KEY POINTS:
Arguments close in the High Court today over whether a lawyer who helped design a $3 billion tax avoidance scheme should be compensated for being dropped by Westpac.
Clive Bradbury is claiming $5.4 million plus interest payments from the trading bank, which he claims ruined his business when it dumped him as legal counsel following the Trinity tax avoidance case.
Bradbury claims it was hypocritical of Westpac to drop him over an alleged tax avoidance scheme, when it was in an ongoing tax avoidance dispute with Inland Revenue.
But Westpac says aside from the fallout surrounding Trinity, it ended the relationship with Bradbury and partner Garry Muir's law firm Bradbury & Muir because it had irretrievably broken down.
Bradbury and Muir were the architects of the 1997 Trinity forestry tax deductions scheme. Last June the Court of Appeal upheld a December 2004 High Court decision that Trinity was "well and truly across the line" on tax avoidance. Bradbury, Muir and others are now appealing to the Supreme Court.
The High Court heard this week that in November 2004 Westpac suspended Bradbury & Muir, after nine years. The suspension came eight days after the pair's names in relation to Trinity were made public.
Three months later, and following the December 2004 ruling on Trinity, the head of Westpac's legal services Richard Willcock formally ended the relationship with Bradbury & Muir.
Bradbury's lawyers have told the court his law firm shaped and expanded its practice around Westpac's needs, to the exclusion of other clients in the banking sector. They say Westpac's action caused Bradbury & Muir to lose most of its legal practice and seriously damaged its reputation.
The Bradbury camp claims it was defamed by a February 2005 briefing paper to the Westpac board which incorrectly referred to the Trinity scheme as tax "evasion".
Westpac says the essence of a solicitor/client relationship is trust. If the client loses that trust it can end the retainer without giving a reason.
It says Bradbury "was entirely the author of his own misfortune" by refusing to communicate responsibly and professionally with the Westpac legal services team. It says he didn't want a relationship with that team; he wanted to continue his arrangement with friend and head of Westpac's asset management group Greg Peebles, with whom he had business interests.
Richard Willcock, group secretary and general counsel for Westpac, told the court the relationship breakdown was exacerbated by communications from Bradbury which he described as "threatening" and "inappropriate".
"Mr Bradbury's refusal to meet with me to discuss the matter or the relationship on first of December is a very strong signal of where we were at in the relationship."
Willcock conceded he should have tried harder to contact Bradbury before dumping the firm.
Ann Sherry, CEO at the time of the Bradbury & Muir axing, told the court she was surprised at the way in which Willcock handled the matter. She thought he should have had a face-to-face discussion with Bradbury and Muir.
TRINITY ROOTS
* 1997: Bradbury & Muir designs the Trinity scheme. Investors in a Douglas fir plantation got a tax holiday by claiming immediate deductions on annual payments of $40,000 that weren't due until 2048.
* 15 November, 2004: Bradbury and Muir's names made public in connection with Trinity.
* 23 November 2004: Westpac suspends Bradbury & Muir.
* December 2004: High Court rules Trinity was tax avoidance.
* February 2005: Westpac dumps Bradbury & Muir
* June 2007: Appeal Court agrees Trinity was tax avoidance
* February 2008: Bradbury claims Westpac owes him and his firm over $5 million in compensation for dumping them.
* February 2008: Westpac still embroiled in a tax avoidance dispute with IRD over "structured financing" deals from the late 1990s. In its last annual report the bank estimated contingent liabilities of as much as $815 million if it loses the case.
