Mixed messaging in PwC partner Richard Gregg’s dismissal, court told

PwC partner Richard Gregg was removed for a failure to properly supervise staff, the firm claimed in a court case that could set a precedent for other tax scandal dismissals.

In limbo PwC partner Richard Gregg was removed for a failure to properly supervise staff, the firm has claimed in a court case that could set a precedent for how it handles other tax scandal dismissals.

Mr Gregg also had his bonus docked by $100,000 in 2021 for deals that went wrong, the NSW Supreme Court has been told.

The court is to decide whether PwC Australia’s attempt to extricate its tax partner from the partnership was within the bounds of the firm’s rules.

The battle that may set a precedent for PwC as it moves to respond to a tax scandal surrounding at least 63 names.

Mr Gregg, a veteran of PwC and a partner since 2013, rushed to the Supreme Court in a bid to block his removal from the partnership last week.

He had taken aim at 11 members of PwC’s governance board, including the firm’s new chief executive Kevin Burrowes, who started running the local operation of the professional services giant on Monday.

On Thursday the court was packed with a high-powered bevy of silks as both sides brought in some of Sydney’s most expensive counsel to argue their cases.

Appearing for Mr Gregg, barrister Arthur Moses, SC claimed PwC had not properly detailed the reasons for his removal from the partnership when it gave Mr Gregg a letter on July 3.

Mr Moses said PwC barely detailed its claims against him, and argued the firm had later confirmed he was not being removed because of the tax scandal but instead due to a failure to properly supervise staff.

He also told the court PwC directed Mr Gregg to two incidents in 2021 that saw him penalised $100,000 from his bonus for the year over some tax research and development incentive deals that went wrong.

Richard Gregg, right, with his lawyer Rebekah Giles at the Supreme Court in Sydney. Picture: Britta Campion

Mr Moses said it was unclear what reasons had been provided to remove Mr Gregg and if the court allowed PwC to use any reasons then it risked a “Lord of the Flies situation” which could see allegations thrown around.

“It is apparent that in effect what would be required by the plaintiff here is to box at shadows,” he said.

However, PwC claimed Mr Gregg had been told of the reasons for his removal and the firm still held the right to terminate his partnership. Matthew Darke SC, appearing for PwC, said the firm only needed to show Mr Gregg’s removal was in the interests of the firm.

“All that is required is a statement of management’s reasons,” he said. “If management’s reasons are bad, the partner can take that up in submissions and the board is bound to consider that in good faith.”

The case hinges on how Justice David Hammerschlag views PwC’s reasons for removing Mr Gregg and whether they fell within proper construction of the firm’s partnership agreement.

“There is only one question of construction of one word and that word is reasons and if what that document contains is reasons as construed within clause 23.3a (of PwC’s partnership agreement) then it’s good,” Justice Hammerschlag said

He reserved a decision, noting it was “readily apparent I have absolutely no idea what the answer to this is”.

“I will give you a speedy judgment. What that means, I don’t really know.”

PwC served Mr Greg with notice on July 3 that it was going to remove him from the partnership after claiming he was linked to a tax scandal that has seen the firm shed its government consulting business and place a number of partners on leave.

The firm has faced weeks of public pressure after parliament published 144 pages of emails showing many members of the firm dealt with confidential government tax briefings.

PwC’s former head of international tax Peter Collins was struck off as a registered tax agent by the Tax Practitioners Board in December after he was found to have shared the confidential data.

Originally published as Mixed messaging in PwC partner Richard Gregg’s dismissal, court told