FEDERAL COURT OF AUSTRALIA Delis v Tax Practitioners' Board [2016] FCA 570 Appeal from: Delis and Tax Practitioners' Board [2015] AATA 820 File number: VID 797 of 2015 Judge: DAVIES J Date of judgment: 24 May 2016 Catchwords: ADMINISTRATIVE LAW – appeal from decision of Administrative Appeals Tribunal – application for renewal of registration as tax agent – whether first applicant was a fit and proper person – relevant considerations – where failure to comply with taxation laws – where Commissioner of Taxation had remitted penalties and interest – where applicant gave evidence of ill-health – Tax Agent Services Act 2009 s 20-5 ADMINISTRATIVE LAW – appeal from decision of Administrative Appeals Tribunal – application for renewal of registration as tax agent – whether first applicant was a fit and proper person – procedural fairness – where applicant gave evidence of ill-health – whether obligation to request additional evidence –Tax Agent Services Act 2009 s 20-5 Legislation: Administrative Appeals Tribunal Act 1975 (Cth) s 44 Federal Court Rules 2011 (Cth) r 33.12(2) Tax Agent Services Act 2009 (Cth) ss 20-5, 20-15, 30-10(2) Cases cited: Australian Securities and Investments Commission v Saxby Bridge Financial Planning Pty Ltd (2003) 133 FCR 290; [2003] FCAFC 244 Haritos v Commissioner of Taxation (2015) 233 FCR 315; [2015] FCAFC 92 Osland v Secretary, Department of Justice (No 2) (2010) 241 CLR 320; [2010] HCA 24 Toohey v Tax Agents' Board of Victoria (2007) 171 FCR 291; [2007] FCA 431 Date of hearing: 12 April 2016 Registry: Victoria Division: General Division National Practice Area: Taxation Category: Catchwords Number of paragraphs: 46 Counsel for the Applicants: N Rosenbaum Solicitor for the Applicants: Charlesworth Josem Partners Solicitor for the Respondent: D Brown of the Australian Government Solicitor ORDERS VID 797 of 2015 BETWEEN: PETER DELIS First Applicant DELIS ENTERPRISES PTY LTD Second Applicant AND: TAX PRACTITIONERS BOARD Respondent JUDGE: DAVIES J DATE OF ORDER: 24 May 2016 THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The applicants pay the respondent's costs of the proceeding. 3. Paragraph 1 of these orders be stayed until 10 June 2016. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT DAVIES J: 1 The applicants have appealed the decision of the Administrative Appeals Tribunal ("Tribunal") which affirmed the decision of the respondent ("the Board") to refuse to renew the registration of the applicants as registered tax agents ("tax agents"). background 2 Pursuant to the Tax Agent Services Act 2009 ("TASA") registration as a tax agent is a requirement to provide tax agent services for a fee. The first applicant ("Mr Delis") was registered in his own right and, as the sole director of the second applicant ("Delis Enterprises"), was also the sole nominated supervising tax agent for Delis Enterprises. 3 In July 2014, both applicants applied to the Board for renewal of their registrations as tax agents. In September 2014, the Board advised the applicants that their applications had been refused as the Board was not satisfied that Mr Delis was a "fit and proper person". Accordingly, Mr Delis was ineligible for registration as a tax agent and, as Mr Delis was the sole director of the company, Delis Enterprises was also ineligible for registration. 4 The applicants unsuccessfully applied to the Tribunal for review of the Board's decision. The Tribunal affirmed the Board's decision that Mr Delis was not a fit and proper person to hold registration as a tax agent. legislation 5 The eligibility criteria for registration as a tax agent are contained in s 20-5 of the TASA. 6 Pursuant to s 20-5(1), an individual, aged 18 years or more, is eligible for registration as a tax agent relevantly: (1)… if the Board is satisfied that: (a) the individual is a fit and proper person; and (b) … 7 Pursuant to s 20-5(3) a company is eligible for registration as a tax agent relevantly: (3)…if the Board is satisfied that: (a) each director of the company is a fit and proper person; and (b) … 8 Section 20-15 sets out matters to which the Board must have regard in determining whether an individual is a fit and proper person. The section provides that: In deciding whether it is satisfied that an individual is a fit and proper person, the Board must have regard to: (a) whether the individual is of good fame, integrity and character; and (b) without limiting paragraph (a): (i) whether an event described in section 20-45 has occurred during the previous 5 years; and (ii) whether the individual had the status of an undischarged bankrupt at any time during the previous 5 years; and (iii) whether the individual served a term of imprisonment, in whole or in part, at any time during the previous 5 years. 9 Section 20-45 sets out certain "events" which may affect a tax agent's continued registration. The section provides as follows: The following events may affect your continued registration as a *registered tax agent … : (a) you are convicted of a *serious taxation offence; (b) you are convicted of an offence involving fraud or dishonesty; (c) you are penalised for being a *promoter of a *tax exploitation scheme; (d) you are penalised for implementing a *scheme that has been promoted on the basis of conformity with a *product ruling in a way that is materially different from that described in the product ruling; (e) you become an undischarged bankrupt or go into external administration; (f) you are sentenced to a term of imprisonment. It was common ground that none of those "events" in s 20-45 applied to the applicants. 10 Pursuant to s 20-25(4), the period of registration must be for at least three years if the application for registration is granted. 11 Sub-division 30-A of Div 30 of the TASA contains a Code of Professional Conduct which applies to tax agents: s 30-5. Relevantly, it is a requirement pursuant to s 30-10(2) that a tax agent comply with the taxation laws in the conduct of the tax agent's personal affairs. the tribunal decision 12 On review of the Board's decision, the Tribunal had to consider for itself whether it was satisfied that Mr Delis was a fit and proper person for registration as a tax agent (Toohey v Tax Agents' Board of Victoria (2007) 171 FCR 291; [2007] FCA 431 at [13]) and concluded that Mr Delis was not a fit and proper person to be registered as a tax agent: s 20-5(1). In consequence, the Tribunal also found that Delis Enterprises did not satisfy the eligibility criteria for registration as Mr Delis was the sole director of that company: s 20-5(3). 13 The Tribunal found systematic, long term non-compliance by both Mr Delis and Delis Enterprises in respect of their taxation obligations. The Tribunal also found a pattern of conduct by Mr Delis and Delis Enterprises in entering into payment arrangements with the Australian Taxation Office ("ATO") in respect of outstanding liabilities, which were then defaulted upon or cancelled. The Tribunal noted that both applicants had entered into further payment arrangements with the ATO, which remained active at the date of the hearing. At [61] the Tribunal stated that the history of Mr Delis's personal non-compliance and that of Delis Enterprises disclosed a pattern of behaviour which was most likely to continue into the future. 14 The unchallenged evidence adduced by the Board before the Tribunal was that Delis Enterprises, since 2003, had been in default of its taxation obligations and, as at 13 March 2015, had outstanding tax liabilities totalling $372,415.34, including outstanding superannuation guarantee liabilities to the ATO of $28,946.47 and a history of non-compliance in the lodgement of its business activity statements. The Tribunal stated at [18] that the "increasing debt to the ATO was mainly due to PAYG tax withheld and GST". As at 22 May 2015, Mr Delis had personal outstanding tax liabilities to the ATO of $11,221.69 in respect of unpaid income tax and a history of non-compliance with his personal tax affairs going back to the income year ended 30 June 2009. Pinia Holdings Pty Ltd ("Pinia Holdings"), another company controlled by Mr Delis, had also failed to make payments of its tax liabilities since June 2010 and as at 19 June 2015 had outstanding tax liabilities totalling $52,840.48. 15 The applicants did not dispute the failures to comply with taxation laws but argued that the non-compliance was not due to deliberate or reckless disregard of relevant taxation laws. The non-compliance with taxation obligations was said to be due to "ongoing episodes of the ill health of Mr Delis which adversely affected his ability to comply with his various taxation obligations and those of Delis Enterprises." The applicants also claimed that their ability to make payments of outstanding tax liabilities was dependent upon payment of professional fees by the clients of the accountancy practice, which accounted for why payments were made well after they were due. The Tribunal rejected both explanations. 16 With respect to the claim that non-compliance was due to Mr Delis's health issues, the Tribunal noted that it had been represented to the Board by the applicants' solicitor that there was "evidence regarding Mr Delis'[s] health issues" but such evidence was not produced to the Tribunal. The Tribunal stated at [46]: Given that Mr Delis was legally represented, and that the issue of his claimed ill-health resulted in incapacity to such an extent that he was unable to lodge returns by their due date and was unable to make payments of tax or superannuation payments to employees of the accountancy practice, it does not fall to the Tribunal to make enquiries regarding the presence or absence of such documents. Given that the nature of the hearing on review is by way of hearing de novo, I would have expected Mr Delis to have produced all relevant medical records to the Tribunal at the hearing. He did not. 17 At [48], the Tribunal concluded: Given the vague and general nature of the evidence given by Mr Delis about his health; the absence of an explanation for the production of medical documents supporting this claim; the fact that the documentary evidence before me plainly discloses that the late lodgement of income tax returns and business activity statements and failure to remit GST and PAYG tax when due as well as the failure to make superannuation guarantee payments to employees was an issue well before any claimed ill-health problems arose; and the absence of an explanation for why the accountancy practice could not have dealt with the lodgement of documents by due dates, I find that little weight can be given to Mr Delis'[s] claims that ill-health was the cause of those problems. 18 With respect to the claim that non-compliance was due to reliance upon payment of fees by clients of the accountancy practice, the Tribunal concluded that the evidence did not support Mr Delis's claim he was unable to make those payments. That evidence included financial statements for the Delis Unit Trust for the year ended 30 June 2013 and the Delis Family Trust for the year ended 30 June 2012 which the Tribunal had requested Mr Delis to produce. The Tribunal concluded at [73] that cash was plainly available to meet the taxation and superannuation guarantee liabilities but it appeared that Mr Delis preferred to use the funds for other purposes. 19 At [102], the Tribunal concluded that the evidence disclosed a pattern of behaviour by Mr Delis regarding his dealings with the ATO over a period of some 14 years. The Tribunal stated that the non-payment of tax liabilities and superannuation guarantee payments could not be explained by his claimed ill-health or lack of funds from the accounting practice. The Tribunal stated: The accountancy practice Financial Statements disclose significant net profits before tax in the 2012 and 2013 income years. Plainly, Mr Delis has preferred to use those monies to his own and his company's advantage, disregarding his and the company's obligations regarding monies which were effectively held on trust for others. For those reasons, I have found that Mr Delis is not a fit and proper person to be registered as a tax agent. 20 In reaching that conclusion, the Tribunal took into account that following the hearing, but before the Tribunal handed down its decision, the outstanding primary tax and superannuation guarantee charge liabilities owed by Mr Delis and the entities which he controls had been discharged. The Tribunal was of the view that the fact that Mr Delis and those entities were now tax compliant did not go to the fitness and propriety of Mr Delis or Delis Enterprises to conduct the practice of a registered tax agent. Earlier at [98]–[99], the Tribunal had noted as follows: 98. However, Mr Delis, in a belated attempt to show that in his personal capacity and as a director of Delis Enterprises and Pinia Investment Holdings, was now compliant, after the conclusion of the hearing and certainly after both parties had concluded their cases, provided to the Tribunal evidence of primary tax payments and payment of the Superannuation Guarantee Charge liability. I did not grant the applicant leave to lodge further evidentiary material following the conclusion of the hearing. Nevertheless, I have mentioned those payments in these reasons for decision. The purpose for doing so is to allow me to make the observation that Mr Delis'[s] pattern of behaviour has again been repeated. When under significant pressure from the ATO and, subsequently, the TPB, at the risk of having legal proceedings brought for the recovery of debts owed to the ATO or the risk of losing his registration as a tax agent, Mr Delis is dragged reluctantly to the compliance table. Absent such threats, there was no evidence that Mr Delis would have complied with his tax or superannuation guarantee obligations. In fact more significantly, it also strongly suggests that without serious threats being made against his ability to earn an income as he has done in the past, he is unlikely to comply with taxation laws in the future. 99. In my opinion, the evidence discloses a pattern of behaviour by Mr Delis which is, understandably, of serious concern to the TPB. Despite being warned, following the TPB's investigation into the conduct of Delis Enterprises as a registered tax agent, and receiving a written caution which warned Mr Delis that failure to bring its lodgment and debt status up to date may adversely affect its (and as a consequence his) renewal of registration, that did not happen. It was not until his and Delis Enterprises' applications for renewal of registration were rejected and Mr Delis sought review by the Tribunal of those decisions that steps were taken to remedy the failures to lodge outstanding returns and pay outstanding tax. That behaviour says much about Mr Delis'[s] integrity and character, none of which is good. Although I have no doubt that Mr Delis has at all times been aware of his obligations to meet his taxation liabilities and lodgment requirements, he has not complied, not for reasons of ill health or lack of funds, but rather because he has preferred to make personal use of those monies to which he was not entitled. In my opinion, the evidence plainly discloses a pattern of behaviour which is manipulative and self-serving. These are not the characteristics of an individual who is of good fame, integrity and character. I find that Mr Delis is not [a] fit and proper person to be registered as a tax agent under the TASA. It follows that because he is the sole director of Delis Enterprises, Delis Enterprises is not eligible to be registered as a tax agent. 21 The Tribunal concluded accordingly that the discharge of those debts following the hearing and prior to the delivery of judgment was not evidence that Mr Delis's pattern of behaviour had ceased and was "not necessarily indicative of the fact that the behaviour, once the immediate threat has passed, will not once again be established." the grounds of appeal 22 The applicants' notice of appeal raised as the questions of law for determination the following: 1. …. 2. … 3. ... 4. Whether the learned Tribunal has correctly ascertained and applied the relevant principles of law particularly given the requirements of section 20-15 of the TASA when having identified that the only issue it was required to determine was whether the First Applicant was a fit and proper person then proceeded to make that determination "in the context the operations of ... [the Second Applicant] ... as well as [the First Applicant's] ... personal income tax position ... [and] ... in light of the operations of Pinia Holdings Pty Ltd in its capacity as the trustee of the Pinia Investment Trust" and in the course of doing so paid either no regard, or alternatively insufficient regard, to actions of the Commissioner of Taxation of the Commonwealth of Australia (the Commissioner) who: (a) granted the First Applicant payment arrangements by way of extensions of time to pay his personal taxation liabilities despite prior instances where the First Applicant had not complied with the terms of other such extensions of time to pay his personal taxation liabilities; (b) granted the Second Applicant payment arrangements by way of extensions of time to pay its taxation liabilities despite prior instances where the Second Applicant had not complied with the terms of other such extensions of time to pay its taxation liabilities; (c) due to the circumstances of the First Applicant remitted penalties imposed thereby on the First Applicant for not complying with his personal taxation obligations in a timely manner; (d) due to the circumstances of the First Applicant remitted interest imposed thereby on the First Applicant for not complying with his personal taxation obligations in a timely manner; (e) due to the circumstances of the First Applicant remitted penalties imposed thereby on the Second Applicant for not complying with its taxation obligations in a timely manner; and (f) due to the circumstances of the First Applicant remitted interest imposed thereby on the Second Applicant for not complying with its taxation obligations in a timely manner. 5. Whether the learned Tribunal erred in law in determining that the First Applicant was not a fit and proper person for the purposes of 20-5(1) of the TASA, notwithstanding the undisputed evidence before the Tribunal in relation to the First Applicant concerning the nature, duration and symptoms of his health and the effect that ill health had on his ability to manage his personal taxation affairs and the taxation affairs of the Second Applicant. 6. Whether the learned Tribunal erred in law in not determining that the First Applicant was not a an individual of good fame, integrity and character for the purposes of section 20-15 of the TASA notwithstanding the undisputed evidence that in regard to his personal taxation affairs and the taxation affairs of the Second Applicant the Commissioner: (a) granted the First Applicant payment arrangements by way of extensions of time to pay his personal taxation liabilities despite prior instances where the First Applicant had not complied with the terms of other such extensions of time to pay his personal taxation liabilities; (b) granted the Second Applicant payment arrangements by way of extensions of time to pay its taxation liabilities despite prior instances where the Second Applicant had not complied with the terms of other such extensions of time to pay its taxation liabilities; (c) due to the circumstances of the First Applicant remitted penalties imposed thereby on the First Applicant for not complying with his personal taxation obligations in a timely manner; (d) due to the circumstances of the First Applicant remitted interest imposed thereby on the First Applicant for not complying with his personal taxation obligations in a timely manner; (e) due to the circumstances of the First Applicant remitted penalties imposed thereby on the Second Applicant for not complying with its taxation obligations in a timely manner; and (f) due to the circumstances of the First Applicant remitted interest imposed thereby on the Second Applicant for not complying with its taxation obligations in a timely manner. 7. Whether the learned Tribunal erred in law in determining that the First Applicant was not a fit and proper person for the purposes of section 20-5(1) of the TASA notwithstanding the undisputed evidence that in regard to his personal taxation affairs and the taxation affairs of the Second Applicant the Commissioner: (a) granted the First Applicant payment arrangements by way of extensions of time to pay his personal taxation liabilities despite prior instances where the First Applicant had not complied with the terms of other such extensions of time to pay his personal taxation liabilities; (b) granted the Second Applicant payment arrangements by way of extensions of time to pay its taxation liabilities despite prior instances where the Second Applicant had not complied with the terms of other such extensions of time to pay its taxation liabilities; (c) due to the circumstances of the First Applicant remitted penalties imposed thereby on the First Applicant for not complying with his personal taxation obligations in a timely manner; (d) due to the circumstances of the First Applicant remitted interest imposed thereby on the First Applicant for not complying with his personal taxation obligations in a timely manner; (e) due to the circumstances of the First Applicant remitted penalties imposed thereby on the Second Applicant for not complying with its taxation obligations in a timely manner; and (f) due to the circumstances of the First Applicant remitted interest imposed thereby on the Second Applicant for not complying with its taxation obligations in a timely manner. 8. Whether the learned Tribunal erred in law in finding the First Applicant was not an individual of good fame, integrity and character for the purposes of section 20-15 of the TASA and therefore not a fit and proper person for the purposes of section 20-5(1) of the TASA given the absence of evidence of: (a) any complaint against either of the Applicants by any of the clients of the Second Applicant; (b) of any delay in the lodging of any income tax or other returns on behalf of the clients of the Second Applicant; (c) any dishonesty or impropriety by the First Applicant; (d) the continued good conduct generally of the Applicants and in particular in relation to the lodging by the First Applicant of his personal income tax returns and the income tax returns of the Second Applicant since the personal circumstances of the First Applicant changed so as to enable him to bring his personal taxation affairs and the taxation affairs of the Second Applicant in that regard into order such that all income tax returns and business activity statements had been lodged with the Australian Taxation Office (the ATO) and on those occasions where the Applicants did not lodge certain income tax returns when required or pay tax in a timely manner, the First Applicant continued to liaise with the ATO, and make payments pursuant to payment arrangements granted by the ATO for payment of those taxation liabilities over time. 9. Whether the learned Tribunal erred in law when it rejected, alternatively did not give appropriate weight, to the evidence of the ill health of the First Applicant given that evidence was uncontradicted, not disputed and indeed was unreservedly accepted by the Respondent. 10. Whether the learned Tribunal erred in law by denying the Applicants natural justice by way of procedural fairness when the learned Tribunal requested the First Applicant produce particular financial records of the Second Applicant but never made a like request of the First Applicant for further evidence concerning his ill health over time given that the learned Tribunal rejected, alternatively afforded little weight, to the evidence of the ill health of the First Applicant presented thereto notwithstanding that evidence presented was uncontradicted, not disputed and indeed was unreservedly accepted by the Respondent. 11. Whether the learned Tribunal erred in law when having identified that the only issue it was required to determine was whether the First Applicant was a fit and proper person and proceeded to make that determination "in the context the operations of ... [the Second Applicant] ... as well as [the First Applicant's] ... personal income tax position ... [and] ... in light of the operations of Pinia Holdings Pty Ltd in its capacity as the trustee of the Pinia Investment Trust" but considered the relevance of the remission by the Commissioner of penalties and general interest charge (GIC) imposed on the Applicants to be doubtful. 12. Whether the learned Tribunal erred in law in finding that "even if ... [the First Applicant] ... were to comply fully with ... [the new payment] ... arrangement, it would not assist his case" when determining whether the First Applicant was: (a) a fit and proper person for the purposes of 20-5(1) of the TASA; (b) an individual of good fame, integrity and character for the purposes of section 20-15 of the TASA; and (c) a person who acts honestly and with integrity for the purposes of 30-10(1) of the TASA. 13. … 14. … 15. Whether the learned Tribunal erred in law by finding that "it must [be] highly doubtful as to whether the current or active payment arrangements will be met with compliance" when the evidence before it was to the contrary. 16. … 17. Whether the learned Tribunal erred in law by indicating it required "objective evidence" in regard to the ill health of the First Applicant when the evidence before it in this regard, albeit from the First Applicant, was uncontradicted, not disputed and indeed was unreservedly accepted by the [respondent]. 18. … 23 Questions 1, 2, 3, 13, 14, 16 and 18 have been omitted because they were not pressed by the applicants. 24 In addition, the applicants sought leave to amend question 11 to add the following: … and did not take into account at all the cash flow situation of either of the applicants as was relevant, relying only on the evidence of the end of year situation of the applicants. Leave to amend was opposed by the Board and I reserved on whether leave should be granted. 25 It is not useful to set out the grounds of appeal as the grounds simply repeat the questions as propositions of law and do not fulfil their function. Rules 33.12(2)(b) and (e) of the Federal Court Rules 2011 (Cth) relevantly provide that a notice of appeal must state the precise question or questions of law to be raised on the appeal and, briefly but specifically, the grounds relied on in support of the relief or variation of the judgment sought. The reason that the notice of appeal must specify the question or questions of law with precision is that an appeal under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) ("AAT Act") must be on a question of law and the ambit of the appeal is confined to the question of law so raised: Haritos v Commissioner of Taxation (2015) 233 FCR 315; [2015] FCAFC 92 at [62]. The function of the requirement in r 33.12(2)(e) to set out the grounds relied upon in support of the order sought is different, namely to indicate how the appellant relies on the stated questions of law to support the orders sought on the appeal: Australian Securities and Investments Commission v Saxby Bridge Financial Planning Pty Ltd (2003) 133 FCR 290; [2003] FCAFC 244 at [47]; Osland v Secretary, Department of Justice (No 2) (2010) 241 CLR 320; [2010] HCA 24 at [21]. In Saxby the Full Federal Court emphasised that there is a distinction between the questions of law to be raised on the appeal and the grounds relied upon in support of the orders sought: [47]–[48] (Branson J) and [108] (Jacobson and Bennett JJ). That distinction was not observed in the present case. questions four, six, seven, eleven, twelve and fifteen 26 These questions can be considered together as they essentially raise the same issue. It was submitted for the applicants that the Tribunal failed to take into account as relevant considerations when speculating as to the future likely compliance of Mr Delis that the Commissioner of Taxation ("the Commissioner") "who importantly had the general administration of all Relevant Legislation" had: (a) granted the applicants payment arrangements by way of extensions of time to pay their taxation liabilities, despite prior instances where they had not complied with the terms of other such extensions of time to pay those taxation liabilities; and (b) due to the circumstances of Mr Delis, remitted penalties and interest imposed on the applicants for non-compliance with their taxation obligations and had not imposed administrative penalties upon Delis Enterprises when it did not lodge superannuation guarantee statements on time. 27 It was submitted that the Tribunal reached its decision that Mr Delis was not a fit and proper person to be registered as a tax agent without paying regard to, or without giving proper or sufficient regard to, the decisions of the Commissioner "concerning the full remission of penalties and interest initially imposed and (excusable) failures in regard to which the Commissioner never imposed administrative penalties ("the Commissioner's Decisions")". It was submitted that the Commissioner's Decisions "provided the Tribunal with a sound basis to properly imply that the conduct of the Applicants referable to these decisions of the Commissioner was in all the circumstances excusable, and consequently did not adversely impact upon the fitness or propriety of [Mr Delis] to be registered as a tax agent". Accordingly, so the argument went, by not so concluding the Tribunal erred in law. 28 Having regard to the nature, scope and object of the legislation, I accept that it was relevant for the Tribunal to take into account whether the applicants had complied with their taxation obligations and, in that regard, any circumstances in mitigation of their conduct. In that regard, whether the Commissioner imposed penalties for non-compliance or remitted penalties or entered into payment arrangements may be relevant considerations to take into account in determining whether an applicant for registration as a tax agent is a "fit and proper person". The Tribunal did, however, expressly take those considerations into account and attributed little or no weight to them. Amongst other reasons, the Tribunal considered that counsel for the applicants had overstated the extent of the remission of penalties and general interest charge. The Tribunal also noted the long history of non-compliance by Mr Delis, Delis Enterprises and Pinia Holdings and found that the evidence disclosed persistent failure by each of them to comply with taxation laws over a period of some 14 years and lengthy periods when no tax was paid, including between June 2008 and February 2010 when "none of the mitigating factors which Mr Delis has relied upon were present during that time". The Tribunal stated that although counsel for the applicants did not dispute that there had been instances of non-compliance with taxation laws, "that grossly understates the true position". The Tribunal also found that although the evidence disclosed that Mr Delis did make payments of arrears of tax from time to time, those payments were either of relatively small amounts or, when the threat of legal action was raised, more substantial amounts, "but always well in arrears and less than the total tax owing". The Tribunal noted at [92]–[95]: 92. … The only occasion that Delis Enterprises' account came close to being in credit was on 29 August 2012 which was immediately after the Commissioner issued a Creditor's Statutory Demand for Payment of Debt. That demand prompted two payments of $50,000 made on 9 and 22 August 2012 followed by a payment of $79,000 on 29 August 2012. Just where those monies came from was not disclosed. However, as soon as that threat had passed, the account slipped back into a substantial debit balance. Furthermore, there were no payments made between 14 November 2013 and November 2014 when the debit balance had amounted to $348,629.75. 93. The failure of the accountancy practice to make the required statutory superannuation guarantee payments to its employees is inexplicable. The balance owing to those employees steadily increased between July 2010 and December 2013 without any obvious attempt to redress that position. As I understood Mr Delis'[s] evidence, he claimed that the reasons for non-payment were that clients of the accountancy practice had not paid their accounts. As I have already explained, that cannot be correct. The Profit and Loss Statements for the 2012 and 2013 income years disclose very substantial net profits before tax. While those accounts are clearly incorrect because they do not take into account unpaid statutory liabilities, nevertheless, there was plainly sufficient cash from the conduct of the accountancy practice to make those statutory payments. Again, the explanation given by Mr Delis was unsatisfactory, and, in my opinion, misleading. 94. Although Mr Delis placed significant reliance upon his claimed ill-health between about 2008 and 2012 for failure to make payments to the tax office and to lodge returns by due date, as the Financial Statements for the accountancy practice disclose, it appears to have continued at substantial profit. Furthermore, that profit is accounted for on a cash basis, rather than an accruals basis. Put simply, that means that the practice in fact received payment from its clients to the extent stated. It was not making a loss but, rather, a substantial profit. Despite Mr Rosenbaum submitting that there was undisputed and uncontradicted evidence showing that the non-compliance with taxation laws by Mr Delis and Delis Enterprises was due to ongoing episodes of ill health, the evidence in fact shows nothing of the sort. Other than Mr Delis'[s] evidence, which necessarily is self-serving and must be given little weight, I had no objective evidence before me on the hearing of this matter which supported his ill health claims … 95. What is apparent when all of the evidence before me is examined carefully, is that the pattern of failure to lodge documents within the prescribed time and failure to pay taxes when those payments were due existed at least in 2002 and possibly even as early as 2000… 29 The Tribunal furthermore did not consider it significant that the ATO had agreed to enter into four new repayment arrangements with the ATO, stating at [78]–[79]: 78. The first thing which needs to be said about that submission is that every taxpayer is required to pay in full his, her or its taxation liability as and when it falls due. Making some payments towards those liabilities over many years in small amounts, often well in arrears of those liabilities arising, and often under the threat of legal action for recovery, is hardly something which should attract an expression of satisfaction. To the contrary, given that in this case that position appears to have been the norm for Mr Delis and Delis Enterprises since around 2000, it deserves condemnation. 79. Nevertheless, Mr Rosenbaum submitted that despite the extensive defaults in payment of tax and lodgement of returns by Mr Delis and Delis Enterprises, it is significant that the ATO has agreed to enter into the four repayment arrangements currently in place. With respect, that statement appears to be a non sequitur. Undoubtedly, the ATO's only concern is to get in tax payments which are due to it in the most cost-effective manner. Issuing court proceedings for recovery every time a taxpayer is in default would certainly not be a cost-effective way of recovering such liabilities. Counsel for the applicants took issue with [79], submitting that [79] "clearly demonstrates that the Tribunal determined that the Commissioner merely found it to be cost-effective to enter into payment arrangements with the Applicants notwithstanding their prior non-compliance with previous payment arrangements rather than issue court proceedings". It was submitted that "the quantum of the debts of the Applicants from time to time do not support this finding". However, no attempt was made to justify that assertion and the Tribunal was not shown to be wrong. 30 The Tribunal further stated at [99]: 99. … Although I have no doubt that Mr Delis has at all times been aware of his obligations to meet his taxation liabilities and lodgment requirements, he has not complied, not for reasons of ill health or lack of funds, but rather because he has preferred to make personal use of those monies to which he was not entitled. In my opinion, the evidence plainly discloses a pattern of behaviour which is manipulative and self-serving. These are not the characteristics of an individual who is of good fame, integrity and character … 31 The Tribunal did not accept that Mr Delis's failure to comply with taxation laws was excusable, even taking into account the remissions of penalty and GIC, and payment arrangements which, for the reasons given by the Tribunal, the Tribunal considered of "doubtful relevance". Bearing in mind that the appeal pursuant to s 44 of the AAT Act does not involve a right of appeal by way of hearing de novo, error must first be shown to permit appellate intervention and no error of principle has been shown in the approach of the Tribunal. Rather than disclosing any error of principle, the submission amounted in substance to no more than an attempt to re-examine the merits with the view to obtaining a different outcome. 32 Accordingly these grounds fail. questions five, nine and seventeen 33 These questions can be considered together as they have essentially raised the same ground. The ground relates to how the Tribunal dealt with Mr Delis's claims about his ill health, being a principal reason advanced for his and Delis Enterprises' failures to comply with taxation laws. 34 It was submitted for the applicants that the findings of the Tribunal "totally ignore the relevant undisputed and uncontradicted evidence before the Tribunal in relation to [Mr Delis] concerning the nature, duration and symptoms of his health and the effect that ill health had on his ability to manage his personal taxation affairs and the taxation affairs of [Delis Enterprises]". 35 It was also submitted that counsel for the Board "essentially admitted unreservedly that evidence when he made the following concession": … the applicant made the point on several occasions in response to cross examination that he had been constrained in terms of his ability to ensure that the company met its lodgement obligations and realised enough business to be able to reduce its accumulated debt by what he described as his health issues and other business issues. We don't differ with the points that have been made by my learned friend and indeed were made from the witness box that indeed, the applicant has over the last five years – so since around 2010 – suffered a number of health issues which have required him to be hospitalised at times over the period. 36 Further it was submitted that the Tribunal's statements, that the applicants provided no "objective" evidence concerning the ill health of Mr Delis and it "expected more than the bare statements by Mr Delis regarding his illness", were "legally misconceived as the evidence in that regard that was before [the Tribunal] was uncontradicted, undisputed and indeed admitted by the respondent". 37 The reasons of the Tribunal disclose that the Tribunal took into account the explanations given by Mr Delis concerning his purported ill health and rejected those explanations, amongst other reasons, because the poor compliance with taxation obligations began before the asserted ill health issues. The Tribunal considered that Mr Delis's assertions of ill health were "necessarily … self-serving" and the Tribunal had no objective evidence which supported his ill health claims. The Tribunal noted that the late lodgement of tax returns and activity statements, and the failure to remit tax and make superannuation guarantee payments to employees was an issue well before any claimed ill health problems arose. Further, the Tribunal took into account Mr Delis's evidence that one of the employees at the accountancy practice was also a registered tax agent and, according to Mr Delis, when he was absent from the practice, the registered tax agent employee undertook supervision responsibilities. The Tribunal concluded that given that the accountancy practice was responsible not only for the lodgement of Mr Delis's income tax returns and those of Delis Enterprises in its capacity as trustee of the Delis Unit Trust, it would also have expected an explanation as to why the employees under the supervision of the registered tax agent could not have performed the duties in the absence of Mr Delis. The Tribunal noted that no explanation was provided by Mr Delis as to why the accountancy practice could not have dealt satisfactorily with all of his and Delis Enterprises' lodgement and tax payment responsibilities, and referred to Mr Delis's witness statement which said that even when Mr Delis was away from the practice, he reviewed work from the accountancy practice while convalescing either in hospital or at home and was available by telephone to supervise and guide its employees. 38 The Tribunal was not bound to accept as a fact Mr Delis's assertion of his ill health as the explanation for non-compliance without medical records which might support Mr Delis's assertions, and the Tribunal was entitled to reject the bare assertion as sufficient evidence to establish the claim. No error of law is disclosed in the Tribunal's rejection of Mr Delis's assertions, which lacked cogent, objective and probative evidence in substantiation. 39 Nor is there any substance in the assertion that the Board conceded that Mr Delis's health issues explained or excused his failures to comply with taxation laws. The concession was as to the fact of episodes of ill health but not that such ill health explained or excused the non-compliance. 40 Accordingly these grounds also fail. question EIGHT 41 The Tribunal was not bound to conclude that Mr Delis is a person of good faith, integrity and character by reason of the absence of evidence of the matters raised by the appeal ground. It was plainly relevant for the Tribunal to take into consideration the history of non-compliance with taxation obligations and open for the Tribunal to conclude that Mr Delis was not a fit and proper person by reason of the long history not only of his non-compliance with his own taxation obligations but that of companies related to him. 42 The Tribunal addressed the statutory criterion of "fit and proper person" at [85]–[90] as follows: 85. What is meant by the expression fit and proper person in the context of the TASA is not defined. One therefore needs to look to the common law to understand how the expression is treated in a legal sense. The High Court of Australia (Mason CJ, Brennan, Deane, Toohey and Gaudron JJ) in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 dealt with the fit and proper person issue in the context of a broadcasting licence. Toohey and Gaudron JJ said, at 380: The expression "fit and proper person", standing alone, carries no precise meaning. It takes its meaning from its context, from the activities in which the person is or will be engaged and the ends to be served by those activities. The concept of "fit and proper" cannot be entirely divorced from the conduct of the person who is or will be engaging in those activities. However, depending on the nature of the activities, the question may be whether improper conduct has occurred, whether it is likely to occur, whether it can be assumed that it will not occur, or whether the general community will have confidence that it will not occur. The list is not exhaustive but it does indicate that, in certain contexts, character (because it provides indication of likely future conduct) or reputation (because it provides indication of public perception as to likely future conduct) may be sufficient to ground a finding that a person is not fit and proper to undertake the activities in question. 86. It is also worth noting what was said by an earlier High Court of Australia decision in Hughes and Vale Proprietary Limited v New South Wales (1955) 93 CLR 127. The question in that case was whether the applicant was a fit and proper person to hold a licence to operate a particular vehicle. Dixon CJ, McTiernan and Webb JJ said, at 156: ... The expression "fit and proper person" is of course familiar enough as traditional words when used with references to offices and perhaps vocations. But their very purpose is to give the widest scope for judgement 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. 87. The context in this case is the conduct of a registered tax agent. Guidance in that context may be obtained from the Federal Court of Australia (Hill J) case of Stasos v Tax Agents' Board (1990) 21 ALD 437. That case involved determining whether a tax agent, who had engaged in tax evasion, was a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters. While obiter dicta, Hill J said the following at 443–444: Before concluding this judgement I would wish to say something about the role of conduct befitting a tax agent. 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 transactions of any business on behalf of a taxpayer in income tax matters for reward. ... 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. ... 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, 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. ... 88. A case which is a little closer to the context in which Mr Delis'[s] application is made is a matter heard by the Administrative Appeals Tribunal (Senior Member Mr RD Fayle) in Carbery & Associates Pty Ltd and Tax Agent's Board of Queensland [2001] AATA 107 (13 February 2001). Mr Carbery had applied for renewal of his registration which was refused by the Tax Agents' Board of Queensland. One of the grounds for refusal to renew his registration was Mr Carbery's failure to file his personal income tax returns as and when due. His reason for failure to do so included his medical condition. The Tribunal said, at [21]: ... In the opinion of the Tribunal, this failure on the part of Mr Carbery to comply with basic requirements of the Australian Taxation Office in regard to its conditions for lodgement of the personal income tax returns of tax agents, is tantamount to a gross dereliction of fundamental duty. This failure is exacerbated, in the opinion of the Tribunal, because it is a failure to comply by a person who, himself, is responsible for the management of his clients' income tax compliance requirements. 89. I have referred to the Explanatory Paper issued by the TPB at [12]. It provides guidance in respect of the activities which a tax agent is expected to undertake and hence gives context to the expression fit and proper person when applied to a registered tax agent. Although I accept that the Explanatory Paper is not binding on me, it makes sense to have regard to what is set out in that document as it is, in effect, simply a summary of what Court and Tribunal cases have considered to be relevant matters in the context of a tax agent. 90. Plainly, by breaching the taxation laws in the conduct of his personal affairs which includes when acting as a director of Delis Enterprises, Mr Delis has breached the Code of Professional Conduct which applies to registered tax agents. While the TASA prescribes sanctions for any such breach, failure to comply with the Code plainly says something about the good fame, integrity and character of an individual. Those matters are relevant criteria for determining whether an individual is a fit and proper person (s. 20-15 TASA). 43 No error of principle is shown in the approach of the Tribunal. This ground also amounted in substance to impermissible merits review and accordingly fails. question 10 44 The issue raised by this question was whether the Tribunal failed to afford procedural fairness by failing to provide opportunity to Mr Delis to provide documentary evidence of his ill health. For the reasons given by the Tribunal at [46] extracted above in [16], the Tribunal was not bound to provide such an opportunity to the applicants. AMENDMENT TO QUESTION 11 45 Question 11 raised the same ground as questions 5, 6 and 7. In oral submissions a new argument was raised, namely that the Tribunal erred in law by only looking at the year end situation of the applicants, not looking at the cash flow situation of the applicants as was relevant. The leave of the Court is required to rely upon this additional ground which should be refused as the ground in substance is yet another attempt to challenge the factual findings by the Tribunal and an impermissible attempt to re-litigate the factual findings made in an appeal on a question of law under s 44 of the AAT Act. conclusion 46 Accordingly the appeal should be dismissed. I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Davies. Associate: Dated: 24 May 2016