Not only was Clarrie Stevens QC struck off earlier this month by the NSW Court of Appeal (see previous report) the court has found it necessary to share its thinking about him in gruesome detail.
Showing no mercy, grim-faced Justice Sheller (Meagher JA and Ipp JA agreeing) cited the stiff judgments handed down in two previous tax aversion cases. “Integrity” is now the buzzword. As today’s (Sept 18, 2003) headnote put it:
“A history of default in paying tax and lodging tax returns, bespeaks a lack of integrity which the public has a right to expect in a barrister and is a failure of the barrister’s legal and civic responsibilities. Such conduct is sufficient to justify a finding of professional misconduct and that the barrister is not a fit and proper person to remain on the Roll of Legal Practitioners: New South Wales Bar Association v Cummins; New South Wales Bar Association v Young.”
What is interesting in His Honour’s findings are excerpts from Clarrie’s two affidavits – the first in May 2003, and the second of September 9, 2003 – the day he was unceremoniously removed from the roll.
It quickly becomes apparent that Clarrie is a man who blames everyone (usually accountants) and everything (usually poor investments) but himself.
Although Clarence started practising as a barrister in 1977, at 25 years of age, he just couldn’t explain why he hadn’t lodged a tax return by the early 1980s:
“But by the early 1980s I was becoming more and more concerned that my affairs were not in order, and, by the mid 1980s, I had put some money aside, to use to meet my tax obligations when they were finally determined, in deposits with either the National Australia Bank or the Commonwealth Banking Corporation. These were ultimately lost in one or other of my unsuccessful investments. I no longer have any documents available to corroborate this.”
In 1983 Clarrie took the enormous step of consulting Parramatta accountancy firm Martin & Allum. No tax returns were actually lodged until 1996, thirteen years later.
Sheller described this tax “strategy” as “financial and civic irresponsibility”:
“The strategy as events showed was to delay indefinitely the lodging of income tax returns for many years. I am satisfied that the acceptance by a barrister, with experience in taxation law, who in November 1991 became Queen’s Counsel, that such a strategy was proper, appropriate or legal, amounted to serious professional misconduct.”
Along the way Clarrie got into deep fiscal merde with some very dodgy sounding investments – “The Drum Reconditioning Investment”, “The Shredders Investment”, “The Merglobe Investment” and “The Tea Trees Investment”.
Stevens bought into a tea tree farm in 1996 because he “anticipated” he would be able to discharge his debt to the Australian Taxation Office via this “future stream of income, unrelated to my activities as a barrister, when the tea trees were harvested”. Only trouble was the trees wouldn’t be harvestable until 2013.
This “distracted” Clarrie from his tax problems further and made him even more depressed, according to his May 2003 affidavit.
Flinty old Sheller was unimpressed:
“In my opinion, the opponent’s investment of well over $300,000, much of it borrowed, when the opponent I am satisfied was well aware that he was obliged to pay income tax for the previous nineteen years, demonstrates a very high level of financial and civic irresponsibility.”
Sheller had much the same to say about Clarrie’s ill-fated flirtation with “The Shredders Investment” which he joined in cahoots with his accountants Warwick Martin and Don Allum:
“Again to consider engaging in such a venture, (albeit that the opponent swears ‘I intended the investments to be successful, and thus not adversely to affect my capacity to meet my obligations, including those to the ATO’), when I am satisfied from his own evidence that the opponent knew and had known for some years that his taxation affairs were not in order, demonstrates a high degree of financial and civic irresponsibility.”
By 1992, when Clarrie’s wife Thalia took over dealings with the accountants, Clarrie was in denial. As he put it:
“Any reference to ‘tax’ or ‘accountants’ in our household had become a great source of aggravation and tension. Thalia was becoming very agitated, and said that she wanted to be on their doorstep to insist that the work be done and the returns submitted. I think I began to be overwhelmed by the problem, and to go into ‘denial’...
“From 1983, my efforts – albeit inadequate – were directed to putting my affairs in order so that I could meet my tax obligation. My intention was to meet it. It was never my intention to avoid paying what was properly due from me.”
This didn’t help his case one iota.
“I do not regard these paragraphs as providing any satisfactory explanation of the opponent’s professional misconduct,” said Justice Sheller.
Nor did Sheller accept Stevens’ explanation of the difference between his non-payment of tax and John Cummins’ non-payment of tax:
”.... as I understood Cummins’ case, he was said to have used bankruptcy to avoid paying his tax obligations; I was seeking to avoid bankruptcy and to pay my tax obligations.”
“A reading of the text of the Chief Justice’s reasons for judgment shows that the opponent’s stated understanding that the essence of Cummins’ case was that he had used bankruptcy to avoid having to pay his tax debt was without foundation. Quite simply it is wrong.”
Then again it could all be due to depression. This appears to have set in around about the time he lodged his first tax return (1996).
By 2002 Clarrie says he was “operating in a fog” because he was so heavily medicated.
A report by Ralph Schureck, Director of the Institute of Psychiatric Evaluation put Clarence’s actions and failure to act down to “a personality disorder and, later, to frank psychiatric illness, as these are clinically defined.”
The Court of Appeal remained unswayed by this evidence.
Finally, they were in full agreement with Clarrie’s own admission that he was not a fit and proper person to practise as a barrister:
“Accordingly, with the sincere desire to attempt to redress my inadequacies of conduct in my taxation affairs and possibly by so acknowledging it thereby to reduce any further damage I may have caused to the profession, I acknowledge I am not currently fit and proper to practise as a barrister, by reason of my failure to lodge tax returns during the period 1977 to 1995, and the late lodgement of my 1999 and 2000 returns.”