CITATION: Council of the New South Wales Bar Association v Davison [2005] NSWADT 252 DIVISION: Legal Services Division APPLICANT PARTIES: Council of the New South Wales Bar Association RESPONDENT William Roy Davison FILE NUMBER: 042024 HEARING DATES: 27/06/2005-30/06/2005, 16/08/2005 SUBMISSIONS CLOSED: 08/16/2005 DATE OF DECISION: 11/07/2005 BEFORE: Chesterman M - ADCJ (Deputy President); Norton S SC - Judicial Member; Bennett C - Non Judicial Member APPLICATION: Professional Misconduct - non-compliance with tax obligations - Professional Misconduct - reckless disregard of tax obligations MATTER FOR DECISION: Principal matter Bankruptcy Act 1966 (Cth) LEGISLATION CITED : Income Tax Assessment Act 1936 (Cth) Legal Profession Act 1987 Briginshaw v Briginshaw (1938) 60 CLR 336 Council of the New South Wales Bar Association v Archer (No 2) [2004] NSWADT 78 Jones v Dunkel (1959) 101 CLR 598 Law Society of New South Wales v Foreman (1994) 34 NSWLR 408 New South Wales Bar Association v Cummins [2001] NSWCA 284 New South Wales Bar Association v Hamman [1999] NSWCA 404 CASES CITED: New South Wales Bar Association v Sahade [2005] NSWADT 159 New South Wales Bar Association v Somosi [2003] NSWCA 285 New South Wales Bar Association v Stevens [2003] NSWCA 261 New South Wales Bar Association v Young [2003] NSWCA 228 Prothonotary of the Supreme Court of New South Wales v McCaffery [2004] NSWCA 470 Prothonotary of the Supreme Court of New South Wales v Ritchard, Unreported, Court of Appeal, NSW, 31 July 1987 Walsh v Law Society of New South Wales (1999) 198 CLR 73 Wardell v New South Wales Bar Association [2002] NSWSC 548 APPLICANT CE Adamson SC REPRESENTATION: SE Pritchard, barrister RESPONDENT RJ Ellicott QC PR Clay, barrister ORDERS: 1. The name of the Respondent should be removed from the Roll of Legal Practitioners; 2. The Respondent is to pay the costs of the Applicant, as agreed or assessed REASONS FOR DECISION Introduction 1 In this case, the principal issue to be determined is whether a barrister, who admits that he has committed professional misconduct on account of his substantial defaults in paying income tax to which he has been assessed, should in all the circumstances be struck off the Roll. 2 The Respondent barrister ('the Barrister') is William Roy Davison. He was admitted to practice as a solicitor of the Supreme Court on 28 May 1965. He commenced practice as a barrister on 7 March 1980. On 4 November 1994, he was appointed Senior Counsel. 3 On 1 November 2001, in consequence of some of the events with which this case is concerned, the Council of the New South Wales Bar Association ('the Bar Association') resolved to cancel his practising certificate as from 9 November 2001. 4 On 1 July 2004, the Bar Association, as Applicant, filed in the Tribunal an Information under Part 10 of the Legal Profession Act 1987 ('the LP Act') against the Barrister. The Information alleged that the Barrister, a legal practitioner within the meaning of s 128 of the Act, had been guilty of professional misconduct. 5 The four grounds on which the Bar Association sought a finding of professional misconduct were set out, with particulars, in the First Schedule to the Information. On 8 February 2005, pursuant to leave that we granted under s 167A of the LP Act, the Bar Association filed additional particulars relating to Grounds 1(a), 2(a) and 2(b). The Grounds and particulars are set out below. 6 In the Second Schedule to the Information, the Bar Association requested the Tribunal (1) to find that the Barrister had been guilty of professional misconduct; (2) in the alternative, to find that he had been guilty of unsatisfactory professional conduct; (3) to find that he is not a fit and proper person to remain on the Roll of Legal Practitioners; (4) to order that his name be removed from the Roll; (5) in the alternative to (3) and (4), to make an order under any one or more of sub-paragraphs (b), (c), (d), (e) or (f) of sub-section 171C(1) of the LP Act; (6) to order that the Tribunal's decision be published; (7) to order that the Barrister pay the Bar Association's costs; and (8) to make such further or other orders as the Tribunal thought fit. 7 In his Amended Reply, filed on 8 April 2005, the Barrister denied, or effectively denied, all of the Grounds except Grounds 2(c) and 4. But he admitted, wholly or in part, a number of the particulars. 8 In the course of giving evidence at the hearing, the Barrister indicated that he was prepared to 'enter a plea' of 'guilty' to the charge of professional misconduct, on the basis of a document headed 'Respondent's Statement of Facts' which was admitted into evidence. But he contested the Bar Association's claims that he was not a fit and proper person to remain on the Roll of Legal Practitioners and that his name should be removed from the Roll. 9 In these circumstances it is convenient, when setting out the four Grounds of the Information and the accompanying particulars, to indicate whether, and if so to what extent, the barrister admitted the truth of each of them, in his Amended Reply and/or in the Respondent's Statement of Facts. The allegations against the Barrister and the extent to which he admitted them 10 The four Grounds and particulars, as amended, are as follows (the additional particulars inserted on 8 February 2005 are marked 'Additional'):- Ground 1 1. The barrister has been guilty of long standing non-compliance with, and reckless disregard of, his legal and civic obligations to:- (a) pay tax by reference to his returns in a timely fashion; and (b) pay penalties and interest imposed as a result of late payment of tax. (Denied) Particulars of (a) i. The barrister's taxable income in the financial years from 1989 to 1999 was not less than $3.5m. (Admitted) ii. The barrister's income tax liability, disregarding penalties and interest ("primary tax liability"), for the financial years from 1989 to 1999 was not less than $1.5m. Of the sum of $1.5m, the barrister did not pay more than $420,000, which amounted to less than a third of his total primary tax liability over that period. (Admitted) iii. During the period of approximately three and a half years from 11 October 1995 until his second bankruptcy which commenced on 16 June 1999, the barrister paid less than $12,000 in tax. (Admitted that the figure is of the order alleged) iv (Additional) Judgment was entered against the barrister in favour of the Deputy Commissioner of Taxation on 6 August 2004 in proceedings 74/04 in the District Court of Newcastle in an amount of $611,907.17 plus $463 for costs, a total of $612, 370.17 ("the 2004 Judgment Debt"). (Admitted) v. (Additional) On or about 7 October 2004 a Bankruptcy Notice was issued to the barrister in respect of a debt owed to the Deputy Commissioner of Taxation of $621,405.14, comprising the 2004 Judgment Debt of $612,370.17, plus interest of $9,0324.97. (Admitted) vi. (Additional) The barrister has not complied with the Bankruptcy Notice or otherwise satisfied the 2004 Judgment Debt. (Admitted) Particulars of (b) iv. As at 28 May 2001, the barrister had accumulated a liability to the Deputy Commissioner of Taxation to pay penalties and interest in excess of $425,000. (Admitted) Ground 2 2. The barrister has failed to comply with his legal and civic obligation to: (a) pay such of the amounts claimed by statements of claim filed on behalf of the Deputy Commissioner of Taxation as he did not reasonably dispute, prior to the entry of judgment; (Denied) (b) comply with judgments of courts requiring payment to the Deputy Commissioner of Taxation; (Denied) (c) comply with notices issued pursuant to section 264 of the Income Tax Assessment Act; (Admitted in part) (d) make timely contributions to his trustee in bankruptcy in accordance with section 139P of the Bankruptcy Act 1966. (Denied) Particulars of (a) i. Judgment was entered against the barrister in favour of the Deputy Commissioner of Taxation in proceedings S 10833 of 1992 on 30 March 1992 in the Supreme Court of New South Wales, in the sum of $556, 957.30. (Admitted) ii. Notwithstanding that the barrister admitted in a defence filed on 21 March 1997 in proceedings S 14332 in the Supreme Court of New South Wales that he was indebted to the Deputy Commissioner of Taxation in the sum of $427,367.78 he did not pay any part of this sum, prior to entry of judgment on 10 March 1999 (see below), or prior to filing a debtor's petition on 7 April 1999 (see below). (Admitted) iii. Judgment was entered by consent against the barrister in favour of the Deputy Commissioner of Taxation in the Supreme Court of New South Wales in proceedings S 14332 of 1996 on or about 10 March 1999, in the sum of $517,770.51. (Admitted) iv. (Additional) Judgment was entered against the barrister in favour of the Deputy Commissioner of Taxation on 6 August 2004 in proceedings 74/04 in the District Court of Newcastle in an amount of $611,907.17 plus $463 for costs, a total of $612, 370.17 ("the 2004 Judgment Debt"). (Admitted) v. (Additional) On or about 7 October 2004 a Bankruptcy Notice was issued to the barrister in respect of a debt owed to the Deputy Commissioner of Taxation of $621,405.14, comprising the 2004 Judgment Debt of $612,370.17, plus interest of $9,0324.97. (Admitted) vi. (Additional) The barrister has not complied with the Bankruptcy Notice or otherwise satisfied the 2004 Judgment Debt. (Admitted) Particulars of (b) i. As at 9 April 1992, when a sequestration order was made against the barrister's estate, he had not paid the judgment debt referred to in i. above. (Admitted) ii. As at 7 April 1999, when the barrister filed a debtor's petition and thereby became bankrupt, his indebtedness to the Deputy Commissioner was in excess of $1m. (Admitted) iv. (Additional) Judgment was entered against the barrister in favour of the Deputy Commissioner of Taxation on 6 August 2004 in proceedings 74/04 in the District Court of Newcastle in an amount of $611,907.17 plus $463 for costs, a total of $612, 370.17 ("the 2004 Judgment Debt"). (Admitted) v. (Additional) On or about 7 October 2004 a Bankruptcy Notice was issued to the barrister in respect of a debt owed to the Deputy Commissioner of Taxation of $621,405.14, comprising the 2004 Judgment Debt of $612,370.17, plus interest of $9,034.97. (Admitted) vi. (Additional) The barrister has not complied with the Bankruptcy Notice or otherwise satisfied the 2004 Judgment Debt. (Admitted) Particulars of (c) i. On or about 12 March 1999 the Deputy Commissioner of Taxation served two notices on the barrister pursuant to section 264(1)(a) and 264(1)(b) of the Income Tax Assessment Act ("the section 264 notices"). (Admitted) ii. The section 264 notices required the barrister to attend at the place specified in the notices on or before 9.30 a.m. on 9 April 1999 and produced (sic) the material specified and the information requested in the section 264 notices. (Admitted) iii. The barrister failed to comply with the section 264 notices. (Admitted) iv. The barrister, in the mistaken belief that it would have the effect of, and for the purpose of, relieving him from his obligation to comply with the section 264 notices, filed a debtors petition in the Federal Court of Australia on 7 April 1999. (Admitted) v. On 7 April 1999 two informations were laid in the Local Court, St James Centre, Sydney, in which it was alleged that the barrister had committed an offence against each of section 8C(1)(a) and 8C(1)(f) of the Taxation Administration Act. (Admitted) vi. On August 1999 the barrister signed an Acknowledgment of Liability and Explanation, in which he admitted that he had committed the offences, and was duly convicted. (Admitted) Particulars of (d) i. In January 2001, at a time when the barrister was in default of his obligation to make contributions to his bankrupt estate, the barrister caused monies to be paid to Comserv in order that it could pay the arrears of lease payments owing to AGC in respect of a 1998 Mercedes Benz motor vehicle driven by the barrister's wife. (Admitted) Ground 3 3. The barrister arranged his affairs in such a manner that his income as a barrister, and assets purchased therefrom, were placed beyond the reach of the Deputy Commissioner of Taxation and his trustees in bankruptcy from time to time, and that the income and assets would therefore not be available to be used to discharge his legal obligation to pay income tax and pay penalties and interest imposed as a result of late payment of tax. (Denied) Particulars (a) From a date not later than April 1996, the barrister used Comserv (No 1482) Pty Limited ("Comserv"), with the intention that Comserv would: i. provide chambers for the use of the barrister; ii. operate as a service company or the barrister's practice; iii. pay third parties for expenses relating to chambers, such as floor fees and clerk's fees; iv. be remunerated by the barrister. (Admitted) (b) The barrister was the only source of income for Comserv. (Admitted) (c) The barrister alienated income to his wife, through Comserv, by causing her to be remunerated at a rate in excess of the commercial value of the services she provided to Comserv. (Admitted) (d) Further, and in addition to the monies paid to the barrister's wife through Comserv, the barrister paid money, and transferred property, to Comserv, his wife and other family members, for the benefit of himself and his family, such that he had insufficient cash or other assets to meet his obligations to pay tax. (Admitted in part) (e) Since a date not later than 1993 the barrister has not held any substantial assets in his own name, notwithstanding that income from his practice, part of which ought to have been used to pay his liability for income tax, has been used to fund the purchase of substantial assets in the names of others, including his wife. (Admitted in part) (f) Shortly prior to his second bankruptcy, the barrister caused fees from his practice as a barrister to be paid into the respective bank accounts of his wife, of other family members and Comserv. (Admitted with qualifications) Ground 4 4. Since a date not later than 1989 the barrister has used monies which would otherwise have been available to discharge his indebtedness to the Deputy Commissioner of Taxation to fund a lifestyle for himself and his family, in excess of that which he could have afforded, had he complied with his legal and civic obligation to pay tax. (Admitted with qualifications) Particulars (a) The barrister has lived beyond his means. (Admitted, as from 1990) (b) Notwithstanding that he appreciated that his personal expenses were excessive, the barrister, during his second bankruptcy, thwarted attempts by his accountants to curb his expenditure by banking income received from his practice as a barrister into his personal account, rather than into an account controlled by the accountants, as had previously been agreed. (Admitted in part) 11 It will be seen that these particulars refer to two bankruptcies of the Barrister. As outlined in the Respondent's Statement of Facts, the first bankruptcy commenced on 9 April 1992, pursuant to a creditor's petition filed by Geneva Finance Ltd. The Barrister was discharged from this bankruptcy on 9 May 1995. The second bankruptcy commenced on 16 June 1999, pursuant to a debtor's petition. At the time when these proceedings were heard, he had not yet been discharged from this bankruptcy. 12 The Respondent's Statement of Facts also outlines a third bankruptcy. On the ground of non-compliance with the Bankruptcy Notice of 7 October 2004 (see particular 1(a)(vi)), a Sequestration Order was made against him on 23 March 2005, based on an act of bankruptcy occurring on 6 December 2004. 13 In relation to all the Grounds in the Information, the Barrister stated in his Amended Reply that he accepted that 'individuals have a legal and civic duty to pay tax and to pay other debts as they fall due'. But he stated also that he did not admit the allegation of a breach of civic obligation, since, as he expressed it, 'he does not know and cannot therefore admit that which may be the asserted legal impact of the civic obligation contended for by the informant in these proceedings'. 14 In relation to Ground 2, he stated in his Amended Reply that he denied (i) the allegation of a breach of a civic obligation, since he did not admit the existence of such an obligation; (ii) the existence, as alleged in paragraph 2(a), of 'a legal obligation in the course of litigation to pay a sum of money not disputed when the claimant's demand in the proceedings is substantially more than is its lawful entitlement and that claim remains disputed'; and (iii) the allegation that he failed to comply with the legal obligation referred to in paragraphs 2 (b) and (d). He admitted, however, his failure to comply with notices issued pursuant to section 264 of the Income Tax Assessment Act, as alleged in paragraph 2 (c). 15 In admitting Ground 4 in the Amended Reply (except as to the alleged breach of a 'civic obligation'), the Barrister added that from about 1996 his indebtedness to the Deputy Commissioner of Taxation was always greater than could have been discharged from his income as a barrister. In the Respondent's Statement of Facts, he claimed that his use of monies as alleged in Ground 4 commenced 'not later than 1991', not, as alleged, at a time 'not later than 1989'. 16 The specific content of what we have labelled partial or qualified admissions by the Barrister will be explained in more detail below. 17 The written submissions of Mr R Ellicott QC, appearing with Mr P Clay of counsel for the Barrister, included some statements that appeared to concede certain matters not covered by the admissions of the Barrister that we have just outlined. We will refer below to these statements. The specific conduct alleged against the Barrister 18 Ms Adamson SC, appearing with Ms S Pritchard of counsel for the Bar Association, reminded us that even if there had been agreement between the parties as to the facts, and indeed as to the orders to be made, we would still be obliged, in proceedings of this nature, to record the findings on which our orders were based: see eg Prothonotary of the Supreme Court of New South Wales v McCaffery [2004] NSWCA 470 at [11 – 12]. We agree. We do not accept the conflicting submission of Mr Ellicott that in these circumstances there is little or no need for us to determine any disputed issues of fact. 19 The voluminous evidence adduced by the Bar Association sought to substantiate all of the particularised allegations in the Information. It also provided a basis for inferring misconduct beyond the scope of these allegations. We will cite one relatively small-scale example, relating to conduct by the Barrister falling within Ground 4 (that is, that he 'used monies which would otherwise have been available to discharge his indebtedness to the Deputy Commissioner of Taxation to fund a lifestyle for himself and his family, in excess of that which he could have afforded, had he complied with his legal and civic obligation to pay tax'). Ms Adamson submitted that evidence from the Barrister's former accountant, Mr G R Ellison, showed this conduct to have commenced as early as 1987. 20 We are mindful, however, of the well-established principle that in proceedings for professional misconduct under Part 10 of the LP Act, 'the function of the Tribunal is confined to that of conducting a hearing "into each allegation particularised in the information"' (Walsh v Law Society of New South Wales (1999) 198 CLR 73 at 95, per McHugh, Kirby and Callinan JJ, quoting the words of s 167(2) of the Act). It is accordingly not open to us to base our conclusions regarding professional misconduct in this case on any finding that conduct such as Ground 4 alleges occurred outside the period identified in that Ground – that is, before 1989. We should only make a finding of fact outside the range of the four Grounds as particularised if it is relevant to the making of a finding within that range. 21 In this section of our judgment, we focus on the specific acts and omissions alleged against the Barrister. What we may broadly term the questions of culpability that the Information raises are explored in the next section. These questions are (a) as to whether the conduct referred to in Grounds 1, 2 and 4 constituted breaches of 'civic' as well as legal obligations; and (b) whether, as alleged in Ground 1, he was guilty of 'reckless disregard' of his legal and 'civic' obligations to pay tax, penalties and interest. 22 In recording our findings, we will follow the order in which the four Grounds and accompanying particulars appear in the Information. 23 Ground 1: Failure to pay income tax, interest and penalties since 1989. The only particular of Ground 1 that the Barrister contested was as to the amount of tax that he paid between 11 October 1995 and the commencement of his second bankruptcy on 16 June 1999. We are satisfied from records kept by Mr Ellison that this amount was $11,864.77, as stated in the Information at particular 1(a)(iii). Having regard to his admissions and to the other financial evidence adduced, we are satisfied also that the nature and scale of the Barrister's failure to pay income tax, interest and penalties since 1989 was set out in Ground 1 and the accompanying particulars. 24 In further elaboration of this matter, the Bar Association tendered evidence showing that between the Barrister's discharge from his first bankruptcy on 9 May 1995 and the filing of the debtors petition leading to his second bankruptcy on 7 April 1999, his gross income was $2,240,200, his taxable income was $1,740,431, his primary tax liability was $796,847.71 and the total of his tax payments was $75,777.12. These tax payments amounted therefore to less than 10% of his primary tax liability. We accept this evidence, which was not disputed. 25 Mr Ellicott drew our attention to material within the Bar Association's evidence suggesting that since the commencement of his second bankruptcy the Barrister had paid amounts totalling about $487,000 by way of contributions to the bankruptcy. This evidence comprised (i) a letter dated 19 August 2002 from Mr M C Donnelly of Ferrier Hodgson, who was the trustee in the Barrister's second bankruptcy, to the Barrister; (ii) the Statement of Liquidated Claim by the Deputy Commissioner of Taxation, dated 20 February 2004, which resulted in the 2004 Judgment Debt and (iii) an email message dated 28 June 2005 from Ms Angela Gallucci, of Ferrier Hodgson, to Ms Rosemary MacDougal, the solicitor for the Bar Association in these proceedings. 26 Mr Ellicott pointed out that the Deputy Commissioner of Taxation was the sole creditor in this bankruptcy and the liabilities to which the bankruptcy related were those accruing before June 1999. It followed, in his submission, that the Barrister's contributions to meeting his tax liabilities between 1989 and 1999 amounted to more than $900,000, not merely the figure of less than $420,000 (the actual figure, as shown in the evidence, was $418,300) mentioned in particular (a)(ii) under Ground 1. 27 We accept Ms Adamson's submission, however, that a figure of $124,421.09 within a category entitled 'payments and/or credits' in the Statement of Liquidated Claim cannot be reliably interpreted to designate a payment by or on behalf of the Barrister, given that there was no other evidence to support this interpretation. 28 On the other hand, Mr Donnelly's letter of 19 August 2002 does provide a sufficient basis for a finding that, within the period since the commencement of the second bankruptcy in June 1999, the Barrister made contributions to the bankruptcy totalling $352,871.27. In that letter, the amount said to be still due on account of contributions was $36,438.71. By 28 June 2005, the date of Ms Gallucci's email message, the amount due had been reduced to $19,835.04, giving rise to the inference that about $16,600 had been paid in the interim. 29 We find accordingly that these payments of about $369,500 operated as repayment of his tax liabilities between 1989 and June 1999 and should be added to the sum of $418,300 paid within that period. 30 The total is approximately $787,800, leaving a shortfall of about $712,200 in satisfying the Barrister's total tax liability of approximately $1.5 million (see particular 1(a)(ii)). 31 It must be remembered, however, that the 2004 Judgment Debt of $612,370.17 plus interest was for unpaid income tax. It led to the third bankruptcy. There was no evidence of any contribution to this bankruptcy. The total amount of unpaid tax since 1989 appears therefore to have been in the vicinity of $1,324,570. 32 To the degree and with the qualifications that we have just outlined, we find that the specific conduct alleged and particularised in Ground 1 has been established to our comfortable satisfaction. 33 Ground 2: Failure to pay amounts of tax claimed in statements of claim or contained in judgments, to comply with s 264 notices and to contribute to bankruptcies. The Barrister did not admit a number of specific matters alleged in this Ground. 34 We need not dwell on his claim, relating to Ground 2(a), that there exists no 'legal obligation in the course of litigation to pay a sum of money not disputed when the claimant's demand in the proceedings is substantially more than is its lawful entitlement and that claim remains disputed'. This issue was not taken up by the Bar Association. Our finding is therefore that Ground 2(a), so far as any legal obligation is concerned, was not made out. 35 We do not understand the Barrister's denial of the allegation of a failure to comply with court judgments (Ground 2(b)), given that he admitted all the accompanying particulars. The evidence clearly substantiated this allegation. 36 The Barrister admitted that he had failed to comply with his legal obligation to comply with notices issued under section 264 of the Income Tax Assessment Act 1936 (Cth) (Ground 2(c)). He admitted the associated particulars. Again, there was evidence to substantiate these allegations. 37 The Barrister denied that he had failed to comply with his legal obligation to make contributions to his trustee in accordance with s 139P of the Bankruptcy Act 1966 (Cth) (Ground 2(d)). He did, however, admit the associated particular (2(d)(i)). 38 Section 139P(1) of the Bankruptcy Act provides as follows:- 139P Liability of bankrupt to pay contribution (1) Subject to section 139Q, if the income that a bankrupt is likely to derive during a contribution assessment period as assessed by the trustee under an original assessment exceeds the actual income threshold amount applicable in relation to the bankrupt when that assessment is made, the bankrupt is liable to pay to the trustee a contribution in respect of that period. 39 The Bar Association did not contend that there was any default in contributions to the first bankruptcy. In fact, the Barrister made contributions of about $163,000, resulting in payment of a dividend of about 22.8 cents in the dollar to the Deputy Commissioner of Taxation and the other unsecured creditors. 40 We have already outlined, at [25 – 29] above, the extent of his contributions to the second bankruptcy. These came to about $369,500. In the Respondent's Statement of Facts, he alleged that as at 30 August 2001 he was up to date with his contributions. There is no evidence specifically contradicting this. 41 By August 2002, however, an amount of $36,438.71, forming part of a contribution assessed at $80,265.34 for the year ending 16 June 2002, was due and unpaid. By 28 June 2005, this amount had been reduced to $19,835.04. The intervening payments included payments of $7,100, made in circumstances outlined below by a company called Sydney Development Services Pty Ltd. 42 The Barrister was not assessed for any further contributions after 16 June 2002, because his income fell below the 'actual income threshold amount' applicable to him. It follows that payment of all of the balance of $19,835.04 quoted by his trustee in June 2005 had been due for at least three years. Evidence set out below suggests that his failure to reduce this balance cannot be attributed to any lack of capacity to pay. 43 We accordingly find that, contrary to his denial, Ground 2(d) has been made out. 44 As just mentioned, the Barrister admitted particular 2(d)(i). The evidence substantiated the allegations in this particular. It showed that in January 2001 the Barrister was in arrears with contributions to the extent of approximately $36,000. He nonetheless caused approximately $11,000 to be paid to Comserv in order that it could pay the arrears of lease payments owing to AGC, a finance company, in respect of a 1998 Mercedes Benz motor vehicle driven by his wife. He stated in cross-examination that his wife still drives this vehicle. 45 To the degree and with the exceptions that we have just outlined, we accordingly find that the specific conduct alleged and particularised in Ground 2 has been established to our comfortable satisfaction. 46 Ground 3: Placing income and assets beyond the reach of the Deputy Commissioner of Taxation and the Barrister's trustees in bankruptcy. The Barrister denied the allegation of conduct of this general nature in Ground 3, but admitted, wholly or in part, all of the associated particulars. 47 The admitted allegations made in particulars 3(a) and (b), relating to the functions performed by Comserv (No 1482) Pty Limited ('Comserv'), do not call for comment. We accept a submission by Mr Ellicott that service companies such as Comserv are often established and maintained by barristers. 48 The admitted allegations in particular 3(c) were substantiated by evidence that the Barrister's wife, Ms Vicki Davison, was paid $5,000 per month for typing services which, as she recalled it, occupied her for some period between one and five hours of her time each week. In 2001, the Barrister's trustee in bankruptcy instituted Federal Court proceedings claiming amongst other things that she had been paid more than the value of the commercial services that she had provided to Comserv. These were resolved by consent orders requiring, amongst other things, that she pay the sum of $150,000 to the trustee. 49 It is convenient to consider particulars 3(d) and (e) together. With regard to particular 3(d), the Barrister admitted that he paid money to Comserv, his wife and other family members, for the benefit of himself and his family, with the consequence that he had insufficient cash or other assets to meet his tax obligations. With regard to 3(e), he admitted that since 1993 he had not held substantial assets in his own name 50 The evidence showed in fact that, according to the Barrister's statement of affairs in respect of his second bankruptcy, the only assets that he held as at 7 April 1999 were items of personal property to the value of $5,000. 51 It showed also that the payments that he made to family members included weekly amounts of $1,500 or $2,000 paid as living expenses to his brother between 1996 and April 1998, enabling his brother to work on a joint venture in which the two of them held equal shares. It involved the marketing of a software program designed to solve Y2K problems. It was a speculative venture, which failed. 52 In relation to these two particulars the Barrister denied (a) that property was transferred to others, (b) that the purpose of payments made was to place assets beyond the reach of the Deputy Commissioner of Taxation and trustees in bankruptcy or for any unlawful purpose, and (c) that income from his practice, part of which ought to have been used to pay his liability for income tax, has been used to fund the purchase of substantial assets in the names of others, including his wife. 53 The evidence showed that the house in which the Barrister lived with his wife was held in her name and that he made substantial contributions towards its purchase. She herself also made a significant contribution towards the deposit on the house. Such claim as the trustee in the second bankruptcy had against her with respect to his share in the home was settled by her payment of $150,000, to which we referred above at [48]. 54 In these circumstances, we consider that the elements of these two particulars that the Barrister denied have not been proved. We accept, however, the Bar Association's submission that, whether or not the Barrister entertained the purpose of placing assets beyond the reach of the Deputy Commissioner of Taxation, the effect of his voluntary payments – including the payments made to his brother in support of a speculative business venture – was that he had insufficient cash or other assets to meet his tax obligations. 55 With regard to particular 3(f), the Barrister admitted that shortly before his second bankruptcy his bank closed his bank account and income from legal practice was paid into either the Comserv account or his wife's account and used for living expenses. 56 This was substantiated by evidence emanating principally from the Barrister's examination in his second bankruptcy, held on 31 October 2000. It was to the following effect. Between 16 February 1999 and the commencement of this bankruptcy on 16 June 1999, he did not deposit any cheques derived from his practice as a barrister into the bank account that he had previously opened to receive such cheques. Instead, he banked a number of cheques into the Comserv account, his wife's account or, he believed, his brother's account. Two cheques paid during March 1999 into his wife's account were for $20,000 and $11,500 respectively. He sought to explain his decision not to use his own account by the fact that the bank had requested the return of his debit card. He took this to mean that the account was closed. 57 To the degree and with the exceptions that we have just outlined, we find that the specific conduct alleged and particularised in Ground 3 has been established to our comfortable satisfaction. 58 Ground 4: Use of monies to fund a lifestyle that would have been unaffordable if tax obligations had been met. The Barrister admitted this Ground in general terms. Furthermore, Mr Ellicott's written submissions included some statements, referred to below, to the effect that the lifestyle maintained by the Barrister and his family was excessive having regard to the scale of his tax obligations. 59 The Barrister's general admission was subject to two qualifications. One was that his use of monies as alleged in the Ground commenced 'not later than 1991', not, as alleged, at a time 'not later than 1989'. This conflicts, however, with his admission, in relation to particular 4(a), that as from 1990 he lived beyond his means. We do not think that much turns on this issue. The other qualification expressed by the Barrister was that from about 1996 his indebtedness to the Deputy Commissioner of Taxation was always greater than could have been discharged from his income as a barrister. 60 Three illustrations from the evidence may be given of the amounts spent by the Barrister on personal items for himself and his family. They serve to substantiate the general allegation in Ground 4 and also particular 4(a). 61 First, a figure of $450,671.17 for personal expenditure in the tax year 1996-97 appears in a letter dated 7 December 1999 from his accountant, Mr Ellison, to his trustee in bankruptcy. No evidence of any unusual events subjecting the Barrister or members of his family to particularly heavy expenditure was put forward to suggest that this amount should not be deemed excessive. 62 Secondly, in the two months prior to his filing, on 7 April 1999, the debtor's petition that led to his second bankruptcy, he and his wife incurred debts of approximately $65,000 on their credit cards. He admitted in cross-examination that none of this expenditure was on assets that his trustee could sell for the benefit of his creditors. It will be recalled that the value of the assets that he disclosed on bankruptcy was about $5,000. 63 Thirdly, on 5 September 2000, an auction sale of a wine collection maintained at the Barrister's home took place, realising net proceeds of $45,163. It comprised 389 lots, many of which were made up of dozens, not single bottles, of wine. The Barrister claimed in an afffidavit sworn on 10 December 2004 that the wine was bought before 1992, the date of his first bankruptcy, and 'mostly in the 1980s'. This claim was however contradicted by the auctioneer's description in the notice of sale. It showed that the vintage of many of the lots sold was later than 1992. 64 The Barrister's partial admission to particular 4(b) was to the effect that on occasions he banked income from his practice as a barrister into his personal account rather than the account controlled by his accountant. In so stating, he denied (i) that he appreciated at the time that his personal expenses were excessive and (ii) that through his conduct he 'thwarted attempts by his accountants to curb his expenditure'. 65 During the examination of the Barrister in his second bankruptcy on 30 October 2000, he stated that in September 1999 his accountant, Mr Ellison, opened a bank account, referred to as a 'practice account', into which cheques deriving from his practice as a barrister were to be deposited. The Barrister admitted, however, that on three subsequent occasions, he banked cheques, totalling at least $32,500, into his own 'personal account'. 66 On 30 June 2000, Mr Ellison wrote to the Barrister expressing his concern at the Barrister's failure to comply with arrangements whereby he controlled the Barrister's income. He pointed out that between 28 October 1999 and 28 June 2000, the Barrister had paid cheques totalling $73,950 into Comserv's bank account and cheques totalling $32,500 into his personal account. Mr Ellison calculated that of the $73,950 paid to Comserv, $21,179.94 had been spent on that company's expenses and the balance ($52,770.06) on 'personal expenditure'. The outcome was that out of the total of $106,450 paid into these two accounts, $85,270.26 had been allocated towards personal expenditure. The Barrister, Mr Ellison wrote, had not disclosed any of these payments to him. 67 At a later examination in his bankruptcy, held on 7 February 2001, the Barrister admitted that, although he had arranged with Mr Ellison that his deposits into his personal account for living expenses would not exceed $2,500 per month, he in fact deposited a total sum of $133,000 into this account during the period of eleven months between February and December 2000. 68 This evidence clearly shows, contrary to the Barrister's assertion in his Amended Reply, that (a) at the time when he paid these funds into these accounts he appreciated that his personal expenses were excessive, and (b) through this conduct he 'thwarted attempts by his accountants to curb his expenditure'. Particular 4(b) is established in full. 69 To the degree that we have just outlined, we find accordingly that the specific conduct alleged and particularised in Ground 4 has been established to our comfortable satisfaction. The issue of culpability 70 As foreshadowed earlier, we will now discuss whether the Barrister failed to comply with his 'civic obligations' with regard to taxation, and whether he was guilty of 'reckless disregard' of both his legal and his civic obligations, under the broad heading of culpability. 71 We should explain briefly that in treating breaches of 'civic obligations' as involving some form of culpability, we are drawing on the use of this concept in recent leading cases in which members of the legal profession have been subjected to disciplinary measures – including removal from the Roll – on account of failure to comply with legal obligations in relation to tax. Those cases include New South Wales Bar Association v Cummins [2001] NSWCA 284 and New South Wales Bar Association v Stevens [2003] NSWCA 261, both of which are discussed below. It will suffice here to say that in both of them a 'civic obligation' is, on our interpretation, regarded as having an ethical dimension, such that a breach of it – at least by a member of a profession that maintains and professes to maintain high standards of integrity – involves some element of impropriety or culpability. 72 In a judgment that the present Panel delivered in the Legal Services Division of this Tribunal in 2004 (Council of the New South Wales Bar Association v Archer (No 2) [2004] NSWADT 78 at [90 – 91]), we endeavoured to explain this point:- 90 … The judgments in Cummins and Stevens , as we read them, convey the message that a sustained failure to discharge the 'civic', as opposed to the 'legal', obligation to pay income tax necessarily involves impropriety, having regard to the standards to be expected of members of the legal profession. 91 Implicit in our conclusion is our understanding that taxpayers who do not pay their tax debts or make provision for the payment of such debts would not be considered to have breached their 'civic obligations' if their failure resulted from circumstances entirely beyond their control, such as being found liable for a huge and wholly unforeseeable debt to some third party. The language of the judgments in Cummins and Stevens implies that moral and ethical considerations underlie the notion of a citizen's 'civic obligation' to pay tax. If no moral or ethical obligation in this regard is breached, there is no breach of the 'civic obligation'. 73 As indicated above at [13 – 15], these elements of Grounds 1, 2 and 4 of the Information were not the subject of admissions by the Barrister, either expressly or by implication. In his written submissions, however, Mr Ellicott made statements that went some way towards conceding that the Barrister had both breached his civic obligations and acted with 'reckless disregard'. Mr Ellicott wrote, for instance, that 'the Respondent was foolish, he ignored his civil obligations to pay tax and did so in circumstances where he preferred his family to the Commissioner of Taxation', adding that 'it may amount to an intentional disregard of his obligations, but it is not dishonest' (para 68). He wrote also that it was 'clear that the Respondent failed to meet his civil and legal obligations to pay his tax in a very substantial amount over a period of at least ten years whilst he was a barrister' (para 89). 74 In an affidavit sworn on 10 December 2004 within these proceedings, the Barrister said that he 'wrongly managed his financial affairs' (para 59) and that both his judgment of his spending and the steps that he took to rectify his financial situation were 'wrong' (paras 61, 62 and 63). He claimed, however, that he did not act with 'wilful or reckless disregard' for his creditors or for the Commissioner of Taxation (paras 61 and 62). 75 In cross-examination, he adhered to the epithet 'wrong' and maintained his denial of 'reckless disregard'. 76 In his affidavit, he made one further assertion relating directly to the issue of his culpability. He stated as follows at paragraph 58:- If I was not aware prior to my first bankruptcy I certainly was in the days after I was first bankrupt, that contributions to a bankruptcy are required and may be required in very large sums of money. I made substantial contributions to my first bankruptcy and I made substantial contributions to my second bankruptcy until my income source was massively affected by the publicity associated with the "bankrupt barristers" and after I ceased to practise due to the cancellation of my Practising Certificate in November 2001. 77 The publicity that he referred to here principally comprised a series of newspaper articles appearing in Sydney early in 2001, alleging that a number of New South Wales barristers had avoided meeting their income tax liabilities by a number of means, including going bankrupt with substantial unpaid debts on account of tax. In an article in the 'Sydney Morning Herald' published on 27 February 2001, the Barrister was identified as one of these. 78 In a judgment delivered on 28 June 2005, we ruled, over opposition from Mr Ellicott, that in the light of this assertion the Bar Association was entitled on two grounds to put questions to the Barrister regarding the level of any income earned by him since early 2001. 79 We formulated the first of these grounds as follows:- In our opinion, questions designed to ascertain what income was earned by the Respondent in the period after the beginning of 2001 are relevant to determining his capacity to make the tax payments to which the judgment of 67 August 2004 and the bankruptcy notice of 7 August 2004 related. The issue of his capacity to make those payments is directly relevant to the question whether he complied during 2004 and 2005 with his civic obligations and indeed whether or not he recklessly disregarded those obligations. 80 As to the second ground, we said this:- This statement in the Respondent's affidavit is made in order to justify his having ceased to make substantial contributions to his second bankruptcy after the appearance of the media publicity early in 2001. It is put forward as a response to the allegation in the Information that he failed to make timely contributions to his trustee in bankruptcy as required by the Bankruptcy Act . In our judgment it is open to the Bar Association to raise questions in order to determine whether this response has a legitimate foundation in fact. 81 It then emerged from cross-examination of the Barrister, and from further evidence admitted under this ruling, that in November or December 2001 a company called Sydney Development Services Pty Ltd ('SDS') was registered. At about the same time, this company engaged him as a consultant on matters of environmental law at an annual salary of $50,000. It did not, however, issue a group certificate to him with respect to this salary. He said in cross-examination that he was not aware of anyone else being employed by SDS as a consultant. He said also that the clients who engaged SDS were 'in the main' clients who used to brief him when he had a practising certificate. 82 When asked in cross-examination whether he was aware that an annual income of $50,000 was insufficient to render him liable to make contributions to his bankruptcy, the Barrister replied that he thought that the threshold was fixed at only $32,000. 83 The Barrister's wife, Ms Vicki Davison, was from the outset the sole director and shareholder of SDS. In cross-examination, the Barrister said initially that he himself played no role in the company's financial management or, in particular, in the preparation of its tax returns. But he also said, referring to an affidavit that she had sworn in other proceedings in November 2001, that Ms Davison had no knowledge of his financial affairs and did not pay much attention to how the family's finances were organised. 84 Ms Davison was not called as a witness. It was indicated to us that she and the Barrister were living together and that this had been the state of affairs during the events that we have just outlined. We agree with a submission by Ms Adamson, based on Jones v Dunkel (1959) 101 CLR 298, that the inference to be drawn is that Ms Davison's evidence would not have supported the Barrister's claim to have played no role in the financial management of SDS. 85 There was further evidence on this issue of financial control of SDS. Printouts of e-mail correspondence in February and April 2004 between the Barrister and the accountant for SDS showed that the accountant, when preparing financial statements and tax returns for SDS for 2001-02 and 2002-03, relied on the Barrister for information and advice. 86 On these grounds, we find that the financial management of SDS was effectively in the hands of the Barrister. 87 The Barrister's income tax return for 2001-02 recorded a total income of $301,712, comprising attributed personal services income of $50,000 and supplement income of $251,712. The Barrister agreed with a suggestion that this last amount most likely comprised payments made to him in the capacity of barrister for services rendered before his practising certificate was cancelled in November 2001. It appeared from other evidence, and was ultimately conceded by the Barrister in cross-examination after some prevarication, that he had not filed tax returns for 2002-03 or 2003-04. 88 The company tax return of SDS for 2001-02 recorded total income of $63,275. Included in its expenses was a figure of $50,000 for total salary and wage expenses. The return for 2002-03 recorded total income of $228,400 and total expenses of the same amount. It also quoted figures of $50,000 for total salary and wage expenses and $211,051 for 'payments to associated persons'. It appeared that by the time of the hearing of these proceedings SDS had not filed a tax return for 2003-04. 89 Further evidence, including answers by the Barrister in cross-examination, showed also that for most of the time since October 2002 SDS had been paid a monthly retainer, apparently of $10,000, by a company called Walker Corporation, in respect of services to be provided by the Barrister to SDS and by SDS to Walker Corporation. There was also correspondence between the Barrister and a representative of Walker Corporation, in which the Barrister proposed that Walker Corporation pay a 'success fee' to SDS if it succeeded in certain litigation in relation to which he, on behalf of SDS, was providing consultancy services. 90 Having discovered this arrangement between SDS and the Barrister, Mr Donnelly, his trustee in bankruptcy, caused notices to be issued to SDS under s 139ZL of the Bankruptcy Act, requiring payments to be made towards his bankruptcy by SDS, as his employer. This prompted the contributions, mentioned above at [41], totalling $7,100. 91 Between June and November 2003, Mr Donnelly also made several unsuccessful requests to the Barrister (directly or via Mr Ellison) for completion of an income questionnaire in order that the level of any further contributions might be assessed. Mr Donnelly also stipulated a date and time in November 2003, giving ten days' notice, at which the Barrister was to attend his office to discuss the administration of the bankruptcy. The Barrister neither attended this appointment nor indicated that he would not attend. At the time stipulated, he was instead engaged in consultancy work for a client of SDS. 92 On the fourth day of the hearing, after the conclusion of the Barrister's testimony but before Mr Ellicott had closed his case, we granted leave, on Mr Ellicott's application, for the Barrister to be recalled for further examination. He then testified that since 7 April 2005 he had been employed by Walker Corporation on a 'trial basis', for an annual base salary of $110,091.74. He tendered two pay slips showing that group tax had been deducted. These matters had not been mentioned previously, either in evidence to the Tribunal or indeed in communications between the Barrister and his trustee in bankruptcy. 93 In assessing whether the Barrister's proven conduct was accompanied by culpability as alleged in the Information, we treat as especially relevant the allegations made and particularised in Grounds 3 and 4. With reference particularly to the events preceding the second bankruptcy and during the early years of that bankruptcy, they describe acts and omissions which, taken collectively, constituted a deliberate strategy for ensuring that the Barrister did not fulfil his civic obligations with regard to very substantial tax liabilities. 94 The conduct of the Barrister since 2001, as disclosed at the hearing, similarly amounts to a deliberate strategy precluding any discharge of his civic obligations (and possibly also his legal obligations) to make appropriate contributions to his second bankruptcy and thereby to reimburse the Commissioner of Taxation for some at least of the unpaid tax. 95 In the light of all this evidence, taken together with the statements acknowledging some element of wrongdoing by the Barrister and (on his behalf) by Mr Ellicott, we are comfortably satisfied that the allegations of breaches of civic obligations in the Information are fully made out. We find that the conduct outlined in the two preceding paragraphs was intentional. The remaining conduct that has been alleged and proved either was intentional or involved 'reckless disregard'. Characterisation as professional misconduct 96 As we have said, the Barrister admitted that he had been 'guilty' of professional misconduct. In the light of the leading authorities, including New South Wales Bar Association v Cummins [2001] NSWCA 284 and New South Wales Bar Association v Stevens [2003] NSWCA 261, to which we have already referred, we have no doubt that the conduct on his part that has been proved to us, taken in conjunction with our findings as to culpability, does indeed amount to professional misconduct. In so ruling, we take account of the fact that much of the income giving rise to the tax liabilities that have not been duly satisfied was earned in the course of practice as a barrister (see the judgment of Spigelman CJ in New South Wales Bar Association v Cummins at [66]). 97 Contrary to a submission by Mr Ellicott, the professional misconduct committed by the Barrister includes relevant conduct following cancellation of his practising certificate in November 2001, in so far as such conduct contributed to his failure to satisfy tax liabilities generated by his prior earning of income as a barrister. In so ruling, we rely on the fact that (a) s 127 of the LP Act defines 'professional misconduct' by reference to conduct of a 'legal practitioner' and (b) a 'legal practitioner' is defined in s 3(1) as 'a person enrolled in the Supreme Court as a legal practitioner', not by reference to the holding of a practising certificate. This point is confirmed by s 25(4). By declaring that it may be professional misconduct for legal practitioners to practise as, or hold themselves out as, a barrister or a solicitor without being a current holder of a practising certificate, this provision similarly indicates that legal practitioners who not hold such a certificate may nonetheless be guilty of professional misconduct. The question whether removal from the Roll is warranted 98 As already indicated, the Bar Association's contention that the Barrister be struck off the Roll of Legal Practitioners pursuant to s 171C(1)(a) of the LP Act was the sole element of its case against him that he disputed. In Mr Ellicott's submission, the appropriate order for us to make was instead that a practising certificate should not be issued to the Barrister until the end of a period specified in the order, as provided for by s 171C(1)(c). 99 It was accepted by counsel on both sides we should not make an order for removal unless we were persuaded of his 'probable permanent unfitness' for practice. In Prothonotary of the Supreme Court of New South Wales v Ritchard, Unreported, Court of Appeal, NSW, 31 July 1987, McHugh JA, having used this phrase, explained it as follows:- The jurisdiction of the court to remove a practitioner from the Roll is entirely protective:… An order for the involuntary removal of a name of a practitioner from the Roll of Solicitors is made only because the probability is that the solicitor is permanently unfit to practise. Unless the court is persuaded that the probability exists the proper order to make will usually be one of suspension or fine instead of removal. 100 In delivering the leading judgment in New South Wales Bar Association v Cummins [2001] NSWCA 284, Spigelman CJ, at [26], expressed his agreement with these observations. At [28], he formulated the basis for the Court's order of removal as being that the respondent barrister 'must be regarded, at the present time, as permanently unfit to practise'. 101 Mr Ellicott reminded us that in applying this criterion of 'probable permanent unfitness' for practice, we must be 'comfortably' satisfied, in accordance with the principles stated by the High Court in Briginshaw v Briginshaw (1938) 60 CLR 336. 102 For ease of exposition, we shall indicate at this point that, in the light of all the findings outlined above and some further matters explained below, we are indeed comfortably satisfied that the Barrister 'must be regarded, at the present time, as permanently unfit to practise'. We consider that an order of removal from the Roll is manifestly justified. 103 In a nutshell, our principal reasons for so concluding are these. First, over a period of about 15 years the Barrister has intentionally or recklessly breached his civic responsibilities with regard to the payment of income tax, with the consequence that a very substantial sum of money has been lost to the Revenue. Secondly, his conduct in recent years provides good grounds for believing that the ethical shortcomings that underlie these breaches have not been remedied. 104 We will now set out our detailed reasons for our conclusion, focusing particularly on the opposing arguments put to us by Mr Ellicott. Breaches of civic obligations with regard to tax as a ground for removal from the roll. 105 As indicated earlier, we interpret the references in recent cases to breaches of 'civic' obligations with regard to tax as covering situations where a taxpayer, intentionally or recklessly, has failed in substantial measure to discharge his/her legal obligations to pay tax lawfully assessed, despite having had the capacity to do so without undue hardship. The violation of ethical and social responsibilities to fellow-citizens must be involved. We would exclude cases where there were reasonable grounds for the failure to discharge these legal obligations: for example, where there was an unforeseeable decline in the scale of the taxpayer's financial resources. 106 In Cummins, Spigelman CJ explained in the following paragraphs why a barrister's disregard of legal and 'civic' obligations with regard to tax may provide the grounds for a finding of probable permament unfitness to practise:- 19 Honesty and integrity are important in many spheres of conduct. However, in some spheres significant public interests are involved in the conduct of particular persons and the state regulates and restricts those who are entitled to engage in those activities and acquire the privileges associated with a particular status. The legal profession has long required the highest standards of integrity. 20 There are four interrelated interests involved. Clients must feel secure in confiding their secrets and entrusting their most personal affairs to lawyers. Fellow practitioners must be able to depend implicitly on the word and the behaviour of their colleagues. The judiciary must have confidence in those who appear before the courts. The public must have confidence in the legal profession by reason of the central role the profession plays in the administration of justice. Many aspects of the administration of justice depend on the trust by the judiciary and/or the public in the performance of professional obligations by professional people…. 22 Even in a period where other values have become of significance to the regulation of the legal profession, … the traditional professional paradigm still has a vitality of abiding significance…. 29 The key admission in the statement of agreed facts is that for thirty-eight years, Mr Cummins did not lodge any tax returns relating to his professional practice, or for any other personal income. This failure was an inexcusable pattern of illegal conduct in complete defiance of his civic responsibilities. Mr Cummins put no evidence before the Court which could explain, let alone excuse, this conduct. For almost four decades, Mr Cummins took advantage of the full range of public services made available by taxation, not least in the provision of the court system by which he made his income. He left the burden of all of this to his fellow citizens. Throughout the four decades he engaged in the rank hypocrisy of advocating that other people should perform their legal obligations, while systematically refusing to perform his own. 30 In the present case, unlike other cases, the barrister did not admit that his actions have jeopardised the reputation and standing of the legal profession. There is no doubt, however, that he has done so. The conduct of a barrister, particularly a barrister who has received the distinction of a Commission as one of her Majesty's Counsel, who has behaved in such complete disregard of his legal and civic obligations, was necessarily such as to bring the entire legal profession into disrepute. 107 These observations have provided the basis for a number of subsequent decisions of the Court of Appeal removing barristers from the Roll in circumstances involving failure to file tax returns over a substantial period: see New South Wales Bar Association v Somosi [2001] NSWCA 285 at [68]; New South Wales Bar Association v Young [2003] NSWCA 228 at [9]; New South Wales Bar Association v Stevens [2003] NSWCA 261 at [15]. 108 We will quote also from a case decided before Cummins, namely, New South Wales Bar Association v Hamman [1999] NSWCA 404. This concerned a barrister who knowingly understated his income when completing his income tax returns. At [85], Mason P said:- I emphatically dispute the proposition that defrauding " the Revenue " for personal gain is of lesser seriousness than defrauding a client, a member of the public or a corporation. The demonstrated unfitness to be trusted in serious matters is identical. Each category of " victim " is a juristic person whose rights to receive property are protected by law, including the criminal law in cases of dishonest interception. " The Revenue " may not have a human face, but neither does a corporation. But behind each (in the final analysis) are human faces who are ultimately worse off in consequence of fraud. Dishonest non-disclosure of income also increases the burden on taxpayers generally because rates of tax inevitably reflect collection levels… 109 These passages from Cummins and Hamman bring together two topics of prime importance in this case. They explain why significant breaches of civic obligations with regard to tax are held to be especially serious when committed by barristers. They also refer to well-established considerations underlying regulation of the legal profession and the imposition of disciplinary sanctions, such as ensuring that clients and the general public can repose their trust in practitioners. 110 With regard to the latter topic, we would quote also from the Court of Appeal's decision in Law Society of New South Wales v Foreman (1994) 34 NSWLR 408. The professional misconduct of the solicitor in this case did not relate to tax obligations, but took the form of reconstructing time sheets so as to deceive both the Family Court and other legal practitioners. At 471, Giles AJA, having referred to the protective character of the Court of Appeal's disciplinary jurisdiction, said:- But the object of protection of the public also includes deterring the legal practitioner in question from repeating the misconduct, and deterring others who might be tempted to fall short of the high standards required of them. And the public, and professional colleagues who practise in the public interest, must be able to repose confidence in legal practitioners, so an element in deterrence is an assurance to the public that serious lapses in the conduct of legal practitioners will not be passed over or lightly put aside, but will be appropriately dealt with. 111 In our opinion, the statements of principle that we have set out in this section of our judgment require us to conclude that an order for removal from the Roll falls within the range of disciplinary sanctions that may be imposed on the Barrister for the professional misconduct that has been alleged and proved against him. Whether proof of criminal behaviour or dishonesty is essential 112 In so concluding, we reject a proposition put to us by Mr Ellicott. This was, in essence, that the leading cases to which we have referred do not authorise the making of an order of removal from the Roll on the ground of breaches of legal and civic obligations relating to tax unless those breaches involved either the commission of criminal offences or dishonesty, in the sense of knowingly making false representations. Mr Ellicott argued that we should accept this proposition and for that reason should not make an order for removal in this case. 113 He pointed out that, except for failing to comply with notices under s 264 of the Income Tax Assessment Act as alleged in Ground 2(c), the Barrister had committed no criminal offences under tax law and was not guilty of dishonesty in relation to his tax liabilities. He had openly disclosed his full income in his tax returns, thereby exposing himself to liabilities to pay tax. While in the terminology familiar to tax lawyers, his conduct in failing to pay tax to which he had been assessed had resulted in avoidance of tax, it had never amounted to evasion. By contrast, the respondent barristers in Cummins, Somosi, Young and Stevens, through failing to file tax returns, and the respondent in Hamman, through deliberately understating his income in his tax returns, had both committed criminal offences and deceived the tax authorities. Their behaviour constituted dishonest tax evasion. 114 Mr Ellicott submitted that a number of the dicta of Spigelman CJ in Cummins and Somosi implied that the Court of Appeal would not have made a striking-off order in either case if no criminal offence or dishonesty had been involved. Notable among these dicta were the following:- The key admission in the statement of agreed facts is that for thirty-eight years, Mr Cummins did not lodge any tax returns relating to his professional practice, or for any other personal income. This failure was an inexcusable pattern of illegal conduct in complete defiance of his civic responsibilities. ( Cummins at [29]) The facts which are critical for determination of these proceedings are not in issue. Mr Somosi did not file an income tax return in any of the seventeen years ending on 30 June, between 1978 and 1994. Accordingly, he paid no tax in any of these years. This was deliberate conduct which had the effect of concealing his income and ensuring that he paid no tax. No inadvertence or accident could conceivably explain such a sustained period of conduct over such a long period. The only inference is that he deliberately and intentionally evaded tax. (Somosi at [63]) 115 Mr Ellicott referred us also to the proceedings in Wardell v New South Wales Bar Association [2002] NSWSC 548. These concerned a decision of the Bar Council on 16 November 2001 to cancel the practising certificate of a barrister, Mr Wardell, on the ground that he was not a fit and proper person to hold such a certificate. On appeal to the Supreme Court, Cripps AJ upheld the Council's decision. 116 Mr Wardell had been declared bankrupt on his own petition, with the Deputy Commissioner of Taxation as his largest creditor. Although he had had an income well above what was needed to meet ordinary living expenses, his payments on account of income tax were in default by more than a million dollars. A major reason was that over a number of years he had spent considerable sums on 'discretionary lifestyle choices', which included annual overseas holidays and heavy gambling. The amounts of 'high living' expenditure 'over and above ordinary business expenses and necessary domestic expenses' were said by Cripps AJ, at [30], to have been between $200,000 and $250,000. 117 Mr Wardell had not failed to file tax returns or committed any other tax offences. He had not disposed of assets in order to quarantine them from creditors. As Cripps AJ put it at [23], he had not been guilty of '"tax evasion" as that expression is relevantly understood'. 118 Cripps AJ's decision to dismiss Mr Wardell's appeal against cancellation of his practising certificate was chiefly based on the following statement of principle (at [42]):- In order to maintain public confidence in the Bar it is necessary , in my opinion, for members of the Bar to recognise and abide by the ethical and moral standards enjoying the special privileges offered by the Bar. It is true that these standards have varied over the years… I would suggest, however, that now it is generally recognised by right thinking members of the community that people have an obligation to meet their debts, if they can, and that the failure of a person to meet his or debts over a long period of time without any exculpating features other than that the money was spent elsewhere would promote in the minds of right thinking people in our community that that person was not a fit and proper person to hold a practising certificate. 119 Over an objection by Ms Adamson, we allowed Mr Ellicott to tender evidence that the Bar Council subsequently resolved to grant Mr Wardell a practising certificate as from 1 July 2003. The period during which he had no certificate was therefore only about 19 months. Mr Ellicott submitted that in the light of the many material similarities between his conduct and that of the Barrister, we should treat the Bar Council's decision to restore Mr Wardell's practising certificate as 'a clear affirmation by the Bar Council that in a case such as Mr Davison's the appropriate course is not to regard him as permanently unfit'. 120 Our reasons for rejecting this line of argument put by Mr Ellicott are these. We agree with him that the facts of the five Court of Appeal cases mentioned above at 106 – 108] can be distinguished from those of the case before us on the basis that he outlined. But we do not agree that the passages from Cummins and Somosi on which he relied indicate that the Court of Appeal regarded either (a) the commission of one or more criminal offences under tax law or (b) dishonesty, in the sense of knowingly making false representations, as a pre-requisite to making a striking-off order on the ground of a barrister's failure to pay tax. 121 The judgments in these two cases, and in the other authorities cited to us, did not resolve this issue either way. The reason – a familiar one in case law – is that it did not need to be resolved. We are not in fact aware of any case in which this issue has been directly posed for determination. 122 Furthermore, other parts of the Chief Justice's judgment in Somosi, on which we invited Mr Ellicott's comments, suggest that his Honour may well have regarded neither the commission of criminal offences by Mr Somosi, the respondent barrister, nor dishonesty on his part as essential to the Court's decision. 123 At [75], referring to the convictions of Mr Somosi under tax law for failing to comply with a notice requiring the filing of tax returns, the Chief Justice said:- 75 In the present case, the conviction and penalty is not, of itself, a matter entitled to substantial weight. The significant matter is the conduct underlying the convictions. The convictions were for the failure to comply with a notice to file seventeen years of returns within a period of about a month from the Notice. However, the underlying conduct, to which the conviction only indirectly related, was the failure by a legal practitioner, over a long period of time and in a systematic way, to comply with his legal and civic obligations. It is that conduct that is entitled to determinative weight in making the judgments the Court has to make in these proceedings, both as to the findings of fact upon which it acts and also on the issue of relief. 124 We recognise that what his Honour describes as 'the underlying conduct' in Somosi was distinguishable, on the grounds urged by Mr Ellicott, from the Barrister's conduct in this case. Nevertheless, this passage downplays the importance of proof of criminal conduct. 125 It was, moreover, followed three paragraphs later by the following passage:- 78 The determinative consideration for these proceedings is that Mr Somosi avoided tax for seventeen years. In the absence of any suggestion to the contrary in his own evidence, I find no difficulty in drawing the obvious inference that his failure to comply with his obligations over that period of time was deliberate and that he intended to avoid taxation. His subsequent conduct does not qualify the impropriety of this failure. Indeed, he has repeated the failure in two subsequent years. 126 This passage puts emphasis on the fact of deliberate conduct resulting in substantial tax avoidance, coupled with an intention to avoid tax. It uses the term 'avoidance', not 'evasion'. As Ms Adamson submitted, it directs attention to the intended and actual outcome of conduct such as that of Mr Somosi and of the Barrister in this case. This was that although their income over a long period was well above the tax threshold, they intentionally avoided making their assessed contributions to public funds, despite deriving benefit from the contributions made by other taxpayers. 127 Mr Ellicott argued to us that we were bound to read this paragraph in Somosi in conjunction with paragraph [63] of the judgment (quoted above at [114]), where the Chief Justice spoke of Mr Somosi's failures to file tax returns, his 'concealment' of income and his having 'deliberately and intentionally evaded tax'. But in view of the intervening paragraphs, from one of which ([75]) we have quoted, we do not think that this is correct. 128 We note in any event that the Barrister's conduct did not constitute 'tax avoidance', in the familiar sense of arranging one's financial affairs so as to attract as little tax as possible. While frowned on in various contexts, tax avoidance in this sense is not unlawful and may not, of itself, constitute a breach of a taxpayer's 'civic' obligations. What the Barrister 'avoided' was something quite different: it was the payment of large amounts of taxation to which he had been assessed. 129 In Cummins, as indicated above at [106], Spigelman CJ said of the respondent barrister (a) that he 'took advantage of the full range of public services made available by taxation, not least in the provision of the court system by which he made his income', but 'left the burden of all of this to his fellow citizens'; (b) that he 'engaged in the rank hypocrisy of advocating that other people should perform their legal obligations, while systematically refusing to perform his own; and (c) that his conduct 'jeopardised the reputation and standing of the legal profession'. In our judgment, these descriptions are applicable, with only slight modifications, to the behaviour, resulting in avoidance of the payment of substantial amounts of tax, which has been alleged and proved against the Barrister in this case. 130 Our view of Mr Ellicott's argument based on the proceedings in Wardell is broadly in line with submissions on the matter made by Ms Adamson. In the absence of any evidence on which the Bar Council based its decision in 2003 to restore Mr Wardell's practising certificate, we cannot infer any 'affirmation' on its part that the Barrister in this case should receive similar treatment. The mere fact that the Bar Association has in the present case included an order for removal from the Roll as one of the orders sought in the Information contradicts any such inference. Furthermore, the Tribunal is not in any event bound by any submission made by the Bar Association (or indeed by the Law Society or the Legal Services Commissioner in cases brought by them) as to what order or orders it should make under s 171C(1) of the LP Act following a finding of professional misconduct. 131 For these various reasons, we are bound, after careful consideration, to reject Mr Ellicott's submission that because no conduct alleged and proved against the Barrister has been shown either to have involved a criminal offence (with one insignificant exception) or to have been 'dishonest' in the specific sense indicated above, we are precluded by existing authority from making an order removing his name from the Roll. Likelihood of future compliance with legal and civic obligations relating to tax 132 Mr Ellicott submitted that we should infer that in future the Barrister would abide by his tax obligations. Such an inference, he argued, would rule out a finding of probable permanent unfitness to practise. 133 In support of this submission, Mr Ellicott relied on statements by the Barrister in a letter dated 17 September 2001 to the Bar Association and in his oral evidence. In the letter, the Barrister acknowledged that his conduct was 'deserving of severe censure' and expressed his regret for the damage that it had caused to the reputation of the legal profession. In oral evidence, he said:- I sincerely regret the position I have been in for the last ten years or more, fifteen years. It is what I did and failed to do was wrong ( sic ). I allowed my attention to be solely devoted to my practice and when my wife became very concerned about our relationship, thereafter devoted my attention to the family as well. I did not devote attention to my financial affairs as I should, and that's what has led me to the position I'm now in, and I sincerely regret that. I sincerely regret that my name was used in press articles about barristers and tax and the reflection that has had upon the Bar and if I had the opportunity, I would ensure that my time was properly divided between – amongst practice, family and my financial obligations. 134 In our opinion, this submission was significantly weakened by a proposal of Mr Ellicott accompanying his argument that the appropriate order in this case was for a practising certificate not to be issued to the Barrister until the end of a period specified in the order. Mr Ellicott proposed that when a new practising certificate was issued, the Bar Council could require the Barrister to submit to a regime of control of his income, ensuring that it would not be disbursed improperly as had occurred in the past. The Barrister in his affidavit of 10 December 2004 indicated that he would be prepared to submit to such a regime. 135 In making this proposal, Mr Ellicott appeared to us to be conceding implicitly that the Barrister could not be relied upon in the future to make proper provision of his own accord for the payment of his tax liabilities. 136 Even apart from this consideration, we are bound to reject Mr Ellicott's contention that the Barrister's regretful statements acknowledging past improprieties and promising to give proper attention in future to his financial obligations dispel any concern that he might seek again to avoid payment of his tax liabilities. Our reason, quite simply, is that since the commencement of his second bankruptcy in June 1999, and most notably since the cancellation of his practising certificate in November 2001, his actual conduct has been wholly at odds with any the terms of any such promise. 137 In ways set out above, he has failed during the last five years to (a) adhere to the regime established by his accountant for controlling his personal expenditure; (b) provide for group tax to be deducted from the annual salary of $50,000 that was shown in tax returns of himself and of SDS to have been paid to him by SDS; (c) file two personal income tax returns within the period stipulated by law; (d) give priority to paying arrears of contributions to his second bankruptcy over paying an amount due on a lease of an expensive car for his wife; (e) pay an amount outstanding for more than three years by way of contribution to this bankruptcy; (e) assist his trustee in bankruptcy to determine his current income with a view to assessing future contributions; (f) give notice in due time to his trustee, or indeed to the Tribunal, of the commencement of his employment by Walker Corporation. 138 This record of failures by the Barrister to make good his past tax defaults and to discharge properly his current tax obligations is counterbalanced only by the evidence of his contributions, totalling about $369,500, that he did make to his second bankruptcy (see [29] above). Even taking these into account, however, we are comfortably satisfied that, as we indicated earlier, the ethical shortcomings that underlie the Barrister's past breaches of his legal and civic obligations with regard to taxation have not been remedied. The Barrister's professional capacities 139 Mr Ellicott tendered affidavits by three former professional colleagues of the Barrister (Mr Trevor Morling QC, Mr Malcolm Craig QC and Mr Gary Green, a principal of a solicitor's firm specialising in environmental and local government law), all of whom testified to the high quality of the Barrister's work within these fields of practice, both at the Bar and when practising earlier as a solicitor. They referred, amongst other things, to his detailed knowledge of the law and his capacity to deal succinctly with large quantities of detailed factual material. 140 Mr Ellicott submitted that this evidence should weigh heavily with us. We should be most reluctant, he said, to strike off a senior barrister whose contribution to specialist fields of legal practice was recognised by other senior practitioners to be of very great value. 141 In responding to this submission, Ms Adamson pointed out that some of the skills of the Barrister to which this evidence referred – notably, the capacity to deal effectively with large quantities of detailed material – were the very skills that he manifestly failed to deploy when managing his own finances and attending to his tax obligations. 142 We are not attracted to this submission by Mr Ellicott. We agree with Ms Adamson's observation and would add two further comments. 143 First, we note that in New South Wales Bar Association v Cummins [2001] NSWCA 284 at [30] (quoted at [106] above), Spigelman CJ treated as a matter counting against, not in favour of, the respondent barrister the fact that he 'had received the distinction of a Commission as one of Her Majesty's Counsel'. 144 Secondly, we accept that in professional misconduct proceedings based on a practitioner's sustained failure to provide skilled and careful service to one or more clients, evidence of this nature would undoubtedly carry a great deal of weight. But where, as in this case, the complaint is of lack of integrity, we consider it inappropriate that a practitioner whose professional skills are of a particularly high order might on that score be permitted to remain on the Roll, whereas another practitioner against whom a complaint in identical terms was proved, but who was of average competence only, should be struck off. The Barrister's credibility 145 In their affidavits, Mr Morling, Mr Craig and Mr Green stated that in professional contexts they had found the Barrister to a person of integrity and honesty, in whom they reposed full confidence. Mr Morling and Mr Craig indicated that they were aware of the nature of the allegations against him in these proceedings. 146 Referring to this evidence and to the transcript of the Barrister's evidence before us, Mr Ellicott submitted that we should find him to have been a truthful and reliable witness. 147 Ms Adamson strongly opposed this assessment of him. She pointed to a number of occasions where he had been compelled during cross-examination to retract wholly or substantially a statement made by him in his affidavit of 10 December 2004 or earlier in his oral evidence. The statements thus retracted in whole or in part included the following: (a) that the wine collection sold by auction after his second bankruptcy was purchased before 1992 and 'mostly in the 1980's; (b) that he had filed his income tax returns for 2001-02 and 2002-03; and (c) that he had played no part in the preparation of SDS's tax returns for those years. 148 Ms Adamson also argued that the evidence regarding his employment by SDS since November 2001 clearly established the falsity of the claim in his affidavit that his 'substantial contributions' to his second bankruptcy ceased because his 'income source' was 'massively affected' by the publicity associated with the 'bankrupt barristers' and by the cancellation of his practising certificate in November 2001. The true position, she claimed, was that while fixing for himself an artificially low salary of $50,000, so as to avoid being assessed for future contributions, he continued to earn substantial amounts (in 2002-03, a total income of $228,400, with the prospect of an additional 'success fee') for a company wholly owned by his wife, with whom he resided. 149 Finally, Ms Adamson contended that the Barrister's failure, until near the end of evidence in these proceedings, to disclose his recent engagement by Walker Corporation, either to the Tribunal or to his trustee in bankruptcy, reflected most adversely on his credit. 150 We agree with Ms Adamson that in the light of these instances the Barrister's sworn evidence in the present proceedings fell significantly short of consistent truthfulness and that this is a matter which we may and should take into account in determining what order should be made (see eg New South Wales Bar Association v Sahade [2005] NSWADT 159 at [118 – 121]). Personal difficulties experienced by the Barrister 151 In his affidavit of 10 December 2004, the Barrister referred to three matters that we should outline here. 152 The first was that during 1990-91 he was separated from his wife and family because, he believed, of the excessive amounts of time that he spent working and his inability to communicate with her. 153 Secondly, one consequence of his first bankruptcy was the loss of the home in which he and Ms Vicki Davison resided with their two young children. A period of considerable instability followed, during which she threatened to leave him, taking the children with her, unless he managed to 'buy a house for her'. In circumstances briefly mentioned above, this was done in July 1997. 154 The third matter, of considerably greater significance, was that in January 1997, the Barrister's son Andrew committed suicide at the age of 27. He was the eldest of three children of an earlier marriage of the Barrister. Some of the circumstances surrounding this tragic event were outlined in confidential evidence tendered on the Barrister's behalf. 155 In his affidavit, the Barrister stated that the loss of his son Andrew, coupled with his having to concentrate on his family on account of the loss of their home, induced him to focus his mind solely on his professional tasks. After the failure in February 1998 of the software venture on which he and his brother had embarked (see [51] above), he had been unable to see any solution to his tax problems, with the result that he 'hid from them'. 156 An affidavit by Dr Robert Fisher, a consultant psychiatrist, was filed on the Barrister's behalf. In a report dated 14 January 2005, Dr Fisher recorded his findings from a series of consultations with the Barrister between 4 March 2001 and September 2004. 157 Dr Fisher found that at the time of the first consultation the Barrister was still 'devastated' by unresolved grief for his son and was suffering from guilt through attributing Andrew's suicide in significant part to the breakup of his first marriage. In addition, he was under heavy pressure on account of the recent publicity about the 'bankrupt barristers', in which he was specifically named. 158 Dr Fisher concluded at the first consultation that the Barrister was 'in a very depressed state'. He diagnosed an Adjustment Disorder. Subsequently, he prescribed anti-depressant medication, which seemed to have a positive effect. 159 Although prepared in 2005, Dr Fisher's report made no specific comment about the Barrister's mental health in recent years. His only observation linking his professional opinions with the events in issue in these proceedings was to the effect that the Barrister's 'depressed mood and unresolved feelings of grief, combined with his tendency to use rationalisation and denial, all contributed to his inattention to his financial affairs leading to the second bankruptcy'. 160 Mr Ellicott submitted that these matters should be taken into account by us, not to excuse the Barrister's failure to meet his tax obligations but to explain it. Their effect, he said, was to 'provide a human face to what occurred'. 161 Ms Adamson acknowledged that these were distressing events, which clearly needed to be taken into account. But she pointed out that although in both New South Wales Bar Association v Somosi [2001] NSWCA 285 and New South Wales Bar Association v Young [2003] NSWCA 228, the respondent barrister had undergone similarly distressing experiences, these had not been treated by the Court of Appeal as a reason for not making an order for removal from the Roll. In the latter case, the respondent had had two marriages, each of which ended in divorce and a disadvantageous property settlement, and had been involved in at least two failed business ventures. Furthermore, in 1985 he had suffered the tragic death of his son by drowning. 162 We would accept that the depression from which the Barrister was suffering following his son's death played a significant role in his going bankrupt in June 1999 and was still affecting him early in 2001. There is no reason to doubt Dr Fisher's professional opinion on these issues. But Dr Fisher did not express a view regarding the Barrister's conduct since November 2001, on which we place significant emphasis. Taking this into account, along with the features of Somosi and Young to which our attention has been drawn, we do not think that the events that we have just outlined provide sufficient grounds for declining to make the order that is otherwise warranted by the facts of this case. Our orders 163 The name of the Barrister should be removed from the Roll of Legal Practitioners. 164 The Barrister is to pay the costs of the Bar Association, as agreed or assessed. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.