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Hellfire Club
24 July, 2008  
Underneath the Archers

The NSW bar wins a round in the six year struggle to get Stephen Archer struck off the roll. Court of Appeal overturns ADT orders for production of documents. Archer claims the bar knew about his tax and bankruptcy affairs, and did sweet FA

imageThe Bar ‘n’ Grill’s Herculean efforts to turf cherubic Stephen Archer (pic) off the jam roll moves apace by tiny increments.

The latest small step is Friday’s (July 18) decision by the NSW Court of Appeal that the bar doesn’t have to hand over to the crumpled tax malingerer truckloads of documents.

Archer wanted:

  • Each of his applications for a practising certificate between January 1, 1984 and June 30, 2001.
  • All correspondence in which he is mentioned between the NSW bar and the Barristers Board of WA between July 1, 1987 and October 9, 2004.
  • All correspondence in which he is mentioned between the NSW Bar Association and the Australian Taxation Office between July 1, 1987 and October 9, 2004
  • The minutes of every meeting of the bar council, any committee of the bar council and any professional conduct committee held between October 1, 2000 and October 9, 2004 that contain references to him.

    The Administrative Decisions Tribunal ordered in February last year that the bar produce these documents.

    Some of them were handed over but most of what Archer wanted the bar said was “non-compellable” under the secrecy provisions attached to disciplinary parts of the Legal Profession Act 1987.

    The bar alleges professional misconduct against the wily ducker and weaver on a number of grounds.

  • He failed to “discharge his legal and civic duty to pay income tax” for the years June 30, 1988 to June 30, 2002, adequately or at all. There were sequestration orders made against Archer in December 1991 and March 2002, with the ATO being the petitioner. In April 1997 Archer went bankrupt on his own petition, with the tax man being the main creditor.
  • He failed to make adequate provisions, or any adequate provision, from his income for the payment of income tax for the years June 30, 1988 to June 30, 2002. On March 29, 1988 Archer entered into a Family Law Act arrangement with his wife, whereby he made payments to her in preference to payments to the ATO. He could have applied to vary the FLA agreement, but did not do so.

    Archer said none of the matters alleged against him is capable as a matter of law of constituting professional misconduct.

    His case is that the documents he has been seeking will show that the bar association knew of his bankruptcy and his tax affairs “over a substantial period of time [and] did not treat them as amounting to professional misconduct”.

    Further, he said the proceedings were brought against him for an “ulterior purpose”.

    imageIn any event, the Court of Appeal’s David Hodgson (pic) found that there had been no waiver of the statutory secrecy provisions and allowed the bar’s appeal against the ADT’s order to produce.

    The whole affair has been batted around since The Sydney Morning Herald’s exposé in February 2001 about bankrupt barristers and their failure to pay tax.

    The bar cancelled Archer’s ticket and since August 2002 it has been trying to get him struck off for professional misconduct.

    The main Sydney Morning Herald article about Archer from February 26, 2001 appears to have disappeared from the web. We reproduce it below. Archer’s final flourish is worth remembering:

    Bankrupt in Paddo: barrister’s $3m unpaid taxes
    Paul Barry

    Barrister Stephen Archer’s wife appears to own everything in his material world, out of reach of the Tax Office, Paul Barry reports.

    By the time his trustee lets him out of bankruptcy in 2005, the well-known Sydney barrister Mr Stephen Archer will have been officially broke for 14 years. But being skint has never stopped him living the high life.

    Just like Laurie Connell, whom he famously defended on fraud charges in the early 1990s, Mr Archer knows how to keep his creditors at bay. Despite racking up a $3.1 million debt to the Tax Office since the 1970s, the high-flying advocate still manages to live in a magnificent Victorian terrace in Paddington, which local real estate agents say is worth at least $1.3 million.

    The four-bedroom renovated mansion, with a fountain in the front garden, belongs to his wife, Sarah, who bought it in 1996 while her husband was still a bankrupt which means that the Tax Office, Mr Archer’s main creditor, can’t get its hands on it.

    Meanwhile, Mr Archer has nothing of value to his name. When he last went bankrupt (for the second time) in 1997, he claimed in his statement of affairs that his only asset was $120 in cash.

    His wife, it seems, owns everything in his material world. All he needs to worry about is divorce.

    Mr Archer’s share in Wardell Chambers in Martin Place, for example, was financed by a $45,000 loan from his wife. His office answering machine, computer and printer also belong to her, as does the photocopier. “Does she do much photocopying?” Mr Archer was asked in 1997 at a public examination by his bankruptcy trustee. “No,” he replied, “she does no photocopying.”

    Questioned as to what his wife did for a living, Mr Archer replied, “Nothing.” At the time she had done nothing for 18 months.

    But the full picture of Mr Archer’s financial affairs is far more remarkable than this, because Federal Court documents show that in March 1988 he handed over all his worldly goods to his wife in a separation agreement under the Family Law Act.

    The two have never divorced and still share the family home. Nor have they ever separated for long. Mr Archer has told the Federal Court that they separated for four months in 1988 and again at the end of 1995 when he moved to Sydney from Perth.

    But the financial settlement still stands, regardless. According to papers filed in the Federal Court, it requires Mr Archer to pay:An indexed amount of $5,500 a month to his wife as maintenance.The majority of costs in relation to their children.”Various ongoing miscellaneous expenses incurred by his wife.”“Costs in maintaining a motor vehicle for his wife of no less than a Mercedes-Benz 280SE standard.”

    Back in 1988, Mr Archer also gave his wife his office equipment, his law books and all the property used in his legal practice, along with $40,000 in cash and part of a valuable stamp collection.

    As a consequence of this 13-year-old agreement, all the family assets have been quarantined from his creditors to this day.

    At the same time, Mr Archer has been able to channel perhaps $100,000 a year to his wife tax-free. Tax experts contacted by the Herald said that payments made under section 86 of the Family Law Act are normally not taxable in the hands of the recipient.

    Mr Archer’s decision to give his assets away came at a time when he was already facing huge debts to the Tax Office, and it is clear that he had been refusing to meet the tax man’s demands for many years.

    According to a chronology prepared by the Tax Office and filed in the Federal Court in 1990, Mr Archer was first sued in 1985 for non-payment of income tax, covering the years 1976 to 1980.

    The following year he was sued by the Deputy Commissioner of Taxation for tax owed from 1982 to 1985. And four years later he was sued for tax owed from 1987 to 1990.

    As the Tax Office document also discloses, Mr Archer had by this time been convicted “on approximately 20 occasions” for not filing a tax return. One of those prosecutions, in March 1989, caused him problems with the Barristers Board of Western Australia.

    Having read a report of his conviction in the Herald, the board wrote to Mr Archer asking him to explain. Shortly afterwards, the West Australian Supreme Court found him guilty of unprofessional conduct and fined him $10,000, but declined to strike him off.

    The setback did not do Mr Archer’s career much good and, in his view, stopped him being made a Queen’s Counsel or Senior Counsel, but it did not put him out of business the NSW Bar Association decided his case had been dealt with in Western Australia, and took no action against him.

    But nor did the shock put Mr Archer back on the straight and narrow. He refused to pay new tax demands sent by the Tax Office, and then defied the bankruptcy laws as well by failing to pay money to his creditors.

    In 1995, Mr Archer’s trustee in bankruptcy, Mr George Caddy, objected to the barrister’s discharge because he had failed to make payments to his creditors of $69,082, even though ordered by the court to do so. His bankruptcy was extended until 2000.

    Then in 1997, while still a bankrupt, Mr Archer put himself into bankruptcy a second time, thus avoiding a new debt to the tax man of $640,000.

    He admitted at his public examination soon afterwards that he had paid no tax for the 1996 and 1997 financial years.

    He was asked: “Have you got any funds set aside for payment of any tax that is due in respect of the 1995-1996 income tax year?” He replied: “No.”

    “Did you at any stage have money set aside?” he was asked. Again he replied: “No.”

    “What system if any do you have in place for setting money aside for the 1996-1997 financial year?” was the next question. “I have no system yet,” he responded. “Have you set aside any money for that purpose?” he was asked. And once again came the answer: “No.”

    Since then, Mr Caddy has objected to Mr Archer being discharged from his second bankruptcy, because he had again failed to make contributions to his creditors (ie, the Tax Office).

    So he will not be released from bankruptcy until 2005, even though he is now up to date with payments.

    When asked by the Herald to discuss his tax-paying record, his bankruptcies and his lack of assets, Mr Archer replied: “If I had not appeared for and against newspapers, including The Sydney Morning Herald, for the past 20 years, I might have mistaken your letter as a polite request to comment upon the matters raised by you.

    “However, both the terms of the letter and the imposition of such an arbitrary and unreasonable time for a response make it plain that the letter was written in the hope that there would be no reply, enabling you to assert that I declined to comment on matters raised.”

    Mr Archer’s letter went on: “As you must have learnt over your years as a journalist, the `facts’ are not always revealed by public records, and an assertion that I have used insolvency to avoid my tax obligations would constitute a mischievous and false characterisation of things that have occurred.”

    We arranged to meet Mr Archer at his Sydney chambers so that he could set the record straight, but he cancelled the appointment some days later.

    His parting words to the Herald were: “Publish and perish.”