Federal Court of Australia

Tax Practitioners Board v Buckland (Interim Injunction) [2023] FCA 836

ORDERS

THE COURT ORDERS THAT:

1.    In these orders:

(a)    “income tax return” has the meaning provided for in section 995-1 of the Income Tax Assessment Act 1997 (Cth);

(b)    “taxpayer” has the meaning provided for in section 6(1) of the Income Tax Assessment Act 1936 (Cth); and

(c)    “TAS Act” means the Tax Agent Services Act 2009 (Cth).

2.    Pursuant to section 70-5(2) of the TAS Act, until the hearing and determination of the amended originating application or further order, the first respondent be restrained from preparing and/or lodging any income tax return for a taxpayer, for a fee or other reward, whilst not a registered tax agent within the meaning of the TAS Act.

3.    Pursuant to section 70-5(2) of the TAS Act, until the hearing and determination of the amended originating application or further order, the second respondent, whether by itself, its officers, servants, agents or howsoever otherwise, be restrained from preparing and/or lodging any income tax return for a taxpayer, for a fee or other reward, whilst not a registered tax agent within the meaning of the TAS Act.

4.    The matter be listed for case management.

5.    Costs be reserved.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

HESPE J:

1    The applicant is the Tax Practitioners Board. By an amended originating application, the Board alleges that each of the first respondent (Mr Anthony Buckland) and the second respondent (Apat na Seasons Pilipinas Corporation) contravened certain provisions of the Tax Agent Services Act 2009 (Cth) (the TAS Act) and seeks (among other things) declarations that:

(1)    the first respondent, Mr Buckland, contravened s 50-5(1) of the TAS Act by providing tax agent services, including the preparation and lodgment of income tax returns for Australian taxpayers for a fee or other reward, whilst not a registered tax agent within the meaning of the TAS Act.

(2)    the second respondent, Apat, contravened s 50-5(1) of the TAS Act by providing tax agent services, including the preparation and lodgment of income tax returns for Australian taxpayers for a fee or other reward, whilst not a registered tax agent within the meaning of the TAS Act.

2    By the present interlocutory application the Board seeks, pursuant to s 70-5(2) of the TAS Act:

(1)    an interlocutory or interim injunction restraining Mr Buckland “from preparing and/or lodging any income tax return [as that term is defined in s 995-1 of the Income Tax Assessment Act 1997 (Cth) (ITAA 97)] for a taxpayer, for a fee or other reward whilst not a registered tax agent within the meaning of the TAS Act”, until the hearing and determination of the amended originating application or further order.

(2)    an interlocutory or interim injunction restraining Apat “from preparing and/or lodging any income tax return [as that term is defined in s 995-1 of the ITAA 97] for a taxpayer, for a fee or other reward whilst not a registered tax agent within the meaning of the TAS Act”, until the hearing and determination of the amended originating application or further order.

3    Mr Buckland is self-represented. The second respondent has not filed a notice of appearance. Leave was granted to the applicant to proceed with the interlocutory application against the second respondent pursuant to rule 10.43D of the Federal Court Rules 2011 (Cth) by Order of the Court dated 14 June 2023.

Evidence relied upon

4    The applicant relies upon 11 affidavits in support of its application (in addition to affidavits relating to service):

(a)    An affidavit of Ms Guise, an individual taxpayer, in which she gives evidence of her interactions with a person she believed to be Mr Buckland. Ms Guise testified that a person she believed to be Mr Buckland prepared and lodged her 2021 income tax return. Apart from emails she sent to an email address containing the name of Apat, her interactions with the person she believed to be Mr Buckland were via Facebook Messenger. The communications included providing her myGov login details and security codes. Ms Guise’s evidence is that she received an invoice by email from an email address containing Mr Buckland’s name with a description “Ordinary Tax Return”. Payment details provided to her in a subsequent email required payment to an account in the name of “Wintergate Trust Account”. Ms Guise testifies that she made that payment.

(b)    Two affidavits of Mr Cuerden, an individual taxpayer, in which he gives evidence of his interactions with a person he believed to be Mr Buckland. Mr Cuerden testified that a person he believed to be Mr Buckland prepared and lodged his 2014 and 2021 income tax return. Mr Cuerden recalled going to an office that Mr Buckland had in Darwin in 2014 and believed that he met with Mr Buckland in person at that time and that Mr Buckland lodged his 2014 income tax return during that appointment. Mr Cuerden testifies that in around July 2021 he searched for Mr Buckland online and his Facebook profile came up. The profile included a photograph of a man Mr Cuerden recognised as the Mr Buckland he met in 2014. Mr Cuerden’s interactions with the person he believed to be Mr Buckland were via Facebook Messenger. The communications included providing his myGov login details and security codes. Mr Cuerden’s evidence is that he made a payment to an account in the name of “Wintergate Trust Account” and that he believed Mr Buckland lodged his return based on messages he received from somebody he believed to be Mr Buckland and the income tax assessment he received for the year ended 30 June 2021.

(c)    An affidavit of Ms Ledingham, an individual taxpayer, in which she gives evidence of her interactions with a person she believed to be Mr Buckland. Ms Ledingham testifies that she sought the services of a person she believed to be Mr Buckland to prepare and lodge her income tax returns for the 2017 to 2021 income years. Ms Ledingham had telephone appointments with Mr Buckland for the lodgment of her 2017 to 2019 income tax returns. She believed her 2019 income tax return had been lodged via myGov. Between 22 July 2020 and 7 August 2020, Ms Ledingham had a telephone appointment with somebody she believed to be Mr Buckland and exchanged emails with respect to the preparation and lodgment of her 2020 income tax return. Ms Ledingham sent and received emails from an email address containing Apat’s name. Ms Ledingham had provided Mr Buckland with her myGov login details when he had assisted with lodging her 2019 income tax return. Based on emails she received from the email address containing Apat’s name, and a notice of assessment she received, she believed her 2020 income tax return had been lodged. In July 2020, Ms Ledingham received an email from the email address containing Apat’s name with bank account details for an account in the name of “Wintergate Trust Account”. Ms Ledingham made a payment to that account with a transaction description of “21 Jul Tax fee.” Ms Ledingham corresponded with Mr Buckland in relation to her 2021 income tax return using Facebook Messenger and email. Having again provided Mr Buckland with her myGov login details and security code, Ms Ledingham believed Mr Buckland lodged her 2021 income tax return because she received a photo containing a heading “Lodgment receipt” and later received a notice of assessment. On 1 October 2021, Ms Ledingham made a payment to the “Wintergate Trust Account”. On 4 October 2021, Ms Ledingham received a copy of a paid invoice from an email address containing Mr Buckland’s name.

(d)    An affidavit of Ms Hawkins, an individual taxpayer, in which she gives evidence of her interactions with a person she believed to be Mr Buckland. Her evidence is that in 2021 she sought the services of Mr Buckland to lodge her income tax returns for the years ended 30 June 2018 to 30 June 2021 (inclusive). From 24 August 2021 to 11 October 2021, she communicated with somebody she believed to be Mr Buckland using Facebook Messenger. The communications included providing her myGov login details and security code. Ms Hawkins testifies that she sent an email to and received emails from an email address containing Apat’s name. One of the emails she received from that email address attached an invoice payable to an account in the name of “Wintergate Trust Account”. Ms Hawkins paid this invoices by transferring an amount to the account details on the invoice. Based on messages she received, and notices of assessment she received, Ms Hawkins believed that Mr Buckland had lodged her 2018, 2019, 2020 and 2021 income tax returns.

(e)    An affidavit of Mr Cavallaro, an individual taxpayer, in which he gives evidence of his interactions with a person he believed to be Mr Buckland. Mr Cavallaro testifies that a person he believed to be Mr Buckland prepared and lodged his 2020 income tax return. Mr Cavallaro corresponded with a person he believed to be Mr Buckland in December 2020 through Facebook Messenger. Mr Cavallaro provided Mr Buckland with his myGov login details and security code. Mr Cavallaro also received emails from an email address containing Apat’s name. Mr Cavallaro was provided with bank account details for an account in the name of “Wintergate Trust Account” to which he made a payment for the amount Mr Buckland had told him was payable for the preparation of his 2020 income tax return and amendments made to his 2018 and 2019 returns. Mr Cavallaro believed that Mr Buckland had lodged his 2020 income tax return and amended 2018 and 2019 returns based on screenshots Mr Cavallaro received on Facebook Messenger and the fact that he received a tax refund payment.

(f)    Two affidavits of Mr Sherpa, an officer of the Australian Taxation Office (ATO) seconded to provide administrative assistance to the Board. Based on his own knowledge, his examination of the Board’s files and information provided to him by others, he testifies that Mr Buckland was previously registered as a tax agent but that the Board determined to terminate that registration with effect from 22 December 2017. Based on a review of the Board’s systems, which he conducted on 14 October 2022, Mr Buckland did not appear as a registered tax agent. According to ASIC records, Mr Buckland is a current director and shareholder of approximately 28% of the shares in Wintergate International Pty Ltd, with Apat holding about 45% of the shares in Wintergate. On 12 July 2018, Mr Buckland was sent a “cease and desist” letter from the Board. On 1 December 2021, the Board received a letter from an individual identifying herself as an “Associate Director” of Apat stating that Mr Buckland had sold the intellectual property and business name of “Anthony D Buckland” and “Anthony D Buckland International Tax Accountant” to that company and that company provided services in the business name of “Anthony D Buckland”. In his second affidavit, Mr Sherpa testifies that he conducted a review of the Board’s systems which record details of persons registered as registered tax agents and Apat did not appear to ever have been a registered tax agent.

(g)    An affidavit of Ms Willis, an officer of the ATO seconded to provide administrative assistance to the Board. The Board had sent a request to the ATO to provide regular reports to the Board with information relating to tax returns that may have been prepared and lodged by Mr Buckland. Based on that information, Ms Willis made enquiries of taxpayers who had been identified as having had their income tax returns lodged by Mr Buckland. Ms Willis gives evidence of her interactions with 5 such individuals.

(h)    An affidavit of Ms Sleep, in which she gives evidence of her interactions with a person she believed to be Mr Buckland. Her evidence is that she sought the services of Mr Buckland to lodge her partner’s (Mr Simpson’s) 2020 and 2021 income tax returns. From 19 November 2021 to 30 December 2021, she communicated with somebody she believed to be Mr Buckland through Facebook Messenger. The communications included providing her partner’s myGov login details and answers to “secret questions” which were required to be answered each time the person she believed to be Mr Buckland logged in. Ms Sleep also testifies that she sent emails to and received emails from an email address containing Apat’s name which were signed off “Cheers Tony”. Based on messages she received, Ms Sleep believed that Mr Buckland had lodged Mr Simpson’s 2020 and 2021 income tax returns. Ms Sleep further testifies that she received emails to Mr Simpson’s Gmail account from an email address containing Mr Buckland’s name attaching invoices payable to an account in the name of “Apat na Seasons Pilipinas” which included itemised amounts for the 2020 and 2021 tax returns. Ms Sleep paid these invoices by transferring amounts from Mr Simpson’s bank account to the account details on the invoices.

(i)    An affidavit of Mr Buckland himself.

5    Mr Buckland objected to the applicant relying upon his affidavit which was dated 9 November 2022 on the basis of the privilege against self-incrimination. Mr Buckland referred to an exchange with Charlesworth J at an earlier case management hearing in these proceedings and claimed the affidavit was not before the Court.

6    At a case management hearing on 11 November 2022, her Honour said:

Mr Buckland, in some legal proceedings orders are made requiring you to take steps in the proceedings, including orders that might require you to divulge information, to file a defence, to file affidavits and the like. You should be aware if you’re not already that there exists a privilege that you can claim. It’s a privilege sometimes referred to as a privilege against self-incrimination, but it extends also to the exposure of a person to civil penalties. That means that in this proceeding I can’t compel you to divulge information that might tend to expose you to a penalty as an individual, a civil penalty, of the kind that is sought by the applicant in this case, but I also warn – need to warn you that if you voluntarily divulge information that might tend to incriminate or assist the applicant in its case and you do that voluntarily, that information might well be used in a way that assists the applicant to establish the contravention.

So I need to make it very plain to you that you need not – nothing I say or no order that I make can compel you to divulge information or to disclose in advance what your defence to these claims might be. You can remain silent about them, basically. You can claim that privilege and you claim it through to judgement, if you wish. So I just wanted to make that plain, because before you put on material before me, before you ask me to read affidavits and ask me to read correspondence and to take it into account, you may wish to have regard to the circumstance that you can claim that privilege.

7    The orders made by Charlesworth J at the conclusion of that hearing included the following:

Any order in this action requiring the respondent to file any document, or make any submission or divulge information is subject to any claim for privilege against self-incrimination or self-exposure to penalty he may make.

8    The affidavit of Mr Buckland dated 9 November 2022 predated the explanation given to him by Charlesworth J.

9    The applicant relies upon Mr Buckland’s affidavit in its written submissions to identify the propositions Mr Buckland relies upon in his defence to the proceedings. The applicant’s written submissions were filed prior to Mr Buckland filing his written submissions. Given Mr Buckland articulates the propositions he wishes to advance in those written submissions (which are filed well after the explanation given to him by Charlesworth J), for the purposes of this application, the Court places no reliance upon Mr Buckland’s affidavit of 9 November 2022 but relies upon Mr Buckland’s submissions as filed in respect of this application.

Legislative context

10    The object of the TAS Act is to ensure that “tax agent services” are provided to the public in accordance with appropriate standards of professional and ethical conduct: TAS Act s 2-5. The Board has the general administration of the TAS Act: s 1-15.

11    Part 5 of the TAS Act is entitled “Civil penalties”. Section 50-5 relevantly provides:

(1)    You contravene this subsection if:

(a)    you provide a service that you know, or ought reasonably to know, is a *tax agent service; and

(b)    the tax agent service is not a *BAS service or a *tax (financial) advice service; and

(c)    you charge or receive a fee or other reward for providing the tax agent service; and

(d)    you are not a *registered tax agent; and

(e)    if you provide the tax agent service as a legal service—either:

(i)    you are prohibited, under a *State law or *Territory law that regulates legal practice and the provision of legal services, from providing that tax agent service; or

(ii)    subject to subsection (3), the service consists of preparing, or lodging, a return or a statement in the nature of a return.

Civil penalty:

(a)    for an individual—250 penalty units; and

(b)    for a body corporate—1,250 penalty units.

Note:    Subdivision 50-C of this Act and Subdivision 298-B of Schedule 1 to the Taxation Administration Act 1953 determine the procedure for obtaining a civil penalty order against you.

12    “Tax agent service” is defined in s 90-5:

(1)    A tax agent service is any service:

(a)    that relates to:

(i)    ascertaining liabilities, obligations or entitlements of an entity that arise, or could arise, under a *taxation law; or

(ii)    advising an entity about liabilities, obligations or entitlements of the entity or another entity that arise, or could arise, under a taxation law; or

(iii)    representing an entity in their dealings with the Commissioner; and

(b)    that is provided in circumstances where the entity can reasonably be expected to rely on the service for either or both of the following purposes:

(i)    to satisfy liabilities or obligations that arise, or could arise, under a taxation law;

(ii)    to claim entitlements that arise, or could arise, under a taxation law.

(2)    A service specified in the regulations for the purposes of this subsection is not a tax agent service.

Note:    For specification by class, see subsection 13(3) of the Legislation Act 2003.

13    The preparation and lodgment of income tax returns (as that term is defined in s 995-1 of the ITAA 97) is a quintessential tax agent service: see for example Tax Practitioners Board v Shanahan [2013] FCA 764 at [9] – [10]. This is also consistent with s 50-5(1)(e)(ii) of the TAS Act which refers to a service consisting of preparing, or lodging, a return or a statement in the nature of a return.

14    Section 70-5 provides:

(1)    If, on the application of the Board, the *Federal Court is satisfied that you have engaged, or are proposing to engage, in conduct that would constitute a contravention of a civil penalty provision, the Federal Court may grant an injunction:

(a)    restraining you from engaging in the conduct; or

(b)    if in the Federal Court’s opinion it is desirable to do so, requiring you to do something.

(2)    Before deciding the application, the *Federal Court may grant an interim injunction:

(a)    restraining you from engaging in conduct; or

(b)    requiring you to do something.

15    In this context, the term “interim injunction” includes an interlocutory injunction in the sense of an injunction until the final hearing or further order: see Patrick Stevedores Operations (1998) 195 CLR 1; [1998] HCA 30 at [110] (per Gaudron J).

General principles

16    Most recently, the well-established principles for considering whether to grant an interlocutory (or as in this case, interim) injunction were expressed by Wheelahan J in the following terms (Avant Group Pty Ltd v Kiddle [2023] FCA 685 at [5]):

The organising principles for considering whether to grant an interlocutory injunction are well known. “[I]n all applications for an interlocutory injunction, a court will ask whether the plaintiff has shown that there is a serious question to be tried as to the plaintiff’s entitlement to relief, has shown that the plaintiff is likely to suffer injury for which damages will not be an adequate remedy, and has shown that the balance of convenience favours the granting of an injunction”: Australian Broadcasting Corporation v O’Neill [2006] HCA 46; 227 CLR 57 (O’Neill) at [19] (Gleeson CJ and Crennan J). The two limbs are inter-related such that the strength of the plaintiff’s case may be relevant to the balance of convenience, and may tip the balance one way or the other.

17    The same principles apply to the grant of a statutory interim injunction: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2009) 189 IR 37; [2009] FCA 997 at [17] (per Barker J). See too, Milam v University of Melbourne (2019) 285 IR 309; [2019] FCA 171 at [8] (per Anastassiou J).

18    In the circumstances of this case, the following propositions are of particular relevance:

(1)    In determining whether there is a serious question to be tried (or to use the expression adopted by Gummow and Hayne JJ in Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; [2006] HCA 46, a prima facie case), it is necessary for the Court to form a view about whether the applicant has shown there is a probability that it will be entitled to an injunction at trial. “Probability” in this context does not mean that the applicant has more than a 50% likelihood of succeeding, but means only that if the evidence remains as it is there is a fair probability that the applicant will succeed: Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; [1968] HCA 1 at 622 (per Kitto, Taylor, Menzies and Owen JJ). How strong the probability needs to be depends upon the nature of the rights asserted and the practical consequences likely to flow from the orders sought.

(2)    Whether there is a serious question to be tried or whether the plaintiff has made out a prima facie case is to be determined on the basis of the evidence remaining as it is, untested: Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148; [1986] HCA 58; at 153 (per Mason ACJ); Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63 at [13] (per Gleeson CJ); O’Neill. The Court does not undertake a preliminary trial, or give or withhold interlocutory relief upon a forecast as to the ultimate result of the case: Beecham at 622 (per Kitto, Taylor, Menzies and Owen JJ). An interlocutory application is not a dress rehearsal for a trial: Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd (2017) 257 FCR 62; [2017] FCAFC 193 at [126] (per Perram J).

(3)    The balance of convenience looks to whether the inconvenience or injury which the applicant would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the respondent would suffer if an injunction were granted: Beecham at 622 – 623 (per Kitto, Taylor, Menzies and Owen JJ). In the present case, the injury which the applicant would be likely to suffer is not personal. The injunction sought here seeks to restrain conduct that Parliament has considered to be contrary to public interest. In the present context, it is that public interest which needs to be balanced against the interests of the respondent.

(4)    The two considerations of the serious question to be tried and the balance of convenience are interrelated. The ultimate question is whether in the exercise of its discretion the Court should make orders in the terms sought. That involves considering both the strength of the claims and the defences and, in simple terms, to decide what is best to be done based on the material before it: Avant at [9] (per Wheelahan J).

(5)    A material consideration in determining whether to grant injunctive relief is the clarity with which the orders sought are expressed, because the respondent would be entitled to know what she is prevented from doing, “and this means not as a matter of law but as a matter of fact”: Redland Bricks Ltd v Morris [1970] AC 652 at 666 (per Lord Upjohn). See also, ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 at 259 (per Lockhart J); Avant at [11] (per Wheelahan J).

Prima facie case

19    The following consideration of the prima facie case is based on evidence untested through cross-examination and some of the evidence, whilst admissible on an interlocutory application, would not be admissible at trial, taking the form of hearsay. The following can extend no further than a provisional assessment of the material before the Court and does not in any way constitute a conclusion as to the outcome of a trial where the evidence would be tested and the issues in dispute fully argued.

Mr Buckland

20    In so far as the application sought against Mr Buckland is concerned, the relevant elements of a contravention of s 50-5 are:

(1)    The respondent provided a service that is a tax agent service;

(2)    The respondent knew or ought reasonably to know the service provided is a tax agent service;

(3)    The tax agent service is not a *BAS service or a *tax (financial) advice service;

(4)    The respondent charged or received a fee or other reward for providing the tax agent service; and

(5)    The respondent was not a registered tax agent.

21    The applicant contends based on the affidavit evidence that Mr Buckland provided tax agent services in the form of preparing and lodging income tax returns.

22    As explained above, the preparation and lodgment of income tax returns is a tax agent service. It is also not a BAS service (as defined in s 90-10 of the TAS Act) and is not a tax (financial) advice service (as defined in s 90-15). Based on the evidence before the Court, Mr Buckland has not been a registered tax agent since December 2017, but had previously been a registered tax agent. Having been a registered tax agent, it is open to the Court to conclude that Mr Buckland knew or ought reasonably to have known that the preparation and lodgment of income tax returns is a tax agent service.

23    The two critical factual issues are:

(a)    Whether Mr Buckland provided services in the form of preparing and lodging income tax returns; and

(b)    If so, whether Mr Buckland charged or received a fee or other reward for providing the tax agent service.

Mr Buckland’s contentions

24    Mr Buckland contended that the evidence provided by Mr Sherpa and Ms Willis was incomplete and contained “missing links” and was likely based on incomplete or incorrect records. Mr Buckland did not identify with any specificity the manner in which the records were incomplete or incorrect. Mr Buckland also challenged the assertion that he had provided tax return lodgment services to 600 or more taxpayers on the basis that the sample of taxpayers who had provided evidence was too small to support such a conclusion.

25    Mr Buckland further contended that the evidence extended no further than the individuals interacted with somebody that they believed to Mr Buckland. They may in fact have interacted with somebody purporting to be Mr Buckland or a bot.

26    Mr Buckland contended that the evidence was not inconsistent with the sale of his business to Apat and that any services were provided by that company.

27    Mr Buckland further contended that the TAS Act did not operate extraterritorially and could not extend to preventing the provision of services by persons based in the Philippines. This contention is considered below in relation to Apat.

Consideration

28    The evidence set out above is arguably capable of supporting a finding that Mr Buckland personally performed tax agent services for a number of taxpayers by preparing and lodging income tax returns and that amounts were paid for these services by the transfer of funds into a bank account controlled by an entity associated with Mr Buckland, being the Wintergate Trust Account. There is evidence, assessed at the level of a prima facie case, that Mr Buckland owns shares in Wintergate. The question of whether the individual taxpayers were mistaken in their belief that they were interacting with Mr Buckland is a matter to be tested at trial.

29    It is not necessary to conclude that Mr Buckland provided services to 600 taxpayers in order to prove a contravention of s 50-5.

30    In so far as Mr Buckland contends that the services were provided by Apat following a sale of his business in 2017, such a contention is not inconsistent with Mr Buckland also being taken to have contravened s 50-5. As Rangiah J said in Tax Practitioners Board v Hacker [2020] FCA 1047 at [78], the question of whether an individual and a company can both be found to have contravened s 50-5(1) of the TAS Act arising from the provision of the same tax agent service depends upon the proper construction of the provision. His Honour concluded that the language of s 50-5(1) of the TAS Act suggests that it is capable of being breached by both an individual and by a company in respect of the provision of the same tax agent service and that there was nothing in the context to suggest that the provision ought to be construed more narrowly. A tax agent service is capable of being provided by a company through an individual employee, director or agent and at the same time, the individual employee, director or agent may himself or herself provide such a service even though he or she is acting for or on behalf of the company. The evidence supports a conclusion that the invoices for the provision of services were issued in the name of Apat suggesting (for the purposes of establishing a prima facie case) that Mr Buckland acted as a representative of Apat in providing tax agent services in the form of preparing and lodging income tax returns.

31    By its terms, s 50-5 is capable of applying to both companies and individuals. Section 50-5 uses the term “you”. Section 90-1(2) provides that an expression has the same meaning in the TAS Act as in the ITAA 97 (other than the expression “this Act”). The expression “you” is defined in s 4-5 of the ITAA 97 as applying to entities generally unless its application is expressly limited.

32    In Hacker, Rangiah J analysed the context of s 50-5 as follows:

[87]    It may be seen that the TAS Act establishes a comprehensive scheme for registration of individuals, partnerships and companies as tax agents and for their conduct and discipline. It also provides, in Pt 5, Div 50, Subdiv 50–A for the punishment of individuals and companies who are not registered tax agents providing tax agent services for reward. These provisions are consistent with the object of the TAS Act in s 2–5 of ensuring that tax agent services are provided to the public in accordance with appropriate standards of professional and ethical conduct.

[88]    Subdivision 50–A has the heading, “Conduct that is prohibited without registration”. Section 50–5 appears in that subdivision. It may be seen that s 50–5(1) prohibits certain individuals, partnerships and companies from providing tax agent services for reward while unregistered. Under ss 20–5(2) and (3), to be eligible for registration, a partnership or company must have, “a sufficient number of individuals, being registered tax agents, to provide tax agent services to a competent standard, and to carry out supervisory arrangements”. The provision seems to contemplate that a partnership or company will employ, engage or otherwise “have” individuals who are registered tax agents to provide tax agent services; and that such registered tax agents may supervise other persons who provide services that are associated with, but do not amount to, tax agent services.

[89]    It may be seen that both a company and an individual employed or engaged by the company may be at once providing the same tax agent service. Where a company provides tax agent services for reward, both the company and the individual who is employed or engaged by the company to perform the services must be registered. If one is unregistered, then that company or that individual may contravene s 50–5(1). If each of them is unregistered, each may contravene s 50–5(1) in respect of the provision of the same service, where paras (a)-(e) are satisfied in relation to each of them.

…

[91]    In my opinion, the language and legislative scheme of s 50–5(1) of the TAS Act demonstrates that when an unregistered individual employee, agent or director of a company provides a tax agent service for a fee or reward for or on behalf of an unregistered company which also charges a fee or receives a reward for that service, both the individual and the company may contravene the provision. It may be noted that it will not be the same offence because the individual and the company will have each breached their separate obligations to be registered.

33    Furthermore, in Hacker, Rangiah J concluded that an individual can receive a reward for providing tax agent services by causing moneys for those services to be paid to an account owned and operated by a company in which that individual owns shares. His Honour said (at [108]):

In my opinion, where an individual who provides a tax agent service causes the client to pay a company for the service, and the individual holds shares in the company, the increase in the value of the shares created by the payment may be regarded as a “reward for providing the tax agent service” received by the individual for the purposes of s 50–5(1)(c). Otherwise, an individual performing unregistered tax agent services could avoid sanction by the device of directing payment to a company in which he or she holds shares. A narrow construction of the provision would be inconsistent with the protective purpose of the TAS Act.

34    The evidence assessed at the level of a prima facie case is capable of supporting a finding that amounts were paid for the preparation and lodgment of income tax returns by Mr Buckland by the transfer of funds into a bank account controlled by an entity in which Mr Buckland held an interest, being the Wintergate Trust Account.

35    The evidence of Ms Sleep is that she made a payment into a bank account with an Australian financial institution held in the name of Apat. Based on the material before the Court in the form of correspondence from Shirley Roa who identified herself as an “Associate Director” of Apat, Mr Buckland appears to have transferred assets to Apat as part of a transfer of business and appears to perform services as a representative of Apat. It also appears that both Mr Buckland and Apat are shareholders in Wintergate. There is an arguable inference to be drawn that Mr Buckland and Apat are associated and that Mr Buckland received a financial benefit for the provision of the services he provided given it is inherently unlikely that he would otherwise provide services to strangers. It is observed however that the strength of the prima facie case in respect of Mr Buckland receiving a reward for the provision of services to Ms Sleep is weaker than that relating to the services provided to other taxpayers.

36    On the evidence and authorities before it, the Court is satisfied that the Board has a prima facie case that Mr Buckland has contravened s 50-5. Whether the facts alleged by the Board will be established on the balance of probabilities is a matter for trial.

Apat

37    Apat did not enter an appearance. In previous correspondence to the solicitors for the Board, a representative of Apat wrote:

To reiterate, our client is a Philippine domestic entity with no business operations within Australia. Neither does it have an Australian agent, Australian branch, office, or juridical entity, through which it may conduct business within the Australian jurisdiction.

38    The evidence set out above is arguably capable of supporting a finding that Apat through its agents and representatives or, on Mr Buckland’s submission, its own Artificial Intelligence (AI) and bots was providing tax agent services for a number of taxpayers by the preparation and lodgment of income tax returns and that amounts were paid for these services by the transfer of funds into a bank account controlled by an entity associated with Apat, being the Wintergate Trust Account, or to an account in the name of Apat (in the case of Ms Sleep). There is evidence, assessed at the level of a prima facie case, that Apat owns shares in Wintergate.

39    The sole issue with respect to Apat, is the extent to which the TAS Act has extraterritorial operation in the sense of applying to the activities of persons who are not present in the jurisdiction. There is a general presumption that “the legislature did not intend to give its enactment an effect which would be inconsistent with international law or with the comity of nations” (Morgan v White (1912) 15 CLR 1 at 5 (per Barton J)) and there is thus a presumption that Acts are restricted in their operation within territorial limits (Jumbunna Coal Mine NL v Victorian Coal Miners’ Association (1908) 6 CLR 309; [1908] HCA 95 at 363 (per O’Connor J)). The presumption is reflected in s 21(1)(b) of the Acts Interpretation Act 1901 (Cth).

40    The presumption operates subject to contrary intention.

41    Section 50-5 is broadly drafted. The tax agent services which are the subject of the present application are limited to the preparation and lodgment of tax returns. These are acts or courses of conduct that culminate in an act that takes effect in Australia (the lodgment of the return with the Commissioner of Taxation). In the present case, the services were provided to taxpayers who themselves were present in Australia. The acts alleged here have a territorial nexus with Australia which extends beyond the mere fact that they relate in some way to Australian income tax. The purpose of the TAS Act is to protect the public interest. It is at least arguable (in the sense required for a prima facie case) that the TAS Act is intended to operate to prohibit the tax agent services the subject of this case, being services involving the preparation and lodgment of income tax returns, notwithstanding that the person providing the service may not be physically present in Australia.

42    As Charlesworth J explained in Tax Practitioners Board v Buckland [2022] FCA 1376 at [28], there is no domestic law incorporating a convention or treaty referred to by Mr Buckland, being laws that would have the effect that the TAS Act does not apply in accordance with its terms.

43    On the evidence and authorities before it, the Court is satisfied that the Board has a prima facie case that Apat has contravened s 50-5. The extent to which the TAS Act has extraterritorial operation is a matter to be finally determined at trial.

Balance of convenience

44    In assessing the balance of convenience, the Court considers the risk of injustice should it turn out to be wrong. The risk of being wrong in this context requires the Court to balance the risk that it will make the wrong decision to grant an interlocutory or interim injunction to a party who fails to establish that right at trial against the risk that the Court will make the wrong decision in failing to grant an injunction to a party who succeeds at trial.

45    The source of power to grant an interim injunction in this case is statutory. The balance of convenience is to be determined having regard to the legislative framework of s 70-5 of the TAS Act. The object of the TAS Act, to ensure that tax agent services are provided in accordance with appropriate standards of professional and ethical conduct, is achieved by requiring those services to be provided by registered tax agents. The taxation system encourages taxpayers to engage registered tax agents and to provide those agents with complete information by giving such taxpayers some limited exemptions from penalties in respect of the provision of false or misleading statements (see eg Schedule 1 to the Taxation Administration Act 1953 (Cth) s 284-75(6)).

46    The nature of the contravening conduct alleged in this case does not involve an isolated instance. There is prima facie evidence of a history of continuing contravening conduct. It is not disputed that neither respondent is a registered tax agent. There is also evidence before the Court which arguably supports a finding that, if not restrained, Mr Buckland and Apat intend to continue to provide tax agent services in the form of preparing and lodging income tax returns whilst not being registered tax agents. Having regard to the public policy of the TAS Act, the grant of an interim injunction would advance that public policy and assist in the enforcement of the public interest: Humane Society International Inc v Kyodo Senpaku Kaisha Ltd (2006) 154 FCR 425; [2006] FCAFC 116 at [20] – [21].

47    In assessing the balance of convenience, the Court has taken into account the limited and specific form of the injunction sought. The respondents are to be restrained from providing tax agent services of a specified kind — the preparation and lodgment of income tax returns as defined in Australian income tax legislation. The applicant accepted that the injunctions sought do not prevent the respondents from providing other types of services, including computer programming services (such as writing code) or conducting education courses relating to AI, or from providing bookkeeping services.

48    Mr Buckland contends that the grant of an interim injunction would prejudice his interests. This contention does not support a conclusion that the balance of convenience requires the injunction not be granted. A substantial part of Mr Buckland’s criticism of the case against him is that the evidence does not establish that he was the person preparing and lodging income tax returns. If he is not providing such services, it is difficult to accept that an injunction restraining him from providing such services causes him substantial prejudice when weighed against the public interest sought to be promoted by the TAS Act. Further, the limited form of the injunction is directed only to restraining Mr Buckland from preparing and lodging income tax returns for a fee or other reward. As a person who is not a registered tax agent, it is difficult to accept that Mr Buckland has a legitimate commercial interest in being able to provide such a service in light of the clear legislative policy that such services are to be provided only by registered tax agents.

49    The second respondent did not file an appearance. Apat is not a registered tax agent. The preparation and lodgment of income tax returns by Apat would be a breach of the legislative intent underpinning the TAS Act. On the evidence and materials before the Court, the risk of injustice to Apat if an injunction is granted will turn on the extent to which the TAS Act has extraterritorial operation. For the reasons set out above, the Court is satisfied that the conduct sought to be restrained has a territorial nexus with Australia. When balanced against the interests of the public to be protected, the Court is not satisfied that the risk that Apat would have been wrongly restrained from preparing and lodging income tax returns justifies a refusal of an interlocutory injunction.

50    The Court has also considered the utility of granting an interlocutory injunction against persons not present in Australia. The Court does not have before it evidence that the interlocutory injunctions are incapable of enforcement. Furthermore, direct enforcement is not the only measure of utility: Humane Society. In the context of the statutory framework, an interim injunction has utility in the curtailment of conduct affecting Australian consumers of tax agent services. Even if the injunction cannot entirely prevent contravention of the TAS Act (for example, because of limitations on the ability to have the injunction enforced against a person present outside of the jurisdiction), the grant of an interim injunction would be expected to inform the consumer of tax agent services that the first and second respondents are not permitted to prepare and lodge tax returns.

51    The Court has given consideration to whether an undertaking as to damages ought to be given by the applicant in relation to either or both of the respondents. It has balanced the following considerations:

(1)    The applicant in this case is not a private party advocating for its private interest but a Commonwealth regulatory body charged with the administration of an Act which seeks to protect the public interest: Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (2016) 244 FCR 538; [2016] FCA 976 at [49]–[50] (per Beach J). This is not a case of the Commonwealth or a Commonwealth agency seeking to protect its own proprietary or private right.

(2)    The injunctions sought have been narrowly and specifically directed to a particular type of conduct — the preparation and lodgment of income tax returns for a fee or other reward. They do not seek to prevent either respondent from engaging in commercial activity generally.

(3)    Neither Mr Buckland nor the second respondent have proffered any form of undertaking which might have met the claim for interlocutory injunctive relief.

(4)    These considerations are balanced against the fact that the interim injunctions may be in place for some time as the matter is readied for trial. The applicant first sought an interim injunction with the filing of its originating application in October last year. That interlocutory relief was not initially pursued because it was anticipated that the matter would be heard expeditiously. However, since that time, Mr Buckland has informed the applicant and the Court of significant health issues with which he is dealing and the challenges he faces as a self-represented litigant with limited resources.

52    On balance, the Court does not require the usual undertaking as to damages because of the limited and specific form of the injunctive relief sought, limited as it is to preventing the respondents from preparing and lodging income tax returns for reward whilst unregistered. The terms of the injunction sought do not preclude the respondents from engaging in commercial activity beyond that which is the specific subject of the complaint. On the face of the statute, that conduct (being the preparation and lodgment of tax returns), if engaged in by a person who is not a registered tax agent, is prohibited.

Associate:

Dated:    25 July 2023