When a Strategy Becomes the Risk: Lessons from Chevron
Home › Case Studies › Case Law Library › Commercial & Business Cases › Tax Law › Chevron Australia Holdings Pty Ltd v Commissioner of Taxation [2017] FCAFC 62
Published: 18 November 2025 | Reviewed: 18 November 2025
(3-minute read)
Case Summary - What Happened
In Chevron Australia Holdings Pty Ltd v Commissioner of Taxation [2017] FCAFC 62, the Court examined a multibillion-dollar internal loan that generated substantial tax deductions in Australia. The loan carried a 9% interest rate, was unsecured, had no financial covenants, and could be drawn at the lender’s discretion.
The Court found that this structure only made sense inside a related-party group, not between independent parties. Transfer pricing law required the Commissioner to replace Chevron’s internal strategy with the rate and terms an independent borrower could realistically obtain.
Allsop CJ stated the key principle:
“The purpose of Division 13 is to bring a transaction from a state influenced by lack of independence to one reflective of arm’s-length dealing.”
In short: their chosen strategy became their exposure.
Why It Still Matters -
Early Strategy Is Often the Client’s Highest Risk
Chevron’s error was not paperwork. It was strategy: adopting an internal structure without pressure-testing it against independent, real-world alternatives.
The same pattern appears in everyday civil disputes:
early decisions lock in the entire cost and timeline
a single pathway is chosen before alternatives are explored
clients select a courtroom lawyer based on urgency, charisma, or marketing
strategy and cost expectations are set by one voice, not compared across several
correcting course later becomes expensive or impossible
Clients face their greatest vulnerability at the very start, before they understand their options, and before they have meaningful comparative data.
Chevron shows what happens when strategy is chosen without independent tension or comparison: the consequences arrive years later.
How to Avoid the Same Trap —
Independent Strategy & Tendering, One Fixed Fee
The clearest parallel between Chevron and civil litigation is strategic independence. Chevron’s loan terms made sense internally but collapsed when tested against an external benchmark.
Clients often encounter the same risk when selecting their first litigation lawyer.
Clean Law is designed to remove that early strategic blind spot.
For one fixed fee, Clean Law:
Analyses the dispute independently, without being the prospective courtroom lawyer.
Prepares a neutral summary that captures issues, risks, and options.
Obtains multiple tenders from independent courtroom lawyers.
Ensures each tender includes:
a complete legal strategy
scope and stage breakdown
cost estimates and assumptions
timing and evidentiary needs
Because Clean Law takes no referral fees, shares no profits, and operates under Law Society trust-account audits and ACNC-governed transparency, the process remains independent and publicly accountable.
Why this safeguard exists
Clients often consider this safer because:
they receive competing strategies, not a single recommended path
they compare costs before committing, not after
each lawyer competes on clarity and reasoning, not marketing
strategy is chosen through analysis rather than urgency or guesswork
the client pays once, not three times, before engaging any lawyer
This aligns squarely with the caution in Chevron: a strategy formed without independent contrasts can become the very source of legal risk.
Reflection
Chevron is a tax case, but its lesson is universal: internal strategy without external comparison can quietly grow into legal exposure.
The safest moment to introduce independence is day one, before any courtroom lawyer is hired, and before the dispute’s path becomes fixed.
Through a fixed-fee, multiple-tender process, clients gain both strategic clarity and independence at the moment it matters most.
The Independent Tendering System (How the Early Strategy Safeguard Works)
Clients often want to see how this one-fee, multi-tender process is conducted and how independence is safeguarded.
You can explore it here:
Some clients prefer to talk through their situation privately before seeking tenders. A short, confidential conversation can help clarify the options available and whether further steps are appropriate.
Start with a free confidential appointment
By Nicky Wang
Principal Solicitor
Legal Liaison Ltd (trading as Clean Law)
Prepared in accordance with public-interest governance,
annual Law Society trust-account audits, and ACNC-reported standards.
Disclaimer: This page is intended to provide general information only and is not legal advice. The contents may not reflect the most current legal developments and do not take into account your individual circumstances. You should not act or refrain from acting on the basis of this information without obtaining legal advice tailored to your situation.
