Ex-EY tax partner’s new evidence thrown out as ‘an abuse of process’
A Federal Court judge has thrown out a former EY Australia partner’s last-minute attempts to rely on new evidence to keep his name secret as “an abuse of process”, following allegations he promoted tax exploitation schemes before being sacked by the big four firm.
The ex-partner applied for his name and the names of his former firm and clients to be suppressed, on the basis that he would be embarrassed and distressed if he were identified facing allegations of promoting tax exploitation schemes. This application was rejected in the first instance following opposition from The Australian Financial Review and the commissioner in October last year.
EY sacked the former partner in August 2022. Will Willitts
The former partner immediately filed an application for leave to appeal the decision. However, a week before the hearing the ex-partner’s lawyers said they would apply to vary his application and introduce new evidence. They would argue that the former partner’s name must be suppressed to protect his safety.
Nine executive counsel Larina Alick, who is representing the Financial Review, argued the former partner failed to provide sufficient time for the new evidence to be considered, he had presented no such evidence for his original suppression application, which was rejected, after the tax office first filed in August 2023, and had, in fact, abandoned the personal safety argument last year.
Elizabeth Bishop, SC, acting for the ATO, labelled the former partner’s move as “an attempt to tidy up the case and run it again”.
Justice Stewart Anderson on Thursday ruled in favour of the Financial Review, the ATO and EY, labelling the application “an abuse of process”.
Justice Anderson reserved his decision on the remainder of the former partner’s leave for appeal application and put a temporary suppression order in place on the dismissed evidence until he delivers judgment.
Ms Bishop on Thursday revealed there were 876 defendants, including the former EY partner, in a Supreme Court of NSW case filed by a former client with many claims similar to those the tax office is making against him
The former client is suing the ex-partner and the EY partnership – which was 876 people when the action was filed in 2022 – over the tax exploitation scheme.
“EY is defending the claim and has filed a cross claim against the former partner. As the matter is before the courts we’re unable to provide further comment,” an EY spokesman said.
The Supreme Court has continually denied the Financial Review’s applications on public interest grounds for access to court documents related to the case.
In October, the Financial Review revealed that the Commissioner of Taxation was suing the ex-partner in the Federal Court, alleging that he promoted three so-called Tax Loss Access Schemes to seven clients between November 2016 and April 2021.
At the time, a temporary suppression order stopped EY from being named. Greens senator Barbara Pocock sent 17 questions to each of the big four firms following the Financial Review’s initial reporting.
The news piled pressure on the big consulting firms following the PwC tax leaks scandal. This led EY to apply to the Federal Court to vary the suppression orders so it could be named. EY is not being sued by the ATO and joined the Financial Review as an intervenor in the case.
By November, EY Australia outed itself as the employer of a former partner and revealed he took more than $700,000 in unauthorised payments related to the allegations. The ATO had sent a notice to EY in June 2021. EY sacked the partner in August 2022.
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Max Mason covers insolvency, courts, regulation, financial crime, cybercrime and corporate wrongdoing. A Walkley Award winner, Max's journalism has also received awards from the National Press Club of Australia, the Kennedy Awards and Citibank. Connect with Max on Twitter. Email Max at max.mason@afr.com
Neil Chenoweth is an investigative reporter for The Australian Financial Review. He is based in Sydney and has won multiple Walkley Awards. Connect with Neil on Twitter. Email Neil at nchenoweth@afr.com.au
