Zelino v Budai

Zelino v Budai concerned a dispute over alleged professional negligence by an accountant in relation to income tax returns. The second and third plaintiffs retained the defendant, an accountant, to prepare their income tax returns. The plaintiffs argued that the defendant's advice was negligent, specifically regarding the assessment of profits derived from a development under section 25A(1) of the Income Tax Assessment Act. The court had to determine whether the defendant's advice constituted negligence.

Further, the plaintiffs had entered into a contract with the defendant to prepare false accounts for their development venture and insert false figures in their tax returns. This contract involved the commission of illegal acts and was for an illegal purpose. The court needed to decide if an action for breach of the contractual duty of care could lie under these circumstances. Additionally, the plaintiffs claimed that the defendant was retained as their accountant with a specific term to procure third parties to issue special rights units in a unit trust. The court had to ascertain whether such a term existed in the retainer and if it could be implied, given its impossibility of performance.

The court found that the defendant was not negligent in advising on the income tax returns. Regarding the illegal contract, the court held that it was for the commission of offences under the Income Tax Assessment Act and the Taxation Administration Act 1953. Consequently, the court exercised its discretion not to award the costs of this issue to the defendant, deeming it contrary to public policy. The defendant's costs for that issue were reduced by one-third. Furthermore, the court highlighted serious breaches of revenue law and professional ethics by the parties involved and directed copies of the judgment to relevant authorities and professional regulatory bodies, with exhibits to be retained pending investigations.