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WA Case: "business as usual"

WA Case: "business as usual"

WA Case: "business as usual"

Legal Practice Board v Computer Accounting & Tax Pty Ltd

Here is our view on a recent WA case that mentioned Cleardocs - the outcome is "business as usual".

In forming our view, we've worked closely with our lawyers, Maddocks.

You can also read the view of the Institute of Chartered Accountants in Australia in the "Court case raises issues about preparation of legal documents" article.

Below we outline the case - which has some curious facts.

The deed in question was not a Cleardocs deed

The SMSF deed in the case is not a Cleardocs deed. In fact:

  • the deed bears no similarities to a Cleardocs deed.
  • the deed was old and out of date. For instance, it refers to the Insurance and Superannuation Commission, which was replaced by the Australian Prudential Regulation Authority in 1999. Cleardocs launched three years later in 2002.

Cleardocs was never contacted by any of the WA Legal Practice Board, the accountant, their lawyers etc.

The first Cleardocs heard about the case was in legal updates provided by law publishers etc.

Cleardocs has never been contacted by any of the accounting firm, its principals, the lawyers in the case or the Legal Practice Board of Western Australia.

The accountant was not a Cleardocs customer - and did not use the Cleardocs system

The firm in the case was not a Cleardocs customer. It did not use the Cleardocs system. It did not use a Cleardocs deed.

Copying an old document would be a breach of Cleardocs terms and conditions

If the deed in the case had been based on a Cleardocs deed, then we believe the way the accounting firm apparently created the deed would have been in breach of the Cleardocs terms and conditions.

At Cleardocs, customers order documents online and buy a one-off license to use the documents delivered. Yet the deed involved in the case appears to have been created in the accountant's offices by copying an old deed the firm had on file.

The Cleardocs terms and conditions make very clear that Cleardocs documents are not available as pro-forma documents. Instead, the Cleardocs system and the assurances we give in our terms and conditions are valid only if the user arranges the relevant document package through Cleardocs on a pay-per-use basis. If the accounting firm had really done what the judgment describes (that is, copying a Cleardocs deed which it had on file), then we believe the firm would have been in breach both of the Cleardocs terms and conditions and of the Copyright Act.

The case

In summary:

  1. The case concerned a principal in an accounting firm who prepared a self-managed superannuation fund (SMSF) trust deed for a client (SMSF Deed). The firm appears to have done that by copying and then filling out an old deed from its files;
  2. It appears that the case arose after a solicitor made a complaint to the Legal Practice Board of Western Australia about the accounting firm. The solicitor made that complaint after the principal had complained to the Legal Practitioners' Complaints Committee about the solicitor;
  3. The accounting firm escaped sanction on technical grounds; and
  4. The link between the case and Cleardocs is that:
    • the principal in the accounting firm gave evidence that the firm had obtained a Cleardocs SMSF trust deed 3 years before the events involved in the case;
    • the principal implied that the SMSF Deed in the case was based on the deed it had obtained from Cleardocs 3 years earlier; and
    • the judge mentioned - in passing - that Cleardocs was the source of the deed. (Though in fact that was not the case. The deed was from another provider.)

Cleardocs' position and your firm's position

Cleardocs', together with its lawyers Maddocks, has gone to considerable lengths in order to gain a full understanding of the background and relevant facts in the WA Case - including by inspecting the court file and examining all relevant transcripts of proceedings. Having been through that process, Cleardocs' position is that:

  • The WA Case does not alter Cleardocs' position concerning the use of Cleardocs by intermediaries. A joint article (dated December 2005 with recently updated contact details), provided by Maddocks and Cleardocs, is freely available on the Cleardocs website: see Article: Intermediaries using Cleardocs
  • Given that Cleardocs was not the source of the SMSF Deed, Cleardocs should never have been named in the WA Case.

The fact is, accountants and others have been using shelf-company and trust providers in Australia for 20 years or so.

Cleardocs is not able to give legal advice. You or your firm (or both) must reach their own conclusions, in consultation with their own advisers, about using Cleardocs.

Cleardocs will continue to monitor relevant developments.

Any questions?

If you have any questions, please call us on 1300 307 343.


Lawyer in Profile

Andrew Wright
Andrew Wright
+61 3 9258 3362

Qualifications: LLB (Hons), BCom, University of Melbourne

Andrew is a Partner in Maddocks Tax and Structuring team. He has significant experience in advising Australian and multinational companies, high net worth individuals, accountants and financial advisers on all areas of taxation law.

Andrew regularly provides advice on:

  • structuring of businesses and transactions,
  • mergers and acquisitions,
  • sale of businesses,
  • corporate reorganisations,
  • fixed and discretionary trust deeds, and
  • international tax structuring.

His advice covers both direct and indirect tax considerations.

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