FEDERAL COURT OF AUSTRALIA Phillip Same Accountants Pty Ltd v Tax Practitioners Board [2011] FCA 458 Citation: Phillip Same Accountants Pty Ltd v Tax Practitioners Board [2011] FCA 458 Parties: PHILLIP SAME ACCOUNTANTS PTY LTD v TAX PRACTITIONERS BOARD File number(s): VID 539 of 2010 Judge: RYAN J Date of judgment: 9 May 2011 Date of hearing: 29 April 2011 Place: Melbourne Division: GENERAL DIVISION Category: No Catchwords Number of paragraphs: 19 Counsel for the Applicant: Mr S Ure Solicitor for the Applicant: Alan Shnider & Co Counsel for the Respondent: Mr P Gray Solicitor for the Respondent: Australian Government Solicitor IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 539 of 2010 BETWEEN: PHILLIP SAME ACCOUNTANTS PTY LTD Applicant AND: TAX PRACTITIONERS BOARD Respondent JUDGE: RYAN J DATE OF ORDER: 9 MAY 2011 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The motion on the amended notice filed on 27 April 2011 be refused. 2. The costs of each party of and incidental to the said motion be the costs of that party in the appeal constituted by proceedings No VID 121 of 2011. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 539 of 2010 BETWEEN: PHILLIP SAME ACCOUNTANTS PTY LTD Applicant AND: TAX PRACTITIONERS BOARD Respondent JUDGE: RYAN J DATE: 9 MAY 2011 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 On 31 January 2011 Middleton J dismissed an application by the applicant, Phillip Same Accountants Pty Ltd. The application was by way of appeal under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act") from a decision of the Administrative Appeals Tribunal ("the Tribunal") given on 11 June 2010. By that decision, the Tribunal affirmed a decision of the respondent, the Tax Practitioners Board ("the Board"), formerly the Tax Agents Board, refusing to re-register the applicant as a tax agent pursuant to s 251JC(1)(c) of the Income Tax Assessment Act 1936 (Cth) ("the Income Tax Assessment Act"). 2 On 21 February 2011, the applicant filed a notice of appeal to a Full Court of this Court against the order of Middleton J of 31 January 2011. That appeal is presently in the list of cases to be fixed for hearing before a Full Court in August of this year. 3 By an amended notice of motion filed on 27 April 2011, the applicant seeks orders that: 1. paragraphs 2 and 3 of the orders of Middleton J dated 31 January 2011 be stayed pending the determination of this appeal or alternatively, 2. the respondent renew the applicant's registration as a tax agent on an interim basis, pending the hearing and determination of the appeal and, if the matter is remitted to the Administrative Appeals Tribunal, the grant of a further stay by the Administrative Appeals Tribunal. 4 Paragraphs 2 and 3 of Middleton J's orders were in these terms; 2. The appeal be dismissed. 3. The applicant pay the respondent's costs. 5 It has been explained by Mr Ure of Counsel for the applicant that the interim stay sought by paragraph 1 of the notice of motion is in the nature of a suspension of the dismissal of the application under s 44 of the AAT Act pending the hearing and determination of the appeal to a Full Court. The effect of such a suspension, it was contended, would be to revive an order made by the AAT on 7 December 2009, in these terms: IT IS ORDERED that until further Order the decision of the Tax Agents' Board of Victoria made on 8 October 2009 be stayed. Such an order has been held by the Tribunal in Re Nelson and The Tax Agents' Board of Queensland (1993) 26 ATR 1213, at [14]-[15], to have the effect of giving a tax agent the benefit of "a deemed registration pending the Board's decision on an application for re-registration where the registration would otherwise have expired." 6 Support for the availability of an order suspending the determination of a proceeding where that determination is the subject of a pending appeal was said to be derived from Re Marks and Federated Ironworkers Association; ex parte Australian Building Construction Employees and Builders' Labourers Federation (1981) 34 ALR 208 ("Re Marks") where Mason J discussed a submission that the High Court had inherent jurisdiction to grant a stay of an order of the Australian Conciliation and Arbitration Commission pending the hearing by a Full Court of the High Court of an application by the unsuccessful party in the Commission for a writ of prohibition. His Honour went on, at 211, to observe; … The statutory power to give a direction that an order nisi for prohibition operates as a stay of proceedings in O 55, r 10, has no application here, the Federation having failed to obtain an order nisi. It has been accepted that the court has inherent jurisdiction to grant a stay of proceedings to preserve the subject matter of litigation, though it is a jurisdiction which is seldom invoked and rarely exercised (Tait v R (1962) 108 CLR 620 at 623–4). There is no reason for thinking that in an appropriate case the court cannot exercise the jurisdiction so as to preserve the subject matter of the litigation when the litigation is an application for a writ of prohibition. There is, however, an aspect of the order now sought which is exceptional and gives to the application a unique quality. It is that the Federation seeks, not a stay of proceedings in the Commission under the orders made there, but a stay of the orders themselves. Mr Ryan QC frankly concedes that he has been unable to discover any case in which a court has in the exercise of inherent jurisdiction stayed an order as distinct from proceedings. He also concedes — and this may have consequences for the prohibition which he ultimately seeks from the Full Court — that there are indeed no proceedings in the Commission on which a stay of proceedings would operate. None the less he argues that where the order sought to be stayed is one which creates rights and does not merely declare rights, the jurisdiction extends to a stay of the order itself. Even so, the court will be more reluctant to stay an order which, though it creates rights, is otherwise declaratory in the sense that, unlike an injunction, it does not require a party to do or abstain from doing something. The distinction between a stay of proceedings and a stay of an order or judgment is perhaps not altogether clear. Contrast O 55, r 10 with O 70, r 12(2) and see the discussion in Allanson v Midland Credit Ltd (1977) 16 ALR 43; 30 FLR 108 at 112–3. Speaking generally, the distinction is between a stay of further proceedings in litigation and a suspension of a judgment or order. The fact that O 55, r 10 makes provision only for a stay of proceedings, and then on an order nisi, indicates that the stay of an order of the kind in question in the exercise of the inherent jurisdiction pending an application for prohibition is at best an exceptional undertaking. 7 Mason J in that case declined, in the exercise of his discretion, to make the order sought. Among the reasons which weighed with his Honour in coming to that conclusion was the fact that "the grant of a stay of an order in the exercise of the inherent jurisdiction is an exceptional course." Mr Ure also referred to Frumar v The Owners of Strata Plan 3695 [2010] NSWCA 172, where Handley AJA (with whom Macfarlan JA agreed) concluded that a permanent stay of a judgment of the New South Wales District Court deprived that judgment of all legal effect or operation. To similar effect, Handley JA, in R v P (No 2) [2003] NSWCA 360, in refusing a stay of an order by Barrett J, considered that the grant of such a stay would have revived certain interlocutory orders which had been made by Windeyer J but which had come to an end upon the making of Barrett J's final orders. Handley JA observed, at [7]-[9]; 8 The precise situation confronting the Court has not been explored in earlier authorities, but it seems to me that the stay of final orders, that is the suspension of them, must deprive them of continuing legal effect while the stay continues. In these circumstances it seems to me that the necessary result is that continuing interlocutory orders which ceased to have effect when the final orders were made will automatically revive. 9 The situation would be different, of course, if the final orders were set aside on appeal because, in that event, if nothing was said, continuing interlocutory orders would not be revived. 8 Counsel for the applicant also referred to s 43(5C) of the AAT Act, which provides: (5C) Despite subsections (5A) and (5B), if: (a) the Tribunal has made an order under subsection 41(2) staying the operation or implementation of the decision under review; and (b) the order was in force immediately before the decision given by the Tribunal on the review; then, unless the Tribunal, the Federal Court of Australia or the Federal Magistrates Court otherwise orders, the operation or implementation of the Tribunal's decision is stayed until: (c) subject to paragraph (d), the end of the period within which a party to the proceeding before the Tribunal may appeal from the decision to the Federal Court of Australia under subsection 44(1) (including any further time for bringing the appeal that is allowed by the Federal Court before the end of that period); or (d) if such an appeal is brought—the appeal is determined. 9 Mr Ure frankly conceded that the reference at the end of that subsection to the appeal being determined is to the "appeal" under the AAT Act which is heard in the original jurisdiction of this Court. Consequently, the stay effected by s 43(5C) came to an end in the present case when the "appeal" was determined by the order of 31 January. A stay or suspension of Middleton J's order would revive the stay effected by s 43(5C) of the AAT Act until a Full Court of this Court either upheld Middleton J's order or set it aside. 10 The applicant contended, in the alternative, that, if the Court were to find itself unable to stay Middleton J's order or suspend its operation, it should make an order that the applicant's registration as a tax agent be renewed until the hearing and determination of the appeal. It was acknowledged that it is rarely, if ever, that a mandatory interlocutory injunction has been granted against a statutory authority. However, it was urged that the applicant has a prima facie case in support of its appeal as of right and the balance of convenience strongly favours the continuation of the tax agent's practice which could well be destroyed if it could not be carried on until after a hearing of the appeal in August 2011 and the subsequent making of orders disposing of the appeal. 11 Section 251JC(4) of the Income Tax Assessment Act which was to be found in Pt VIIA of that Act was repealed on 1 March 2010 before the AAT determined on 11 June 2010 the application to review the decision of the Board. As a result of that repeal, the situation of the applicant attracted the application of Part 2 of the Tax Agent Services (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) ("the Transitional Act"), 12 Item 2 of Part 2 of the Transitional Act provided: (1) If an entity was, immediately before commencement, a registered tax agent within the meaning of the old law, the entity is taken to be a registered tax agent within the meaning of the new law for the period: (a) beginning on the day on which this Schedule commences; and (b) ending on the day on which: (i) the entity's registration would have expired under the old law but for its repeal by Schedule 1 to this Act; or (ii) if item 17 of this Schedule applies and the Board decides to cancel the entity's registration—the entity's registration is cancelled under the old law despite its repeal by Schedule 1 to this Act; or (iii) the entity's registration is terminated under Subdivision 30-B or 40-A of the new law; whichever occurs first. 13 It was contended by Mr Gray of Counsel for the Board, that the applicant's continuing registration, as deemed to be in existence in accordance with Re Nelson and the Tax Agents Board noted at [5] above, ended on the day on which the registration would have expired under the old law, i.e, s 251JC(4) of the Income Tax Assessment Act, as operated on by s 43(5C) of the AAT Act quoted at [8] above. That occurred as a matter of historical fact when the appeal was determined by the order of Middleton J on 31 January 2011 without any stay of that order having been granted. Consideration 14 I accept that it is within the inherent jurisdiction of this Court to stay or suspend the operation of an order made in the original jurisdiction of the Court pending the hearing and determination of an appeal against the same order. The exercise of the power to which I have just referred is not the same as a grant of a stay of execution of an order pending an appeal, which is expressly provided for by O 37 r 10 of the Rules of this Court. 15 In the present case, since the primary order of Middleton J did no more than dismiss the applicant's application by way of appeal from the AAT, there was nothing in that order to execute or enforce. 16 In my view, the application for a stay in the sense of a suspension of Middleton J's order, and the alternative claim for an interlocutory injunction requiring the Board to treat the applicant as the holder of a renewed tax agent's licence are each to be resolved in the light of similar discretionary factors. Those in favour of the grant of relief including the following; (a) if the appeal succeeds and the applicant ultimately persuades the Tribunal, or the Board to renew its licence, the applicant will have been deprived, in the meantime, of the opportunity to conduct its practice as a tax agent and derive remuneration therefrom. Correspondingly, the applicant's clients will be forced to go elsewhere to obtain the services of a tax agent during the interim which will include the end of the 2011 tax year. (b) the appeal is to be regarded as at least arguable. As Middleton J observed, at [37] of his reasons; … if the applicant can show that the Tribunal did not properly consider Mr Same's past conduct and likelihood of future conduct, including a proper evaluation of his character and reputation, then the Tribunal would have made an error of law and the matter should be remitted to a differently constituted Tribunal for redetermination. Whether the Tribunal properly took into account the matters identified by his Honour depends on the proper interpretation of the Tribunal's reasons as to which minds may reasonably differ. 17 The factors which weigh against exercising the discretion favourably to the applicant include; (a) the grant of a stay or suspension of a final order is, as Mason J pointed out in Re Marks (supra), an exceptional course. A similar observation can be made of the grant of a mandatory interlocutory injunction against a statutory body which has the same effect. (b) it is doubtful whether a suspension of an order which finally determines an appeal means that the appeal has no longer been "determined" so as to bring to an end a stay brought about by operation of s 43(5C) of the AAT Act. (c) there is a strong presumption that, the decision of the Board and its affirmation by the Tribunal were correct, as Middleton J has held. In those circumstances, there is a public interest in excluding from practice a tax agent whose nominee is considered by those statutory bodies not to be a fit and proper person for the purposes of registration. (d) The applicant has, in fact, not practised as a tax agent since 31 January 2011. On 27 April 2011, the solicitor for the Board wrote to the solicitors for the applicant contending that the applicable legislative provisions precluded "your client from legally providing tax agent services after 31 January 2011, the date that his Honour Justice Middleton affirmed the … Tribunal's decision of Deputy President McDonald." That letter concluded with these paragraphs; 3. We seek confirmation that your client has not been providing tax agent services since 31 January 2011. 4. Our client now opposes your client's application for a further stay, given the period of time that has elapsed since 31 January 2011. Your client should not have been providing tax agent services since its appeal was determined by Justice Middleton, and as a result this part of its practice should already have been discontinued for the last three months, which means that your client would not be prejudiced by a further stay application being refused. On 28 April 2011 the applicant's solicitors replied advising that; We are instructed by our client that our client has not provided any Taxation or Bass Services since 31st January 2011. There is no evidence as to what the applicant has done since 31 January 2011 to preserve the continuity of its tax agent's practice or to retain the goodwill of its clients. Nor has the Court been apprised in any specific terms of how a stay from now until the hearing of the appeal would be used to change the situation which has existed since 31 January 2011. I indicate parenthetically that the Court has indicated that it could accord the applicant's appeal a speedy hearing in the May Full Court sittings. However, the applicant has declined that invitation because of the unavailability of Counsel retained by it for the appeal. (e) If the Full Court is persuaded in the course of hearing the appeal that the applicant has a strong case for setting aside Middleton J's order it can itself, if necessary, frame appropriate interlocutory relief to give effect to that view. 18 On weighing the factors outlined at [16] and [17] above, I have come to the conclusion that the balance is strongly against staying or suspending Middleton J's dismissal of the application to this Court or requiring the Board, until the hearing and determination of the appeal from Middleton J, to treat the applicant as a registered tax agent. Conclusion 19 It follows from the view which I have just expressed that the amended motion on notice filed on 27 April 2011 must be refused. I shall order that the costs of each party of and incidental to that motion be that party's costs in the appeal. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Ryan. Associate: Dated: 9 May 2011