the Board should not be satisfied that he was no longer a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters.

14. At the hearing before the Tribunal Mr Stasos did not deny his wrongdoings as a tax agent servicing clients or as a tax agent taxpayer. However, he submitted that since September 1985 he had been "wholly and sincerely contrite". He said that he had been "punished" for his wrongdoings as a taxpayer by the imposition of penalties by way of additional tax for the incorrect returns; that he had in all respects since then been meticulous, diligent and proper in the performance of his duties as a tax agent and that he was, at the time the Board decided to cancel his registration as a tax agent and at the time of the hearing before the Tribunal a fit and proper person to be registered as a tax agent.

15. The Tribunal had no difficulty in finding that a person who concealed income with a view to understatement of his assessable income and knowingly and deliberately so understated that income was not a fit and proper person to be a registered tax agent. The Tribunal said:

"But, a fortiori, a tax agent who endeavours to make

effective his attempts to evade income tax by

concealing the received assessable income by failing to

claim as tax deductions for his clients the fees paid

to himself as a tax agent is unfit to be registered as

a tax agent. More seriously, a person who exploits

the dependence upon him of his clients by not claiming

the deductions to which they were entitled with a view

to some advantage to himself is not fit to be

registered as a tax agent."

16. By reference to the decisions of the High Court in Clyne v The New South Wales Bar Association [1960] HCA 40; (1960) 104 CLR 186 at 201-2 and The New South Wales Bar Association v Evatt [1968] HCA 20; (1968) 117 CLR 177 at 183-4, the Tribunal pointed out that the purpose of exercising jurisdiction to deregister a tax agent was not to punish that tax agent but to protect those members of the public who require protection. It acknowledged that Mr Stasos "now professes a complete understanding of the error of his ways and sincere contrition that he ever acted as he did."

The Tribunal then stated the general issue to be determined in the following terms:

"In so far as the Applicant engaged in wrongdoing which

resulted in small but repeated losses to a significant

number of his clients - people known to him to be

unlikely to be able to identify his wrongdoing and

known to him to be persons who by reason of their

social disabilities were substantially dependent upon

him, and in so far as he embarked upon and continued

over a long period in systematic tax evasion, the

question is whether his registration as a tax agent

should have been cancelled on (sic) some lesser

sanction (if any) imposed."

17. In the Tribunal's view the "abuse of privilege" in not claiming deductions for his fees in clients' returns for his own perceived advantage was a more serious breach of Mr Stasos' responsibilities as a tax agent than the understatement of his income or the steps he had taken to conceal his true taxable income. This was a matter, of which the Board had not been made aware and which only came to light during cross-examination of Mr Stasos in the Tribunal. It was a matter, which the Board considered should be weighed against Mr Stasos' conduct in the four years that had elapsed since September 1985 as the following passage, (hereafter referred to as the "even now passage") which was the subject of submissions to be hereafter noted:

"But in a period of over four years (from

September 1985 to December 1989), ... the

Applicant has not been shown to have performed

below the standards to be expected of tax agents

in the exercise of their privileges and the

discharge of their responsibilities. On the

other hand, the nature and circumstances of the

evasion of income tax and the absence of any

disclosure at any time to the Commissioner of

information not already known to him is such as to

reasonably leave doubts as to whether in all

respects there has even now been full disclosure.

Similar doubts would reasonably exist in hitherto

trusting clients upon becoming aware of the

prolonged period of repetitive and frequent

deception of clients."

18. The Tribunal noted that the question before it was whether it was satisfied at the time of making its decision that Mr Stasos was at that time a fit and proper person, having regard to his past misconduct, not whether four years previously at the time of the misconduct he was such a fit and proper person. It noted the argument, put on behalf of Mr Stasos that:

"...if the Tribunal should find that by reason of the

events of the past four years the Applicant `is' a fit

and proper person at the present time, there is no

basis for exercise of the power set forth in Section

251K(2)(d); although suspension or cancellation may

follow by reason of past conduct in relation to the

other provisions."

19. The Tribunal then continued, in a passage the subject of criticism ("the no proven misconduct passage"):

"In the view of the Tribunal, having regard to the

gravity of the misconduct extending over several years

to 1985, and notwithstanding the absence of any proven

misconduct since, the Applicant is not now a fit and

proper person to be registered as a tax agent."

The Tribunal thereupon considered the alternatives open to it of cancellation or suspension and the different considerations applicable. In confirming the decision of the Board, the Tribunal accepted that there could be circumstances where it would be appropriate to make an order which would have the effect of restoring an applicant to the register at a later date. The Tribunal, however was of the view that cancellation was the appropriate determination in the present case. The Tribunal added:

"But in our view, care should be taken in the

exercise of any claim to such seemingly prophetic

judgment. In forming that view, we particularly

bear in mind that the misconduct disclosed in

these proceedings was quite deliberate, repeated,

ongoing and extended over a prolonged period. We

also bear in mind that, in considering restoration

in status, it would be appropriate for the Board

to pay close attention to the conduct of the

Applicant, not only in the period from September

1985 to date, but in the period yet to come which

will precede any application for restoration in

status".

20. The applicant submitted that the Tribunal erred in law in five respects, which it was submitted should be viewed both separately and cumulatively as indicating that the Tribunal must have applied a wrong principle of law in reaching its conclusion. The applicant did not point to any statement of principle by the Tribunal which was said to contain error. The five matters were as follows:

1. There was no evidence to justify the Tribunal's

finding in the "even now" passage that there was doubt that

Mr Stasos had disclosed the names of all the accounts in

names other than his own which he operated.

2. There was no evidence before the Tribunal to justify

a finding that Mr Stasos' failure to claim deductions for

his fees in clients' returns was in respect of "those

clients... known to him to be unlikely to be able to

identify his wrongdoing and known to him to be persons who

... were substantially dependent upon him."

3. During the course of its reasons the Tribunal

referred to the failure of Mr Stasos to call his wife to

give evidence and drew the inference that this evidence

would not have assisted Mr Stasos. Yet the Tribunal did

this, so it was said, without evidence which showed the

wife's involvement in the practice during the years in which

the misconduct took place.

4. There was no evidence before the Tribunal other than

such as would justify the conclusion that Mr Stasos was

presently complying with the appropriate standards of a tax

agent. Yet in a number of passages, including the "no

proven misconduct" passage the Tribunal, acting contrary to

that evidence, merely concluded that Mr Stasos had "not been

shown to have performed below the standards" requisite.

Complementary to this submission was a submission that the

Tribunal had failed to refer in its Reasons to the steps

which had been taken by Mr Stasos to ensure that he complied

in all respects with his obligations to keep proper records

and submit proper returns.

5. The Tribunal made no finding as to whether Mr Stasos

was truly contrite, this being a relevant matter to the

question before the Tribunal whether he was, at the time of

the hearing before the Tribunal, a fit and proper person to

be registered as a tax agent.

21. I turn to deal with each submission, noting that it was not submitted for the Board that the appeal did not raise a question of law.

22. It was urged for Mr Stasos that the "even now passage" amounted to a finding that Mr Stasos had not to the present time made a full disclosure of the bank accounts in false names or at the least, an expression of doubt on the part of the Tribunal that he had not. I do not think that this is so. A fair reading of the passage suggests to me that the Tribunal was merely stating an obvious proposition that the objective circumstances surrounding the disclosure of Mr Stasos' evasion (where the names of accounts were revealed only after he had been confronted with the names known to the tax officers who interviewed him and incorrect information was given to them) coupled with the deliberate nature of the tax evasion activities themselves, left doubts whether a full disclosure had been made.

23. The evidence in no way suggested that further accounts in fact existed and it was clear that the Commissioner's investigations had not brought to light any additional accounts, with the consequence that in due course a settlement of Mr Stasos' tax liabilities had been achieved by the issue of an amended assessment which had been met by Mr Stasos. It was never put to Mr Stasos, at least directly, that any such accounts existed, either by the Tribunal or in cross-examination.

24. The course of the evidence was that counsel for Mr Stasos before the Tribunal asked him in chief whether there were any additional accounts, the names of which had not been supplied to the Department, to which Mr Stasos answered "no". Subsequently, Mr Stasos swore that there was no reason in the present which would go to his fitness to be and the propriety of his being a tax agent. He was then cross-examined.

25. Some of Mr Stasos' answers might be described as evasive, in that he did not give a truthful answer until pressed. It was in the course of this cross-examination that Mr Stasos admitted that he had not claimed in most clients' returns as a deduction, his fees. Counsel for the Board questioned Mr Stasos on the bank accounts he had maintained in false names. Mr Stasos deposed that these accounts were always maintained in the one bank, the National Bank, although the cross-examination led to, at least the possibility that one of the accounts was kept with Westpac. Mr Stasos was uncertain whether it was in a false name, explaining that it was such a long time ago. Counsel for the Board then asked Mr Stasos directly whether he conducted false bank accounts with other banks, and to this question Mr Stasos answered:

26. After the cross-examination of Mr Stasos had concluded, Mr Roach asked a number of questions, included among which was the following question, answered as is shown, in the affirmative:

"Now, the day after the first interview you went

through and gave the commissioner a full list of the

false name accounts. Am I correct?---Yes."

27. While in some circumstances it would be a breach of the rules of procedural fairness for a Tribunal to make a finding of fact where the subject matter of that finding is not in issue and has not been put to the party against whose interest the finding is made, no such complaint can be made where the course of cross-examination, for example, makes it clear that the matter is in issue between the parties. Particularly is this true where the very matter has, as in the present case, been raised by counsel for the party against whom the finding (if there be one) was made. Cf. Faucilles Pty Ltd v Federal Commissioner of Taxation (1990) 90 ATC 4003 at 4022-4, and the cases there cited. Although in that case I dissented, nothing in the reasons of the majority would cast doubt on the propositions of law there stated. Rather, the majority could not discern on the facts of that case any breach of the rules of natural justice.

28. It follows in my opinion, that even if the Tribunal did find that there was reason to doubt whether Mr Stasos had made a full disclosure of the false accounts, this was a matter that had been raised as an issue in the evidence, and was a finding open to the Tribunal.

29. The second criticism made on behalf of Mr Stasos was that the Tribunal's finding that the failure to claim deductions in his clients' returns was in respect of those clients not likely to become aware of the omission: "those persons most dependent upon his integrity", was unsupported by the evidence.

30. It is clear that the Tribunal, correctly in my view, saw the failure to claim deductions for clients, when that failure was to the advantage of Mr Stasos, as a more serious breach of Mr Stasos' responsibilities as a tax agent than the steps he took to conceal his real income. True it was that Mr Stasos did not himself admit that the clients were such as were unlikely to discover his wrong doings or were persons most dependent upon his integrity, nor did any person given such evidence in so many words, but this was a matter of inference from the evidence before the Tribunal. That evidence made it clear that Mr Stasos' clients were mostly migrants of various ethnic backgrounds. Indeed Mr Stasos in an affidavit filed in the proceedings before the Tribunal described them as: "simple, hardworking people on modest salaries near the bottom of the socioeconomic ladder."

31. The Tribunal heard evidence from a number of clients called on behalf of Mr Stasos and in respect of these clients was able to assess them for itself. I can detect no error of law in the conclusion drawn by the Tribunal that the evidence suggested that Mr Stasos "confined his omissions to those clients not likely to become aware of his omission - the persons most dependent upon his integrity" if indeed, having regard to the Tribunal's use of the word "suggests" it is properly to be seen as a finding.

32. The third submission criticised the apparent use by the Tribunal of the rule in Jones v Dunkel [1959] HCA 8; (1958-59) 101 CLR 298, in the comment made by the Tribunal that evidence of Mr Stasos' wife would not have assisted the applicant.

33. Mr Stasos gave evidence that for about five years after his marriage his wife worked as a dental therapist and that since then she had cared for the children and assisted him in his practice. It is, no doubt, clear that Mrs Stasos was not involved in the practice until at least January 1983 and that the period of misconduct included a period prior to January 1983. However, it also included a period after January 1983, when on Mr Stasos' evidence she did have involvement in the practice, so that it might well have been the case that Mrs Stasos' evidence had some bearing on the issues before the Tribunal.

34. While that is probably sufficient to dispose of the submission, there is a curiosity about the Tribunal's reference to Mrs Stasos, in that nowhere in the reasons for decision is it clear what relevance the evidence of Mrs Stasos might have had. The rule in Jones v Dunkel, which is a rule of common sense has two interconnected limbs. The first is that stated by the Tribunal, namely that it may be inferred that the evidence would not have assisted the case of the party who might otherwise have called the evidence. The second, is that stated by Kitto J in the case itself (at 308):

"...any inference favourable to the plaintiff for which

there was ground in the evidence might be more

confidently drawn when a person presumably able to put

the true complexion on the facts relied on as the

ground for the inference has not been called as a

witness by the defendant and the evidence provides no

sufficient explanation of his absence."

35. The rule has been often applied: Electronic Industries Limited v The Mayor, Councillors and Citizens of the City of Oakleigh [1973] VicRp 15; (1973) VR 177 per Gowans J at 189, Lebanese Moslem Association v Minister for Immigration and Ethnic Affairs (1986) 67 ALR 195 per Pincus J at 199-200, Citibank Limited v Federal Commissioner of Taxation (1988) 88 ATC 4714 at 4729 and the cases collected in Cross on Evidence, 3rd Australian ed, para 1.42-1.44.

36. It is difficult to see just how the Tribunal applied the rule, and more particularly how any finding it made was affected by it. Merely to infer that the evidence of Mrs Stasos would not have assisted the case of her husband, hardly seems to advance the case of either party to the review. Nowhere in the reasons does it appear that the failure of Mrs Stasos to give evidence enabled the Tribunal more readily to draw any inference otherwise available to it, unless the unexplained failure of Mrs Stasos to give evidence assisted the Tribunal to a conclusion if there be one in the "even now" passage. However, as I have already observed, there was ample evidence before the Tribunal from which this conclusion could have been drawn. Accordingly I do not think that the Tribunal fell into error in commenting upon the application of the rule in Jones v Dunkel. Nor am I of the view that even if it had, the error played any part in the conclusion which the Tribunal reached.

37. The fourth submission was principally directed to the fact that the Tribunal erred in failing to refer to the steps taken by Mr Stasos to ensure, after 1985, that he kept proper records and made full disclosure to the Commissioner of his assessable income. In his affidavit, read in the proceedings, Mr Stasos deposed that he had had his personal returns prepared by an independent chartered accountant and that he had "kept the most meticulous records" of his income and expenditure. The gravamen of the complaint was, presumably, that the Tribunal should have recorded this evidence on which Mr Stasos was cross-examined and presumably should have taken it into account so as to make a more positive finding than that which it made, when it concluded that Mr Stasos "had not been shown to have performed below the standards to be expected of tax agents in the exercise of their privileges and the discharge of their responsibilities."

38. No doubt the steps taken by Mr Stasos in the period up to the date of the Tribunal's decision, to ensure compliance with the Act in respect of his own returns, were not irrelevant to the matter in issue in the Tribunal. But I am not persuaded that the Tribunal failed to take them into account. The Tribunal is obliged by s.43(2B) of the Administrative Appeals Tribunal Act 1975 to include in its reasons its findings on material questions of fact, but it can not be expected, as Davies J had cause recently to observe in Skaf v Minister for Immigration and Ethnic Affairs (31 August 1990, unreported) that a Tribunal will expressly mention every possible factor which is relevant to the matter in issue. This is particularly so when the matter is not in issue between the parties.

39. As can be seen from the statement of the submissions made on behalf of Mr Stasos included in the Tribunal's reasons, the Tribunal was aware that it was Mr Stasos' submission that he had in all respects been "both diligent and proper in the performance of his duties as a tax agent" since the month of September 1985. No doubt failure to lodge accurate income tax returns on one's own behalf will be a relevant fact in determining whether the lodger, being a tax agent, is a fit and proper person to be registered as such, but the fact that the tax agent has diligently kept his own returns is but a small facet of the question. This is particularly so where the more serious misconduct lay, in the present case, in the failure to claim deductions for clients. I am not persuaded, that in the present case the Tribunal failed to consider the evidence given by Mr Stasos, but even if it did, I am not persuaded that the consideration of this evidence would have affected the result.

40. Finally, it was submitted that the Tribunal should have made a finding, on the evidence, that Mr Stasos was contrite, and that a failure to make such a finding was an error of law, contrition being a relevant factor to be taken into account. This was not a matter clearly raised in the notice of appeal, but, by consent, I gave leave to Mr Stasos to amend his grounds of appeal to encompass the point.

41. Where the issue is whether a person, who has been guilty of misconduct is at a time somewhat after that misconduct a fit and proper person to exercise a particular occupation carrying with it privileges and responsibilities, it will be relevant whether that person has understood the error of his ways. Failure so to do would, of itself, demonstrate his unfitness: The New South Wales Bar Association v Evatt [1968] HCA 20; (1968) 117 CLR 177 at 184. Thus, where a legal practitioner has been struck off and subsequently seeks readmission to the profession, he may lead evidence that he has redeemed his earlier errors and demonstrate that they did not reflect any permanent defect in character: Ex parte Lenehan [1948] HCA 45; (1948) 77 CLR 403 at 424. It will as Lenehan demonstrates, be a step on the way, to show that the applicant now understands that what he did was in error. Failure to admit the error of his ways, and thereby to show his contrition was fatal to the application made by Mr Clyne to be readmitted. (See Ex parte Clyne, Supreme Court of New South Wales, 12 December 1961, unreported).

42. It may be noted that in the proceedings in the Supreme Court in Clyne, Sugerman J said at 8 of his Honour's judgment:

"The Court must be convinced that there has been a

complete repentance and a determination to persevere in

honourable conduct - see In re Weare ((1893) 2 QB 439

at p 447)"

43. It was the submission for Mr Stasos that since September 1985 he had been contrite. He had indeed said so in evidence. The Tribunal made no finding, directly, either way on the matter although it referred to the fact that Mr Stasos had professed "sincere contrition". The Tribunal was clearly influenced by the fact that the misconduct of Mr Stasos was, as it found, deliberate, repeated, ongoing and extended over a prolonged period of time. It was, no doubt influenced also, by the fact that the knowledge that Mr Stasos had not claimed the fees in his clients' returns was revealed only in cross-examination and then after answers that may be thought to be evasive. The Tribunal's reference to the fact that in the years since 1985 there had been on Mr Stasos' part an "absence of any proven misconduct", probably suggests that it may well not have been satisfied that he was in truth repentant.

44. But be that as it may, the Tribunal's discussion of the issue whether there should be a cancellation of the registration or merely a suspension of it for a fixed time makes it clear that the Tribunal was of the view that given the gravity of the offences committed, insufficient time had elapsed to enable it to be assessed whether Mr Stasos was at the time of the Tribunal's decision a "fit and proper person". Thus the Tribunal concluded the substantive part of its reasons with the following words:

"We also bear in mind that, in considering restoration

in status, it would be appropriate for the Board to pay

close attention to the conduct of the Applicant, not

only in the period from September 1985 to date, but in

the period yet to come which will precede any

application for restoration in status."

45. In my view the Tribunal committed no error of law in the course it took.

46. Before concluding this judgment I would wish to say something about the role and conduct befitting a tax agent.

47. The legislature has chosen in s.251L of the Act to confer upon registered tax agents a virtual monopoly in the preparation for reward of income tax returns and objections and in relation to the transaction of any business on behalf of a taxpayer in income tax matters for reward. Thus, subject to the rights which are preserved to solicitors or barristers by s.251L(4), which rights extend only to acting in their professional capacity in preparing objections, or in any litigation or proceedings before the Administrative Appeals Tribunal, the Relief Board or the Tax Agent's Board or a court, or acting in an advisory capacity in connection with the preparation of returns or with any income tax matter, which rights do not extend to the preparation of returns as such, a registered tax agent will be the sole person entitled for a fee to represent and advise a taxpayer in his dealings with the Australian Taxation Office.

48. The conferral of this privilege upon registered tax agents carries with it a consequent set of obligations and responsibilities. A person is required, before being registered as a tax agent to demonstrate that he is a fit and proper person to prepare income tax returns and transact business on behalf of clients in tax matters and inter alia, that as at the date of application he is of good fame, integrity and character. Accordingly it is necessary that he demonstrate that he has the necessary knowledge and experience to equip himself to perform these tasks (cf. The Tax Agents' Board of Queensland v Seymour (1990) 90 ATC 4262, Re Crowley and Tax Agents' Board (NSW) (1990) 90 ATC 2005 and Re Culmer and Tax Agents' Board (1990) 90 ATC 2018).

49. Once registered, however, the tax agent must keep up to date with the massive changes to the income tax law, no easy task in the present time, so that he can properly advise and represent his clients. That is a responsibility which comes with the privileged position in which he is placed. Negligence in the performance of his duties will bring not only the normal consequences in damages in tort, but will render the agent liable to the client statutorily under s.251M of the Act.

50. In addition to the tax agent dealing with his client, he will, almost invariably have dealings with officers of the Australian Taxation Office and perhaps the boards or tribunals to which I have already referred. Those dealings must be able to be carried on in an atmosphere of mutual trust. The Commissioner and his officers must be able to accept that, to the best of the ability of the tax agent, returns have been prepared which are true and accurate. This is particularly so now that the Commissioner has proceeded to a system of self assessment, with inaccuracies only coming to light in case of random audit or, presumably, other information coming to the hands of the Commissioner.

51. The Commissioner and his officers must be able, also, to accept the word of a tax agent when acting for a taxpayer in negotiations, and a fortiori in matters proceeding in a Board, the Administrative Appeals Tribunal or indeed a court it is imperative that the honesty and integrity of the tax agent not be called into doubt. So it is that it is a requirement, not only of initial registration, but of remaining on the register that a tax agent be a fit and proper person to perform the duties of a tax agent and bear the responsibilities that come with those duties.

52. The words "fit and proper person" are, as the High Court pointed out in Hughes and Vale Pty Ltd v The State of New South Wales (No 2) [1955] HCA 28; (1955) 93 CLR 127 at 156, words traditionally used in relation to persons holding offices or vocations:

"But their very purpose is to give the widest scope for

judgment and indeed for rejection. `Fit' (or

`idoneus') with respect to an office is said to involve

three things, honesty, knowledge and ability: `honesty

to execute it truly without malice, affection or

partiality; knowledge to know what he ought duly to do;

and ability as well in estate as in body, that he may

intend and execute his office, when need is,

diligently, and not for impotency or poverty neglect

it' - Coke."

53. To this catalogue of what must be described as basic attributes I would, with respect add "diligence" and in a case such as the present, "professionalism", by which I intend to include the putting of the interests of one's client before one's own self interest.

54. The content of what is necessary to constitute a person a fit and proper person to occupy a particular office or pursue a particular vocation may vary having regard to the office or vocation under consideration. However, as was said by Hale J in Maxwell v Dixon (1965) WAR 167 at 169:

"...Clearly different qualifications are needed by eg

lawyers, transport operators, hotel keepers and land

agents, but, as is shown by the cases cited in the

judgment referred to (Hughes and Vale Pty Ltd v The

State of New South Wales (No 2) (supra)), it is not

necessary to confine oneself to the special provisions

of the Act in question in deciding whether a man is fit

provided one gives weight only to matters which can

fairly be seen to be relevant to the vocation in

issue."

55. Davies J expressed in Re Su and Tax Agents' Board, SA 82 ATC 4284 at 4286-7 the content of what is required of a person fit and proper to be registered or to retain registration as a tax agent in the following words:

"The function of a tax agent is to prepare and lodge

income tax returns for other persons. A person is a

fit and proper person to handle the affairs of a client

if he is a person of good reputation, has a proper

knowledge of taxation laws, is able to prepare income

tax returns competently and is able to deal competently

with any queries which may be raised by officers of the

Taxation Department. He should be a person of such

competence and integrity that others may entrust their

taxation affairs to his care. He should be a person

of such reputation and ability that officers of the

Taxation Department may proceed upon the footing that

the taxation returns lodged by the agent have been

prepared by him honestly and competently."

With respect, but subject to the qualification that his Honour stated too narrowly the functions of a tax agent by limiting these to the preparation of returns, I agree with what his Honour there says.

56. Where a person has, in dereliction of his responsibilities as a tax agent, not only engaged in a deliberate and extensive course of conduct of tax evasion, (conduct, which, as Davies J explained in Re Su is inconsistent with the role which tax agents are called upon to perform) but did so in such a way as to be not only dishonest, but also so as to prefer his own interests to that of his clients, and indeed to the detriment of his clients, it is clear that in so doing, and at the time of the wrongdoing, that person is not a fit and proper person to remain registered as a tax agent. This does not mean that that person will for all time be unfit to be re-registered, or as here that, where action to deregister is delayed for some years he will have combined to be a person who is not fit and proper to remain registered at the time his cancellation of registration is considered.

57. However, a person who has been shown to be other than a fit and proper person to be registered must satisfy the Tribunal considering his re-registration or cancellation of his registration as the case may be, that he appreciates the significance of his wrongdoing, that he regrets it and that he has rehabilitated himself such that it is truly unlikely that there will be any lapse in the future of the standards which are required of him. The more serious his dereliction from duty the longer may be the time necessary to show this. It will not be sufficient for him to merely express his contrition. The Tribunal must be satisfied on the balance of probabilities that not only is that contrition actually felt, but that he will not again deviate from the high standards required of him as a registered tax agent.

58. In the present case there is much to be said for the view that the Tribunal did not accept that Mr Stasos was in truth contrite. Certainly, the answers given by him in cross-examination could have supported such a conclusion. But the Tribunal was entitled to find, as it, at least by implication, did that insufficient time had passed for it to be satisfied that Mr Stasos was a fit and proper person to be a registered tax agent and in so doing did not err in law.