Legal Services Commissioner v Dempsey - [2007] QSC 270

SUPREME COURT OF QUEENSLAND

CITATION:

Legal Services Commissioner v Dempsey [2007] QSC 270

PARTIES:

LEGAL SERVICES COMMISSIONER
(applicant)
v
PAUL ANTHONY DEMPSEY
(respondent)

FILE NO:

4250 of 2007

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED ON:

25 September 2007

DELIVERED AT:

Brisbane

HEARING DATE:

10 September 2007

JUDGE:

Chesterman J

ORDER:

1. A declaration that in respect to Katherine Wickham and Mark Curlewis, disbursements and outlays paid from the respondent’s trust account in the prosecution of their actions were disbursements as defined by s48IC of the Queensland Law Society Act 1948 (Qld);
2. A declaration that the maximum amount of fees that the respondent was entitled to charge Katherine Wickham and Mark Curlewis in accordance with the formulae specified in s48IC of the Queensland Law Society Act 1948 included any tax payable pursuant to the A New Tax (Goods and Services Tax) Act 1999 (Cth);
3. A declaration that the respondent was not entitled to charge Katherine Wickham or Mark Curlewis or deduct from their settlement monies, any amount in respect of Goods and Services Tax he may have been liable to pay on the supply of legal services to those clients.

CATCHWORDS:

PROFESSIONS – SOLICITOR – TRUST ACCOUNTS – MONEY HELD IN TRUST – FEES - where the respondent solicitor was acting for clients on a contingency fee basis – where the respondent required the clients to take out loans to cover any outgoings in the course of acting for the clients – where those funds were paid directly into the respondent’s trust account and used to pay any disbursements – where the relevant legislation limited the amount of professional fees a solicitor could charge by a formulae which deducted the amount of disbursements from a clients settlement figures before taking a percentage of that figure as a maximum amount permitted to be charged as professional fees – where the respondent sought to argue that as the outgoings were paid directly from loan monies paid into the trust account and not paid to the respondent as reimbursement those monies were not disbursements under s 48IC Queensland Law Society Act 1948 (Qld) – whether those funds were disbursements – whether those funds should have been taken into account to lower the maximum amount chargeable – meaning of “disbursements”

TAXATION GOODS AND SERVICES TAX - Where the respondent’s legal service attracted the obligation on behalf of the respondent to pay Goods and Services Tax – where it is common practice to pass the amount of the tax down to client by including an equivalent amount in the amount for professional fees - whether the New Tax (Goods and Services Tax) Act 1999 (Cth) authorised the respondent to charge his clients more than amount allowed under the formulae provided by the Queensland Law Society Act – whether the maximum amount chargeable under the Queensland Law Society Act included any GST payable.

A New Tax (Goods and Services Tax) Act 1999 (Cth), s 9.5, s 9.10, s9.40, s 9.70

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2007] QSC 270
Decision Date: 25 September 2007

CaseChat Overview and Summary

The case of Legal Services Commissioner v Dempsey involved the Legal Services Commissioner acting against a solicitor, Dempsey, concerning the handling of trust accounts and the calculation of permissible fees. The Commissioner alleged that Dempsey, while acting on a contingency fee basis, had required his clients to take out loans to cover any expenses in the course of their case. These funds were paid directly into Dempsey's trust account and used to pay any disbursements. Dempsey argued that because the funds were paid directly into his trust account and not reimbursed to him personally, they were not considered disbursements under the relevant legislation. The dispute centred on whether these funds should be considered disbursements and whether they should lower the maximum amount of fees Dempsey could charge.

The primary legal issues for the court to decide were the meaning of "disbursements" as defined in section 48IC of the Queensland Law Society Act 1948 (Qld) and whether Dempsey's fees could include the Goods and Services Tax (GST). Dempsey contended that the funds paid into his trust account were not disbursements and thus should not reduce the maximum allowable fees. Furthermore, Dempsey argued that the GST obligation did not affect the maximum fees allowable under the legislation, and he could charge clients more than the amount calculated by the formulae provided by the Queensland Law Society Act. The court had to determine whether Dempsey's interpretation of the legislation was correct and if he was permitted to pass on the GST to his clients.

The court found that the funds paid into Dempsey's trust account to cover disbursements were indeed disbursements as defined by the legislation. Consequently, these funds should be taken into account when calculating the maximum allowable fees. Additionally, the court ruled that the maximum fees permitted under the Queensland Law Society Act included any GST payable, and Dempsey was not entitled to charge his clients additional amounts for GST. The court concluded that Dempsey had not complied with the legislative requirements governing the calculation of allowable fees and disbursements.

The court's final orders declared that the disbursements made from Dempsey's trust account were indeed disbursements as defined by section 48IC of the Queensland Law Society Act 1948 (Qld). It also stated that the maximum allowable fees included any GST payable, and Dempsey was not entitled to charge his clients any additional amounts for GST. This decision clarifies the interpretation of "disbursements" and the inclusion of GST in the calculation of allowable fees for solicitors in Queensland.

Orders

Orders of the court

1. A declaration that in respect to Katherine Wickham and Mark Curlewis, disbursements and outlays paid from the respondent’s trust account in the prosecution of their actions were disbursements as defined by s48IC of the Queensland Law Society Act 1948 (Qld);

2. A declaration that the maximum amount of fees that the respondent was entitled to charge Katherine Wickham and Mark Curlewis in accordance with the formulae specified in s48IC of the Queensland Law Society Act 1948 included any tax payable pursuant to the A New Tax (Goods and Services Tax) Act 1999 (Cth);

3. A declaration that the respondent was not entitled to charge Katherine Wickham or Mark Curlewis or deduct from their settlement monies, any amount in respect of Goods and Services Tax he may have been liable to pay on the supply of legal services to those clients.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Legal Services Commissioner v Dempsey [2007] QSC 270
PARTIES:	LEGAL SERVICES COMMISSIONER (applicant) v PAUL ANTHONY DEMPSEY (respondent)
FILE NO:	4250 of 2007
DIVISION:	Trial
PROCEEDING:	Application
ORIGINATING COURT:	Supreme Court of Queensland
DELIVERED ON:	25 September 2007
DELIVERED AT:	Brisbane
HEARING DATE:	10 September 2007
JUDGE:	Chesterman J
ORDER:	1. A declaration that in respect to Katherine Wickham and Mark Curlewis, disbursements and outlays paid from the respondent’s trust account in the prosecution of their actions were disbursements as defined by s48IC of the Queensland Law Society Act 1948 (Qld); 2. A declaration that the maximum amount of fees that the respondent was entitled to charge Katherine Wickham and Mark Curlewis in accordance with the formulae specified in s48IC of the Queensland Law Society Act 1948 included any tax payable pursuant to the A New Tax (Goods and Services Tax) Act 1999 (Cth); 3. A declaration that the respondent was not entitled to charge Katherine Wickham or Mark Curlewis or deduct from their settlement monies, any amount in respect of Goods and Services Tax he may have been liable to pay on the supply of legal services to those clients.
CATCHWORDS:	PROFESSIONS – SOLICITOR – TRUST ACCOUNTS – MONEY HELD IN TRUST – FEES - where the respondent solicitor was acting for clients on a contingency fee basis – where the respondent required the clients to take out loans to cover any outgoings in the course of acting for the clients – where those funds were paid directly into the respondent’s trust account and used to pay any disbursements – where the relevant legislation limited the amount of professional fees a solicitor could charge by a formulae which deducted the amount of disbursements from a clients settlement figures before taking a percentage of that figure as a maximum amount permitted to be charged as professional fees – where the respondent sought to argue that as the outgoings were paid directly from loan monies paid into the trust account and not paid to the respondent as reimbursement those monies were not disbursements under s 48IC Queensland Law Society Act 1948 (Qld) – whether those funds were disbursements – whether those funds should have been taken into account to lower the maximum amount chargeable – meaning of “disbursements” TAXATION GOODS AND SERVICES TAX - Where the respondent’s legal service attracted the obligation on behalf of the respondent to pay Goods and Services Tax – where it is common practice to pass the amount of the tax down to client by including an equivalent amount in the amount for professional fees - whether the New Tax (Goods and Services Tax) Act 1999 (Cth) authorised the respondent to charge his clients more than amount allowed under the formulae provided by the Queensland Law Society Act – whether the maximum amount chargeable under the Queensland Law Society Act included any GST payable. A New Tax (Goods and Services Tax) Act 1999 (Cth), s 9.5, s 9.10, s9.40, s 9.70