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Aussie Home Loans founder, John Symond, has won a multimillion-dollar court case against Gadens law firm over an $11m tax bill. However, the two sides remain on relatively good terms, a Gadens spokesperson tells Australian Broker, with the law firm continuing to represent Aussie Home Loans.
According to the Australian Financial Review, Supreme Court Justice Robert Beech-Jones ruled on Friday that ‘aggressive and wrong’ advice given by ex-Gadens partner, Ross Seller, between 2003 and 2004 was ‘negligent’, ‘misleading’ and in breach of the firm’s contract of retainer.
Symond’s legal representatives claimed Gadens’ advice on the restructuring of the Aussie group was wrong and resulted in ‘double taxation’. The iconic broker had initially sought advice about a way to borrow money from the business without the funds, totalling $57m over three years, being taxed in his hands.
The ATO, however, saw things differently. Symond was forced to pay a $6.6m settlement to the ATO in December, 2007, to cover tax, penalties and interest.
Seller left Gadens in 2005 and continued to give advice on the restructure from his new post at Abbott Tout. Symond settled his claim against Abbott Tout, now HWL Ebsworth, in February this year for $1.85 million.
The judge rejected an argument by Gadens that there were ‘concurrent wrongdoers’, such as accounting firm PwC, which was retained by the Aussie Group in late 2006 or early 2007.
“[PwC] inherited a client who had acted on aggressive and wrong tax advice and had thereby acquired a very large tax exposure. Close scrutiny from and negotiations with the ATO were about to commence.”
The accounting firm was “dealing with a quagmire of someone else’s, namely Gadens’, making”, the judgment continued.
Gadens’ argument that Symond failed to take reasonable care for his own interests was also rejected by the judge, who added that he was ‘satisfied that Mr Symond incurred the claimed amount of professional fees…by reason of the negligence, breach of contract and misleading conduct of Gadens.”
A Gadens spokesperson was unable to comment as to whether the firm will appeal Justice Beech Jones’ ruling.
At time of publication, Aussie remained unavailable for comment.
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