Reported Decision : (2002) Aust Torts Reports 81-653 New South Wales Supreme Court CITATION : Cameron v Bar Association of NSW [2002] NSWSC 191 revised - 25/03/2002 FILE NUMBER(S) : SC 13646/01 HEARING DATE(S) : 08.03.02 JUDGMENT DATE : 20 March 2002 PARTIES : Robert William Cameron The Bar Association of New South Wales JUDGMENT OF : Simpson J COUNSEL : D.F. Rofe QC with A.J. Tudehope (Plaintiff) P.R. Garling SC with C.E. Adamson (Defendant) SOLICITORS : McLaughlin Riordan (Plaintiff) Hicksons (Defendant) CATCHWORDS : Legal Profession Act 1987 - ss38FB, 38FC, 38FE - "fit and proper person to hold a practising certificate" - whether dishonesty necessary - dishonesty established Legal Profession Act 1987 LEGISLATION CITED : Legal Profession Regulation 1994 Taxation Administration Act 1953 Bankruptcy Act 1966 Veghelyi v Council of the Law Society of New South Wales (1989) 17 NSWLR 669; Murphy v the Bar Association of New South Wales [2001] NSWSC 1191, unreported, 21 December 2001 CASES CITED : Chamberlain v the Law Society of the Australian Capital Territory (1993) 43 FCR 148 NSW Bar Association v Cummins [2001] NSWCA 284, 52 NSWLR 279 NSW Bar Association v Somosi [2001] NSWCA 285 NSW Bar Association v Hamman [1999] NSWCA 404, unreported, 9 September 1999 DECISION : Application for interlocutory relief as sought in summons refused with costs. IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION DUTY JUDGE list SIMPSON J 20 March 2002 13646/01 Robert William Cameron v The Bar Association of New South Wales JUDGMENT 1 Her Honour: The plaintiff, Robert William Cameron, appeals under s38B of the Legal Profession Act 1987 ("the Act") against a decision made by the Council ("the Bar Council") of the New South Wales Bar Association ("the Bar Association") to cancel a practising certificate it had previously issued to the plaintiff under s27(1) of the Act. In deciding to cancel the practising certificate the Bar Council acted under both s38FC(1) and s38FE(1)(b) of the Act. 2 Sections 38FB, 38FC and 38FE appear in Part 3, Division 1AA of the Act, which came into effect on 27 July 2001. 3 Section 38 FB relevantly provides: "(1) An applicant for a practising certificate who, since being admitted as a legal practitioner: (a) has committed an act of bankruptcy, or (b) has been found guilty of an indictable offence or a tax offence, must provide a written statement, in accordance with the regulations, showing why, despite the act of bankruptcy or finding of guilt and any circumstances surrounding the act or finding, the applicant considers that he or she is a fit and proper person to hold a practising certificate." 4 Section 38FC relevantly provides: "(1) A Council must refuse to issue, or must cancel or suspend, a practising certificate if: (a) the Council is aware that the applicant for or holder of the practising certificate has, since being admitted as a legal practitioner, committed an act of bankruptcy or been found guilty of an indictable offence or a tax offence, and (b) the Council considers that the act of bankruptcy, indictable offence or tax offence was committed in circumstances that show that the applicant or holder is not a fit and proper person to hold a practising certificate. … (5) Despite any other provision of this Act, a Council required to take action under subsection (1) in relation to a barrister or solicitor may, for the purpose of enabling the proper arrangement of the affairs of the barrister or solicitor: (a) issue a practising certificate to the barrister or solicitor that remains in force for such period, specified in the practising certificate, as the Council considers necessary to achieve that purpose, or (b) defer cancelling or suspending the practising certificate held by the barrister or solicitor for such period as the Council considers necessary to achieve that purpose." "A Council" includes the Bar Council. 5 Section 38FE provides: "(1) A Council may refuse to issue, or may cancel or suspend, a practising certificate if the applicant or holder: (a) is required by section 38FB to provide a written statement in relation to a matter and has failed to provide a written statement in accordance with that section, or (b) has provided a written statement in accordance with section 38FB but, in the opinion of the Council to which the statement was provided, has failed to show in that statement that he or she is a fit and proper person to hold a practising certificate, or (c) has failed to comply with a requirement under section 38FI or has wilfully contravened section 38FI (4). (2) If a Council acts under this section and, within 14 days after being notified of the action, the applicant or holder concerned requires the Council to state its reasons for the action, the Council must comply with the requirement without delay." 6 An appeal under s38B against a s38FC decision is a hearing de novo in the original jurisdiction of the court: Veghelyi v Council of the Law Society of New South Wales (1989) 17 NSWLR 669; Murphy v the Bar Association of New South Wales [2001] NSWSC 1191, unreported, 21 December 2001, per McClellan J. Background 7 The plaintiff was admitted (under the regime then prevailing) to practise as a barrister at law on 22 November 1968. He has been in continuous private practice since 1975. A practising certificate under the regime provided by Part 3, Division 1 of the Act was issued on 1 July 2001 and (unless and until cancelled) entitled him to practise until 30 June 2002. On 1 November 2001, acting under s38FC and s38FE(1)(b), the Bar Council resolved to cancel the practising certificate. The plaintiff was advised of this resolution by a letter dated 2 November 2001. The cancellation was specified to take effect from midnight on 1 December 2001. 8 By summons dated 26 November 2001 the plaintiff sought a variety of orders, including a stay of the cancellation and a declaration that he is a fit and proper person to practise as a barrister. He sought other, consequential orders to which it is not presently necessary to refer. Despite the language used in the summons, and the formulation of the orders sought, the summons was, in effect, an appeal under s38B. 9 On 12 December 2001 the plaintiff discontinued that proceeding before any hearing commenced. 10 On 26 March 2002 the plaintiff filed a fresh summons in substantially identical terms to the earlier summons. Both parties proceeded on the basis that the hearing that ensued on that day was an interlocutory one, pending the outcome of a full and final adjudication of the plaintiff's appeal. 11 In these circumstances, it seems to me to be appropriate to confine my findings of fact to the minimum necessary to enable a proper determination of the plaintiff's interlocutory claim. Further relevant statutory provisions 12 Clause 69D, inserted into the Legal Profession Regulation 1994 in March 2001, relevantly provides as follows: "(1) If a barrister or solicitor is found guilty of an offence (other than an excluded offence), the barrister or solicitor must: a) notify the appropriate Council in writing of the finding and the nature of the offence, and b) furnish to the appropriate Council, within the time specified by the appropriate Council, such further information as it requires relating to the finding or the commission of the offence. (2) Sub-clause (1): … (f) extends to an offence (other than an indictable offence) committed within the period of ten years occurring immediately before the commencement of this clause (and so extends whether the finding of guilt was made before or after that commencement)." (emphasis added) 13 It will be seen that the obligation to disclose as imposed by this provision is not identical to that imposed by s38FB. The obligation imposed by regulation 69D is to disclose offences committed within a ten year period immediately before the commencement of the clause (that is, March 2001). The obligation imposed by s38FB is to disclose any act of bankruptcy, and any finding of guilt for an indictable offence or tax offence at any time since being admitted as a legal practitioner. 14 On 8 June 2001, pursuant to s27 of the Act, the plaintiff applied to the Bar Council for the issue of a practising certificate. He completed the necessary form, in the process declaring that he had never been found guilty of an indictable offence, but that he had, in the preceding ten years, been found guilty of an offence other than an indictable offence; that he had been a bankrupt, that he had had a creditor's petition served on him; that he had presented to the Official Receiver a declaration of intention to present a debtor's petition; and that he had in fact presented a debtor's petition. In an annexed disclosure statement he provided details of some of the various matters declared. 15 Relevantly, these were a bankruptcy in December 1994, on the petition of the Deputy Commissioner of Taxation and a second bankruptcy in February 1995, again on the petition of the Deputy Commissioner of Taxation. The plaintiff does not appear, in this disclosure statement, to have provided any additional information about the offence or offences of which he had been found guilty. 16 On 9 March 2001 the president of the Bar Association circularised all members with a notification that the Bar Association's powers to investigate conduct extraneous to a barrister's practice, but potentially relevant to a barrister's fitness to practise as such, had been increased, attaching copies of amendments to the relevant regulations. On 6 April the plaintiff disclosed that, on 12 November 1996 and again on 8 November 2000 he had been convicted under s8C of the Taxation Administration Act 1953 for failing to comply with a notice to furnish income tax returns for the years ended 30 June 1995 and 30 June 1999 respectively; and on 27 May 1997 he had been convicted under s8H of the same Act of failing to comply with a court order to furnish an income tax return for the year ended 30 June 1995. He further disclosed that he had, on 5 January 2001, been served by the Deputy Commissioner of Taxation with a creditor's petition under the Bankruptcy Act 1966. 17 He provided a statement under regulation 69E(2)(a) containing an explanation of the matters referred to. There followed some correspondence between the plaintiff and the Bar Association; this, generally speaking, consisted of requests by the Bar Association for additional information and the plaintiff's responses to those requests. 18 On 5 October 2001 the Bar Association sent to the plaintiff a draft interim report of the same date, and invited the plaintiff to consider whether it contained any errors of fact or emphasis, and to bring to the attention of the Bar Association any further matters that he wished the Bar Association to consider. The authors of the draft report (apparently a committee of the Bar Association) recommended that the Bar Council consider whether, for the purposes of s38FC(1) of the Act, the matters disclosed by the plaintiff were committed in circumstances that showed he was not a fit and proper person to hold a practising certificate; that, for the purposes of s38FE(1) the Bar Council form the opinion that the plaintiff had failed to show that he was a fit and proper person to hold a practising certificate; and that his practising certificate be cancelled. 19 On 16 October 2001 the plaintiff responded to the invitation extended in the letter. 20 On 24 October 2001 the Bar Council resolved: "1. that for the purposes of s38FC(1) of the Legal Profession Act , the matters notified by Robert William Cameron were committed in circumstances which showed that Robert William Cameron is not a fit and proper person to hold a practising certificate; 2. that for the purposes of s38FE(1) of that Act, Robert William Cameron has failed to show to show that he is a fit and proper person to hold a practising certificate; 3. the practising certificate of Robert William Cameron be cancelled." 21 The Council further resolved to defer cancellation of the practising certificate until midnight on Friday 2 November 2001 so as to enable the plaintiff properly to arrange his affairs. 22 The Bar Association notified the plaintiff of the resolution by letter dated 26 October 2001. 23 The plaintiff thereupon (on 26 November 2001) commenced the initial proceedings in this court which he discontinued on 12 December 2001. 24 In an affidavit sworn on 4 March 2002 the plaintiff explained his decision to discontinue the proceedings. He deposed that, on Friday 7 December 2001, he first became aware that the July 2001 amendments to the Act had "drastically extended" the disclosure requirements so as to require disclosure of any "tax offence" that had occurred outside the ten year period referred to in regulation 69D but since he had been admitted as a legal practitioner. Although he had committed such offences, he had not disclosed them, and believed it inappropriate to appeal to the court whilst his disclosure was incomplete. On 13 February 2002 the plaintiff made a further disclosure to the Bar Association, this time of tax offences committed outside the ten year period, but whilst he was admitted as a legal practitioner. There were four offences contrary to s8C of the Taxation Administration Act for failing to comply with a notice to file an income tax returns (for the years ended 1984, 1985, 1987 and 1989) and two offences contrary to s8H of that Act, of failing to comply with court orders to furnish returns (years ended 1983 and 1988). 25 The plaintiff has given a lengthy explanation for his poor record of compliance with taxation laws. He does not challenge the statements of fact contained in the draft report to the Bar Association and this is a convenient source of some of the relevant factual materials. These statements included an assertion that, following the plaintiff's 1990 bankruptcy, the Deputy Commissioner of Taxation lodged a proof of debt totalling $80,504 in unpaid income tax over a period commencing in 1979 and ending in 1987; and a further sum of unpaid provisional tax, additional tax for late payment, interest on a judgment obtained by the Deputy Commissioner, and judgment costs, bringing the total owed to the Deputy Commissioner to $278,109.84. The authors of the report concluded that "for several years in the 1980's" the plaintiff had paid no tax at all, and that in other years he had paid less tax than that for which he was liable. 26 Following the 1995 bankruptcy the Deputy Commissioner for Taxation lodged a proof of debt of almost $90,000, of which almost $53,000 was attributable to unpaid tax for the years 1993 and 1994. The authors of the report noted also that, on 8 December 2000, the Deputy Commissioner had presented a third creditor's petition against the plaintiff, this time claiming a total of $157,401.87 made up in part of unpaid tax for 1996, 1997, 1998 and 1999 tax years. The authors observed that the plaintiff had paid no income tax for most of the years since the 1995 bankruptcy. However, the draft report further noted that the plaintiff had filed a notice of intention to oppose the petition on a variety of stated grounds. The authors of the report observed that, between 30 June 1991 and 30 June 2000, the plaintiff had paid to Edsprey Pty Ltd ("Edsprey") sums amounting to $127,351. Edsprey was the trustee of the plaintiff's family trust, and the owner of shares in Counsels' Chambers Ltd that gave a right of occupation to a barrister's room in Wentworth Chambers. It was from this room that the plaintiff conducted his practice. The payments to Edsprey were made as rental to enable the plaintiff to occupy the room, and for service fees. A very large payment was made to Edsprey in 2000, this being for rental and accrued arrears of rental. However, the authors noted that the plaintiff made these payments to Edsprey at a time when he owed substantial sums of money in tax. 27 The plaintiff's explanation, as provided to the Bar Association and repeated in this court, although lengthy, may be briefly outlined. He attributed the 1990 bankruptcy to his investment in an agricultural development scheme that had been promoted as a tax minimisation scheme, but which had eventually been disallowed, leaving the plaintiff (among others) with a tax debt that he was unable to meet. In an attempt to extricate himself from his financial predicament, he purchased (in the name of Edsprey) chambers in Wentworth Chambers, necessitating the sale of chambers he owned in another building. Although he had reached agreement on the sale of these other chambers, that sale did not eventuate; nevertheless the plaintiff was obliged to proceed with his purchase. He borrowed to fund the purchase, on an interest only basis for a period, but when the loan became due, the value of the chambers had decreased, and he was unable to refinance. Further, the plaintiff suffered significantly from late payment or non-payment of fees owed to him. 28 Senior counsel for the plaintiff urged that he should be seen as incompetent in the management of his own affairs, but not as delinquent, or, at least, not deliberately or culpably so. He contended that the plaintiff's troubles began with the failed tax minimisation scheme in about 1990 and that the plaintiff was never thereafter able to extricate himself from the financial mire into which he had fallen. Far more detail than has here been recounted was contained in the various responses to the Bar Association and in his affidavits. I should also note that some character references and other testaments to the plaintiff's diligence and integrity were provided. 29 Senior counsel for the Bar Association, on the other hand, argued that the plaintiff's tax chronology demonstrated a continuous history of failure to discharge his taxation obligations, leaving a clear inference that he intended to adopt this course and that he did so deliberately, preferring all other creditors to the Deputy Commissioner: senior counsel placed particular weight on the payments made to Edsprey, the plaintiff's own family trust. The proper approach to s38FC 30 On behalf of the plaintiff reliance was placed on the decision of McClellan J in Murphy v the Bar Association of New South Wales [2001] NSWSC 1191, unreported, 21 December 2001. 31 In that case, McClellan J was considering a similar appeal brought by a barrister whose practising certificate had been cancelled under s38FE(1)(b). His Honour held, as I understand his judgment, that, once an investigation has taken place, s38FE becomes irrelevant. The subsequent decision by the Bar Council was made and the decision by this court on an appeal under s38B is made under s38FC. The test there imposed is whether the relevant conduct of the barrister (the bankruptcy, the indictable offence(s) or tax offence(s)) was committed in circumstances that showed that the person concerned is not a fit and proper person to hold a practising certificate. 32 Since the Bar Council's resolution in the present case, and the decisions to cancel the plaintiff's practising certificate were made under both sections, I do not find it necessary to embark upon the exercise undertaken by McClellan J. 33 Section 38FB introduces the conduct to which all the sections are directed – acts of bankruptcy on the part of an applicant for the holder of a practising certificate, and indictable or tax offences committed by such persons. Section 38FE focuses upon the adequacy of any explanation given by the person concerned for that conduct; it confers upon the Bar Council a discretion to refuse to issue or to cancel or suspend a practising certificate where no explanation is given, or where the explanation given fails to show that the person is a fit and proper person. The section imposes an onus on the person concerned to provide an explanation and to satisfy the Bar Council that he/she is a fit and proper person. 34 Section 38FC is directed to where the Bar Council is in possession of sufficient facts concerning the relevant conduct to make an examination of that conduct and the circumstances in which it was committed and to form an opinion whether these circumstances show that the person concerned is not a fit and proper person. No exercise of discretion arises: once the Bar Council has formed the requisite opinion, the result is dictated. Where the Bar Council is satisfied that the person concerned is not a fit and proper person to hold a practising certificate it must refuse to issue, or it must cancel or suspend, a practising certificate. 35 Here, as I have indicated, there was a great deal of correspondence between the parties and thorough investigation of the circumstance by the Bar Council. The Bar Council was, and hence this court is, in a position to make the necessary evaluation under s38FC. It is unnecessary to have recourse to s38FE. 36 McClellan J went on to consider the correct approach to s38FC, and in particular the words "not a fit and proper person to hold a practising certificate". Essentially, he held, the words denoted dishonesty (see especially [45]). 37 In the present case counsel for the plaintiff urged that construction upon me. Counsel for the Bar Association, although expressly renouncing the construction adopted by McClellan J, did not seek to argue that I should not adopt it, recognising the principles of comity that guide first instance judges. This creates something of a difficulty. I have real reservations about McClellan J's construction of the words in the section; it seems to me that these words are intended to encompass conduct that goes outside dishonesty and embrace significant impropriety, lack of integrity or bad faith falling short of dishonesty. Dishonesty is itself a somewhat elastic concept, not necessarily conveying the same meaning to everybody. This can be seen, for example, in McClellan J's reference to Chamberlain v the Law Society of the Australian Capital Territory (1993) 43 FCR 148: conduct there characterised by the court as improper was described by McClellan J as dishonest. 38 The difficulty, however, that I now encounter is that, owing to the position adopted on behalf of the Bar Association of not seeking to challenge the Murphy construction of s38FC, no argument was addressed to the question on behalf of the plaintiff. Both parties approached the issue on the basis that I would follow and adopt the reasoning and conclusions in Murphy. Once counsel for the Bar Association signified their intention in this respect, it could hardly be expected that counsel for the plaintiff would take up time on what appeared to be a non-issue. For those reasons, and with some misgivings, I do propose to approach the question I have to decide on the statutory construction stated in Murphy. 39 I have not the slightest doubt that the conduct engaged in by the plaintiff over many years was improper. The question I have to determine, in the circumstances, is whether that conduct should also be characterised as dishonest such as to warrant a conclusion that he is not a fit and proper person to hold a practising certificate. 40 Senior counsel for the Bar Association drew my attention to an annexure to an affidavit sworn by the plaintiff on 4 March 2002, headed "Briefs Returned or to be Returned". Precisely what is intended by this document is not clear. A number of briefs are listed, each with a date, and a monetary sum, presumably representing the fees the plaintiff anticipates will be payable on completion of his work. All matters post-date 1 December 2001, the date of cancellation of the plaintiff's practising certificate. Counsel for the Bar Association invited me to draw the inference, from this, that the plaintiff has continued, since the cancellation, and in breach of the Act, to undertake work as a legal practitioner. This inference I decline to draw. There is no real explanation for the dates, the latest of which is May 2002, but it seems to me that the most likely inference is that the dates are dates allocated for hearing of the matters listed. This does not imply that the plaintiff has continued to work on the briefs or to render fees for any work he has done. It was open to counsel for the Bar Association to cross-examine the plaintiff on the affidavits he had filed but he declined to do so. Cross-examination could have elucidated the meaning of the document. Finally, I do not understand it ever to have been part of the Bar Association's case that the plaintiff is not a fit and proper person to hold a practising certificate by reason of any breach of the Act or failure to comply with the cancellation of his practising certificate. I place no reliance on the document. 41 I was referred also to two recent decisions of the Court of Appeal, each delivered after the introduction of Division 1AA into the Act, but neither specifically under those provisions. These were the decisions in the NSW Bar Association v Cummins [2001] NSWCA 284, 52 NSWLR 279, and NSW Bar Association v Somosi [2001] NSWCA 285, unreported, 31 August 2001. In each case the opponent, a barrister, had failed over many years to file income tax returns or pay tax. The Court of Appeal found, in Somosi, that: "the only inference is that he deliberately and intentionally evaded tax." (at para [63]) 42 Earlier the Court of Appeal found another barrister unfit to hold a practising certificate by reason of "a systematic course of tax evasion": NSW Bar Association v Hamman [1999] NSWCA 404, unreported, 9 September 1999. 43 Given the restraint which I have concluded I should exercise by reason of the decision in Murphy, the question I must ask myself is whether the plaintiff's conduct over the years amounted to tax evasion. If so, it is, in my opinion, axiomatically dishonest. 44 It is of some significance, in my opinion, that, in the plaintiff's first bankruptcy the only creditor was the Deputy Commissioner of Taxation. In the second bankruptcy the Deputy Commissioner of Taxation was the petitioning creditor and the only supporting creditor was a finance company that had financed the purchase of the chambers in Wentworth Chambers. This, together with the consistent history of failure to comply with taxation obligations, suggests to me that the plaintiff's conduct should be characterised as more than mere incompetence in the management of his own affairs, but a deliberate course of relegating the legitimate claims of the Deputy Commissioner of Taxation to the lowest priority. This, in turn, suggests to me that the plaintiff's conduct has crossed the line, blurry though that line may be, that distinguishes impropriety or lack of integrity from dishonesty. The filing of taxation returns, and the payment of tax, is not voluntary; it is an obligation every citizen has to every other citizen, and to the community as a whole. In the case of the self-employed, where income tax is not deducted at source, persistent failure to meet the obligation, both to disclose income and to pay tax on that income, signifies a disregard of that obligation and surpasses carelessness, incompetence, or lack of organisation. 45 Nor can I accept that the plaintiff's taxation defalcations can be traced back to the disallowance of the taxation minimisation scheme. In his initial disclosure statement (Ex A) the plaintiff said that the scheme had been allowed as a deduction for three years until 1985, when it was rejected. But the plaintiff's failure to furnish income tax returns dates back to 1983 and 1984, and the Deputy Commissioner's proof of debt dates back as far as 1979. 46 I am satisfied that, on the material before me, the plaintiff has been shown to have been guilty of relevant dishonesty and therefore to be not a fit and proper person to hold a practising certificate under the Act. I have come to this conclusion, as indicated, because it has been necessary to consider the question of dishonesty. Left to myself, without the constraints of Murphy, I would have found that the lack of integrity, and the extent of the impropriety in meeting tax obligations over the years, whether properly characterised as dishonest or not, produced the same result. 47 The orders I make are that: 1. the plaintiff have leave to amend the summons herein as he may be advised within 28 days from this date; 2. application for interlocutory relief as sought in paragraph 1 of the summons herein be dismissed; 3. plaintiff to pay the costs of the defendant of the application; and 4. summons stood over generally with leave to each party to restore same to the list on 7 days notice. ********** Last Modified: 03/26/2002 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.