Symond v Gadens Lawyers Sydney Pty Ltd - [2013] NSWSC 955

Supreme Court

New South Wales

Medium Neutral Citation: Symond v Gadens Lawyers Sydney Pty Ltd [2013] NSWSC 955
Hearing dates: 18 February to 1 March 2013
Decision date: 19 July 2013
Jurisdiction: Common Law
Before: Beech-Jones J
Decision:
Plaintiff succeeds in establishing negligence, breach of retainer and contravention of s 52 of the Trade Practices Act 1974 (Cth) against the First Defendant. Quantification of judgment to await further calculations.

Catchwords:
NEGLIGENCE - professional negligence - specialised tax advice - was advice concerning the tax consequences of the proposed business restructure negligent - whether advice that the redemption of preference shares would be tax free was wrong - failure to advert to the definition of "dividend" in s 6(1) of the Income Tax Assessment Act 1936 - failure to warn of the risk of application of s 45B and Part IVA of the ITAA 1936 to proceeds of the redemption- what alternative structures should have been recommended - negligent misstatement.

CONTRACT - was there was a contract of retainer - breach of retainer.

TRADE AND COMMERCE - trade practices - whether defendant engaged in misleading or deceptive conduct contrary to s 52 of the Trade Practices Act 1974 (Cth).

CAUSATION - whether alleged deficiencies in advice caused liabilities of plaintiff under Deed of Settlement with the Commissioner of Taxation - whether deficiencies must coincide with the precise tax exposures settled under the Deed.

DAMAGES - measurement of loss or damage - alternative structures that should have been recommended - tax consequences of those structures - which alternative would the plaintiff most likely have pursued "but for" the negligent advice - difference between plaintiff's financial position under "but for" scenario and in the events that transpired - benefit of pursuing restructure that was recommended - whether benefit from paying dividends earlier rather than later permanent or temporary - measurement of benefit - valuation of deduction in franking credits from franking account - reflective loss - whether deduction from franking account only caused reflective loss to shareholder.
DAMAGES - apportionment of loss - concurrent wrongdoers - meaning of damage in context of "apportionable claim" - test for apportionment.
Legislation Cited: - Civil Liability Act 2002
- Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (Cth)
- Fringe Benefits Tax Assessment Act 1986 (Cth)
- Income Tax Assessment Act 1936 (Cth)
- Income Tax Assessment Act 1997 (Cth)
- Professional Standards Act 1994
- Taxation Laws Amendment Act (No 3) 1998 (Cth)
- Taxation Laws Amendment Act (No 2) 2002
- Trade Practices Act 1974 (Cth)
Cases Cited: - Adeels Palace Pty Ltd v Moubarak [2009] HCA 48; 239 CLR 420
- Astley v Austrust Ltd [1999] HCA 6; 197 CLR 1
- Chen v Karandonis [2002] NSWCA 412
- Gould v Vaggelas [1985] HCA 85; (1984) 157 CLR 215
- Hayden v Federal Commissioner of Taxation (1996) 96 ATC 4797; 33 ATR 352
- Hendriks v McGeoch [2008] NSWCA 53
- Heydon v NRMA Ltd [2000] NSWCA 374; 51 NSWLR 1
- Hill v Van Erp [1997] HCA 9; 188 CLR 159
- Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10; 87 ALJR 505
- J & G Knowles & Associates Pty Ltd v Commissioner of Taxation [2000] FCA 196; 96 FCR 402
- Johnson v Gore Wood & Co [2000] UKHL 65; [2002] 2 AC 1
- Jones v Dunkel (1959) 101 CLR 298
- Kenny & Good Pty Ltd v MGICA [1999] HCA 25; 199 CLR 413
- McRae v Commonwealth Disposals Commission (1951) 84 CLR 377
- March v E & MH Stramare Pty Ltd [1991] HCA 12; 171 CLR 506
- Mercedes Holdings Pty Ltd v Waters (No 3) [2011] FCA 236
- Mills v Federal Commissioner of Taxation [2011] FCAFC 158; 198 FCR 89
- Mills v Federal Commissioner of Taxation [2012] HCA 51; 87 ALJR 53
- Minister for Immigration & Ethnic Affairs v Guo [1997] HCA 22; 191 CLR 559
- Mitchell Morgan Nominees Pty Ltd v Vella [2011] NSWCA 390
- Murphy v Overton Investments Pty Ltd [2004] HCA 3; 216 CLR 388
- Norris v Blake [No 2] (1997) 41 NSWLR 49
- Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204; 1 All ER 354
- Sellars v Adelaide Petroleum NL [1994] HCA 4; 179 CLR 332
- Starrim Pty Ltd v Commissioner of Taxation [2000] FCA 952; 102 FCR 194
- Tepko Pty Ltd v Water Board [2001 HCA 19; 206 CLR 1
- Vinidex Tubemakers Pty Ltd v Thiess Contractors Pty Ltd [2000] NSWCA 67
- Wallace v Kam [2012] NSWCA 82; Aust Torts Reports 82
- Wallace v Kam [2013] HCA 19; 87 ALJR 648
- Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514
- Wynbergen v Hoyts Corporation Pty Ltd [1997] HCA 52; 72 ALJR 65
Category: Principal judgment
Parties: John Joseph Symond (Plaintiff)
Gadens Lawyers Sydney Pty Ltd (1st Defendant)
Ross Edward Seller (4th Defendant)
John Henry Bartrop (5th Defendant)
Gregory Anthony Thomas Bateman (6th Defendant)
John Cunningham Bell (7th Defendant)
Bryan Robert Belling (8th Defendant)
Dennis Raymond Bluth (9th Defendant)
Seamus John Burke (10th Defendant)
Susan Jane Burns (11th Defendant)
Robert Angus Cameron (12th Defendant)
John Alexander Cole (13th Defendant)
Sancia Catherine de Jersey (14th Defendant)
Christine Lynne Ecob (15th Defendant)
John David Berkeley Edelman (16th Defendant)
David Radcliffe Ford (17th Defendant)
Kirston Marie Gerathy (18th Defendant)
Richard Kenneth Graham (19th Defendant)
Timothy Martin Griffiths (20th Defendant)
Mark Alfred Harrowell (21st Defendant)
Michael Raymond Hodgson (22nd Defendant)
Gail Jennifer Howard (23rd Defendant)
Victor Francis Kelly (24th Defendant)
Nicholas John Matkovich (25th Defendant)
Robert William McCormadk (26th Defendant)
Brett Gregory McKenzie-Craig (27th Defendant)
Peter Gregory Noble (28th Defendant)
Gary Francis Punch (29th Defendant)
Penelope Jane Snyman (30th Defendant)
Ellis Neville Varejes (32nd Defendant)
Damian Gregory Ward (34th Defendant)
Representation: Counsel:
A.J. Payne SC, J.O. Hmelnitsky and R.A. Jedrzejczyk (Plaintiff)
S.R. Donaldson SC, B.L. Jones (First Defendant)
Solicitors:
Baker & McKenzie (Plaintiff)
DLA Piper Australia (First Defendant)

File Number(s): 2009/297612

Judgment

In 1992 the plaintiff, John Symond, founded a business whose legal structure has changed over the years but which has always been known as "Aussie Home Loans" (the "business"). The business provides various financial services at the retail level. At times it has made losses but at least from 2005 it has been very profitable.

In 2003 Mr Symond and those assisting him obtained legal advice from the first defendant, Gadens Lawyers Sydney Pty Ltd ("Gadens"). The partner principally responsible for providing that advice was Mr Ross Seller, an expert in taxation law. The subject of the advice concerned the tax consequences of a revised ownership structure of the business. One aspect of the advice was directed to the means by which Mr Symond could continue to borrow funds from the business. It was anticipated that he would need to do so to complete the construction of his home.

Mr Seller and Gadens provided advice. It was acted upon and a restructure was effected in 2003 and 2004 (the "Restructure"). As part of the Restructure, a mechanism was put in place by which Mr Symond could withdraw funds from the Aussie Home Loans Group (defined at [15]) by redeeming preference shares issued by the new corporate vehicle that owned the entities making up the Aussie Home Loans Group, AHL Holdings Pty Ltd ("Holdings"). During the financial years ended 30 June 2004, 30 June 2005 and 30 June 2006, Mr Symond drew down around $57 million. The ultimate source of those funds was the external financier to the Aussie Home Loans Group, the Australia and New Zealand Banking Group Ltd ("ANZ").

On about 17 January 2005, Mr Seller left Gadens and joined the law firm Abbott Tout. He continued to provide advice and assistance. Later that year the Australian Taxation Office ("ATO") commenced a review of Mr Symond's taxation affairs as part of a process of scrutinising the taxation affairs of high net worth individuals. The manner in which Mr Symond had taken funds out of the business attracted the ATO's attention. In 2007 the ATO commenced an audit of his affairs. This led to a Deed of Settlement with the Commissioner for Taxation ("Commissioner") in which Mr Symond agreed to pay a substantial amount of tax, penalties and interest charges, and Holdings agreed to deduct an amount from its "franking account" that it maintained in accordance with s 200.15 of the Income Tax Assessment Act 1997 (Cth) ("ITAA 1997").

Mr Symond now sues Gadens. He alleges that it was negligent, acted in breach of contract, uttered negligent misstatements, and engaged in misleading conduct contrary to former s 52 of the Trade Practices Act 1974 (Cth) ("TPA"). He claims that Gadens' advice did not conform to the standard of a reasonably competent solicitor and was otherwise misleading. He also contends that Gadens should have advised him as to the availability of other means of structuring his affairs and those of the Aussie Home Loans Group to ensure that the monies he needed to borrow to complete the construction of his home were not taxed in his hands.

Gadens denies these allegations. It also asserts that the implementation of the alternative structures that Mr Symond suggests it should have recommended to him would have caused the payment of much greater amounts of tax than the amounts paid under the settlement with the Commissioner. It contends that the deduction from the franking account did not cause him any compensable loss. In the alternative, Gadens contends that a number of other parties were "concurrent wrongdoers" with it and that accordingly its liability should be correspondingly reduced.

Mr Symond sued Abbott Tout as well as Gadens. In February 2013 he settled his claim against Abbott Tout. As part of that settlement, Abbott Tout paid Mr Symond $1.85 million (excluding costs). The terms of that settlement affect the amount he can recover from Gadens in the manner explained at [451].

In summary, I have concluded that Gadens was negligent and in breach of its contract of retainer with Mr Symond in relation to the structure it proposed to Mr Symond, and its advice that the proceeds from the redemption of the preference shares would be "tax free" in his hands. In proposing that structure and providing that advice it also uttered negligent misstatements and engaged in conduct contrary to s 52 of the TPA. I find that Gadens was obliged to advise Mr Symond not to proceed with the Restructure and instead should have advised him of three other ways to restructure the business so as to achieve Mr Symond's objective, with the preferred scenario being the option described as "Scenario 2" (see [269]ff). Had this advice been given, the imposition of the tax, penalties and interest charges and the deduction from Holdings' franking account that occurred as a result of the settlement with the Commissioner, as well as various professional fees that Mr Symond paid, would have been avoided, although some allowance needs to be made for the possibility that other costs might have been incurred (see [424]).

However, in assessing the quantum of Mr Symond's loss it is necessary to bring to account certain extra tax liabilities that Mr Symond would have incurred had he implemented Scenario 2. The parties were in sharp dispute as to whether those tax liabilities represented a permanent benefit, as contended by Gadens, or a temporary benefit, as contended by Mr Symond, arising from his adoption of the Restucture proposed by Gadens. I have concluded that some portion of those extra tax liabilities was permanent but the remainder was temporary. On the material available, I am unable to calculate the value of the offsetting benefit but have set out the basis for the parties to calculate it below at [374] to [375].

The parties were also in dispute about whether any aspect of the damages payable to Mr Symond should include an amount referable to the deduction from Holdings' franking account. I have concluded that the deduction was causative of a loss to Mr Symond as a shareholder of Holdings, and that its value should be determined by an assessment of the lost value to the pool of franking credits that was occasioned having regard to my assessment of the distribution rate of earned franking credits by Holdings (see [396] to [414]).

I have also concluded that Abbott Tout was a concurrent wrongdoer with Gadens, but have rejected the latter's allegation that other parties were also concurrent wrongdoers. I have determined that it is "just" that Gadens bear 85% of the total losses occasioned to Mr Symond. The determination of the precise amount of the damages recoverable by Mr Symond from Gadens, if any, will need to await the calculations noted in [422] to [426], and then the application of the formula provided in the terms of settlement between Mr Symond and Abbott Tout that were in a limited respect also accepted by Gadens (see [452] to [455]).

The balance of the judgment explains the reasons for this conclusion. It is structured as follows:

(1) Background ([13]);

(a) 1992 to 2002 ([14] to [22]);

(b) Mr Symond's Relationship with Gadens ([23] to [33]);

(d) 1 July 2003 to 1 July 2004 ([96] to [118]);

(e) Redemption of the Redeemable Preference Shares ([119] to [129]);

(f) Mr Seller's Move to Abbott Tout and the ATO Risk Review ([130] to [145]);

(g) The ATO Audit and Settlement with Mr Symond in 2007 ([146] to [158]);

(h) Further Factual Findings ([159] to [178]);

(2) Duty of Care and Contract of Retainer with Gadens ([179] to [187]);

(3) Standard of Care and Breach ([188] to [222]);

(4) Negligent Misstatement ([223] to [229]);

(5) Misleading or Deceptive Conduct ([230] to [231]);

(6) The Connection Between the Liabilities Imposed by the Deed and Breach ([232] to [238]);

(7) The Three Scenarios ([239] to [240]);

(8) Scenario 1 - Continuing to Borrow from the AHLUT ([241] to [268]);

(a) Tax Treatment of Scenario 1 ([243] to [258]);

(b) Scenario 1 - Reconstituted Accounts and Financial Capacity ([259] to [268]);

(9) Scenario 2 - Borrowing from the AHLUT and Interposing a Corporate Owner ([269] to [286]);

(a) Scenario 2 - Tax Treatment ([272] to [277]);

(b) Scenario 2 - Reconstituted Accounts and Financial Capacity ([278] to [286]);

(10) Beath Scenario 3 - Division 7A Compliant Loan Agreement ([287] to [291]);

(11) Deductibility of Interest ([292] to [297]);

(12) The Required Advice ([298] to [312]);

(13) The Preferred Scenario ([313] to [318]);

(14) The Competing Assessments of Loss ([319] to [329]);

(15) Penalties, GIC and Professional Fees ([330] to [335]);

(16) Benefit of the Restructure ([336] to [376]);

(a) Parties' Submissions ([336] to [346]);

(b) Benefit of Restructure - Consideration ([347] to [373]);

(17) Loss of Franking Credits ([377] to [421]);

(18) Quantum - Summary [422] to 426];

(19) Apportionment ([427] to [448]);

(a) Apportionment - Abbott Tout ([434] to [444]);

(b) Apportionment - PricewaterhouseCoopers (PwC) ([445] to [447]);

(20) Contributory Negligence ([449]);

(21) Professional Standards Act 1994 ([450]);

(22) The Settlement with Abbott Tout ([451]);

(23) Further Progress ([456]).

Background

Unless I state otherwise, where I refer to some aspect of the evidence in the narrative from [14] to [158] it is evidence which I accept.

1992 to 2002

As I have stated, Mr Symond started the business in February 1992. Prior to 2004, the business was conducted by Aussie Home Loans Limited as trustee for the AHL Unit Trust ("AHLUT"). Mr Symond owned and controlled all the units in the AHLUT through various entities, which relevantly included the Dawnraptor Trust and the Symond Investment Trust. At some point Mr Nicholas Paten acquired 10% of the units in the AHLUT as trustee for the Nicholas Paten Family Trust. Various restrictions were placed on his ownership of those units. It was common ground that in broad terms his units and shareholdings could be ignored, and Mr Symond was effectively the 100% owner of the business and the relevant entities that constituted it.

At some point certain additional companies were introduced into the collection of entities that constituted the business, although for the present they can be ignored. At various times I refer to the "Aussie Home Loan Group" (or "Aussie group") which is synonymous with the collection of entities that owned and operated the business from time to time, with the exception of Mr Symond, Mr Paten, the Dawnraptor Trust and the Symond Investment Trust.

The business operated at a loss between 1992 and 1994. For the years 1995 to 1999, the business made a taxable profit of under $5 million each year except for 1997 when the business made a taxable profit of around $7.3 million. The business then returned to making taxable losses in the years 2000 to 2002.

In 1998 Mr Symond purchased some land in Point Piper. By 2002 the relevant approvals necessary to commence construction of a new home on that land had been obtained. As at early 2003 Mr Symond expected that it would take three years to build and require $50 million in funding. As is the case with all home building projects, big or small, it took longer and cost more. The house was completed in November 2006 and required funding of $57 million to complete.

At various times the Aussie Home Loans Group had external lending arrangements with a number of lenders concerning its home loans and financial products. However from 1998, the ANZ was the only external lender providing finance to the business for its operating needs and Mr Symond personally. Prior to the Restructure Mr Symond borrowed funds from the AHLUT which in turn borrowed funds from the ANZ. The ANZ was aware of the loan arrangements between the AHLUT and Mr Symond and the purpose to which the loan proceeds were being put. Mr Symond personally guaranteed the loans and the ANZ held security over his assets including the land at Point Piper as well as the assets of the business.

In 2003, Mr Symond informed the ANZ that he needed funds for the construction of his home at Point Piper and the amount of funding needed. The ANZ was informed by Mr Symond that monies loaned through its facility to the AHLUT were being used by Mr Symond to build his home.

The loans from the AHLUT to Mr Symond were on interest-free terms. Prior to the Restructure no tax had been imposed on their receipt. No issue had been raised with them by the auditors of the Aussie Home Loans businesses. Mr Symond also stated that no issue had been raised with those loans by the ATO, although the extent of disclosure to it was not the subject of any evidence.

In April 2002 Aussie Home Loans provided ANZ with forecasts for the business suggesting substantial profits and positive cashflow from that time until 30 June 2006. Mr Symond stated that by the start of 2003 "if the Aussie business was making a profit it was only a small one" but that "it was clear to me at the time that Aussie would start making a substantial profit within as little as a year". I accept this evidence. Although the level of profitability suggested by the projections given to the ANZ did not prove to be correct, the trend predicted by them and expected by Mr Symond was borne out.

At various times prior to 2003 Mr Symond had turned his mind to divesting or diversifying the ownership of the business either by an institutional public offering ("IPO") or sale to another investor. He had preliminary negotiations with a number of potential investors. During those negotiations queries had been raised about the use of a trust as the vehicle that owned and operated the business. This had caused Mr Symond to believe that that form of ownership structure might make any divestment or diversification of ownership "more difficult".

Mr Symond's Relationship with Gadens

In 2002 Mr Jonathan (Jon) Denovan was the managing director of Gadens. Mr Symond first met Mr Denovan in the 1980s when he was working as a conveyancer and law clerk. Mr Symond later formed a joint venture known as Mortgage Acceptance Nominees Limited. Mr Denovan acted as his legal adviser from that time.

From an early time in the life of the business, Gadens was retained to provide legal advice in relation to the Aussie Home Loan Group's operations and Mr Symond's interests in the business. Mr Denovan was a director of some of the entities within the Aussie group from late 2004 to August 2005.

In the late 1990s or early 2000s, Mr Denovan told Mr Symond that he should begin preparing for an IPO, and that Gadens could advise on what steps needed to be taken. Gadens opened a new matter called "Project Panther", which involved the preparation of a detailed roadmap for conducting a sale of interests in the business by an IPO.

Sometime in 2002, Mr Denovan said to Mr Symond, "you oughta get serious and go ahead with doing an IPO now. Gadens can manage it all for you. Our team are experts at IPOs. They are also tax specialists". Mr Symond responded "I could well look at an IPO but my trusts might need to be cleaned up first". Also, at some point in 2002 Mr Symond advised Mr Denovan that he expected the business "to become very profitable in the near future".

Some time around 2001, Mr Denovan introduced Mr Symond and the Aussie group's then Chief Financial Officer, Mr David Makinson, to Mr Seller. Mr Denovan described Mr Seller as a "top tax expert" who, along with his associate Mr Justin Rossetto, could advise Mr Symond and Aussie Home Loans in relation to taxation issues.

In or around 2002, Mr Denovan told Mr Symond that Messrs Seller and Rossetto would advise Mr Symond on how to restructure the Aussie group in order to position the business for an IPO.

Mr Symond recalled attending a meeting in 2002 with Messrs Denovan, Seller and possibly Rossetto, at which Mr Seller explained how the business could be restructured to prepare it for an IPO. Mr Symond recalls Mr Seller saying:

"You should do this. We have put together a very smart way to clean things up for you for the future."

In 2002 discussions were held with potential investors in the business. They did not yield any offer which Mr Symond found acceptable and they ceased in August 2002.

While these discussions were continuing, advice was sought from Mr Seller. In February 2002 Mr Makinson emailed Mr Seller a proposal for a revised corporate structure and sought his views on "any potential tax issues". Mr Seller replied in an email to Mr Makinson dated 28 March 2002. Mr Seller listed the key issues "with the corporatisation of [the] AHLUT", including "Treatment of Unit Holder Loans". This was clearly a reference to Mr Symond's loans from the AHLUT.

Despite the negotiations ceasing in August 2002, Mr Makinson still sought advice about the appropriate structure.

On 3 September 2002, Mr Makinson met with Mr Seller and briefly discussed how the Aussie Home Loans Group might go about effecting a restructure. Later that day, Mr Makinson emailed Mr Symond and summarised the discussion. He identified one of the priorities as being to "optimise [the] unitholder tax position".

Restructure up to 30 June 2003

Mr Seller stated that in January 2003 he was invited to join Messrs Symond and Robert Wannan at the cricket. Mr Wannan was a non-executive director of some of the companies in the Aussie Home Loans Group from 4 May 2001 to 27 October 2008. He says that Mr Symond raised the corporatisation issue with him and requested that he pursue it "although [it was] not vitally critical today". Both Mr Symond and Mr Wannan recalled the occasion but not the conversation described by Mr Seller. I accept that it occurred.

In late 2002 or in early 2003 Mr Symond had a conversation with Messrs Makinson and Wannan regarding the proposed restructure of the Aussie group. Mr Makinson was the Chief Financial Officer of the Aussie Home Loans Group from September 2001 to September 2006. Mr Symond stated that during one of those conversations he said words to the following effect:

"I think we should maybe consider a restructure, which will require unravelling the trusts and setting up a clean shell, so it will be less complicated in the future to do an IPO or let an investor come in. I need you to make sure Gadens and any other advisers involved look out for my interests and address the fundamental issues. I don't understand the technicalities. But there are a couple of deal breakers. They are:

(i) I want to be able to retain the existing tax losses which I have in my trusts;

(ii) I want to be able to continue to borrow funds from the trusts as I am currently doing without incurring any additional tax. I have already drawn down about $17 million and the construction of my house is underway. I have to be able to continue with that; and

(iii) any restructure or arrangement set up has to be 100% compliant with the tax regulations. I can't risk any problems with the ATO. I need to focus on the business. It's getting there but it isn't there yet and any issues with the ATO may jeopardise the business's future. I have a reputation to maintain. The last thing I want is for the media or the public to think I'm some kind of tax cheat, or that I've done something wrong. Everything has to continue to be squeaky clean."

I accept that this conversation occurred and it encapsulated Mr Symond's state of mind. Mr Symond instructed Messrs Makinson and Wannan to seek appropriate advice from Gadens regarding corporatisation and provide their recommendations based on that advice.

On 17 February 2003, Mr Seller sent an email to Messrs Symond, Makinson and Wannan. The email stated:

"The Corporatisation issue is also important and needs to be resolved and finished this Financial Year as the necessary [Capital Gains Tax] rollovers to make it work come to an end on 1 July. I briefly discussed these matters with [Mr Wannan] and [Mr Symond] in January. Perhaps we should all formally meet to set all this straight." (emphasis added)

Mr Makinson responded the next day, saying he would "set up a [c]orporatisation meeting asap".

On 20 February 2003, Messrs Makinson and Wannan met with Messrs Seller and Rossetto. Mr Wannan recalls that there was a discussion at that meeting as to how the business could be corporatised. A partner from the Aussie Home Loans Group's auditors, Ernst & Young ("E&Y"), Mr John Buttle, attended to discuss the accounting treatment of goodwill in the event that corporatisation was pursued. Mr Seller recalls Mr Buttle stating that if they "put the business into a new structure" it would be necessary to amortise goodwill. Mr Seller states that he told those present at the meeting that they would need to look at Mr Symond's "loan accounts and the effect of Division 7A as it would apply to the arrangement but [it] would be assisted by the amortisation of goodwill in the short term". He says he inquired as to the state of Mr Symond's loan account and that Mr Wannan replied that it was "about $10 million". Mr Seller says that he commented that that "we need to look into this for the purposes of Division 7A to avoid it becoming a deemed dividend". Neither Mr Wannan nor Mr Makinson recall these comments. However I accept that words to this effect were stated by Mr Seller.

Mr Wannan recalls that it was agreed at the meeting that Gadens would prepare an advice on corporatisation. Consistent with that recollection, on 14 March 2003, Gadens sent a letter of advice (the "14 March 2003 Advice") outlining a proposed corporatisation strategy for the Aussie group. The advice had a space for signature for Mr Seller and another Gadens partner. It was attached to an email from Mr Rossetto to Messrs Symond, Makinson, Wannan, Denovan and Seller.

The 14 March Advice 2003 described itself as a "report" and described its scope as follows:

"This report will discuss the following:

 the final corporatisation strategy.

 The tax implications associated with the strategy.

 A discussion of how the corporatisation will be affected by the new Consolidations Regime.

 A discussion of how the corporatisation will be affected by the new General Value Shifting Regime (GVSR);

 The tax implications associated with the existing loans from [the AHLUT] to [Mr Symond] and the most beneficial way to treat these loans going forward.

 The Corporate law issues associated with the corporatisation such as re-negotiation of contracts." (emphasis in original)

The 14 March 2003 Advice suggested that "the simplest way to restructure the Aussie group is to roll-over the AHLUT into a company" (New Co). It proposed the transfer of the assets of the AHLUT to that company, the disposal or redemption of the units in the AHLUT and the issue of new shares by New Co to the unitholders. In relation to My Symond's loan, it stated:

"Loans to [Mr Symond]

At present, there is a loan arrangement between the AHLUT and [Mr Symond] allowing [him] to withdraw funds from the trust on a monthly basis. We must decide how to treat these existing loans in light of the corporatisation and also decide how to treat this arrangement going forward.

Before we provide you with written advice on this topic, we will discuss the various options available to you in conference."

In cross examination Mr Seller said that he understood that any proposal he came up with for corporatising the Aussie group had to address matters such that any loans to Mr Symond would be received by him in the most tax efficient way.

A conference was held on 17 March 2003 between Messrs Seller, Denovan, Makinson, Wannan and representatives of E&Y. Mr Makinson took his copy of the 14 March 2003 Advice to the meeting. He made notes on the front page. Mr Makinson says it was his usual practice to raise any issues noted down at meetings. The first note comprises a list of what Mr Makinson stated were the three "important issues", the second of which is "Loans to [Mr Symond]". Further down in the left-hand margin on the front page, Mr Makinson wrote: "How will [Mr Symond] access $$ going forward?". An email from the representatives of E&Y present at the meeting to Mr Makinson sent at 5.00pm on that day contains a list of "Key Issues" which are said to have potential tax consequences for the unit holders. Two of those issues are "Loans to [Mr Symond] - Existing" and "Loans to [Mr Symond] - Prospective".

Mr Wannan recalls that he stated the following:

"[Mr Symond] has 3 particular needs and any restructure would have to address them, those needs being:

(a) to unlock equity in the context of a future sell down or IPO;

(b) to continue to borrow funds tax free without any Division 7A problems in order to complete the construction of his home at Point Piper; and

(c) to preserve the existing tax losses in the business.

He also has obligations in relation to the option documentation with [Mr Paten] under which he has an option to purchase [Mr Paten]'s 10% in the Aussie Home Loans Group and [Mr Paten] has a put option entitling him to require [Mr Symond] to purchase that 10%."

Mr Wannan also made handwritten notes on his copy of Gadens' letter dated 14 March 2003. Those notes included the entries "Issue: [Mr Symond] existing and future loans" and "Div 7A".

Mr Seller denied that Mr Wannan or anyone else mentioned Mr Symond obtaining funds to construct his home. Mr Seller asserted that he advised the meeting that the income tax losses of the AHLUT could be carried over into the new corporate structure. He also asserts that he stated, inter alia, that "we'll need to provide a separate advice in relation to the loans covering issues such as Division 7A deemed dividends, [Fringe Benefits Tax] and perhaps Part IVA". He also states that he floated the possibility of Mr Symond selling the "rights to his name" and thereby creating a "debit loan account" which he could draw on. Neither Mr Wannan nor Mr Makinson can recall Mr Seller making those comments. There is no file note to support them. If such a proposal had been floated I would have expected it to have been raised in either an email or in the meeting that Messrs Makinson and Wannan had with him the next day (see below).

Having regard to the various notes of the meeting I am satisfied that during that meeting someone raised with Mr Seller the necessity of addressing the adverse effects of any proposed restructure on Mr Symond's ability to access funds from the business and, if possible, ensuring that there were none. I am also satisfied that some reference was made to "Division 7A", ie Division 7A of Part III of the Income Tax Assessment Act 1936 (Cth) ("ITAA 1936"). I am not prepared to accept that there was any proposal raised for Mr Symond to sell the rights to his name or that Mr Seller indicated he or Gadens would advise on Division 7A of the Fringe Benefits Tax Assessment Act 1986 (Cth) ("FBTAA") and the anti-avoidance provisions in Part IVA of the ITAA 1936.

Even if those things had been raised the position would only be worse for Gadens. As I will explain, in their subsequent advices they did not address the potential application of Division 7A, the FBTAA or Part IVA of the ITAA 1936 to the operation of Mr Symond's loan account, but instead made unequivocal statements about him receiving funds "tax free". If Mr Seller had stated on 17 March 2003 that he would separately advise on those matters then his subsequent silence, coupled with the unambiguous nature of the statements he did make, would reinforce the suggestion that those parts of the taxation legislation had no potential operation upon the structure that Gadens suggested.

On 18 March 2003, Messrs Makinson and Wannan met with Mr Symond to discuss the previous day's conference with Gadens. Mr Symond said words to the following effect:

"I do not want to go ahead with a restructure at this time, but get Gadens to look into the fundamental issues of the tax losses and the tax consequences of a restructure on my loans so that we can consider it down the track."

After the meeting, Mr Makinson sent an email to Messrs Seller, Denovan, Rossetto and Wannan, which was copied to Mr Symond. The email relevantly stated:

"[Mr Wannan] and I met with [Mr Symond] this morning to assess his appetite to proceed with corporatisation at this time.

One of the key pressures was, until receiving [Mr Seller]'s latest advice, a perceived imperative to get things done by 30 June 2003. It now seems that this imperative does not in fact apply, and based on this, plus our concerns about the scale and cost of the exercise in what is already a very busy time, [Mr Symond, Mr Wannan] and I all agree that we will not proceed with corporatisation at the moment."

Mr Denovan responded to Mr Makinson's email at 3.47pm, saying he thought the decision "sound[ed] sensible," and suggesting that Gadens prepare "a report on the difference [between Mr Symond]'s loan accounts, existing and future, pre and post incorporation (with worked examples)".

Mr Seller responded to Mr Makinson's email on 20 March 2003. He pointed out that certain provisions providing relief from capital gains tax would cease on 30 June 2003. He suggested that:

"it would be better to commence a strategy now to bring about the corporatisation within the next 12 [months at] the outside."

This prompted a further meeting on 11 April 2003, attended by Messrs Makinson, Wannan, Seller and Rossetto. Mr Symond was overseas at the time.

At that meeting, Messrs Makinson and Wannan explained their and Mr Symond's reasons for deferring corporatisation. Mr Wannan recalled Mr Seller responding with words to the effect of, "I think you've made the wrong decision and you ought to proceed with a restructure this year". Mr Seller denied saying this. Mr Wannan also recalls that either he or Mr Makinson stated that the 14 March 2003 Advice "doesn't really deal with [Mr Symond]'s personal issues" and told Mr Seller that:

"You have also not provided us with any definitive advice yet about whether [Mr Symond] can continue to take loans from the business without any tax consequences. ... [Mr Symond] has an ongoing need to fund the construction of his home and to get the funds for that project tax free if possible. Your advice therefore must address the personal consequences for [Mr Symond] ..."

Mr Seller did not address this part of the conversation as recounted by Mr Wannan but did deny that any reference was made to Mr Symond constructing his own home. Mr Wannan recalled Mr Seller agreeing that not all of these issues had been addressed but indicating that he would do so. Mr Seller could not recall saying words to that effect.

In his affidavit Mr Seller set out a detailed description of what was stated during the meeting on 11 April 2003. He recounts a dialogue between himself, Mr Makinson and Mr Wannan about Mr Symond accessing "more cash going forward" and Mr Makinson stating that it "should all sort itself out in the short term in any event because we are expecting to have a significant equity deal or initial public offer within the next three years". Mr Seller stated that Messrs Wannan and Makinson exchanged jocular references to Mr Symond's spending habits and that he, Mr Seller, noted that Mr Symond's loan account balance was $17 million and inquired about his spending rate. He says that Messrs Wannan and Makinson referred to Mr Symond buying a "boat" or a "helicopter". He states that the following conversation ensued:

Mr Seller: "Well being sensible how much would he really need in the short term until there is an external investor of some sort? There is always a Division 7A issue that must be considered whenever Mr Symond receives a loan or payment from a company whether directly or indirectly through a trust. If the company has distributable profits or surplus then the [ATO] would seek to characterise the loan or payment as a deemed dividend under Division 7A. Whilst there is no accounting profit, especially given the write off of goodwill for the next few years, I don't expect there to be accounting profits in the group which would mean that there is unlikely to be a significant tax problem with Division 7A. This would change though if the group became profitable in an accounting sense. The amortisation of goodwill reduces accounting profit which in turn reduces the chance of there being a distributable surplus for the purposes of Division 7A. Whilst goodwill amortisation occurs it is highly unlikely that the group will have a distributable surplus and would be very difficult for the [ATO] to try to apply Division 7A or alternatively to try and apply Part IVA."

Mr Makinson: "Yes I understand."

Mr Wannan: "Yes I understand."

Mr Makinson: "It should not be a problem in the short term as there are unlikely to be any significant profits from the group's operations in the next three years and also cash flow is reasonably tight so he would not be able to afford to fund too much in any event."

Mr Seller: "So if we deal with the $17 million and added a similar amount would that be enough by way of potential draw downs possible in the future as a return of capital?"

Mr Makinson: "I'm not sure, [Mr Symond] can spend quite a lot of money."

Mr Makinson laughed again.

Mr Wannan also laughed again and said: "Yes he can."

Mr Seller: "Well it would be preferable to borrow outside the group if it is anticipated that significant amounts are to be drawn down and leave a fairly open-ended amount that he could borrow with a guarantee say from the group. That would virtually eliminate the deemed dividend risk."

Mr Makinson: "What do you mean - borrow in [Mr Symond]'s name?"

Mr Seller: "Well yes, either in his name or [the name of] one of his entities. It would be the easiest way to accommodate any demand for funds [Mr Symond] may have in the short term."

Mr Wannan: "[Mr Symond] does not want any borrowings in his name or outside the group. He wants them all inside the operating entity."

Mr Makinson: "Yes I agree that is right."

Mr Wannan: "I will talk to [Mr Symond] about it and come back to you."

Messrs Wannan and Makinson denied Mr Seller's version of this discussion, especially the references to Mr Symond's spending or that Mr Seller proffered advice about the potential operation of Division 7A or Part IVA.

I do not accept the conversation as recounted by Mr Seller occurred. Mr Seller made a file note of the meeting but its contents did not support the terms of the conversation he recounted. If there had been a discussion about Mr Symond's spending, then the topic would have turned to the construction of his home and not the possibility of a boat or helicopter. Why would Mr Makinson or Mr Wannan refer to those items when they knew he was spending very large sums on his house? As further outlined below, over the next months Mr Seller provided a number of written advices about the tax treatment of amounts that Mr Symond proposed to withdraw. He did not reiterate any aspect of the oral advice he claims to have given in that conversation. Given the context in which the advice was being sought, if advice of this kind had been proffered it would have at the very least been followed up by a request for Gadens to outline these concerns in writing.

An internal Gadens' memorandum dated 15 May 2003 relevantly stated:

"Aussie decided not to go ahead with the corporatisation. When we met with them on 11 April they gave the following reasons:

1. The existing loans to [Mr Symond] might need to be repaid or commercialised (Div 7A issues).

2. [Mr Symond] may not be able to draw money from the new company without having to pay tax (Div 7A issues).

3. There was uncertainty as to whether the losses may be used by the head entity in the consolidated group.

4. Six months wouldn't be enough time to clear up all corporate issues (ie, reassigning contracts).

...

Key concerns

Any proposal we put to Aussie must take consider [sic] the following:

1. [Mr Symond] must be able to draw funds from the new company in the same manner (ie, tax free in his hands)." (emphasis added)

I am satisfied that the first four points in this memorandum record what was conveyed to Mr Seller in the meeting on 11 April 2003 as the reasons for the decision not to proceed with corporatisation. I am also satisfied that Mr Wannan's recollection as to what he conveyed were the shortcomings in the 14 March 2003 Advice is reasonably accurate. It is consistent with what is recorded in the memorandum prepared on 15 May 2003 and with the follow-up email sent by Mr Seller on 12 May 2003 noted below.

In cross examination, Mr Seller accepted he understood that any proposal that Gadens would put to the Aussie group and Mr Symond had to address the concern that "[Mr Symond] must be able to draw funds from the new company in the same manner (ie, tax free in his hands)", and that any such advice would be provided to Mr Symond for his consideration concerning his personal tax affairs.

On 12 May 2003, Mr Seller sent an email to Messrs Symond, Makinson and Wannan, saying that Gadens had "gone a long way to solving all the issues we discussed last time as well as the loans issue and a possible uplift of the cost base for [Mr Symond] if and when he sells". Mr Seller also requested another meeting with Messrs Makinson and Wannan.

On 21 May 2003, Gadens sent a draft letter of advice setting out a new proposed corporate structure for the Aussie group (the "21 May 2003 Draft"). The draft advice was attached to an email from Mr Seller to Mr Makinson, copying Messrs Symond, Wannan, Denovan and Rossetto.

The 21 May 2003 Draft bore the date 22 May 2003. It stated that its purpose was:

"... to present an alternative structure for the corporatisation of Aussie Home Loans (Aussie). We have devised this alternative structure as you expressed some concerns with our original structure when we met with you on 11 April 2003."

The 21 May 2003 Draft then recited the four concerns listed in the memorandum of 15 May 2003 noted above at [58].

The 21 May 2003 Draft continued:

"We have since considered these issues and present an alternative structure for the corporatisation of Aussie (alternative structure).

The alternative structure addresses all of your above-mentioned concerns and provides significant tax benefits for Aussie." (emphasis added)

The 21 May 2003 Draft proposed to corporatise the business by interposing a company ("New Co A") between Mr Symond and the AHLUT, and having the AHLUT transfer the operating assets of the business to a subsidiary of New Co A called "New Co B".

The 21 May 2003 Draft recommended that existing and future loans to Mr Symond be dealt with by the creation of a new special purpose trust, as follows:

(a) a special purpose unit trust would be established and the AHLUT would subscribe for 50 million $1 units in the new trust;

(b) the new trust would lend $50 million to Mr Symond;

(d) the remainder of the $50 million would be lent to the AHLUT;

(e) the AHLUT would repay that loan to Mr Symond at his discretion; and

(f) the entire Aussie group would be consolidated for tax purposes, but the new trust would not be part of the consolidated group.

The 21 May 2003 Draft included the following diagram of the proposed new structure:

Crucially, in setting out the steps to be followed, the draft advice stated:

"[Mr Symond] will use a portion of the $50 million to repay his outstanding loans to the AHLUT. [He] will then lend the remainder of the $50 million to the AHLUT who will repay these amounts to [him] at his discretion. When the funds are returned to [Mr Symond] via the AHLUT they will be tax-free in [his] hands." (emphasis added)

Other than this statement, the only discussion of the taxation exposure of Mr Symond in this letter was the following:

"John Symond's ability to draw funds from Aussie

The concern we have regarding the arrangement with New Trust, is that it may be caught by the interposed entity provisions once the [business] consolidates. The argument would be as follows.

After the group consolidates all payments made by the group will be made by New Co A for tax purposes. The interposed entity provisions state that if an amount is paid by a private company to an interposed entity that on-lends those funds to an associate of the private company, the provisions will deem that private company to have made the loan and not the interposed entity. The amount may then be taxed as a deemed dividend in the hands of the associate that received the funds.

In the current situation, this may apply where the AHLUT pays $50 million to New Trust who on-lends that amount to [Mr Symond] who is an [associate] of the AHLUT. Prior to consolidations this doesn't pose a problem as the amount is being paid out of a trust and not a company. The question is whether after the group is consolidated, the amounts that were previously paid to New Trust are now deemed to have been paid by New Co A bringing it within the scope of the interposed entity provisions.

Provided the units are subscribed for in New Trust by the AHLUT prior to consolidations, the interposed entity provisions should not apply. The provisions may apply if this was done after the group consolidated. In any event we believe that the consolidation should occur on 1 July 2003 to further minimise the consequences of the loans." (emphasis in original)

This passage was subject to severe criticism by Mr Symond and the tax expert engaged on his behalf for these proceedings, Mr Magid. It was said that it reveals a misunderstanding of the consolidation provisions. It is not necessary to resolve this. The reference to the "interposed entity" provisions is to Subdivision E of Division 7A. They are addressed below at [273] to [275]. At present it is only necessary to note that these were the only caveats placed on the emphatic statement that the return of funds would be "tax-free in [Mr Symond]'s hands".

On 22 May 2003, a meeting was held between Messrs Symond, Makinson, Wannan and Seller to discuss the 21 May 2003 Draft. It is not clear whether Messrs Denovan and Rossetto were present. Mr Wannan recalls that Mr Seller addressed the 21 May 2003 Draft, stating inter alia:

"[Mr Symond] will be able to obtain funds tax free by the introduction of a new trust and loans to and from the [AHLUT].

Under these arrangements there will be no income tax consequences [and] Division 7A will not apply to force the loan to be commercialised as it is dealing with an amount lent from a trust and not a private company.

The return of funds to [Mr Symond] via the [AHLUT] is a return of capital and therefore would be tax free in his hands."

Mr Wannan also recalls Mr Symond stating that he was not across the detail of the proposal but seeking an assurance that Mr Seller had "no doubts about what [he had] told [them] and how the restructure affect[ed] [him] personally" and that the proposal was "squeaky clean" and thus could not cause reputational damage to either him or the "Aussie brand". He recalled Mr Seller responding that "we are confident we have addressed all of your concerns and that there are no problems".

Neither Mr Symond nor Mr Makinson specifically asserted that Mr Seller said words to this effect. However, Mr Symond identified this as one of the meetings in which Mr Seller provided assurances in similar terms. I address that part of his evidence and Mr Seller's evidence at [160]ff.

In his affidavit Mr Seller stated that he did not recall the statements attributed to him by Mr Wannan. He recalled a conversation in which Messrs Wannan and Makinson expressed satisfaction with the structure suggested in the 21 May 2003 Draft and inquired whether the amount available could be increased above $50 million. Mr Makinson did not recall this, Mr Symond said he recalled it in "general terms", and Mr Wannan did not dispute its substance either.

I accept that Mr Seller said words to the effect attributed to him by Mr Wannan and that part of the meeting transpired in the manner suggested by Mr Seller. The end result is at this meeting Mr Seller reiterated the clear and emphatic terms of the 21 May 2003 Draft so far as it concerned the tax free receipt of loan funds by Mr Symond and Mr Symond and his advisers were satisfied with that advice.

On 20 June 2003, Gadens sent a revised letter of advice that bore the date 19 June 2003 (the "19 June 2003 Advice") to Mr Makinson. This letter was in similar terms to the 21 May 2003 Draft regarding the corporate structure proposed by Gadens and the taxation consequences of implementing that structure. It addressed a number of additional topics that are not relevant. The 19 June 2003 Advice contained the same statements as noted in [63] and [65] above, and the statement in [69] that "[w]hen the funds are returned to [Mr Symond] via the AHLUT they will be tax-free in [Mr Symond's] hands". It also advised that the entire group would be consolidated for tax purposes, but not the new trust referred to in the diagram in [68]. Instead of the passage immediately following the heading "[Mr Symond]'s ability to draw funds from Aussie" set out in [70], the 19 June Advice stated:

"5. [Mr Symond]'s ability to draw funds from the consolidated Aussie

We are of the opinion that [Mr Symond] can withdraw funds from the group by way of repayment of his new loan account. We do not believe the interposed entity provisions in Division 7A of the [ITAA1936] will be applicable once the Aussie group consolidates.

These rules may have applied if the AHLUT pays $50 million to New Trust who on-lends that amount to [Mr Symond] post consolidation. A question also arises whether after the group is consolidated, the amounts that were previously paid to New Trust are now deemed to have been paid by New Co A bringing it within the scope of the interposed entity provisions.

Our opinion is that provided the units are subscribed for in New Trust by the AHLUT prior to consolidation, the interposed entity provisions should not apply. The provisions may apply if this was done after the group consolidated. In any event we believe that consolidation should occur on 1 July 2003 to further minimise the consequences of the loans."

Mr Rossetto's email attaching the 19 June 2003 Advice also included a covering letter "explaining what needs to be done before 30 June 2003" and suggested a "meet[ing] ... to discuss the revised advise [sic] and agree on what steps should be taken before 30 June".

Messrs Makinson and Rossetto exchanged emails on 23 June 2003 about setting up a meeting with Mr Symond to "walk [him] thru [sic] the proposal". During that exchange Mr Rossetto reiterated the time pressures involved, stating that "the new structure needs to be in place by 30 June 2003".

One topic that had to be addressed was the position of Mr Paten. On the evening of 23 June 2003, Mr Rossetto emailed a letter of advice to Messrs Makinson, Wannan and Seller. The letter was entitled "[Mr Paten] trust arrangement" and Mr Seller was listed as the author. Under the heading "Advice" the letter stated:

"The trust arrangement as outlined in our letter of 19 June is as follows:

1. A special purpose unit trust (New Trust) is first established and the AHLUT subscribe [sic] for a set number of $1 units in New Trust. In [Mr Symond]'s case it will be $50 million. (emphasis in original)

2. At the same time a party close to Mr Symond (even [Mr Symond] himself) [will] subscribe for some special 'control' units in New Trust. The person who holds these special units will ultimately control New Trust.

3. New Trust then lends those funds to [Mr Symond].

4. [Mr Symond] the [sic] uses a portion of the $50 million to repay his outstanding loans to the AHLUT.

5. [Mr Symond] then lends the remainder of the $50 million to the AHLUT who will repay these amounts to [him] at his discretion. When the funds are returned to [him] via the AHLUT they will be tax-free in [his] hands as they represent a return of capital.

For a detailed discussion of the tax implications associated with these steps please refer to our original advice." (emphasis added)

On 25 June 2003, a meeting was held between Messrs Makinson, Wannan, Seller, Rossetto and other Gadens representatives. There was a discussion concerning the requirements for implementing the restructure. Mr Wannan raised a concern about the impact of the restructure on Mr Paten. He recalled Mr Seller agreeing to prepare a letter concerning the effects of the restructure on Mr Paten and to provide him with an assurance that he would not be materially disadvantaged. Mr Wannan advised those present at the meeting that Mr Symond had stated that the cost of building his home had increased and requested that the amount of borrowing be increased from $50 million to $75 million. He recalled Mr Seller stating "that won't be a problem". Mr Seller did not deny that there was a discussion about Mr Paten or increasing the amount of the borrowing, but denied knowledge that it was connected to Mr Symond's construction of his home. I have already found that he was aware that Mr Symond was proposing to continue to draw down funds to build his home. I accept Mr Wannan's evidence.

A further meeting took place the following day on 26 June 2003. This time both Mr Symond and Mr Paten were present. The details of the Restructure were explained to Mr Paten, who requested a written assurance that he would not be adversely affected. Mr Symond responded that he was prepared to provide a signed undertaking to that effect, based on the advice he had received from Gadens.

Mr Wannan recalled that the 19 June 2003 Advice was discussed and that Mr Seller said:

"[Mr Symond] will not be adversely effected [sic]. There will be no Division 7A problems, no capital gains tax concerns and both the existing loans and future loans will be able to continue unaffected."

In cross examination Mr Seller stated that he did not recall using these words but agreed that it was possible he said "something along those lines" and it was "consistent in [his] view" with Mr Symond's tax position personally as at June 2003. I am satisfied he said those words.

Mr Wannan also recalled that either he or Mr Makinson asked Mr Seller whether there was "any chance of Part IVA applying". Mr Seller responded with words to the effect of "I do not believe Part IVA is relevant at all". This part of the conversation was not taken up with Mr Seller in cross examination.

Mr Wannan recalls that at one point during the meeting, Mr Paten said words to the effect:

"I do not want to be worse off in the same way as [Mr Symond] doesn't want to be adversely affected."

Mr Seller replied:

"[J]ust as for [Mr Symond], there will be no tax issues of concern which will arise for [Mr Paten] from the corporatisation."

In cross examination Mr Seller stated that he could not remember saying those words but was not prepared to deny stating them. I am also satisfied that he said those words.

In his affidavit Mr Seller recounts a discussion at this meeting which addressed the position of Mr Paten. He also asserted that there was a "discussion about Division 7A risks and Part IVA risks". During one part of cross examination he stated that he could not recall saying in this meeting that Mr Symond faced Division 7A or Part IVA risks. However, when he was later shown his affidavit he asserted that "[t]hat's the sort of thing that most definitely would have been said at these meetings, yes". In a context where Gadens' written advice was unequivocal and made no reference to any such risks this was not the type of matter that "would have been said". I am not satisfied that Mr Seller made any such statement. To the contrary, I find he did not.

On 30 June 2003, a settlement meeting was held to sign the settlement documentation for corporatisation. The meeting was attended by Messrs Symond, Wannan, Seller and Paten, as well as other lawyers from Gadens.

In his affidavit Mr Seller stated that during this meeting he told Mr Symond that "[t]here is always a risk in drawing money out of a corporate group, but I believe this restructure works". Mr Symond denied being told this. In cross examination Mr Seller recalled a brief conversation in the "hallway" but could not remember giving any warning about tax risk. Later he said that he certainly gave a warning about Division 7A. I do not accept that he made any reference to Division 7A or Part IVA in any conversation between himself and Mr Symond on 30 June 2003.

Upon execution of the relevant documents, the following transactions were effected:

Holdings was interposed between the AHLUT and its unit holders, with the unit holders receiving shares in Holdings in the same proportion to their unit holdings in the AHLUT in exchange for their units, pursuant to a Sale and Subscription Deed;

AHL Investments Pty Limited ("Investments") was established as a 100% subsidiary of Holdings;

Mr Symond transferred nine shares and Mr Paten transferred one share in Aussie Home Loans Holdings Pty Ltd - being its entire issued share capital - to Investments;

a new trust, the Alice Trust, was created, with twenty ordinary units issued to the AHLUT on creation;

the AHLUT subscribed for 75 million $1 ordinary share units in the Alice Trust;

Mr Symond subscribed for 10,000 A-class units in the Alice Trust;

the Alice Trust made loans totalling $75 million as follows:

a. $837,369.12 to the Dawnraptor Trust;

b. $9,365,681.20 to the Symond Investment Trust; and

c. $64,796,949.68 to Mr Symond;

the Dawnraptor Trust and the Symond Investment Trust used the proceeds of the loans from the Alice Trust to repay their loans to the AHLUT; and

Mr Symond used the proceeds of the loan from the Alice Trust to:

a. lend $1,725,637.93 to Mr Paten;

b. repay a loan from the AHLUT, in the amount of $5,333,310.62; and

c. lend $57,738,001.13 to the AHLUT.

Mr Symond also signed a letter addressed to Mr Paten stating that it was his intention and that of all the parties he controlled that the Restructure did not "change [Mr Paten's] position in any manner which causes material detriment" and undertaking to "amend all documentation and do all other things necessary to ensure that the Restructure does not have any material adverse effect" on Mr Paten should he discover such a consequence after the Restructure was effected.

This letter was drafted by Gadens. It demonstrates the very high level of reliance placed by My Symond on Gadens at the time. The letter potentially made Mr Symond liable to take unspecified action ("all things necessary") in favour of Mr Paten should the Restructure prove detrimental.

On 9 July 2003, Gadens sent a letter to Mr Symond confirming that the Restructure had taken place on 30 June and summarising the transactions that had been effected.

The effect of the transactions described in [90] above was that as at 1 July 2003 the ownership structure of Aussie Home Loans was as follows:

As between Mr Symond and Mr Seller there is a significant dispute in their evidence as to whether in the period up to 30 June 2003 Mr Seller made reference to any tax risks for Mr Symond in withdrawing funds under the proposed structure. I have already resolved aspects of that dispute but I return to determine the balance of it at [160]ff below.

1 July 2003 to 1 July 2004

On 16 July 2003 Mr Seller sent an email to Mr Makinson communicating an intention to add to the Restructure "the issue of redeemable shares" in place of the "loan from [Mr Symond] to Aussie" which at that time was a loan from him to the AHLUT. This was the first reference in the evidence to the use of redeemable preference shares (RPS).

Also in July 2003, the ANZ approved a loan facility with the Aussie group that had an overall limit of just over $45 million.

On 25 July 2003 Messrs Seller, Makinson and Wannan held a meeting in which Mr Seller proposed capitalising the loans by issuing the RPS. Mr Seller recalls Mr Wannan suggesting that this arrangement would assist in complying with lending conditions to be imposed by the ANZ on a new facility. Mr Wannan denied stating that. It is not necessary to resolve that dispute.

On 29 July 2003, Gadens sent a letter of advice (the "29 July 2003 Advice") which proposed a strategy for capitalising the loan from Mr Symond to the AHLUT. It relevantly stated:

"This letter should be read in conjunction with our letter to you of 19 June 2003, which outlined the final corporatisation strategy implemented by Aussie on 30 June 2003. The capitalisation of the loans between the members of the Aussie group may be viewed as an additional step to the overall corporatisation strategy.

Capitalisation strategy

The strategy for capitalising the loan from [Mr Symond] to the AHLUT is as follows:

1. [Mr Symond] will subscribe for 57,738,001 $1 redeemable preference shares in [Holdings] ...;

2. [Mr Symond] will pay for the shares by way of promissory note;

3. [Holdings] will then subscribe for 57,738,001 units in the AHLUT and will pay for those units by endorsing the promissory note received from [him];

4. The AHLUT will then repay the loan to [Mr Symond] in full by endorsing the promissory note it receives from [Holdings]. The net effect is that [the] AHLUT no longer has a loan from [Mr Symond] and [he] is the holder of 57,738,001 redeemable preference shares in Holdings;

5. [Mr Symond] will then be able to redeem those shares from time to time for cash."

The only relevant part of the letter addressing the taxation treatment of the funds obtained from redeeming the shares was the following:

"Step 5

As stated above, [Mr Symond] will be issued with 57,738,001 $1 redeemable preference shares in Holdings and will pay for those shares by way of promissory note. [He] is therefore contributing $57,738,001 of capital to Holdings.

Holdings may periodically return this capital to [Mr Symond] in consideration for redeeming his preference shares. Provided that the value of the distribution of capital to [him] does not exceed the amount paid up on the share, the distribution will be tax free in the hands of the shareholders. For example, if Holdings redeem[s] 1 million of [his] shares, provided he is paid $1,000,000 or less for the shares, it will not be taxable in [his] hands." (emphasis added)

This letter gave no warnings about any tax risks associated with the receipt of funds following a redemption.

On 4 August 2003, a meeting was held between Messrs Wannan, Makinson, Seller, Ms Habib and others. Ms Habib has held various positions but from November 2001 until late 2006 she was engaged as Financial Controller. According to Mr Wannan, either he or Mr Makinson asked Mr Seller whether he was "certain that there are no adverse tax consequences in relation to this proposal for [Mr Symond] and [the business]". He stated that Mr Seller replied with words to the following effect:

"The capitalisation will provide another layer of protection to [Mr Symond] and there will be no adverse tax consequences associated with capitalising the loans from the Alice Trust to the various [Mr Symond] entities. [He] will be redeeming shares for cash tax free instead of Aussie repaying [his] loans to the Unit Trust."

Mr Seller denied making this statement. Mr Makinson did not refer to this meeting in his affidavit. Ms Habib was only able to recall that Gadens did not refer to any adverse tax consequences in the meetings she attended in July and August 2003.

The statement attributed to Mr Seller by Mr Wannan was completely consistent with the terms of the 29 July 2003 Advice. I accept that it was said. It seems to me inevitable that the discussion would have focussed on that advice and the tax position of Mr Symond. If Mr Seller had not reiterated his advice then I would expect the subsequent correspondence to have referred to that.

On 14 August 2003, Gadens sent a revised letter of advice concerning capitalisation (the "14 August 2003 Advice"). It repeated the comments set out above.

On 18 August 2003 Gadens sent to Mr Makinson a letter entitled "Capitalisation of Intra Group Loans". It enclosed a bundle of documents that were said to "effect the transactions contemplated by our advice with respect to the AHLUT", ie to convert the loan from Mr Symond to the AHLUT into RPS in Holdings. The letter stated, inter alia, that the preference shares are "not redeemable except out of legally available profits or the proceeds of a new issue of shares made for that purpose". (This advice was reiterated in an email sent by Gadens to Ms Habib on 24 November 2003.)

Although it is not entirely clear, it appears that these documents were all executed around September 2003. Mr Makinson sought confirmation from Mr Seller that they could be dated 30 June 2003 so that their effect could be reflected in the accounts for the financial year ended on that date. Mr Seller advised that "if it is a formalisation of decisions made earlier then it is not a problem [to backdate the documents]". It is difficult to see how that could be correct given that capitalising the loans was a matter that was only first raised in July 2003. However no issue was raised concerning this with any of the witnesses and it was not suggested that anything turned on it.

On 30 October 2003, Messrs Seller and Rossetto met with Ms Habib. Mr Seller recalls Mr Makinson being present but neither he nor Ms Habib have any recollection to that effect. According to Mr Seller a conversation to the following effect took place:

Mr Makinson: "Will the transfer of assets and the consequential restructuring affect Mr Symond's ability to continue withdrawing funds from the Group?"

Mr Seller: "There will need to be a new step, involving the issue of redeemable preference shares by [Investments] to the [AHLUT]. Holdings will then cancel its units in [the AHLUT] and Mr Symond will redeem his redeemable preference shares in [Holdings]. The Division 7A risk will remain. Provided there is no profit in the Group there will be no distributable surplus, so Division 7A should not apply. As you know, there will be no profit whilst the goodwill is being amortised. The Part IVA risk also remains the same."

Ms Habib denied that Mr Seller made the statement he attributes to himself. She took three pages of notes of the meeting. They do not refer to Division 7A or Part IVA. Mr Makinson denies he was present when any such risk was outlined.

In cross examination Mr Seller was referred to the notes he took of this meeting but was unable to nominate any part of those notes which referred to a discussion concerning Division 7A or Part IVA. This is another occasion on which Mr Seller asserts he provided a verbal warning which detracted from the emphatic nature of the written advice he provided, yet there is no documentary evidence to support his assertion and much against it. I do not accept his evidence as to what was stated during this meeting.

On 19 November 2003, Mr Seller wrote to Mr Makinson setting out "a summary of the reasons why the assets of the [AHLUT] should be transferred to [Investments]". The letter advised that if the business was to remain an asset of the AHLUT and there was to be a sale or float of Mr Symond's shares in Holdings, then the due diligence process would disclose the arrangements with the Alice Trust to third parties.

On 4 December 2003 at 9.58am, Mr Seller emailed Mr Makinson stating, inter alia:

"[E&Y has] asked that we prepare an advice covering Part IVA issues (if any) to do with the Alice trust. I am happy to do this and will but am unsure of its relevance to the audit. However an advice dealing with the Part IVA issues of the corporatisation and consolidation would be relevant. As a result I though[t] we should do a Part IVA type advice for the consolidation [and] corporatisation issues. A separate advice should cover the Alice trust. Please advise."

At 10.27am, Mr Makinson responded:

"Will be guided by you on whether we need a wider Part IVA advice - I thought we had largely covered this off in earlier advices?"

Mr Seller replied on 5 December 2003:

"The advice needed would need to cover the whole transaction. It would be a worthwhile exercise to have it on file. There was a document released recently by the ATO dealing with their views on anti avoidance and Part IVA. In my view we fit favourably within the circumstances set out in that document. Our advice should refer to that. Would you like me to contact [E&Y] in that regard and Steve [Danielson]?"

Gadens prepared a draft of this advice but it was not tendered. In his affidavit Mr Seller noted that one version of the draft was marked "[t]his letter was never sent by Gadens to the client" and another version was marked "NOT SENT". Mr Seller stated that he could not recall it being sent but that "it may have been sent as a draft as it was my practice to do so". I am not satisfied that it was.

In the latter part of 2003 through to the first half of 2004 consideration was given to the transfer of the operating assets from the AHLUT to Investments. One issue arising from that transfer and the corporatisation steps effected on 30 June 2003 was the accounting treatment of goodwill. On 6 January 2004 E&Y advised that "Aussie" (presumably Holdings) would be required to amortise goodwill in its published accounts up to 30 June 2005. For accounts prepared after that time the introduction of a new accounting standard would no longer require that although the accounts for the year ended 30 June 2006 would still need to show a comparison with the accounts for the previous years.

On 1 July 2004 Aussie Home Loans Ltd as trustee for the AHLUT and Investments entered into a Business and Asset Sale Agreement the effect of which was to transfer the operating assets from the AHLUT to Investments. The consideration for the transfer was not specifically stated in the agreement but having regard to valuations that were prepared it was likely to be well in excess of $100 million. The agreement records that it was paid by Investments issuing ordinary shares of $1 each to the AHLUT. However correspondence between Gadens and Aussie Home Loans in July and August 2004 clarified that part of that share issue had to be in the form of RPS as that would enable the AHLUT to draw funds from Investments and then pass them to Holdings for provision to Mr Symond.

Thus after this final step in the Restructure the ownership structure of the Aussie Home Loans Group was as follows:

Redemption of the Redeemable Preference Shares

On 30 June 2004 Messrs Seller and Rossetto sent a memo to Mr Makinson and Ms Habib outlining how the distributions via the RPS should be effected (the "30 June 2004 Memo"). At the time of that memo the transfer of the operating assets to Investments was anticipated to occur very soon. The memo recounted the current method of redemption whereby the AHLUT redeemed units held by Holdings and then Holdings redeemed RPS held by Mr Symond. Under the heading "Tax implications associated with these steps" it addressed the application of the capital gains tax regime to the redemption process and added:

"Tax will only be payable where the amount paid to [Mr Symond] for a particular share exceeds his cost base in that share (emphasis in original). Essentially this means that $57,738,001 may be distributed to [Mr Symond] tax-free." (emphasis added)

Although in context the word "tax" was a reference to capital gains tax, the memo does not even hint at the possibility of the imposition of other forms of tax on the receipt by Mr Symond of funds from the redemption process.

The memo also outlined how the redemption process would operate after the transfer of the operating assets to Investments. Investments would redeem the RPS held by the AHLUT, which in turn would redeem the units held by Holdings and Holdings would redeem the RPS held by Mr Symond. In relation to the tax treatment of that process it advised that "[t]he same principles will apply".

On 1 July 2004 Mr Seller states that he attended a meeting with Ms Habib and Mr Makinson. Neither Ms Habib nor Mr Makinson could recall attending such a meeting. Mr Seller recalls that Mr Makinson said that the auditors needed to agree to the "process of dealing" with the RPS, and asked him (Mr Seller) to "conduct a review of the arrangement for Division 7A risk purposes". Mr Makinson stated that he did not recall attending the meeting or making such a request. Ms Habib cannot recall attending the meeting or the conversation asserted by Mr Seller. She denies that Mr Makinson suggested in her presence that the auditors agree to the process for redemption, as she states that was a process she sought Gadens' advice on.

In the end result I am not satisfied that the conversation that Mr Seller asserts occurred on 1 July 2004 in fact happened. The likelihood that Mr Makinson spontaneously requested a review of the arrangement involving the RPS for "Division 7A risk purposes" strikes me as unlikely in view of the emphatic advice from Gadens to that time. The only correspondence that addressed Division 7A was the exchange next noted which concerns the limited issue of a potential Division 7A exposure if sufficient redemptions were not documented in a financial year to cover the amounts taken out by Mr Symond.

On 12 July 2004, Mr Rossetto sent by email a memorandum entitled "Tax Queries" to Ms Belinda Meyers and Ms Mary Habib, copied to Mr Seller. The memorandum was apparently responding to certain queries raised by the business, the first of which was:

"Given that there were a number of ad hoc 'redemptions' over the course of the year, can these redemptions be treated as advances to a standard annual redemption which is reconciled and formalised at the end of each Financial Year?

Current transactions are treated as such for other arrangements within the organisation."

The response to this question from Mr Rossetto stated that he assumed that a loan arrangement would be put in place to cover the ad hoc extraction of funds during the year pending the final redemption with the proceeds of that redemption wiping out the loan balance. He added:

"Please note that the redemption of the units/shares should be done before 30 June each year. This is extremely important as there may be a Division 7A (deemed dividend) problem if there is an outstanding loan at year-end. The redemption should be finalised before this time each year." (emphasis in original)

On 19 August 2004, Mr Makinson sent an email to Messrs Seller and Rossetto, which relevantly stated:

"I've just come from a meeting with [the] ANZ, the upshot of which is that they are proposing to fund the bulk of the construction costs of [Mr Symond]'s house via a new commercial facility to Aussie to the tune of some $20-23 million.

I am going on the assumption that these funds would be remitted to [Mr Symond] via the usual mechanism of redemption of the redeemable preference shares. Can you confirm? Also - are there any other particular concerns I should be aware of, given the quantum of funds involved?"

On 25 August 2004, Mr Rossetto responded to Mr Makinson's query, which was copied to Ms Habib and Mr Seller. Under the heading "Loan to [Investments]", the email stated:

"If it is a loan to [Investments] we assume that [Investments] will draw down on the loan periodically to make payments for [Mr Symond]'s house. If so, the funds should be moved from [Investments] to [Mr Symond] via the normal redemption process. However, before this can be done Investments and [the] AHLUT will decide on the final purchase price for the 1 July 2004 transfer. This is important as [Investments] still has to issue ordinary and redeemable preference shares to the AHLUT as consideration. The number of redeemable preference shares will equal the $57 million (approx) less what was paid to [Mr Symond] over the last financial year. The remaining shares issued to [the] AHLUT will be ordinary shares.

[Mr Symond] will then access funds from Aussie via the previously used redemption process. The difference post 1 July 2004 is that there will be another layer to the redemption. [Investments] will redeem shares held by [the] AHLUT on a dollar for dollar basis then the AHLUT will redeem units held by Holdings on a dollar for dollar basis then Holdings will redeem some of the redeemable preference shares held by [Mr Symond] on a dollar for dollar basis.

There should be no other tax issues associated with this transaction."

Other than the limited reference to Division 7A in the email noted at [125], none of these communications from Gadens contained any warning of any possible adverse tax consequences from the redemption of RPS.

During the period from 30 June 2003 to early 2006, Mr Symond withdrew funds from the business by redeeming the RPS. The total amount that Mr Symond received by way of redemptions over that period was $57,662,999.70, comprised of $20,652,804.70 in the year ended 30 June 2004, $16,251,485.00 in the year ended 30 June 2005, and $20,758,710.00 in the year ended 30 June 2006. Consistent with the above exchanges, it appears that amounts were withdrawn spasmodically with subsequent redemptions being effected to regularise the withdrawal of funds.

Mr Seller's Move to Abbott Tout and the ATO Risk Review

In or about January 2005, Messrs Seller and Rossetto left Gadens to join Abbott Tout. They continued to provide legal advice to Mr Symond and the business on taxation matters.

In May 2004 Mr Seller alerted Mr Symond to what he described as the ATO's "[H]igh Net Worth Individuals Task Force", which appears to be a group within the ATO that applies a level of scrutiny, less than that involved in a full tax audit, to individual tax payers with a net worth in excess of $30 million. On 16 February 2005 the ATO wrote to Mr Symond, care of Mitchell & Partners, advising that it was conducting a review of his income tax affairs and seeking his response to certain questions which were attached. The questions posed were of a general nature.

Also in February 2005, Abbott Tout was engaged to review the 2004 income tax returns of the Aussie group. No consideration was then given to the tax treatment of the RPS.

In April 2005 E&Y raised a number of queries including whether the ATO could apply the anti-tax avoidance provisions in Part IVA of the ITAA 1936 to aspects of the Restructure. They noted that the application of Part IVA "will depend upon the existence of a tax benefit" but that whatever the outcome of such application, "these transactions are likely to raise the interest of the ATO, and are therefore likely to come under scrutiny". Ms Habib forwarded E&Y's concerns to Abbott Tout and requested that it prepare a response.

This analysis yields a figure for the distribution rate that in my view is too low for a number of reasons. First, it excludes the period prior to 2005 when losses were incurred. This is especially relevant if the matter is being considered from the perspective of the time of the settlement with the Commissioner when those losses would have been quite recent. Second, the last year that was partially included (2011) was very profitable for Holdings, yet the level of dividend distribution was the same as the previous year. Third, it takes no account of the possibility of CBA moving to 100% ownership and consolidating the franking credits. Bearing those matters in mind I consider that a distribution rate of 50% should be adopted.

If this rate is applied to the value to Mr Symond of the deduction to the franking account as calculated by Mr Potter, it yields a figure of $1,291,178.50. Thus, I assess the value of the imposition of a $5,014,285.00 deduction to the franking account on his shareholding as $1,291,178.50. While this reasoning would ordinarily result in interest on that amount being allowed from the date of the Deed, I will defer that date to 1 January 2011 to accommodate the point addressed at [386]. That date approximates the time at which the balance of the franking account under Scenario 2 would have equated to the accounting balance in the events that transpired if no deduction had been made from the latter.

The third issue arises from Mr Donaldson SC's submission that, assuming some value could be attributed to franking credits, a deduction to the franking account is only "an injury to the company affecting its value and is a reflective loss to shareholders that cannot be recovered in an action by a shareholder". In support of that submission Mr Donaldson SC cited Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204 at 222 to 223, Gould v Vaggelas [1985] HCA 85; (1984) 157 CLR 215 at 219 to 220 per Gibbs CJ, and Mercedes Holdings Pty Ltd v Waters (No 3) [2011] FCA 236 at [38] per Perram J. For the reasons that follow, I reject the submission.

The so called principle of "reflective loss" is part of the common law of Australia. In Gould v Vaggelas at 219 Gibbs CJ stated that pursuant to that principle a party "cannot recover damages which are merely a reflection of a loss suffered by the company, [although] they may recover damages for the loss which they personally have suffered and which is separate and distinct from the loss suffered by the company". His Honour specifically cited Prudential Assurance Co Ltd with approval. In Chen v Karandonis [2002] NSWCA 412 at [34] to [53] Beazley JA (with whom Heydon and Hodgson JJA agreed) cited Prudential Assurance and the subsequent judgment of the House of Lords in Johnson v Gore Wood & Co [2000] UKHL 65; [2002] 2 AC 1.

In Johnson at 35 to 36 Lord Bingham of Cornwall summarised the relevant principle as follows:

"These authorities support the following propositions. (1) Where a company suffers loss caused by a breach of duty owed to it, only the company may sue in respect of that loss. No action lies at the suit of a shareholder suing in that capacity and no other to make good a diminution in the value of the shareholder's shareholding where that merely reflects the loss suffered by the company. A claim will not lie by a shareholder to make good a loss which would be made good if the company's assets were replenished through action against the party responsible for the loss, even if the company, acting through its constitutional organs, has declined or failed to make good that loss. So much is clear from Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] 1 Ch 204, particularly at pp 222-223, Heron International [Ltd v Lord Grade [1983] BCLC 244], particularly at pp 261-262, George Fischer [(Great Britain) Ltd v Multi Construction Ltd [1995] 1 BCLC 260], particularly at pp 266 and 270-271, Gerber [Garment Technology Inc v Lectra Systems Ltd [1997] RPC 443] and Stein v Blake [[1998] 1 All ER 724], particularly at pp 726-729. (2) Where a company suffers loss but has no cause of action to sue to recover that loss, the shareholder in the company may sue in respect of it (if the shareholder has a cause of action to do so), even though the loss is a diminution in the value of the shareholding. This is supported by Lee v Sheard [1956] 1 QB 192, 195-196, George Fischer and Gerber. (3) Where a company suffers a loss caused by a breach of duty to it, and a shareholder suffers a loss separate and distinct from that suffered by the company caused by a breach of a duty independently owed to the shareholder, each may sue to recover the loss caused to it by breach of the duty owed to it but neither may recover loss caused to the other by breach of the duty owed to that other." (emphasis added)

At 62 Lord Millett discussed the first and second of these propositions. At 66 to 67 his Lordship stated:

"Reflective loss extends beyond the diminution of the value of the shares; it extends to the loss of dividends (specifically mentioned in Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204) and all other payments which the shareholder might have obtained from the company if it had not been deprived of its funds.

...

On the other hand, [the shareholder] is entitled (subject to the rules on remoteness of damage) to recover in respect of a loss which he has sustained by reason of his inability to have recourse to the company's funds and which the company would not have sustained itself." (emphasis added)

At 36 to 37 Lord Bingham applied these principles to the various heads of damage that had been pleaded by the appellant in that case. The appellant claimed that he and a company had jointly retained solicitors who then negligently conducted litigation on behalf of the company. The company compromised its claim against the solicitors and then the appellant sued them separately. It is unnecessary to describe his heads of damage in detail, but one is described as an "additional tax liability" which his Lordship described as a "personal loss" and stated "it would not [be struck] out". Of course a loss of a franking credit results in an additional tax liability to a shareholder. That said, the nature of the appellant's tax liability in Johnson was not discussed further.

In this case the reflective loss principle can only be invoked if the "company", namely Holdings, has suffered loss and the shareholder, namely Mr Symond, has not "suffered [a loss] which is separate and distinct from the loss suffered by the company". I have described the nature of franking credits and the franking account above. Nothing in the ITAA1997 (or elsewhere) suggests that franking credits are an asset of the company that maintains the franking account. Franking credits are not listed as an asset on Holdings' balance sheet and it cannot buy or sell them. As I have stated, the franking account is a statutory concept which records the amount of tax credits that can be made available to shareholders. The ledger of Holdings recording franking credits and debits is merely a record reflecting the contents of that account. The debiting of the franking account does not involve the direct occasioning of loss to the company. Instead it results in the loss of amounts that the company "can pass to its members" (s 200.15(1) of ITAA1997). A deduction to the franking account represents a separate and distinct loss suffered by the shareholder(s) and not by the company.

The chapter from Mr Lonergan's book that I have referred to includes a discussion of whether a positive franking account balance for a listed company makes the company more attractive to investors and thus may lower its cost of capital. He is sceptical of the latter contention on the basis that the size and level of foreign investor interest drives the cost of capital in this country, and such investors do not utilise franking credits. This scepticism appears unjustified in the case of Holdings, as its actual and likely investors are Australian residents. In any event, assuming that the presence of franking credits does lower the cost of capital for Holdings that does not mean that the company suffers a direct loss from the loss of franking credits. If anything it would only suggest that the company suffers its own form of reflective loss arising from the direct loss occasioned to the shareholders but not vice versa.

Quantum - Summary

It follows that the calculation of the loss and damage occasioned to Mr Symond as a result of Gadens' actionable conduct is to be determined in the following manner.

First, by totalling the items listed in the first four rows of the table in [320], being the tax, penalties and GIC imposed by reason of the settlement reached with the Commissioner and the professional fees incurred, and updating the interest calculation on those amounts.

Second, by deducting an amount for the cost of the extra advice concerning the FBTAA that I have referred to at [317] ($25,000.00) and the amount allowed for the possibility that further scrutiny beyond the 2005 review might have been necessary in relation to Mr Symond's FBT exposure ($75,000.00) (see [330]).

Third, by deducting an amount for the benefit of the Restructure calculated in accordance with [374] to [375].

Fourth, by adding $1,291,178.50 together with interest from 1 January 2011, being the loss occasioned to Mr Symond by the deduction of $5,014,286.00 from Holdings' franking account.

Apportionment

Gadens pleaded that, if it was found liable, each of Abbott Tout, PwC, the "AHL Group" (being either synonymous with the Aussie group or at least part of it) and Mitchell & Partners was a concurrent wrongdoer with it, and its liability should be correspondingly reduced to what the Court considers "just" by the operation of s 35 of the CLA and s 87CD of the TPA. Its final submissions did not press so much of this claim as concerned the Aussie Home Loans Group.

Five matters should be noted about the legislative provisions concerning apportionment. First, both parties' submissions appeared to accept that all of Mr Symond's causes of action were "apportionable claims" as defined in either s 34(1) of the CLA or s 87CB(1) of the TPA. In relation to the latter, this involved an assumption that the relevant apportionment legislation for the cause of action under former s 52 of the TPA was that found in Part VIA of the TPA, which was inserted with effect from 26 July 2004 by the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (Cth). Part VIA applied to causes of action that accrued after that date (see Schedule 12, Item 1). Most of the misleading representations occurred prior to 26 July 2004, but presumably the parties acted on the basis that the loss or damage sued for crystallised after that time (Wardley).

Second, the onus of demonstrating that any other party was a "concurrent wrongdoer" rested upon Gadens. Such a wrongdoer is a person who is "one of two or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim" (CLA, s 34(2); TPA, s 87CB(3)).

Third, although not stated expressly, the definition of "concurrent wrongdoer" requires that the alleged concurrent wrongdoer be legally liable to the plaintiff (Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10; 87 ALJR 505 at [47] per French CJ, Hayne and Kiefel JJ; and [90] to [91] per Bell and Gageler JJ).

Fourth, the definition of "apportionable claim" also requires that there be a precise identification of the "damage or loss that is the subject of the claim" (s CLA, s 34(2); TPA, s 87CB(3)). "Damage" in this context does not refer to damages that are assessed and awarded. According to French CJ, Hayne and Kiefel JJ in Hunt & Hunt, it comprises the "injury and other foreseeable consequences suffered by a plaintiff" (at [24]). The dissenting judgment of Bell and Gageler JJ in that case does not suggest any difference in approach (see [93]). However, the difficulties in its application are illustrated by the facts in Hunt & Hunt. In that case the appellant solicitors had negligently failed to include a covenant to repay the amount lent in a mortgage that was registered over real property owned by an innocent party. Loans to the innocent party sought to be secured by the mortgage had been procured by the fraud of certain third parties. The lender failed to recover from the innocent party under the loan agreement because it was void, having been procured by fraud. It failed to recover under the mortgage because, even though it was registered, it only secured the debt under the void loan agreement and did not include a separate covenant requiring the innocent party to repay that debt. French CJ, Hayne and Kiefel JJ held that the solicitors and the fraudsters were concurrent wrongdoers vis-à-vis the lender, and the solicitor's liability was reduced accordingly. Their Honours characterised the injury to the borrower as its inability to recover the sum advanced (at [28]). This injury had two independent causes, the negligence of the solicitors and the fraudulent conduct of the third parties. In contrast, Bell and Gageler JJ characterised the injury as the borrower having "no security", a result which was not caused by the fraudulent conduct of the third parties. According to their Honours, this had the consequence that they and the solicitors were not concurrent wrongdoers (at [100]).

Fifth, the test for apportionment under both the CLA and the TPA is the same, namely that the liability of a defendant who is a concurrent wrongdoer such as Gadens is limited to "an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage and loss" (CLA, s 35(1); TPA, s 87CD(1)). In Mitchell Morgan Nominees Pty Ltd v Vella [2011] NSWCA 390 at [83], Giles JA noted the similarity of wording between these provisions and the language used in the statutes enabling contribution between joint tortfeasors and stated that:

"The accepted application [of those provisions] ... 'involves a comparison both of culpability, ie of the degree of departure from the standard of care of the reasonable man ... and of the relative importance of the acts of the parties in causing the damage ...', and there must be a comparative examination of 'the whole conduct of each negligent party in relation to the circumstances of the accident': Podrebersek v Australian Iron & Steel Pty Ltd at 494 (citations omitted); see also (for example) Wynbergen v Hoyts Corporatioin Pty Ltd (1997) 72 ALJR 65 and Vinidex Tubemakers Pty Ltd v Thiess Contractors Pty Ltd [2000] NSWCA 67."

Although his Honour stated that this approach may require modification in the case of a fraudulent as opposed to negligent wrongdoer (at [84]), that observation has no application in this case. The decision in Vella was the subject of the successful appeal to the High Court in Hunt & Hunt that I have already described. In that case only the judgment of French CJ, Hayne and Kiefel JJ touched upon the way in which liability should be apportioned as between concurrent wrongdoers, and their brief comment (at [58]) was consistent with the adoption of the approach of Giles JA, at least in the case of concurrent wrongdoers who are both negligent.

Apportionment - Abbott Tout

As noted above, with effect from January 2005 Messrs Seller and Rossetto moved to Abbott Tout. I have already described the relevant work undertaken by them on behalf of Mr Symond and the Aussie group in the period that followed (at [130]ff). Gadens contended that Abbott Tout was a concurrent wrongdoer and pointed to the failure of Abbott Tout via Mr Sellers to advise Mr Symond and those advising him of the risk of him incurring a tax liability by redeeming preference shares.

In support of this contention Gadens pointed to parts of Mr Magid's first report which addressed the conduct of Abbott Tout. In this report, Mr Magid addressed the "deficiencies" in its letter of 13 May 2005 (responding to E&Y) (see [135]) and the advice said to have been given by Abbott Tout in conference in early August 2005 (see [137]). Consistent with other aspects of his evidence, Mr Magid stated that the advice was deficient "in that it did not include advice regarding the taxation risks arising in relation to those redemptions", ie the risks that I have discussed previously at [196] to [216]. Further he stated that Mr Symond should have been advised "to consider discontinuing or suspending redemptions of those redeemable preference shares pending completion of the ATO review".

Mr Magid also discussed the position of Abbott Tout in his second report. He addressed a contention advanced in response to his first report that it would have weakened Mr Symond's bargaining position vis-à-vis the ATO if Abbott Tout had advised him to cease redemptions. He accepted that contention "[t]o [an] extent" and noted that a competent solicitor should have advised Mr Symond of the alternative courses of action and the risks attaching to them. However, he added:

"6.5 Apart from that, in my view the position of Mr Symond in early 2005 in relation to what had already occurred to that point had placed him in a position of such high tax risk that the mitigation of the amount at risk by discontinuing or suspending redemptions of the redeemable preference shares at that time would have been an advantage which would have outweighed any increase in the likelihood of an adverse result because of the change being made.

6.6 In any event, in my view the likelihood at that point in time of an adverse result was already so high that any increase in that likelihood resulting from discontinuing or suspending redemption of the redeemable preference shares would not have been material. This is because, for the reasons given at section 3.9 through 3.12 of my First Report, the entire amount paid to Mr Symond upon the redemption or purported redemption of his redeemable preference shares in Holdings could have been included in his assessable income as a dividend. Discontinuing or suspending those redemptions would have reduced the amount so at risk.

6.7 Similarly, discontinuing or suspending the redemption of those redeemable preference shares would have reduced the amount at risk of being the subject of a determination under section 45C that they be taken to be unfranked dividends paid out of profits of Holdings and therefore assessable income of Mr Symond, a risk which existed for the reasons given in sections 3.14 through 3.23 of my First Report.

6.8 Finally, discontinuing or suspending redemption of the redeemable preference shares would have reduced the amount at risk of a determination under section 177F that some or all of the amounts paid upon those redemptions be included in Mr Symond's assessable income under the general anti-avoidance provisions of Part IVA, a risk which existed for the reasons given in sections 3.24 through 3.43 of my First Report.

6.9 It was because of the existence of those high risks that I reached the view, stated in section 8.8 of my First Report, that the settlement reached by Mr Symond with the ATO was reasonable. Those risks do not include the risk of an amount being assessable to Mr Symond as a deemed dividend under Division 7A." (emphasis added)

Thus, Mr Magid opines that as at 2005 Mr Symond already had such a high exposure that any increase in the risk of scrutiny which would arise from ceasing redemptions was only marginal. In effect, Mr Magid considered that Abbott Tout should have recognised that Mr Symond was in a big hole and told him to stop digging. I accept Mr Magid's evidence concerning the conduct of Abbott Tout.

Mr Donaldson SC submitted that Abbott Tout was "overwhelmingly responsible" for the circumstances that resulted in Mr Symond's assessment. He pointed to three matters. First, he submitted that Abbott Tout was aware, through the knowledge of Mr Seller, that a considerable quantity of RPS remained to be redeemed. Second, he submitted that Abbott Tout was aware that the ATO was reviewing Mr Symond's affairs and there was a real possibility the ATO could suggest that Division 7A or s 45B applied to render the redemptions assessable. Third, he submitted that Abbott Tout failed to take any steps to advise Mr Symond that those risks could be eliminated if he ceased redeeming the RPS and otherwise obtained funds through a loan from the AHLUT or another group entity on a commercial basis (thereby complying with the terms of s 109N of Division 7A). Mr Donaldson SC also noted that in 2005 "E&Y had repeatedly raised the prospect that the arrangement would come under ATO scrutiny".

Mr Payne SC did not dispute these matters, but submitted that Mr Magid's conclusion about the high level of risk that Mr Symond was facing when Abbott Tout became involved meant that I could not be satisfied that the settlement he reached with the ATO would have been any different had Abbott Tout advised that the redemption of preference shares should cease. He submitted that, at best, Mr Symond "might have done a little bit better on penalties and interest if Abbott Tout [had advised Mr Symond to stop] redeeming".

In my view Mr Payne SC's submission wrongly conflates the "damage or loss that is the subject of the claim" as referred to in s 34(2) of the CLA and s 87CB(3) of the TPA with the damages that are assessed and awarded in the proceedings (see Hunt & Hunt at [24] and [90]). The various liabilities imposed upon Mr Symond by the ATO's assessment are component parts of the damages that are otherwise recoverable by Mr Symond. However, consistent with the approach of French CJ, Hayne and Kiefel JJ in Hunt & Hunt at [24], the relevant "injury" suffered by Mr Symond and identified by Mr Magid was the (massive) exposure to a tax liability he acquired from redeeming preference shares over a three year period. When the "injury" is identified in those terms, then Mr Magid's opinion confirms that Abbott Tout's conduct "caused [at least some of] the damage or loss that is the subject of the claim" in these proceedings (CLA, s 34(2); TPA, s 87CB(3)).

Mr Magid's opinion referred to the deficient advice given by Abbott Tout in May and August 2005. As Mr Donaldson SC noted, it was aware from February 2005 that the ATO was undertaking a review, and from April 2005 it received E&Y's queries. Based on Mr Magid's opinion, I identify 1 May 2005 as the date from which Abbott Tout became obliged to provide the advice he refers to.

One matter relevant to assessing what "amount reflecting that proportion of the damage or loss claimed" that it is "just" should be attributed to Abbott Tout is the extent of Mr Symond's exposure that could have been avoided had Abbott Tout taken the steps identified by Mr Magid (and had Mr Symond acted on that advice). The evidence did not explore whether any steps could have been taken late in FY05 but before 30 June 2005 to document the monies that had been withdrawn in the financial year to that date by some method that did not involve the redemption of preference shares. In the absence of any suggestion to that effect I cannot proceed on the basis that that was possible. On that basis and having regard to the figures referred to in [129], it seems that approximately two thirds of the RPS had been redeemed by May 2005. Thus about two thirds of Mr Symond's exposure had arisen before the time I find that Abbott Tout should have intervened.

Further, I consider that the extent of Gadens' responsibility for the exposure arising far exceeds that of Abbott Tout. Gadens conceived of the entire structure. Abbott Tout did not. Both orally and in writing Gadens gave very emphatic (and wrong) advice about the tax free status of the proceeds of the redemption of the preference shares. It was that advice that assuaged any concerns of Mr Symond and those who advised him. Abbott Tout's conduct was nothing of that kind. Instead, Abbott Tout was in the position of inheriting a client in an exposed position and not advising them to minimise their exposure. Gadens was responsible for that circumstance arising. To continue the analogy made above, Abbott Tout should have recognised that Mr Symond was in a big hole, but Gadens dug it in the first place.

In my view the departure from the relevant standard by Gadens, and the consequences of it for Mr Symond, was far worse than that of Abbott Tout. I address the position of PwC and Mitchell & Partners next and conclude that they are not concurrent wrongdoers. Accordingly, in accordance with s 35(1) of the CLA and s 87CD(1) of the TPA, I consider that it is "just" that Gadens' liability be limited to an amount reflecting a proportion of 85% of the damage or loss claimed.

Apportionment - PwC

I have already referred to the fact that Holdings retained PwC sometime in either late 2006 or early 2007 and to the latter's subsequent involvement in the audit of Mr Symond's affairs (at [147] to [151]). Gadens submitted that, in view of its knowledge of Mr Symond's tax exposure and its receipt of the QC's advice referred to at [149], it was incumbent on PwC to advise Mr Symond to include the amount of redemptions he received in FY06 in the tax return that he lodged in May 2007 (see [149]). Gadens submitted that the penalties and GIC for which Mr Symond became liable would not have arisen had PwC advised Mr Symond to include the redemptions he received in FY06 in his tax return lodged in May 2007.

Again, this submission appears to conflate the amounts sought to be recovered by Mr Symond with the "injury" he sustained (cf Hunt & Hunt at [24] and [40]). Leaving that aside, I am not satisfied that PwC has breached any legal duty that it owed Mr Symond for two reasons. First, on the limited material that was tendered concerning PwC's role, I am not satisfied that PwC did not canvass with either Mr Symond or one of his advisors the possibility of making the disclosure.

Second, in any event, for the reasons agreed to by Mr Beath noted at [331], I am not satisfied that any duty it owed to Mr Symond required it to recommend disclosure of the redemption amounts received in FY06. PwC was retained to assist Mr Symond in difficult circumstances. It 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. As was agreed by Mr Beath, to have included the redemptions for FY06 in Mr Symond's tax return for that year would have led to those amounts becoming the starting point for the negotiations with the ATO about Mr Symond's exposure and not the end point. Considered prospectively as at May 2007, the inclusion of those amounts in the return might have been considered as a means of avoiding or minimising the imposition of some penalties and GIC, but it was at least reasonably open to a person in PwC's circumstances to conclude that would have been at the cost of an overall assessment that was most likely to be much greater than proved to be the case.

Apportionment - Mitchell & Partners

Gadens made the same allegation against Mitchell & Partners that it made against PwC in relation to the tax return for FY06 that was lodged in May 2007. I have referred to aspects of its role in [131], [137] and [146]. The reasons I have given for rejecting this aspect of Gadens' defence so far as PwC is concerned also apply to Mitchell & Partners. While Mitchell & Partners was not retained by Mr Symond at a late stage, like PwC it had no role in the provision of advice concerning or the implementation of the Restructure. In that sense both it and PwC were dealing with a quagmire of someone else's, namely Gadens', making.

Contributory Negligence

Although Gadens pleaded contributory negligence on the part of the Mr Symond, it made no submissions in support of that allegation. In any event it would follow from the findings that in so far as this pleading rests upon an assertion that in adopting the Restructure Mr Symond failed to take reasonable care for his own interests, this allegation cannot be supported. The defence also alleges that the terms of the settlement with the ATO somehow involved contributory negligence on Mr Symond's part, but this contention was not developed. In any event, the high level of expert advice that Mr Symond received in relation to that settlement and the finding I have made at [447] negates any such suggestion. My acceptance of the opinion of Mr Magid noted at [436] confirms that conclusion.

Professional Standards Act 1994

Gadens also pleaded that its liability was limited by the operation of the Professional Standards Act 1994. This was not pressed in its final submissions.

The Settlement with Abbott Tout

As I have stated Mr Symond settled his claim against Abbott Tout. I was informed that one part of that settlement involved a payment of $1.85 million to Mr Symond (which was not attributable to costs). At the time of the settlement a Deed was entered into between Mr Symond, Abbott Tout and Gadens relating to the manner in which that sum would be accounted for, bearing in mind the apportionment claim made by Gadens concerning Abbott Tout. The Deed was not tendered but by agreement the relevant part was read onto the transcript as recording a joint agreement between the parties on this topic to the following effect:

"The deed provides:

For the avoidance of doubt the liability of Gadens in the proceedings is to be determined as follows:

(a) assess the quantum of the liability of both Gadens and Abbott Tout defendants (if any) to Symond without taking into account the effect of this Deed including the obligation to pay, the payment or receipt of the Abbott Tout settlement amount (the defendant's gross liability)."

...

(b) apportion the defendant's gross liability between Gadens and Abbott Tout defendants and any other alleged wrongdoers referred to in paragraphs 61 to 76C of Gadens' defence filed 14 August 2012 in accordance with the principles applicable under the apportionment provisions referred to in paragraphs 55, 60, 66, 67, 75, 76, 76B and 76C of Gadens' defence filed 14 August 2012 and to determine the amount of Gadens' share of the defendant's gross liability (Gadens' gross liability).

(c) deduct $1.85 million from the amount of the defendant's gross liability (the defendant's net liability) and

(d) Gadens is liable to Symond for the lesser of the defendant's net liability or Gadens' gross liability."

In relation to sub-clause (a), I have assessed the total quantum of liability of Gadens (and Abbott Tout), however the calculation of the amount must await the further calculations I have outlined in [422] to [426]. The outcome of that calculation will produce a figure for the "defendant's gross liability".

In relation to sub-clause (b), the liability of Abbott Tout in respect of that loss will be 15% of the amount to be calculated. I have rejected the submission that there are any other "alleged wrongdoers". The figure for "Gadens' gross liability" will be 85% of the amount to be calculated.

In relation to sub-clause (c), the "defendant's net liability" will be the figure yielded by the calculations noted in [423] to [426], less $1.85 million.

In relation to sub-clause (d), Gadens will be liable for the lesser of Gadens' gross liability or the defendant's net liability. On my understanding of the likely outcome of the calculations it is probable that the latter will represent the amount of Gadens' liability.

Further Progress

Assuming that the outcome of the above calculations and steps is that an amount of damages is recoverable by Mr Symond against Gadens, then a verdict will be entered in his favour. As further calculations need to be undertaken, I cannot enter any final orders at this stage. The only order that I will make at this point is that the proceedings be stood over for further directions before me at 9.30am on 8 August 2013, with liberty to apply on one days' notice. In the meantime, the parties should confer as to the appropriate calculations, their respective positions on costs, and the final forms of order. I so order.

**********

Decision last updated: 19 July 2013

Medium Neutral Citation:	Symond v Gadens Lawyers Sydney Pty Ltd [2013] NSWSC 955
Hearing dates:	18 February to 1 March 2013
Decision date:	19 July 2013
Jurisdiction:	Common Law
Before:	Beech-Jones J
Decision:	Plaintiff succeeds in establishing negligence, breach of retainer and contravention of s 52 of the Trade Practices Act 1974 (Cth) against the First Defendant. Quantification of judgment to await further calculations.
Catchwords:	NEGLIGENCE - professional negligence - specialised tax advice - was advice concerning the tax consequences of the proposed business restructure negligent - whether advice that the redemption of preference shares would be tax free was wrong - failure to advert to the definition of "dividend" in s 6(1) of the Income Tax Assessment Act 1936 - failure to warn of the risk of application of s 45B and Part IVA of the ITAA 1936 to proceeds of the redemption- what alternative structures should have been recommended - negligent misstatement. CONTRACT - was there was a contract of retainer - breach of retainer. TRADE AND COMMERCE - trade practices - whether defendant engaged in misleading or deceptive conduct contrary to s 52 of the Trade Practices Act 1974 (Cth). CAUSATION - whether alleged deficiencies in advice caused liabilities of plaintiff under Deed of Settlement with the Commissioner of Taxation - whether deficiencies must coincide with the precise tax exposures settled under the Deed. DAMAGES - measurement of loss or damage - alternative structures that should have been recommended - tax consequences of those structures - which alternative would the plaintiff most likely have pursued "but for" the negligent advice - difference between plaintiff's financial position under "but for" scenario and in the events that transpired - benefit of pursuing restructure that was recommended - whether benefit from paying dividends earlier rather than later permanent or temporary - measurement of benefit - valuation of deduction in franking credits from franking account - reflective loss - whether deduction from franking account only caused reflective loss to shareholder. DAMAGES - apportionment of loss - concurrent wrongdoers - meaning of damage in context of "apportionable claim" - test for apportionment.
Legislation Cited:	- Civil Liability Act 2002 - Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (Cth) - Fringe Benefits Tax Assessment Act 1986 (Cth) - Income Tax Assessment Act 1936 (Cth) - Income Tax Assessment Act 1997 (Cth) - Professional Standards Act 1994 - Taxation Laws Amendment Act (No 3) 1998 (Cth) - Taxation Laws Amendment Act (No 2) 2002 - Trade Practices Act 1974 (Cth)
Cases Cited:	- Adeels Palace Pty Ltd v Moubarak [2009] HCA 48; 239 CLR 420 - Astley v Austrust Ltd [1999] HCA 6; 197 CLR 1 - Chen v Karandonis [2002] NSWCA 412 - Gould v Vaggelas [1985] HCA 85; (1984) 157 CLR 215 - Hayden v Federal Commissioner of Taxation (1996) 96 ATC 4797; 33 ATR 352 - Hendriks v McGeoch [2008] NSWCA 53 - Heydon v NRMA Ltd [2000] NSWCA 374; 51 NSWLR 1 - Hill v Van Erp [1997] HCA 9; 188 CLR 159 - Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10; 87 ALJR 505 - J & G Knowles & Associates Pty Ltd v Commissioner of Taxation [2000] FCA 196; 96 FCR 402 - Johnson v Gore Wood & Co [2000] UKHL 65; [2002] 2 AC 1 - Jones v Dunkel (1959) 101 CLR 298 - Kenny & Good Pty Ltd v MGICA [1999] HCA 25; 199 CLR 413 - McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 - March v E & MH Stramare Pty Ltd [1991] HCA 12; 171 CLR 506 - Mercedes Holdings Pty Ltd v Waters (No 3) [2011] FCA 236 - Mills v Federal Commissioner of Taxation [2011] FCAFC 158; 198 FCR 89 - Mills v Federal Commissioner of Taxation [2012] HCA 51; 87 ALJR 53 - Minister for Immigration & Ethnic Affairs v Guo [1997] HCA 22; 191 CLR 559 - Mitchell Morgan Nominees Pty Ltd v Vella [2011] NSWCA 390 - Murphy v Overton Investments Pty Ltd [2004] HCA 3; 216 CLR 388 - Norris v Blake [No 2] (1997) 41 NSWLR 49 - Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204; 1 All ER 354 - Sellars v Adelaide Petroleum NL [1994] HCA 4; 179 CLR 332 - Starrim Pty Ltd v Commissioner of Taxation [2000] FCA 952; 102 FCR 194 - Tepko Pty Ltd v Water Board [2001 HCA 19; 206 CLR 1 - Vinidex Tubemakers Pty Ltd v Thiess Contractors Pty Ltd [2000] NSWCA 67 - Wallace v Kam [2012] NSWCA 82; Aust Torts Reports 82 - Wallace v Kam [2013] HCA 19; 87 ALJR 648 - Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 - Wynbergen v Hoyts Corporation Pty Ltd [1997] HCA 52; 72 ALJR 65
Category:	Principal judgment
Parties:	John Joseph Symond (Plaintiff) Gadens Lawyers Sydney Pty Ltd (1st Defendant) Ross Edward Seller (4th Defendant) John Henry Bartrop (5th Defendant) Gregory Anthony Thomas Bateman (6th Defendant) John Cunningham Bell (7th Defendant) Bryan Robert Belling (8th Defendant) Dennis Raymond Bluth (9th Defendant) Seamus John Burke (10th Defendant) Susan Jane Burns (11th Defendant) Robert Angus Cameron (12th Defendant) John Alexander Cole (13th Defendant) Sancia Catherine de Jersey (14th Defendant) Christine Lynne Ecob (15th Defendant) John David Berkeley Edelman (16th Defendant) David Radcliffe Ford (17th Defendant) Kirston Marie Gerathy (18th Defendant) Richard Kenneth Graham (19th Defendant) Timothy Martin Griffiths (20th Defendant) Mark Alfred Harrowell (21st Defendant) Michael Raymond Hodgson (22nd Defendant) Gail Jennifer Howard (23rd Defendant) Victor Francis Kelly (24th Defendant) Nicholas John Matkovich (25th Defendant) Robert William McCormadk (26th Defendant) Brett Gregory McKenzie-Craig (27th Defendant) Peter Gregory Noble (28th Defendant) Gary Francis Punch (29th Defendant) Penelope Jane Snyman (30th Defendant) Ellis Neville Varejes (32nd Defendant) Damian Gregory Ward (34th Defendant)
Representation:	Counsel: A.J. Payne SC, J.O. Hmelnitsky and R.A. Jedrzejczyk (Plaintiff) S.R. Donaldson SC, B.L. Jones (First Defendant) Solicitors: Baker & McKenzie (Plaintiff) DLA Piper Australia (First Defendant)
File Number(s):	2009/297612