Failure to pay tax, and employees super … Borrowing heavily from his mother … Lacking evidence to support bi-polar claim … Extravagant lifestyle … Generous payments for children and former wife … Jennifer Cooke reports
Michael John Teys, a strata title specialist whose former law shop was known as Teys Lawyers, was found by NCAT last week (Sept. 27) to be permanently unfit to practice law.
As the sole legal practitioner of Teys Lawyers until April 2014 and afterwards the sole principal of Michael Teys Lawyers, NCAT found he had failed, and caused his practice to fail, to remit more than $500,000 owed to the ATO.
He was also found to have failed to pay almost $40,000 in superannuation entitlements to employees. And he had breached s.260 of the Legal Profession Act 2004 by intermixing trust monies.
Admitted to the Queensland roll in December 1985 and to the NSW roll in February 2000, Teys had intermixed other monies with his firm’s trust monies which NCAT found was “intended to frustrate” an ATO garnishee order put in place a month before the practice was put into voluntary liquidation in April 2014.
It also rejected the assertion – for which there was no expert medical evidence – that his “propensity to engage in extravagant expenditure was a symptom of his Bipolar II disorder”.
Teys told the tribunal he has been under longstanding treatment for the condition, which was impacted significantly in 2012 when he disclosed his homosexuality and his 28-year marriage ended.
Despite retrenching three lawyers in Sydney in 2012, he made a commercial decision to expand the practice and opened offices in Melbourne and on the Gold Coast in an attempt to trade his way out of financial difficulties.
The venture – “an expensive vanity exercise” – failed and while paying some of his tax obligations, the ATO debt increased and he continued to spend money, including on luxury items. He was also borrowing money from his mother, sister and others.
The Law Society of NSW alleged that Teys preferred his own interests to those of Teys Lawyers’ employees and the ATO for two years.
Teys conceded taking at least $514,645 from the business in the 2013 financial year to ensure his former wife and children were properly financially supported after his marriage breakdown.
He argued that his state of mind in ensuring that his family had stability could not be regarded as evidence that he was disingenuous, morally wrong or demonstrated unfitness.
His monthly payments to his wife and four children during the 2013 and 2014 financial years, including school and university fees, were up to $30,000 a month.
Teys admitted receiving about $480,000 from his mother during 2014 which “could have made a significant contribution towards satisfaction of the debts” to the ATO and staff superannuation entitlements.
He also admitted that by moving non-trust monies into the law firm’s trust account in March and April 2014, he sought to prevent the ATO having access to the funds.
At all times, Teys submitted to NCAT that he had acted on advice from experienced people, including an insolvency expert, and did not act dishonestly.
NCAT was satisfied that Teys’s conduct in the 2012 financial year showed he preferred the interests of himself and his family over his statutory obligations, particularly that of his company to pay tax.
“This conduct continued during the 2013 financial year, during which he caused a total of $777,000 to be paid [to] his former wife and himself instead of paying the debts, and during the 2014 financial year. We are satisfied that during the 2014 financial year, the respondent continued to take significant sums of money from Teys Lawyers and he continued to live an extravagant lifestyle without regard to the level of debt owed.”
Awarding costs against him, NCAT found Teys, who had limited insight into his conduct, had control over his level of spending, the amount of payments to his former wife and children and “access to significant funds from his mother and sister”.
According to the most recent liquidator’s report before the tribunal, employees will receive 26 per cent of their entitlements in wages, superannuation, annual leave and payment in lieu of notice.
In 2016 Teys was also disqualified from managing corporations for five years. This followed an ASIC investigation which found he had breached his duties as a director which included failing to comply with financial services laws.