Sargent and Tax Agents' Board of Victoria [2009] AATA 219; (2009) 75 ATR 495 (2 April 2009)

Last Updated: 15 December 2010

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 219

ADMINISTRATIVE APPEALS TRIBUNAL ) No. 2007/5841

)

GENERAL ADMINISTRATIVE DECISION )

Re

ROSS ANDREW SARGENT

Applicant

And

TAX AGENTS’ BOARD OF VICTORIA

Respondent

DECISION

Tribunal:

G.D. Friedman, Senior Member

Date: 2 April 2009

Place: Melbourne

Decision:

The Tribunal affirms the decision under review.

(sgd) G.D. Friedman
Senior Member

TAX AGENT – cancellation of registration – conviction on sexual offences – whether suspension more appropriate than cancellation

Income Tax Assessment Act 1936 ss 251BC(1), 251K(2)(d), 251K(3)

Buttsworth v Walton, unreported NSW Court of Appeal, 19 December 1991

Hardcastle v Commissioner of Police [1984] FCA 105; (1984) 53 ALR 593

Morris v Psychologists Registration Board, unreported Supreme Court of Victoria, 19 December 1997

Re Pappalardo and Tax Agents' Board of Victoria [2003] AATA 990

The Law Society of South Australia v McKerlie [2008] SASC 222

REASONS FOR DECISION

2 April 2009 G.D. Friedman, Senior Member

1. Ross Sargent is an accountant who has been a registered tax agent since 1999. On 2 November 2007 the respondent cancelled his registration following his conviction in the Melbourne Magistrates’ Court on a number of criminal charges involving stalking and child pornography. He served a term of imprisonment and is undertaking community service as part of his sentence.
2. On 28 November 2007 Mr Sargent sought review by the Tribunal of the decision to cancel his registration. The Tribunal granted a stay of the decision and Mr Sargent has continued to practise as a tax agent during the Tribunal’s proceedings.

ISSUE

3. Mr Sargent conceded that he is not a fit and proper person to practise as a tax agent in Victoria, so the grounds exist for suspension or cancellation of his registration as a tax agent. However he believes that a period of suspension of his registration as a tax agent should be imposed rather than cancellation. This involves consideration of whether cancellation or suspension of registration would best serve the objectives of protection of the public and protection and maintenance of the standards and reputation of the profession.

LEGISLATIVE FRAMEWORK AND CASELAW

4. Section 251K(2)(d) of the Income Tax Assessment Act 1936 provides that the respondent may suspend or cancel the registration of a tax agent if it is satisfied that the tax agent is not a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters. Section 251BC(1) of the Act provides for circumstances in which a person is not a fit and proper person. These include where, at a particular time, the person is not of good fame, integrity and character. Section 251K(3) of the Act provides that if the registration of a tax agent is not already suspended, a suspension by the respondent shall be for a period that the respondent thinks fit.

5. The purpose of the disciplinary provisions of the Act providing for suspension or cancellation of registration is to protect the public from future misconduct by a practitioner, not to punish the practitioner or exact retribution (Hardcastle v Commissioner of Police [1984] FCA 105; (1984) 53 ALR 593). In Re Pappalardo and Tax Agents’ Board of Victoria [2003] AATA 990 the Tribunal stated at [44]:

Protection of the public is of course a major object of any system of regulation of a profession or occupation. If tax agents are not competent at their work the public should be protected from relying on them for performance of the tasks required of a tax agent. Similarly the public is entitled to expect that a tax agent’s professional conduct will be appropriate.

6. In The Law Society of South Australia v McKerlie [2008] SASC 222 Gray J stated at [22] that public confidence and trust in the legal profession are essential to effective functioning of the profession. The same would appear to be true of the profession of preparing tax returns and transacting business on behalf of taxpayers in income tax matters.

7. In Buttsworth v Walton, unreported NSW Court of Appeal, 19 December 1991, Samuels JA held at page 15 that the public interest in a practitioner continuing in practice must be weighed against the public interest in protecting clients from any repetition of the conduct exhibited in the particular case.

8. In Morris v Psychologists Registration Board, unreported Supreme Court of Victoria, 19 December 1997, Harper J held that a lack of insight by a professional into the effect and seriousness of his or her behaviour is relevant to the question of protection of the public, and thus, is relevant to the ultimate determination.

HOW DID THE OFFENCES ARISE?

9. In February 2005 Mr Sargent installed a camera in the women’s toilet in the premises in which his accounting practice was located. The camera downloaded images onto a computer he used to conduct his accountancy practice. The camera was discovered by a maintenance worker in October 2006, and police recovered more than 1000 video images of women and girls using the toilet. On 3 October 2007 in the Melbourne Magistrates’ Court he pleaded guilty to 12 charges of stalking and one charge each of installing an optical surveillance device; maintaining an optical surveillance device; making child pornography; and possessing child pornography.

10. Mr Sargent was sentenced to 14 months’ gaol with a minimum of eight months. He appealed to the County Court against his sentence, and on 13 November 2007 his sentence was reduced to two months’ gaol. He was also ordered to complete 500 hours of unpaid community work; pay a fine of $5,000; complete a sex offender treatment program; undertake psychiatric testing during a community-based order for two years; and was placed on the sex offenders register for fifteen years.

11. In a written submission to the Tribunal dated 13 March 2008 Mr Sargent said that the decision to cancel his registration was made on the basis of media reports of his criminal proceedings and was unreasonable. He stated that his actions arose from extremely poor handling of a highly stressful series of events during the first half of 2003. By way of background Mr Sargent said that he commenced work in his father’s suburban accounting practice in 1986 and took over the business in 2000 after obtaining his registration as a tax agent in 1999. He explained that in 2003 his father had surgery for a major illness and his wife also became ill. In a written statement dated 23 March 2009 he said that the illness of both close family members was traumatic and stressful, and that the offences resulted from his attempt to seek sexual gratification remotely by installing the camera. He said that he believed at the time that he was not hurting anyone.

PROTECTION OF THE PUBLIC

12. Mr Sargent explained that he has served his term of imprisonment; has paid the fine; has completed 358.5 hours of unpaid community work; and has been assessed for the sex offender treatment program and is awaiting a placement. He also stated that he has attended therapeutic sessions with Mr P Newton, forensic and counselling psychologist. He said that he now realises that his thinking was distorted, his action in installing the camera was wrong and that he deserved to be punished. He emphasised that he understands that his victims suffered greatly and that their privacy has been invaded in a most unforgivable way. He agreed that he had betrayed people he knew, and was ashamed. Mr Sargent said that through seeking professional help he feels that he has learned about the need to seek assistance from family, friends and professionals when the need arises. He told the Tribunal that he is confident that he will never repeat the offending behaviour.

13. Mr Newton told the Tribunal that he carried out a psychological assessment of Mr Sargent in October 2007 in connection with the criminal proceedings. In his report dated 31 October 2007 Mr Newton said that Mr Sargent had suffered recurrent depressive symptoms since at least 2003. He concluded that Mr Sargent’s offending appeared to have been motivated by his desire to establish a type of pseudo-connection with those he filmed while at the same time avoiding the anxiety which initiating actual physical contact with them would have inspired. Mr Newton evaluated Mr Sargent’s risk of recidivism for other sexual offences based on the interaction of stable (personality-based) factors and dynamic (situationally-determined) factors and assessed Mr Sargent’s overall risk of sexual recidivism as moderate-low, which could be reduced to the low-risk range with the provision of appropriate treatment.

14. In a further report dated 11 November 2008 Mr Newton stated that he has been treating Mr Sargent monthly since April 2008 in connection with the community-based order. He said that the counselling has covered areas such as the development of Mr Sargent’s insight into his offending; the development of greater victim empathy; and training in relapse prevention. He concluded that Mr Sargent has made good progress, and has achieved a positive degree of insight into the factors that contributed to his offending, although further work remains before the matters can be said to be resolved.

15. In a third report dated 18 March 2009 Mr Newton stated that since writing his second report he has continued to see Mr Sargent monthly. He stated that Mr Sargent has continued to be a motivated and diligent participant in treatment and has developed further insight into his behaviour. In oral evidence Mr Newton explained that Mr Sargent has expressed a willingness to extend the sessions beyond the expiry of the community-based order in January 2010. He assessed Mr Sargent as having a low risk of re-offending.

16. Dr D Sullivan, consultant forensic psychiatrist, told the Tribunal in a report dated 25 July 2008 that he examined Mr Sargent at the request of Mr Sargent’s solicitors, and found that Mr Sargent’s offending was voyeuristic and ill-judged, but does not reflect a prior pattern of offending. There is no suggestion of paedophilia. Dr Sullivan concluded that given Mr Sargent’s personality and the consequences of his criminal conviction, the publicity and the shame will serve to provide a marked deterrent to future offending. Dr Sullivan said that Mr Sargent is at low risk of re-offending. He recommended continuing contact with Mr Newton.

17. In a further report dated 11 November 2008 Dr Sullivan stated that he had seen Mr Sargent on 4 September 2008 and had spoken to him three times by telephone. Dr Sullivan concluded that there is a propensity to anxiety rather than a mood disorder warranting medical treatment. He found no evidence of sustained deviant sexual interests, and maintained his earlier opinion that the risk of sexual re-offending is low. Dr Sullivan told the Tribunal that in the event that Mr Sargent’s registration as a tax agent is restored there would be little likelihood of an adverse effect on the safety of the public.
18. In relation to the chances of sexual recidivism the Tribunal takes into account that Mr Sargent has expressed remorse and has been attending therapeutic sessions with Mr Newton on a regular basis. He is making progress into gaining insight into the seriousness and consequences of his behaviour. The Tribunal accepts the evidence of Mr Newton and Dr Sullivan, both of whom are experienced practitioners in the field of sexual offenders, that the chances of Mr Sargent committing further sexual offences are low. Although the process of gaining insight is incomplete, the Tribunal finds that the public would be protected from further offending of a sexual nature if Mr Sargent’s registration is either suspended or cancelled.

PROTECTION AND MAINTENANCE OF THE STANDARDS AND REPUTATION OF THE PROFESSION

19. In a written statement dated 23 March 2009 Mr Sargent stated that he now realises that his offending behaviour had the potential to affect his clients, thus breaching his duty to them and undermining the trust placed in him as a tax agent. He also said that this had very serious consequences for the profession as a whole. He said that he was truly sorry for the harm that has been done to the people who have been affected, and he recognises that his conduct has brought his profession into disrepute.

20. In oral evidence Mr Sargent said that his family, friends and most of his clients have been supportive of his efforts to remain in practice, and emphasised that in the past there has only been one complaint against him. He told the Tribunal that he has retained most of his clients since the criminal proceedings were concluded and has attracted new clients. Under cross-examination he stated that he could distinguish about 90 per cent of the images captured by the camera he installed, although generally the images were of low quality. He said that he viewed each image for a few seconds and named the files when he was able to identify the person. He said that at the time of the offences he did not believe that any of his clients were among the images captured by the camera because they would come to his office for appointments and leave immediately afterwards. He agreed, however, that in retrospect some of the images may have been of women who were his clients, although he said that to the best of his knowledge there were none. The police had removed all the images as part of their investigation.

21. In relation to the expectation of clients, Mr Sargent agreed that the relationship between a tax agent and his or her client involved a degree of trust, and that existing or potential clients may view his actions in installing the camera as a breach of that trust. He said that he discusses his past with each new client and makes full disclosure of the offending behaviour. Mr Sargent mentioned that he had also told existing clients about the offences. He emphasised that his work as a tax agent represents his sole source of income. He agreed that he would be eligible to seek employment as a bookkeeper or an employee accountant during any period of cancellation or suspension of his registration as a tax agent.

22. Mr Newton stated that Mr Sargent has shown a clear understanding of the issues of propriety and integrity in his professional life and the implications of his offending not only for himself, but for his clients and the profession as a whole. He said that the recent sessions have focused on ethical principles relating to professional obligations and the need to improve Mr Sargent’s understanding of professional behaviour. Mr Newton concluded that Mr Sargent has used his knowledge of the relevant ethical and moral principles as they apply to the professional relationship between tax agent and client to develop an understanding of the implications of his actions for his professional practice. In Mr Newton’s opinion Mr Sargent has also built a foundation of genuine empathy for the impact of his actions upon those directly and indirectly affected by his behaviour.

23. Under cross-examination Mr Newton agreed that his sessions with Mr Sargent had only begun to deal with issues relating to professional practice in about September 2008, and that these issues were included in the sessions because the Tribunal’s hearing of the review application had been scheduled for November 2008. Mr Newton said that initially Mr Sargent had viewed the matters of propriety and integrity fairly narrowly in financial terms, but that as discussions continued Mr Sargent had come to realise that his conduct had broader implications concerning the way the role of a professional is viewed as a consequence of his offending behaviour. Mr Newton agreed that there was a possibility that some of Mr Sargent’s clients were among the victims of the offences, and that Mr Sargent had indicated that he was not aware of any. He said that he had not discussed with Mr Sargent whether new and current clients had been made aware of the offences, and did not believe that disclosure was required under the principles of ethical practice.

24. Dr Sullivan stated in his second report that there are no elements of the offending that are likely to interfere with Mr Sargent’s work as a tax agent.

25. There is no doubt that Mr Sargent took advantage of the situation at his workplace by installing a camera in the women’s toilet and covertly capturing on his work computer a large number of images of women and girls without their knowledge or consent. The Tribunal concludes that by his actions Mr Sargent has demonstrated that he would no longer be regarded as a person in whom clients, who had full knowledge of his offending, could realistically place their trust, particularly as the relationship between a tax agent and his or her client involves the provision of highly sensitive personal and financial information. The Tribunal agrees with Mr Sargent that his conduct has brought the profession into disrepute.

26. Although Mr Sargent said that he now informs existing and prospective clients about his past behaviour, his evidence was unconvincing because this issue was not included in any of his written statements tendered to the Tribunal; was not given in evidence in chief at the hearing; and was raised only in passing during cross-examination. It was unsubstantiated. The Tribunal is still uncertain whether images of past or existing clients were captured by the camera that he installed. There may be no legal obligation on Mr Sargent to inform every woman who was a client at the time of the offences of the possibility that she was a victim of his crimes. However if he could identify 90 per cent of the images captured by the camera, he should have known whether his clients were likely to have been captured by the camera, rather than merely stating that none had been captured to the best of my knowledge. Significantly Mr Sargent did not raise with Mr Newton or Dr Sullivan the possibility that clients might have been among the victims. This shows that he lacks an understanding of his obligations to the standards and reputation of the profession at large.

27. The offences committed by Mr Sargent are extremely serious. Despite the low risk of sexual re-offending he has only recently begun to address the issues surrounding the damage he has caused to the reputation of the profession. Women who were clients at the time of the offences might still not be aware of the possibility that images of them were taken. Some victims may be existing clients. Consequently even if Mr Sargent continues to make progress in his therapeutic sessions with Mr Newton and if he completes the sexual offender treatment program as ordered by the sentencing Judge the Tribunal believes that the standards and reputation of the profession would not be protected or maintained without further scrutiny by the respondent. This would involve a judgment as to whether Mr Sargent has developed sufficient insight into the impact of his offending on the reputation of the profession to demonstrate that he has become a fit and proper person to practise as a tax agent in Victoria. Such an outcome could not be achieved by a period of suspension, but by cancellation of his registration. At an appropriate time Mr Sargent would be able to make an application to the respondent for re-registration.

CONCLUSION

28. For these reasons the Tribunal finds that, despite its conclusion that Mr Sargent is unlikely to commit further sexual offences, he is not a fit and proper person to practise as a tax agent in Victoria and the correct or preferable decision is cancellation of his registration as a tax agent.

DECISION

29. The Tribunal affirms the decision under review.

I certify that the twenty-nine [29] preceding paragraphs are a true copy of the reasons for the decision of:

G.D. Friedman, Senior Member

(sgd) Mara Putnis

Associate

Dates of hearing: 12 November 2008, 23 and 24 March 2009

Date of decision: 2 April 2009

Counsel for the applicant: Ms S. Hinchey (12 November 2008, 23 March 2009); Ms K. Stynes (24 March 2009)

Solicitor for the applicant: Galbally & O’Bryan Lawyers

Advocate for the respondent: Mr P. Gray

Solicitor for the respondent: Australian Government Solicitor