VCAT mucks-up determination of penalty for bankrupt Melbourne barrister who got into bother with his tax ... The extent to which the purchase of "small luxuries" is relevant ... How deep does one's head have to be in the sand ... Twilight years at the bar ... The role of "sympathy" in dishing out a penalty ... Other vexing questions
YARRASIDE barrister Nigel Turner has to wade through another round with the Bureau de Spank after Karin Emerton J tossed out an earlier VCAT finding that the bankrupt brief be reprimanded and fined $5,000 for misconduct arising from a string of tax offences.
The judge found that the tribunal had made such a hash of its determination that the decision "is not only unlawful, it is arguably no decision at all".
Nigel pleaded guilty to a charge of professional misconduct arising from his conviction in June 2002 for failure to lodge tax returns on time between 1996 and 2000; a conviction in May 2003 for failing to comply with a magistrate's orders in relation to lodging late returns; another conviction in April 2007 for failure to lodge on time returns for 1996 to 2005 and BAS returns between March 2002 and September 2006.
In relation to his bankruptcy he failed to disclose on time income earned as a barrister between 1996 to 2006; failure to make provision and pay on time income tax between 1996 and 2006; and failure to disclose, to make provision and to pay GST on income between July 2000 and September 2006.
All very unfortunate.
The LSC sought leave to appeal the decision of Gerard Butcher, sitting as a single member of the tribunal.
The commissioner contended that the penalties were insufficient for this bout of unfitness and impropriety and that Nigel's ticket should have been suspended for between six to 12 months.
Sixteen questions of law were raised, but the central issue was the tribunal discounting the seriousness of the offending.
Here are some of the issues with which Emerton grappled:
1. The tribunal said that its role as protective of the public was minimal because Turner's actions were "not directly involved with clients".
This misunderstood VCAT's jurisdiction under the Act as it is responsible for also also protecting "the reputation of the legal profession and to maintain confidence in the justice system generally".
2. The tribunal said that the barrister's delinquency in tax matters arose from the breakdown of his marriage and the allocation of the bulk of his income to his wife and son.
"The allocation of income over and above his basic living requirements was a contest between paying tax or paying for small luxuries. The small luxuries won."
The small luxuries were "very minor indeed in the overall scheme of things".
Emerton said there was no evidentiary basis for a finding that there was a contest between paying tax and paying for small luxuries. The tribunal's error enabled it to "gloss over" the significant change in Nigel's financial circumstances after 2005.
3. The tribunal observed that Turner had "developed a head-in-the-sand approach to his taxation problems".
The Supreme Court said this reduced the utility of general deterrence. Emerton said:
"It seems to amount to a finding that even after the respondent's financial circumstances improved, he could not confront the very real issue of not having attended to his taxation affairs over a number of years because the thought of doing so was so overwhelming.
This might explain why the respondent did not respond to his improved financial circumstances in 2005 and 2006 by paying his tax."
4. The tribunal took a "global view" of Nigel's situation, taking into account that he is "in the twilight of his professional career and has limited prospects"; that he had not profited from his actions; he has suffered the indignity of several convictions and bankruptcy; and now suffers the further indignity of the findings of the tribunal.
This was found by the court to be far too vague and seemed "to serve no purpose other than to display sympathy for the respondent".
5. The tribunal made another blunder by finding that Nigel was now fit and proper to be a barrister, despite not being fit and proper when failing to meet his tax obligations.
Emerton said:
"If the tribunal's inquiry was not directed to past conduct, then no practitioner who was at the time of disposition fit and proper could have his or her practising certificate suspended or cancelled. That cannot have been the intention of the legislature."
* * *
NIGEL first approached the bar in August 2006 to admit his taxation lapses.
He lodged returns the following January. In August 2008 the Legal Services Commissioner was notified of his non-payment of tax.
It was not until April 2011 that the commissioner applied to the tribunal for a sanction involving a suspension.
Emerton complained about the delay and the prejudice suffered by Turner.
He will be in his sixties before any new sanction is imposed. If he's suspended for 12 months he will have to rebuild his practice late in life.
"Although barristers may and do continue to practise well into their dotage," nonetheless the effect of a suspension will be more serious for a barrister's of Nigel's vintage.
Despite the delay that has occurred that ought not to preclude the grant of leave for the commissioner to appeal, and to uphold the appeal, but the next round should proceed smartishly.