FEDERAL COURT OF AUSTRALIA

Commissioner of Taxation v Iannuzzi (No 3) [2024] FCA 45

ORDERS

THE COURT ORDERS THAT:

1.    The parties are to confer on the form of orders to be made to give effect to these reasons.

2.    Within 14 days of the date of publication of these reasons:

(a)    if the parties can agree on the form of orders to be made, including, if agreement can be reached, on the question of costs or the manner in which any dispute as to costs is to be resolved, they are to provide to the Associate to Markovic J draft orders to be made in Chambers; or

(b)    if the parties cannot agree on the form of orders to be made:

(i)    each party is to provide to the Associate to Markovic J their proposed draft orders including on the question of costs, the manner in which any extant applications for costs are to be dealt with by the Court and for a timetable for the filing and service of affidavits and submissions, not exceeding eight pages in length, in support of and in response to any application for indemnity costs by any of the Applicants (as defined in these reasons); and

(ii)    the proceeding will be listed for case management hearing on 23 February 2024 at 9.30 am AEDT to resolve the form of orders to be made.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

MARKOVIC J:

1    On 25 August 2017 the plaintiff, the Commissioner of Taxation, commenced this proceeding seeking, among other things, an inquiry pursuant to s 536 of the Corporations Act 2001 (Cth) into the conduct of the defendant, David Nicholas Iannuzzi. At that time and leading up to the making of final orders in November 2019, the Commissioner and Mr Iannuzzi were the only parties to the proceeding. The conduct of the proceeding as between the Commissioner and Mr Iannuzzi is described below.

2    On 2 September 2019, after the trial judge, Stewart J, had reserved his judgment in relation to the relief sought by the Commissioner, the Court made orders by consent including relevantly that:

1.    Pursuant to s 601AH(2) of the [Corporations Act] the Australian Securities and Investments Commission (ASIC) forthwith reinstate the registration of each of the following companies:

a)    RC Group Aust Pty Limited (Deregistered) ACN 164 000 462;

b)    Inter Management Group Pty Limited (Deregistered) ACN 105 115 759;

c)    Co-ordinated Transport Solutions Pty Limited (Deregistered) ACN 110 905 774;

d)    Diesel Dan Pty Limited (Deregistered) ACN 127 303 682;

e)    Silverhills Haulage Australia Pty Limited (Deregistered) ACN 128 613 016;

f)    ACN 133 636 414 Pty Limited (Deregistered) ACN 133 636 414;

g)    Fara Logistics (Aust) Pty Limited (Deregistered) ACN 146 285 029;

h)    Machinery Moves Australia Pty Limited (Deregistered) ACN 159 498 254; and

i)    Brisbane Inner City Tilt Tray Services Pty Limited (Deregistered) ACN 159 968 840,

(jointly, the Companies).

2.    Pursuant to s 601AH(3)(d) of the [Corporations Act], upon the reinstatement of the registration of the Companies, Ms Gayle Dickerson and Mr Stephen Vaughan be appointed as the joint and several liquidators of each of the Companies.

3.    Pursuant to section 601AH(3)(d) of the [Corporations Act], when calculating the period ending three years after the relation-back day for any of the Companies, the period between the date of the deregistration of the relevant company and the date of these orders shall be disregarded.

4.    Pursuant to section 601AH(3)(d) of the [Corporations Act], if proceedings are commenced by Ms Dickerson and Mr Vaughan as the joint and several liquidators of any of the Companies in reliance upon Order 3, Ms Dickerson and Mr Vaughan must cause a copy of these Orders to be served upon the defendant with the initiating process by which the proceedings are commenced and the defendant shall thereafter be at liberty to apply to this Court to vary or discharge Order 3 in relation to itself.

(Reinstatement Orders).

3    Since the Reinstatement Orders were made, Gayle Dickerson and Stephen Ernest Vaughan (Liquidators) in their capacity as joint and several liquidators of the Companies (as defined in the Reinstatement Orders) have, in reliance upon Order 3 of the Reinstatement Orders, commenced a number of proceedings in the Supreme Court of New South Wales. Upon doing so, in compliance with Order 4 of the Reinstatement Orders, they served a copy of those orders on the defendants to the proceedings.

4    Having done so, pursuant to the liberty granted by Order 4 of the Reinstatement Orders, four groups of defendants to the various proceedings commenced by the Liquidators in the Supreme Court have filed interlocutory applications in which they seek, in effect, that Order 3 of the Reinstatement Orders be discharged or, in the alternative, that it be varied so it does not operate in respect of claims made against the relevant defendants or, in the further alternative, that Order 3 be varied so that it does not operate as against the relevant defendants in relation to claims by any of the Companies as defined in Order 3 of the Reinstatement Orders or the Liquidators under Div 2 of Pt 5.7 of the Corporations Act.

5    Interlocutory applications seeking orders to that effect have been filed by:

(1)    Runcity Pty Ltd, Calabro Real Estate Pty Ltd, Interfreight Transport Pty Ltd (Interfreight 2), Diesel Dan (NSW) Pty Ltd (Diesel Dan 2), John Tabuso, Mirjana Tabuso and Maurizio Ligori (Tabuso Application). Since the filing of the interlocutory application, a liquidator has been appointed to Calabro Real Estate. Accordingly, the orders sought are pressed only by the balance of the applicants to the interlocutory application who I will refer to collectively as the Tabuso Applicants;

(2)    Katherine Khalil and Kito Investments Pty Ltd who I will refer to collectively as the Kito Applicants (Kito Application);

(3)    Michael Borg, Borg Family Pty Ltd and 746 Greendale Road Greendale Pty Ltd who I will refer to collectively as the Borg Applicants (Borg Application); and

(4)    Givana (Holdings) Pty Ltd and Givana Pty Ltd who I will refer to collectively as the Givana Applicants (Givana Application).

Although the Borg Applicants and the Givana Applicants have each filed an interlocutory application they are represented by the same solicitors and counsel and make the same submissions. I will refer to those applicants collectively as the Borg & Givana Applicants and to the four applicant groups collectively as the Applicants.

6    On 9 December 2022 the Commissioner filed an interlocutory application (Commissioner’s Application). That application only arises for consideration in the event that any of the Applicants are successful in having Order 3 of the Reinstatement Orders discharged or varied. In that event, the Commissioner seeks:

(1)    an order pursuant to s 601AH(3)(d) of the Corporations Act to the effect that, when calculating the period ending three years after the relation-back day for any of the reinstated companies, the period between the date of the deregistration of the relevant company and 2 September 2019 be disregarded;

(2)    in the alternative an order pursuant to s 536(1) of the Corporations Act (now repealed) to the effect that, when calculating the period ending three years after the relation-back day for any of the reinstated companies, the period between the date of the deregistration of the relevant company and 2 September 2019 be disregarded or, alternatively, an order to the same effect; and

(3)    an order that if an order in the terms of [6(1)] and/or [6(2)] above is made, that order operate nunc pro tunc with effect from 2 September 2019.

BACKGROUND

Phoenix taskforce established

7    In 2014 a Phoenix Taskforce was established. The agencies involved in the taskforce included the Australian Taxation Office (ATO) and the Australian Securities and Investments Commission (ASIC) as well as other government agencies. As described by Michael Hughes, a partner of MinterEllison, the solicitors for the Commissioner, the aim of the inter-agency operation was to detect, deter and disrupt certain behaviours including phoenixing activity, incorrect tax refund claims, taxation irregularities and money laundering, by investigating, among other things: tax agents promoting and facilitating this behaviour; insolvency practitioners facilitating this behaviour; and companies and individuals profiting from this behaviour.

The ATO commences an investigation into Mr Iannuzzi

8    A focus of the Commissioner’s investigation was on potential phoenixing activity in which Mr Iannuzzi was involved arising from his relationship with Banq Accountants and Advisors Pty Limited (in liquidation) trading as Banq Accountants.

9    In 2015 the ATO commenced an investigation into Mr Iannuzzi’s conduct in his capacity as external administrator of various entities of which the Deputy Commissioner of Taxation was, or may be, a creditor.

10    According to a document titled “Agreed Statement of Facts” which was tendered by Mr Iannuzzi in this proceeding in the circumstances described at [24] and [26] below and treated as a statement of concessions:

(1)    at all relevant times Mr Iannuzzi was the sole director of Veritas Advisory Services Pty Ltd which, among other things, carried on a business of providing insolvency related services;

(2)    prior to his death on 16 June 2015 Murray Godfrey was also a director of Veritas Advisory;

(3)    Mr Iannuzzi inherited the relationship with Banq Accountants from RMG Partners, Mr Godfrey’s former business;

(4)    Banq Accountants was a referring entity to Mr Iannuzzi. It provided Mr Iannuzzi’s contact details to a director, debtor or creditor for the purpose of seeking specialist insolvency advice which may result in an appointment for Mr Iannuzzi; and

(5)    Mr Iannuzzi received referrals from Banq Accountants to act as liquidator in a creditors’ voluntary liquidation for at least 28 companies.

The Liquidation and deregistration of RC Group and the Tabuso Group of companies

11    On 18 August 2014 RC Group Aust Pty Ltd was placed into liquidation and Messrs Iannuzzi and Godfrey were appointed as liquidators.

12    On 8 December 2014 the following companies were placed into liquidation:

(1)    Inter Management Group Pty Ltd;

(2)    Co-ordinated Transport Solutions Pty Ltd;

(3)    Diesel Dan Pty Ltd (Diesel Dan 1);

(4)    Silverhills Haulage Australia Pty Ltd;

(5)    ACN 133 636 414 Pty Ltd (formerly known as Interfreight Transport Solutions Pty Ltd) (Interfreight 1);

(6)    Fara Logistics (Aust) Pty Ltd;

(7)    Machinery Moves Australia Pty Ltd; and

(8)    Brisbane Inner City Tilt Tray Services Pty Ltd,

collectively Tabuso Group.

13    Messrs Iannuzzi and Godfrey were appointed as liquidators of each of the Tabuso Group companies.

14    RC Group and each of the Tabuso Group companies were deregistered on the dates set out below:

(1)    RC Group on 27 December 2015;

(2)    Machinery Moves on 29 May 2015;

(3)    Silverhills Haulage and Inter Management on 29 December 2015;

(4)    Co-Ordinated Transport, Diesel Dan 1, Fara Logistics and Brisbane Inner City Tilt Tray on 30 December 2015; and

(5)    Interfreight 1 on 8 May 2016.

The Commissioner commences this proceeding against Mr Iannuzzi

15    It was agreed between the parties that the Commissioner first retained MinterEllison to act for him on 1 April 2016. Mr Hughes explains that he was retained to advise and act in connection with the Commissioner’s complaints and concerns about Mr Iannuzzi’s conduct.

16    As set out above, on 25 August 2017 the Commissioner commenced this proceeding against Mr Iannuzzi as defendant by filing an originating process. On 3 May 2019 the Commissioner filed an amended originating process, the amendments to which only affected Sch B to the originating process. In his amended originating process the Commissioner sought:

(1)    interlocutory relief including, among other things:

(a)    an order for an inquiry pursuant to s 90-10 of the Insolvency Practice Schedule (Corporations), being Sch 2 to the Corporations Act (IPS) or alternatively s 536(1) of the Corporations Act (now repealed) (Inquiry Application) into the external administration by Mr Ianuzzi of each of the companies listed in Sch A to the amended originating process; and

(b)    orders pursuant to s 601AH of the Corporations Act directing ASIC to reinstate the registration of RC Group and to appoint Robyn Erskine as its liquidator; and

(2)    final relief including, among other things:

(a)    orders pursuant to s 90-50 of the IPS or alternatively s 536(1) of the Corporations Act (now repealed) that Mr Iannuzzi cease to be the liquidator of the companies listed in Pt 1 of Sch A to the amended originating process and that a person other than Mr Iannuzzi be appointed liquidator to each of those companies; and

(b)    orders pursuant to s 90-15 of the IPS or alternatively s 536(1) of the Corporations Act (now repealed) that:

(i)    Mr Iannuzzi’s name be removed from the register of liquidators maintained pursuant to the Corporations Act;

(ii)    Mr Iannuzzi be restrained for a period of 10 years, or such other period as the Court thinks fit, from applying to be a registered liquidator under the Corporations Act; and

(iii)    Mr Iannuzzi be restrained for a period of 10 years, or such other period as the Court thinks fit, from holding the office of trustee in bankruptcy, liquidator, provisional liquidator, voluntary administrator, administrator of a deed of company arrangement, or as a receiver or other controller of property of any corporation, as that term is defined in s 57A of the Corporations Act.

17    On 23 April 2018 Perram J heard the Inquiry Application. On 16 July 2018 his Honour made an order, among others, that the Inquiry Application be heard at the same time as the hearing of the Commissioner’s claims for final relief: see Commissioner of Taxation v Iannuzzi [2018] FCA 1053.

18    On 1 May 2019 Stewart J fixed the hearing of the Inquiry Application and any subsequent inquiry for three days commencing on 17 July 2019.

19    As part of their preparation for hearing the Commissioner and Mr Iannuzzi exchanged lists of affidavits and other documentary evidence on which they intended to rely as well as objections to each other’s evidence.

20    On 5 July 2019 Johnson Winter & Slattery (JWS), the solicitors for Mr Iannuzzi, sent an email to MinterEllison attaching a letter of the same date (5 July 2019 Letter) and draft orders. The 5 July 2019 Letter included (as written):

2    Our client’s health has deteriorated. In those circumstances, and given the ongoing toll that the Proceeding is taking on our client, he is prepared to consent, without admission, to the orders sought in the Amended Originating Processed filed on 3 May 2019 (OP) as appropriately modified in the form enclosed with this letter.

3    As to the modifications, we note that prayer 5 of the OP seeks compensation for each of the companies the subject of the Proceeding (Companies) for any loss sustained because of our client’s alleged breach of duty as a liquidator. Our client does not consider that your client has put evidence before the Court which would support an order of compensation in respect of any of the Companies. Further, the Court will not be able to quantify the alleged loss suffered by the individual Companies on the basis of the evidence before the Court. As such, our client would be willing to consent to orders that the registration of any of the Companies of your client’s choosing be reinstated and that a liquidator of your client’s choice be appointed to any of the Companies, who may then pursue compensation.

4    While our client considers that the Court would be able to make the orders enclosed on the basis of the evidence currently before it, we understand that you may consider that an agreed statement of facts is required. Accordingly, we are in the process of preparing one and, to that end, we ask that you provide us with a word version of your client’s OP.

(Emphasis in original.)

21    On 9 July 2019 MinterEllison responded to the 5 July 2019 Letter. As to the suggestion made by Mr Iannuzzi that certain companies the subject of the proceeding be reinstated, that letter included:

Finally, our client welcomes your client’s offer to consent to orders reinstating Companies of our client’s choosing and to appoint new liquidators to these entities. However, and for the avoidance of any doubt, our client does not consider that such orders would obviate the need for any compensation to be paid by your client. As you and your client would be aware, the ability of any replacement liquidator to pursue compensation would no doubt be contingent upon our client expending further time and expense in dealing with, funding and indemnifying any replacement liquidator to pursue that claim, with which the Court is currently seized within these proceedings, and as to which our client will invite the Court to take a view concerning your client’s conduct, as a whole, over all of the liquidations which are the subject of these proceedings.

22    Thereafter the parties exchanged further correspondence including in relation to a preliminary hearing of the proceeding scheduled for 15 July 2019 at 2.15 pm for the purpose of addressing and determining objections to the tender of evidence.

23    On the morning of 15 July 2019 JWS communicated with the Court on behalf of the parties notifying it that Mr Iannuzzi had withdrawn his objections to the tender of the Commissioner’s evidence but requesting that the proceeding remain listed at 2.15 pm that afternoon to address other matters.

24    At 2.15 pm on 15 July 2019 the proceeding was listed before Stewart J. At that time the Commissioner handed up a document titled “Agreed Statement of Facts” which had been served by Mr Iannuzzi on the Commissioner but which was not agreed between the parties. As described by Mr Hughes, this document contained a statement of admissions made by Mr Iannuzzi for the purposes of the Court making certain orders sought by the Commissioner in the amended originating process.

25    On 16 July 2019, at the request of the Court, the parties each provided their written submissions in relation to relief. MinterEllison also provided the Court with draft orders to be made by consent.

The hearing before Stewart J

26    The Inquiry Application was listed for hearing commencing on 17 July 2019. At that hearing:

(1)    the Agreed Statement of Facts was tendered and marked as an exhibit. While it was titled “Agreed Statement of Facts” it was not agreed to by the Commissioner and was, as set out above, treated as a statement of concessions or admissions made by Mr Iannuzzi for the purpose of the proposed orders;

(2)    all of the documents referred to in the Agreed Statement of Facts were tendered;

(3)    all of the documents referred to in the Commissioner’s submissions on relief which were not referred to in the Agreed Statement of Facts were tendered, save for a psychologist’s report served by Mr Iannuzzi on the Commissioner;

(4)    a document titled “Admission made by the defendant relevant to paragraph 17 of the Commissioner’s submissions” was tendered; and

(5)    at the commencement of the hearing senior counsel appearing for the Commissioner, Mr McLure SC, provided the Court with a revised form of the proposed draft consent orders which had been amended to include two additional proposed orders at paragraphs 5 and 6. The additional orders concerned reinstatement of the registration of certain companies (Draft Consent Orders).

27    The Agreed Statement of Facts was a detailed document which included a concession by Mr Iannuzzi that he had “in relation to each of the companies subject of the proceeding failed to exercise reasonable care and diligence in his conduct of the relevant liquidation or administration”: at [14]. Relevantly the companies included RC Group and the Tabuso Group.

28    In relation to RC Group the Agreed Statement of Facts included (omitting document identification numbers):

(1)    by way of introduction that:

104.    At all material times, RC Group was owned and controlled by George Khalil, brother of Fred Khalil.

105.    On 18 August 2014, the members of RC Group resolved to wind up the company voluntarily and appoint Iannuzzi and Godfrey as joint and several liquidators.

(2)    under the heading “Inadequate disclosure in [declaration of independence and relevant relationships and declaration of indemnities (DIRRI)]”:

107.    On 25 August 2014, Iannuzzi circulated the First Report to Creditors in respect of RC Group, which amongst other things, annexed a DIRRI signed by Iannuzzi.

108.    The DIRRI:

    …

d)    failed to disclose the Banq Referral Relationship in circumstances where the Company’s director was the brother of Fred Khalil of Banq; and

e)    failed to disclose that Iannuzzi and Godfrey had received a number of referrals from Gino Cassaniti, an employee of RC Group, and director of Original Banq.

(3)    under the heading “Investigations conducted by liquidators and inadequate disclosure to creditors” that:

(a)    in about August 2014 the Commonwealth Bank of Australia (CBA) informed Veritas Advisory that RC Group held two accounts with it, details of which were provided, and that Messrs Iannuzzi and Godfrey:

failed in August 2014, or at any time before August 2016 to obtain the bank statements referred to in the preceding paragraph from the CBA. In failing to do so, Iannuzzi and Godfrey failed to identify or investigate transactions totalling more than $6 million, including more than $888,885.00 in cash withdrawals, which were possibly unfair preferences within the meaning of s 588FA of the Corporations Act and therefore possibly voidable transactions within the meaning of s 588FE of the Corporations Act made by RC Group to various entities within the period 6 months before the relation-back day …

        (at [110]-[111]);

(b)    on 1 September 2014 Mr Iannuzzi chaired the first meeting of creditors of RC Group during which two issues were raised, one concerning whether there were other companies of which the director had been a director which had been placed into liquidation and the other concerning why all business activity statements (BAS) for RC Group had been lodged at the same time, both of which Mr Iannuzzi said he would investigate: at [112];

(c)    in his final report to creditors Mr Iannuzzi failed to disclose confirmation of the two bank accounts held by RC Group, failed to report to creditors in relation to companies of which the director had been a director and which had been placed into liquidation in the last seven years and failed to report on any investigations undertaken in relation to lodgement of the BAS at the same time: at [120]; and

(d)    on 28 August 2015 the Deputy Commissioner sent a letter to Mr Iannuzzi advising him of his concerns with Mr Iannuzzi’s conduct of the liquidation of RC Group and on 10 September 2015 Mr Iannuzzi responded to that letter but, in doing so, failed to disclose correspondence which had passed between his office and the CBA: at [121]-[123].

29    In relation to the Tabuso Group the Agreed Statement of Facts included:

(1)    that at all material times the companies in the Tabuso Group were owned by Mr and Mrs Tabuso or entities associated with them: at [173];

(2)    under the heading “Conduct of liquidations” that:

(a)    on 16 December 2014 Mr Iannuzzi approved the transfer of a phone line from Inter Management Group to Interfreight 2: at [177];

(b)    a reasonably competent liquidator in Mr Iannuzzi’s position would reasonably have suspected the possibility that the persons in control of the Tabuso Group companies were involved in activity to deliberately liquidate the companies in the group and transfer the assets of the group to a new entity, in the circumstances set out relating to the phone line transfer: at [178];

(c)    a reasonably competent liquidator in Mr Iannuzzi’s position would have suspected that some or all of the proofs of debt provided by Banq Accountants on behalf of Interfreight 2 and Diesel Dan 2 in relation to each of the Tabuso Group companies warranted further investigation in the circumstances there set out including that Interfreight 2 and Diesel Dan 2 had been registered on 5 September 2013, a date after the Tabuso Group companies had ceased trading: at [183];

(d)    the proofs of debt submitted by Banq Accountants were admitted to proof by Mr Iannuzzi for the amounts stated, except that those lodged by Diesel Dan 2 were admitted as debts owing to Diesel Dan 1 and Mr Iannuzzi did not disclose to creditors any investigations which he undertook to establish the veracity of the proofs of debt: at [184];

(e)    in his DIRRI attached to the first report to creditors Mr Iannuzzi failed to disclose his professional relationship with Banq Accountants and failed to provide an updated DIRRI to disclose that relationship: at [185]-[186], [190]; and

(f)    in his final report to creditors Mr Iannuzzi failed to provide explanations for a number of matters as set out in the Agreed Statement of Facts: at [191]-[195].

30    In the course of the hearing on 17 July 2019 in considering paragraph 5 of the Draft Consent Orders, which concerned reinstatement of particular companies, the following exchange took place between the Court, Mr McLure SC and senior counsel for Mr Ianuzzi, Mr Pike SC (as his Honour then was):

His Honour:     Yes. There was a point that I overlooked and that’s you were going to explain to me order 5.

Mr McLure:    Yes. So at paragraph 6 of the originating process, the Commissioner seeks orders for compensation – it’s paragraph 5? All right. Sorry. Thank you. Your Honour can see that there is no order agreed for the compensation as part of this process. The alternative avenue to seek compensation is to have liquidators appointed to these companies, some of them have to be reregistered, and then for such newly appointed liquidator to pursue Mr Iannuzzi for compensation, or, for that matter, pursue anyone else for compensation.

What we are asking your Honour to do, by consent, is for that topic to be stood over until 30 August 2019 so that the Commissioner can give consideration to whether or not he would wish to fund that activity, bearing in mind there’s an issue about what would be the likely proceeds to be obtained from pursuing those actions, whether it be the ability of Mr Iannuzzi to satisfy a judgment or some other potential respondent, and we would also have to identify who an appropriate liquidator would be. And as to paragraph 6, we would urge your Honour to make that order to signify the court’s interest in ensuring that these kind of matters are brought to the attention of people who are involved, or agencies that are involved, in the regulation of insolvency practitioners.

His Honour:    I’m not sure that I have schedule A to the amended originating process.

…

Mr McLure:    Well, schedule A is the list of the companies and schedule B is the –

…

His Honour:    But, now, is that relief – so the relief covered by paragraph 5 of the amended originating process is for compensation for the defendant – it’s that the defendant compensate each of the companies. Yes. In order for that to happen, the companies would have to be – those that have been deregistered would have to be reregistered.

Mr McLure:    Yes. Yes.

His Honour:    So, I mean, my question is really twofold, I suppose. One is: is the foreshadowed relief of your order 5, which is to say the reinstatement of the registration of the companies listed in schedule A, is that covered by the process in this case? And then, secondly, is it competent for me to make that order in this case or are there other parties that needed to have been notified or anything else to have occurred?

Mr McLure:    There would certainly be some other procedural steps that would need to occur. For example, in terms of appointing new liquidators, we would need to obtain consents and so on. Would your Honour excuse me one moment. So there’s steps that we would need to take to make..

His Honour:    But that would be revisited on – or visited on a future occasion.

Mr McLure:    Yes.

His Honour:    Yes.

Mr McLure:    But in terms of power, that’s, we submit, plainly within both section 536 of the Corporations Act, in terms of making any order necessary to give effect to the objects of that provision. But we need not trouble your Honour with that issue today. We’re just asking your Honour to defer that issue until 30 August 2019, by which time we will have made some decisions, that is the Commissioner will have made some decisions about what, if anything, he wants to do about that.

His Honour:    And does that – that deferral doesn’t depend on me having made a decision on paragraphs 1 to 4 and given reasons for it. So, in other words, I can make order 5 now.

Mr Pike:    Yes.

Mr McLure:    That’s right. And …

His Honour:    And I shouldn’t wait, because it may be that my reasons, or, indeed, my orders, don’t come until after 30 August or - - -

Mr McLure:    That’s right. I think Mr Pike will correct me, but I think we both agree that that’s an order your Honour could make by consent, without having been satisfied about the underlying material.

His Honour:    It’s a case management order, really. Yes. Yes. Thank you, Mr McLure. Mr Pike.

Mr Pike:    May it please the court, can I just then address, just briefly, before I come back to a few other matters, and hopefully I will be able to be brief, just the orders that my learned friend was just addressing. ...

In relation to order 5, as we understand what is contemplated by that is, rather than the Commissioner seeking compensation in these proceedings, as was originally proposed, what will occur is that the Commissioner will consider which of the companies he wishes to have reinstated, in other words and new liquidators appointed, that will occur as part of these proceedings and then the new liquidator, once appointed, will determine issues such as whether claims should be proceeded, including against my client or otherwise. So your Honour won’t need – once order 5 is made, and we would say your Honour can do that now, then once orders for reinstatement, such as they are necessary, are made at a future time, that will be done with any issue of compensation in these proceedings.

    (Emphasis added.)

31    At the conclusion of the hearing Stewart J reserved judgment on the question of the relief sought in paragraphs 1 to 4 of the Draft Consent Orders and stood over the proceeding to 3 September 2019 for case management in relation to the making of orders for the reinstatement of registration of the companies contemplated by paragraphs 5 and 6 of the Draft Consent Orders.

Events leading up to and the making of the Reinstatement Orders

32    On 30 August 2019 MinterEllison sent a letter to JWS which included (as written):

As you will recall, on the last occasion his Honour noted that the listing on 3 September 2019 would be for case management in relation to the making of orders for the reinstatement of the registration of the companied listed in Schedule A of the Amended Originating Process unless the proposed orders were by consent and the parties were able to satisfy his Honour that the making of those orders was justified.

In light of his Honour’s comments, we are instructed to give notice to your client that our client intends to seek the reinstatement of RC Group and the Tabuso Group of Companies, and the appointment of Ms Gayle Dickerson of KPMG as liquidator of these entities upon reinstatement, in accordance with the enclosed draft short minutes of order.

Could you please confirm by 10 am on 2 September 2019 whether your client consents to these draft short minutes of order?

33    The Commissioner’s draft orders enclosed with MinterEllison’s letter sought reinstatement of the registration of the RC Group and the companies in the Tabuso Group, the appointment of Ms Dickerson as liquidator of the reinstated companies, that ASIC be provided with a copy of the orders and that there be liberty to apply on two days’ notice. The proposed draft orders did not seek any order to the effect of Order 3 of the Reinstatement Orders.

34    By email sent at 1.22 pm on 2 September 2019 MinterEllison sought an urgent response to its 30 August 2019 letter. JWS responded later that afternoon noting that its client was prepared to consent to the Commissioner’s proposed orders, that he was also prepared to consent to “the attached orders” and querying whether the Commissioner was prepared to consent to orders in the form of the “attached orders”. The “attached orders” amended the form of the Commissioner’s proposed orders and introduced for the first time proposed orders in the form of Orders 3 and 4 of the Reinstatement Orders.

35    By email sent at 4.02 pm on 2 September 2019 the Commissioner agreed to the orders in the form proposed by Mr Iannuzzi referred to in the preceding paragraph. In its email MinterEllison noted that there would be a joint appointment of Ms Dickerson and Mr Vaughan as liquidators, provided further amended orders reflecting that change and informed JWS that the Commissioner wished to provide the proposed orders to the Associate to Stewart J with submissions in the form attached. JWS consented to that course on Mr Iannuzzi’s behalf and provided a signed copy of the proposed orders by return email.

36    Later on 2 September 2019, prior to the making of the Reinstatement Orders, MinterEllison sent an email to the Associate to Stewart J, copying in JWS, attaching the Commissioner’s three page submission in support of the proposed orders. Those submissions addressed the requirements of s 601AH(2) of the Corporations Act, namely the Commissioner’s standing as a “person aggrieved” and the factors which the Court may take into account in considering whether it is just that the registration of a company be reinstated. The submissions focussed (at [5]) on Mr Iannuzzi stating that:

The Commissioner submits that the reinstatement of RC Group and each of the Tabuso Group companies is just in the following circumstances:

(a)    Prior to RC Group and the Tabuso Group of companies being deregistered, the defendant was appointed as liquidator of each of these companies. In this regard, the Statement of admissions made by the defendant for the purposes of this proceeding and provided to the Court on 15 July 2019 (Statement of Admissions), contains a number of admissions concerning the defendant’s negligence in carrying out his duties as external administrator of these companies prior to their deregistration, including, by way of example, failing to investigate in excess of $6 million in potential uncommercial transactions in relation to RC Group, including more than $1.3 million in cash transactions.

(b)    The reinstatement of the companies identified is necessary in order for any claims for compensation against the defendant to be pursued for the benefit of the creditors of these companies. For this purpose, the draft consent orders include orders providing for Ms Gayle Dickerson of KPMG, a registered liquidator, to be appointed as the liquidator of RC Group and each of the Tabuso Group of companies upon reinstatement.

(c)    The defendant, as the person likely to be prejudiced by the reinstatement of the companies, has been notified of, and consents to, the orders for reinstatement of these companies.

(d)    The public interest weighs in favour of reinstatement in circumstances where the new liquidator’s pursuit of any such claims against the defendant will not only potentially assist the creditors of the companies, but also assist in generally deterring other registered liquidators from engaging in misconduct.

(Emphasis in original.)

Mr Iannuzzi did not file or serve any written submissions in support of the proposed orders.

37    On 2 September 2019 by consent between the Commissioner and Mr Iannuzzi the Court made the Reinstatement Orders. On the evening of 2 September 2019 the Associate to Stewart J sent an email to the solicitors for the Commissioner and Mr Iannuzzi stating:

His Honour was satisfied that the Commissioner is a person aggrieved and that it is just that the Companies registration be reinstated and has accordingly made the attached orders in Chambers this afternoon. They will be available on the Commonwealth Courts Portal shortly. The case management tomorrow has been vacated and no attendance is required.

(Emphasis in original.)

38    Pursuant to the Reinstatement Orders, ASIC reinstated the registration of the RC Group and each of the companies in the Tabuso Group and Ms Dickerson and Mr Vaughan were appointed as the joint and several liquidators of each of those companies.

Final orders and reasons for judgment

39    On 7 November 2019 the Court made the following orders by consent:

(1)    Mr Iannuzzi’s name be removed from the register of liquidators maintained pursuant to the Corporations Act;

(2)    Mr Iannuzzi be restrained for a period of 10 years from applying to be a registered liquidator under the Corporations Act;

(3)    Mr Iannuzzi be restrained for a period of 10 years from applying to be registered as a trustee in bankruptcy and from accepting appointment as liquidator, provisional liquidator, voluntary administrator, administrator of a deed of company arrangement, or as a receiver or other controller of property of any corporation, as that term is defined in s 57A of the Corporations Act; and

(4)    Mr Iannuzzi pay the Commissioner’s costs of the proceeding as agreed or assessed.

See Commissioner of Taxation v Iannuzzi (No 2) [2019] FCA 1818.

40    In Iannuzzi (No 2) Stewart J made findings about Mr Iannuzzi’s conduct. By way of example in relation to RC Group and Mr Iannuzzi’s final report to creditors at [75]-[78] his Honour said:

75    Mr Iannuzzi failed to report to creditors in relation to the names of the nine companies that had been placed into liquidation in the last seven years of which the director had also been a director. He also failed to report to creditors on any investigations and findings in relation to why all business activity statements for RC Group had been lodged at the same time and to set out what investigations he had made into the $100,000 proof of debt filed by George Khalil to ensure the claim was legitimate.

76    On 28 August 2015, the Deputy Commissioner of Taxation sent a letter to Mr Iannuzzi raising some of the above failures in the report. On 10 September 2015, Mr Iannuzzi sent a letter in response advising that, amongst other things, the CBA had failed to advise of the bank accounts held by RC Group, despite the earlier correspondence from CBA confirming the existence of two accounts (see above at [67]).

77    Although not admitted by Mr Iannuzzi, I find this to be a breach by him of his duties of diligence and candour. A liquidator acting with the requisite diligence and candour would have taken the necessary care to ensure that the correspondence to the Deputy Commissioner was accurate and would have advised of the bank accounts that he had been advised of by the CBA.

78    Further, a candid liquidator presented with the information by the Deputy Commissioner would have made enquiries of his staff and CBA to investigate the matters raised and would have reported on these investigations to the Deputy Commissioner who was a major creditor.

41    In relation to Mr Iannuzzi’s conduct of the external administration of companies in the Tabuso Group at [125] his Honour concluded that:

Mr Iannuzzi admits that the matters in paragraphs [104]-[124] above reasonably suggest that he has failed to exercise reasonable care and diligence in the exercise of his powers and the discharge of his duties as external administrator of each of the companies in the Tabuso Group. Once again, in my judgement Mr Iannuzzi’s conduct in relation to these companies fell very substantially below the level that the law expects of a liquidator.

42    At [188]-[196] of Iannuzzi (No 2) under the heading “Mr Iannuzzi’s insight with regard to his conduct” Stewart J set out, in effect, a history of the proceeding, albeit through the prism of Mr Iannuzzi’s conduct of his defence, as follows:

188    As indicated, this proceeding was commenced in August 2017. Annexed to the originating process was a schedule in the nature of a pleading setting out more than 90 pages of detailed factual averments on the basis of which it was said that the relief sought was justified. That schedule was subsequently amended, in May 2019, but for the most part the amendments merely added references to documents underpinning the averments and made very few substantive changes.

189    The Commissioner also served affidavits and 10 volumes of documents that had been produced under subpoenas to third parties. However, the attitude taken by Mr Iannuzzi right up to the week of the final hearing, which is to say over a period of nearly two years, was to deny what was put against him and to raise obstacles to the Commissioner’s case.

190    Mr Iannuzzi served a defence, in December 2017, in which certain averments that were subsequently admitted were denied, and which resisted even an inquiry into his conduct, never mind conclusions with regard to that conduct that might justify sanctions.

191    Mr Iannuzzi served an affidavit, in March 2018, in which he either denied averments which he has subsequently admitted, or he sought to place an exculpatory gloss on averments in respect of which he now accepts that findings critical of his conduct should be made.

192    Mr Iannuzzi also objected to the admissibility of most of the documents sought to be relied on by the Commissioner, which objection was rejected by Perram J. As indicated, Mr Iannuzzi then sought leave to appeal against that decision but that application was dismissed. Even thereafter, albeit on marginally different terms, Mr Iannuzzi continued to press the objection to the Commissioner’s evidence. Whereas the original objection that was rejected by Perram J was that the documents were not admissible at the stage of deciding whether there should be an inquiry, it was now contended that the documents were not admissible at the stage of determining whether any disciplinary orders should be made against Mr Iannuzzi.

193    The hearing of the evidence objection was listed for 15 July 2019, two days before the hearing on the inquiry. Both sides of the case filed submissions, and I prepared for the hearing. Then, on the morning of the hearing on the objection, I was advised through my Associate that Mr Iannuzzi withdrew his objection but that the matter should still be called. When it was called, I was advised that Mr Iannuzzi was prepared to make the admissions contained in the so-called statement of agreed facts and that orders would likely be sought by consent.

194    It was an admitted fact in the proceeding that as recently as 23 May 2019, that is to say only about seven weeks before the hearing, Mr Iannuzzi in a counselling session with a psychologist expressed some disbelief, frustration and significant feelings of injustice surrounding the matter. He said that he perceived he had been unfairly targeted by the Commissioner. Thus, at that late stage Mr Iannuzzi lacked an appreciation of the delinquency of his conduct.

195    Notwithstanding that history of dogged opposition and resistance, at what might quite appropriately and without exaggeration be described as the eleventh hour, Mr Iannuzzi accepted much of the wrongdoing alleged against him. Senior counsel on his behalf candidly and rightly accepted that his new-found insight, coming when it did, was “belated” and that that counts against him and points in favour of a strong sanction. In that regard, Mr Iannuzzi was prepared to consent to very serious, “life-changing” consequences. Senior counsel accepted, without prompting, that Mr Iannuzzi’s conduct constituted “a very significant departure” from the standard expected of him.

196    It goes without saying that Mr Iannuzzi’s conduct in defending the matter until very near the end has taken up a considerable amount of time and effort of the Court which is to the detriment of other litigants, and it has put the Commissioner to considerable effort and costs not all of which will be made good by the party/party costs order to which he has consented. These matters all count against him in so far as an appropriate penalty is concerned.

Supreme Court Proceedings

Voidable transaction proceedings

43    On 23 April 2021 RC Group and the Liquidators in their capacity as liquidators of RC Group commenced proceeding number 2021/115083 in the Supreme Court (RC Group Voidables Proceeding) against a number of defendants including, among others:

(1)    Runcity, the first applicant in the Tabuso Application;

(2)    Mrs Khalil, the first applicant in the Kito Application;

(3)    Kito Investments, the second applicant in the Kito Application;

(4)    Mr Borg, the first applicant in the Borg Application;

(5)    Borg Family, the second applicant in the Borg Application;

(6)    746 Greendale Road, the third applicant in the Borg Application;

(7)    Givana (Holdings), the first applicant in the Givana Application; and

(8)    Givana, the second applicant in the Givana Application.

44    On 1 April 2021 Interfreight 1 and the Liquidators in their capacity as liquidators of Interfreight 1 commenced proceeding number 2021/00091488 in the Supreme Court (Interfreight Proceeding) against a number of defendants including, among others:

(1)    Interfreight 2, the third applicant in the Tabuso Application;

(2)    Diesel Dan 2, the fourth applicant in the Tabuso Application; and

(3)    Mrs Tabuso, the sixth applicant in the Tabuso Application.

45    On 9 August 2021 Silverhills Haulage, Co-ordinated Transport, Diesel Dan 1, Fara Logistics, Inter Management Group and the Liquidators in their capacity as liquidators of each of those companies commenced proceeding number 2021/00227002 in the Supreme Court (Silverhills Haulage Proceeding) against a number of defendants including, among others:

(1)    Interfreight 2;

(2)    Diesel Dan 2;

(3)    Runcity;

(4)    Mr Tabuso, the fifth applicant in the Tabuso Application;

(5)    Mrs Tabuso; and

(6)    Mr Ligori, the seventh applicant in the Tabuso Application.

46    As described by Mr Vaughan:

(1)    in the RC Group Voidables Proceeding, the Interfreight Proceeding and the Silverhills Haulage Proceeding (collectively Supreme Court Proceedings) the Liquidators seek relief under s 588FF(1) of the Corporations Act for uncommercial transactions pursuant to s 588FC of that Act and unreasonable director-related transactions pursuant to s 588FDA of the Corporations Act (Statutory Claims). In each of the proceedings, the Liquidators rely upon the Reinstatement Orders in relation to those claims;

(2)    for example, in the RC Group Voidables Proceeding at [79] to [83] of their statement of claim the plaintiffs contend that:

79    On 27 December 2015, RC Group was deregistered by ASIC.

80    On 2 September 2019, in Federal Court of Australia Proceedings Number NSD1510/2017, Stewart J ordered that:

(a)    ASIC reinstate RC Group as a company pursuant to section 601AH(2) of the Corporations Act;

(b)    pursuant to section 601AH(3)(d) of the Corporations Act, when calculating the period ending three years after the relation-back day for RC Group, the period between the date of deregistration and the date of the order shall be disregarded;

(c)    the Second Plaintiffs be appointed as the joint and several liquidators of RC Group.

81    On or about 3 September 2019, RC Group was reinstated as a company by ASIC.

82    By reason of the matters pleaded in paragraphs 74, 79, 80(b) and 81 above, for the purposes of calculating the period ending three year after the Relation-back Day, the period between 27 December 2015 and 2 September 2019, being a period of 1345 days, is to be disregarded.

83    By reason of the matter pleaded in paragraphs 74, 79, 80(b) and 81 above, the period ending three years after the relation-back Day in respect of RC Group is 23 April 2021.

(3)    in the RC Group Voidables Proceeding the Liquidators also seek accounts and equitable compensation for moneys had and received and money retained without lawful entitlement; and

(4)    there remain 28 defendants to the RC Group Voidables Proceeding against whom the Liquidators claim relief totalling $11,577,157. The number of defendants has reduced because:

(a)    since the commencement of the proceeding the Liquidators have settled their claims against nine of the 39 named defendants on confidential terms; and

(b)    on 2 November 2022 AKA Civil Australia Pty Ltd (in liquidation) and AKA (NSW) Pty Ltd (in liquidation), the ninth and tenth defendants to the proceeding, were placed into liquidation.

47    Mr Vaughan also notes in relation to the transactions the subject of the Statutory Claims that:

(1)    in the case of RC Group, they comprise electronic funds transfers or cash withdrawals, which, in turn, comprise a portion of the total of over $29 million which was withdrawn from the company’s accounts;

(2)    in the case of the Interfreight Proceeding and Silverhills Haulage Proceeding, they comprise electronic funds transfers and the disposition of the assets of the plaintiff companies;

(3)    the Liquidators have not been able to identify any or any material benefit to the plaintiff company that made the payment in each case;

(4)    there was no or no adequate record that would explain the nature of the transaction or otherwise be expected to be retained in the books and records of RC Group or the companies in the Tabuso Group; and

(5)    the Liquidators have not been able to identify any or any adequate consideration provided by the recipient to the plaintiff companies.

Negligence proceedings

48    Two further proceedings have been commenced:

(1)    on 17 August 2020 RC Group and the Liquidators commenced proceeding number 2020/00239747 in the Supreme Court against Mr Iannuzzi, Maggie Chan in her capacity as the executrix of the estate of the late Mr Godfrey and Veritas Advisory as defendants (RC Group Negligence Proceeding); and

(2)    on 7 December 2020 the Tabuso Group companies and the Liquidators commenced proceeding number 2020/00347646 in the Supreme Court against Mr Iannuzzi, Ms Chan in her capacity as the executrix of the estate of the late Mr Godfrey and Veritas Advisory as defendants (Tabuso Negligence Proceeding).

49    In the RC Group Negligence Proceeding and the Tabuso Negligence Proceeding (together Negligence Proceedings) the plaintiffs seek damages for breach by the defendants to those proceedings of ss 180, 181, 182 and 183 of the Corporations Act and of their general law duties. Mr Vaughan explains that those proceedings were commenced in circumstances where Mr Iannuzzi, by the Agreed Statement of Facts, admitted that he breached various duties owed to RC Group and to the Tabuso Group and where in Iannuzzi (No 2) at [220] the Court acknowledged that there were possible losses to creditors.

50    According to Mr Vaughan, the damages sought by the Liquidators in the Negligence Proceedings cannot be quantified until the Supreme Court Proceedings have concluded.

Consequences if the Reinstatement Orders are discharged or varied

51    Mr Vaughan understands that if the Reinstatement Orders are set aside or varied the Statutory Claims would be time barred by reason of s 588FF(3) of the Corporation Act and those claims, which are assets available to RC Group and the Tabuso Group companies, would be extinguished.

52    Mr Vaughan notes that the Liquidators have alternative causes of action on foot by which they seek to recover the value of the Statutory Claims, including the Negligence Proceedings and the alternative equitable causes of action pleaded in the RC Group Voidables Proceeding. However, the Liquidators consider that there are risks to their ability to recover the full value of the Statutory Claims by way of those alternative causes of action. In particular:

(1)    Mr Vaughan believes that there is generally a better chance of recovery against a wide variety of defendants (many of whom, such as Mr and Mrs Tabuso, own real estate) than there would be in pursuing a smaller number of defendants, particularly the defendants to the Negligence Proceedings;

(2)    the defendants to the Negligence Proceedings have pleaded in their respective defences that their liability is limited pursuant to the CPA Australia Professional Standards (Accountants) Scheme with the effect that damages are limited to $2 million; and

(3)    Mr Vaughan understands that Mr Iannuzzi and Veritas Advisory, two of the three defendants to the Negligence Proceedings, have effectively said in correspondence that they are impecunious, the insurer has denied coverage and the Liquidators ought to expect no meaningful recovery from those proceedings.

The Applicants’ evidence

53    The following Applicants gave evidence in support of their respective applications:

(1)    Mrs Khalil;

(2)    Mr Borg;

(3)    Mr Tabuso;

(4)    Ms Tabuso; and

(5)    Mr Ligori.

54    In addition:

(1)    Christine Louise Perry, the solicitor for the Tabuso Applicants, gave evidence; and

(2)    the Borg & Givana Applicants sought to rely on evidence given by Gino Robert Cassaniti.

Mr Cassaniti

55    Gino Robert Cassaniti is the sole director of Givana (Holdings) and Givana. Givana (Holdings) and Givana are respectively the fifteenth and thirty-eighth defendants in the RC Group Voidables Proceeding and on 22 December 2021 they filed their defence in that proceeding in which they contend that the claim was filed out of time and is statute barred.

56    Mr Cassaniti did not make himself available for cross-examination. On that basis, objection was successfully taken to most of his evidence. Accordingly, his evidence was limited to the following:

(1)    at no time prior to the making of the Reinstatement Orders was Mr Cassaniti informed about this proceeding or that the Commissioner and Mr Iannuzzi intended to seek the Reinstatement Orders; and

(2)    at no time prior to or after the making of the Reinstatement Orders until 7 October 2021 when Mr Cassaniti was served with the statement of claim dated 23 April 2021 commencing the RC Group Voidables Proceeding (RC Group Voidables Proceeding SOC) was he made aware of the allegations pleaded against him in that proceeding.

Mrs Khalil

57    Katherine Khalil is the sole director of Kito Investments which is the trustee of the Kito Investment Trust, a discretionary trust originally established for the benefit of Mrs Khalil and her former husband Faouzi (Fred) Khalil.

58    Mrs Khalil and Kito Investments are respectively the third and fourth defendants to the RC Group Voidables Proceeding.

59    Mrs Khalil deposes that:

(1)    at no time prior to the making of the Reinstatement Orders was she informed about this proceeding or that the Commissioner and Mr Iannuzzi intended to seek the Reinstatement Orders;

(2)    at no time prior to or after the making of the Reinstatement Orders until she was served with the RC Group Voidables Proceeding SOC on 7 October 2021 was she made aware of the allegations in that statement of claim;

(3)    at no time prior to or after the Reinstatement Orders were made was she directed to preserve her records;

(4)    given that more than nine years have passed since the events in dispute in the RC Group Voidables Proceeding, her memory of that time is not as good as it was and many of her records have been thrown away, lost or destroyed; and

(5)    in November 2013 she moved house.

60    Between about July 2011 and December 2016 Mrs Khalil worked at Banq Accountants. Mr Khalil was a director of and also worked at Banq Accountants and both Mrs Khalil and Kito Investments were clients of Banq Accountants. During the period that Mrs Khalil worked at Banq Accountants she had three children with her former husband, in January 2012, November 2013 and March 2017, and after each birth she took at least one year off. Mrs Khalil explains that:

(1)    some of the records and documents that are relevant to the allegations made against her and Kito Investments in the RC Group Voidables Proceeding were likely previously stored with Banq Accountants;

(2)    Banq Accountants moved premises in January 2017 from a property located in Punchbowl to one located in Silverwater where it now trades as “Stratum Accountants”;

(3)    she does not think that Banq Accountants still trades and she does not know where the records went;

(4)    she has been informed by Mr Khalil that sometime before 2018 Mr Cassaniti took all of Banq Accountants’ records to a storage facility on Mr Tabuso’s farm and that rainwater got into the storage facility and destroyed the records stored there; and

(5)    despite having attempted to do so by telephone, online and by attending the Bankstown branch, she has been unable to obtain banking records for the period 2011 to 2014 from the National Australia Bank (NAB), where she and Kito Investments banked. In cross-examination Mrs Khalil explained that the reason given to her by the NAB for not being in a position to provide banking records for that period was because they were more than seven years old.

61    On 16 February 2017 Mr and Mrs Khalil separated. On 23 June 2021 they agreed on consent orders for their property settlement and on 24 September 2021 orders were made. Mrs Khalil says that, had she been served with the RC Group Voidables Proceeding SOC or been given notice of the allegations made in the RC Group Voidables Proceeding, she probably would have settled with Mr Khalil on different terms based on advice from her lawyers. While she does not know what different orders she would have sought, she says that she would have obtained legal advice about that matter and any impact of the proceeding on her.

62    In cross-examination Mrs Khalil was taken to a document titled “Application for voluntary deregistration of a company” for Kito Investments dated 16 May 2022 (Kito Investments Deregistration Application). Despite the fact that Mrs Khalil is Kito Investments’ sole director, she said that she did not sign that document, she had not seen the document before it was shown to her in cross-examination and she could not recall discussing it with anyone in May 2022. The Kito Investments Deregistration Application was lodged by Stratum Accountants Pty Ltd. Mrs Khalil accepted that she had worked for Stratum Accountants since about 2019.

Mr Borg

63    Michael Borg is the sole director of Borg Family, the sixth defendant to the RC Group Voidables Proceeding, and from 1 December 20217 to 3 August 2022 was the sole director of 746 Greendale Road. He is also the fifth defendant in the RC Group Voidables Proceeding.

64    Mr Borg noted that in the RC Group Voidables Proceeding relief is sought against:

(1)    him in relation to certain payments totalling $600,000 allegedly made between 17 June 2013 and 10 June 2014; and

(2)    Borg Family in relation to certain payments totalling $70,000 allegedly made between 6 June 2014 and 1 July 2014.

65    Mr Borg, Borg Family and 746 Greendale Road have filed a defence in the RC Group Voidables Proceeding.

66    Mr Borg was not informed at any time prior to 2 September 2019, when the Reinstatement Orders were made, of the hearing of this proceeding before Stewart J or that the parties at the time intended to apply for the Reinstatement Orders.

67    At no time prior to or after the making of the Reinstatement Orders until he was served with the RC Group Voidables Proceeding SOC on or about 12 October 2021 was Mr Borg made aware of the allegations made in that statement of claim.

68    The sums claimed by the plaintiffs from Mr Borg and Borg Family arise out of a loan made by Mr Borg to RC Group at Mr Khalil’s request. Mr Borg says that it was a term of the loan that fixed interest of $70,000 would be paid and he directed that sum to be paid to Borg Family.

69    Mr Borg says that a decade has passed since he entered into the loan agreement with RC Group, he has changed accountants since that time as a result of a dispute he had with the accountants who were assisting him at the time of the loan agreement and, due to the passage of time, he has not retained a copy of the loan agreement and, because of the dispute, is unable to procure a copy from his former accountants. In summary Mr Borg says that, as a result of the passage of time and his dispute with his former accountants, it has been very difficult for him to locate the loan agreement.

70    The RC Group Voidables Proceeding continues to cause Mr Borg and his family both emotional and financial distress.

71    Mr Borg was cross-examined. He accepted that Borg Family and 746 Greendale Road used Banq Accountants as their accountants but ceased to do so in about 2016 to 2017.

72    Mr Borg was taken to the transcript of his examination carried out by the Liquidators on 6 October 2020 and directed to the following exchange:

Q:    You haven’t produced any documents, pursuant to an order for production addressed to yourself, have you?

A:    I don’t know.

Q:    Well, have you or not?

A:    Privilege. I don’t know.

Q:    But you have got boxes of documents relating to your business records back at your home, is that correct?

A:    I have got a few little things.

Q:    Well, you said boxes earlier, didn’t you?

A:    Well, I have given them whatever they have wanted if they have asked for it.

73    Mr Borg accepted that he has boxes of documents containing his business records, including in relation to Borg Family and 746 Greendale Road, at his home. He searched through those boxes but did not find “the paper he needed”, namely the loan agreement for the moneys that he loaned personally to RC Group.

74    Mr Borg was also directed to the following evidence which he gave during the course of the Liquidators’ examination on 6 October 2020:

Q:    Are you, did you receive money from RC Group (Aust) Pty Ltd between 17 June 2013 and 9 June 2014?

A:    Mate, I honestly, can’t remember. I would have to have a look.

Q:    Did you or your company receive some $600,000 from RC Group (Aust)?

A:    Mate, I - I doubt it. I doubt it.

Q:    RC Group (Aust), as I've shown you through the invoices, is a labour hire company. What would RC Group (Aust) Pty Ltd be paying you or your company money?

A:    Mate, I don't know. I would have to look at the bank statements. I don’t know.

Q:    Well, before you can’t- - -?

A:    I can’t remember. It was that long ago. I’ve had that much money in and out of my accounts. I can’t remember.

75    Mr Borg said that at the time he gave that evidence, 6 October 2020, it was truthful but it no longer is truthful. That is because he has received money from RC Group, namely the money relating to the loan agreement that he has not been able to locate. Mr Borg also said that is the nature of the defence he wishes to rely on in the RC Group Voidables Proceeding.

76    Mr Borg accepted that during the course of the Liquidators’ examination he was asked questions on this topic. When it was put to him that in responding to those questions he said nothing about a loan agreement he gave the following evidence:

Well, I didn’t know. Like I said, I’ve had millions of dollars go through my accounts. To be asked on the spot, I answered as I did, I – which I didn’t know, which now I know where it’s from or whatnot and what you’re going to ask me, so I’m answering your truthfully. Yes, I did receive it.

Mr Tabuso

77    John Tabuso is married to Mirjana Tabuso. He is the director of Diesel Dan 2 and Interfreight 2 and was the director of Calabro Real Estate from 8 June 1999 to 6 July 2013, at which time Mrs Tabuso became the sole director and shareholder of Calabro Real Estate.

78    Mr Tabuso is not educated. He has difficulty reading and understanding documents.

79    In the early 1990’s Mr Tabuso started a mechanical workshop, working on cars and trucks mostly for himself. His only formal qualification is a trade certificate in mechanical repairs. Over time, with experience, he has developed an understanding of engines.

80    In about 1998 Mr Tabuso started working as a truck driver and in about 1999 he started a trucking transport business with Jose Sanchez and commenced freight transport on an intra and interstate basis (Trucking Business). Mr Sanchez left the Trucking Business in about 2005.

The development of the Trucking Business

81    At first, the Trucking Business used contractors who drove their own trucks. However, over time, as it grew, the Trucking Business was able to purchase its own trucks and engage drivers who drove trucks for the various companies allocated to perform work.

82    In around 1999 Mr Tabuso’s accountant, Sam Cassaniti, recommended and implemented a structure whereby a series of separate companies were incorporated or transferred to him and trusts were established for two principal reasons: asset protection; and the reduction of the cost of workers’ compensation where administrative staff and truck drivers had different rates for workers’ compensation risk and calculation of premiums. One company, Calabro Real Estate, leased or bought the plant and equipment and any real estate and other companies rented the property or equipment from it. Calabro Real Estate had two trusts: one in which property was owned; and a second in which trucks and equipment were owned. As at the date Mr Tabuso swore his affidavit, Calabro Real Estate continued to trade in this capacity.

83    Interfreight (Aust) Pty Ltd, which was incorporated in about June 2003, was the main trading entity. It conducted the Trucking Business which at that time was mostly interstate freight transport. By about 2005 Calabro Real Estate owned around eight trucks and Interfreight (Aust) received purchase orders and rented premises and trucks from Calabro Real Estate to carry out the transport work.

84    On 30 August 2007 Diesel Dan 1 was incorporated on the advice of Mr Tabuso’s accountant, at the time Christian Fox. Diesel Dan 1 supplied fuel and tyres for, and carried out maintenance and repairs on, the trucks and related equipment such as forklifts and pickers.

85    Initially, the Trucking Business’ operations were located at 12 Ash Road, Prestons. In 2009 it moved to 395 Devonshire Road, Kemps Creek, into premises owned by Runchief Pty Ltd. Mr Tabuso worked seven days a week in the Trucking Business and by 2010 it had grown and owned between 15 to 18 trucks.

86    Over the years, the Trucking Business bought or “opened” several additional companies, which were “ownerdriver” companies including in about 2007 Silverhills Haulage, in about 2010 Fara Logistics and in about 2012 Machinery Moves and Brisbane Inner City Tilt Tray. The Trucking Business maintained these companies to keep their customer bases or to have differentiation in the market with a view to maximising work received from allocators and loading agents, who booked freight transport and who were generally unable to use a single freight company. Mr Tabuso explained that occasionally, on behalf of Interfreight (Aust), he would make a customer angry. That customer would then ring up, for example, Silverhills Haulage on its different number and engage it to carry the freight. However, it was always Interfreight (Aust), and later, Interfreight 1, that would perform the work.

87    By around 2009, Interfreight (Aust) employed about 15 full-time employees and used subcontractors, who were mostly truck drivers. Other employees included booking staff, loading staff, administrative and accounting staff and allocators who distributed the jobs. Some employees were employed in different companies or split their time between several companies which paid all or part of their wages. Most employees were employed by Interfreight (Aust). The costs of premises rental, insurance premiums, accounting fees and wages were spread across all entities, as invoiced or based on usage. Diesel Dan 1 would invoice Interfreight (Aust) or Calabro Real Estate, as appropriate, for fuel, repairs, service charges and tyres. The Trucking Business was carried out entirely within the group.

88    As set out in the preceding paragraph, most employees were employed by Interfreight (Aust). However, from time to time, employees would provide services to other companies and the relevant employee’s wages would be based on the entities for whom they were working. For example, Mr Ligori, a mechanic, primarily carried out tasks for Diesel Dan 1 in repairing and maintaining trucks. While his wages were generally paid by Interfreight (Aust), some were paid by Diesel Dan 1.

89    Mr Tabuso has engaged a number of accountants over the years for his personal affairs and for the Trucking Business. For the Trucking Business: from 2012 to 2016 he engaged Mr Khalil of Banq Accountants; and since 2016 he has engaged Andrew Dunstan of Strategic Accountants.

Mr Tabuso’s illness

90    In 2013 Mr Tabuso fell ill having suffered a heart attack. He underwent several surgeries and was in hospital for some time. Following this, he was required to lower his stress levels and not work as hard.

91    Mr Tabuso explained that while he was away from work and attending to his medical condition, the Trucking Business unravelled. There was no-one in the business with his knowledge to direct staff or to manage the intercompany payment obligations. Mr Tabuso returned to work on a part-time basis and was unable to manage the Trucking Business.

92    In about mid 2013, Mr Khalil advised Mr Tabuso that the Trucking Business needed to be “cleaned up” and that he should start new entities and phase out and wind down, over time, the “old companies”. Accordingly, Interfreight 2 and Diesel Dan 2 were incorporated and they began servicing the Trucking Business while the older entities were wound down. In cross-examination Mr Tabuso agreed that this occurred a little while after he was made a bankrupt in July 2013 and that until about 2017 the registered office of each of the newly incorporated companies was Banq Accountants.

93    Mr Tabuso explained that there were difficulties with the transition process, including, for example, that customers would often continue to pay Interfreight (Aust) or Interfreight 1 rather than the new company, Interfreight 2, which had performed the work. Where that occurred funds had to be remitted to Interfreight 2 but sometimes administrative staff would use those funds to pay intercompany expenses in order to save double movement of funds.

RC Group

94    At one point Vince Macri, Mr Tabuso’s solicitor, advised Mr Tabuso to use a payroll services company to employ all employees. Accordingly, in about 2013 or 2014 Mr Tabuso raised the engagement of a payroll services company with Mr Khalil. A few weeks later Mr Khalil informed Mr Tabuso, among other things, that he had “set [Mr Tabuso] up with [RC Group]”. Mr Khalil provided details about the process Mr Tabuso would need to undertake to enable RC Group to pay the Trucking Business’ employees.

95    Mr Tabuso says that had nothing to do with the business of RC Group other than engaging it to handle the Trucking Business’ payroll.

The Tabuso Group goes into liquidation

96    By the end of 2014, when the transition of the Trucking Business from the “old companies”, which included the Tabuso Group companies, to the newly incorporated companies was complete, Banq Accountants advised Mr Tabuso to put the “old companies” into liquidation. This occurred in December 2014 at which time Messrs Iannuzzi and Godfrey were appointed as liquidators of those companies.

97    The only debt owing to a creditor outside the Trucking Business of which Mr Tabuso was aware at the time of the liquidations was a debt of approximately $20,000 owed to the ATO by, he thinks, Silverhills Haulage. After the liquidations of the “old companies” Mr Tabuso attempted, without success, to pay the outstanding debt to the ATO, but there were penalties and other difficulties which he did not understand and the ATO refused to deal with him directly. Mr Tabuso assumed this had all been resolved through the liquidation process.

98    Mr Tabuso understands that in about December 2014 Messrs Iannuzzi and Godfrey in their capacity as the liquidators, through Banq Accountants, took all the books and records for each of the “old companies” including electronic accounting records.

Books and records

99    In about 2016 Mr Tabuso was in dispute with Banq Accountants over its fees. It was at that time that Mr Tabuso moved his accounting business from Banq Accountants to Mr Dunstan of Strategic Accountants. Mr Tabuso’s dispute with Banq Accountants continued for a long time. From about 2015 Mr Tabuso sought the Trucking Business’ accounting records from Banq Accountants but it claimed a lien over them and, as the fees dispute was never resolved, Banq Accountants refused to release any of the Trucking Business’ records.

100    By letter dated 25 March 2015 Mr Iannuzzi, in his capacity of liquidator of each of the Tabuso Group companies, sought from Mr Tabuso, in his capacity as a former director, the books and records in his possession for each of those companies. In cross-examination Mr Tabuso agreed to two propositions: first, that he did not produce any documents in response to that request because he said “the accountant had it all”; and secondly, that he did not respond to Mr Iannuzzi’s letter.

101    Mr Tabuso said that during the liquidation of the Tabuso Group companies he did not have access to a single document that related in any way to their financial affairs but that he asked Banq Accountants several times to provide the documents.

102    Mr Tabuso explained that most of the records for the Tabuso Group were hard copy but there were some computer files and that Banq Accountants also took those files. Mr Tabuso could not say whether the Tabuso Group maintained copies of the latter but said that he would not know how to keep such a file and that he did not even know how to turn on a computer.

103    Mr Tabuso understands that in order to comply with taxation, accounting and workers’ compensation obligations, Mr Dunstan had to work from bank statements. In about 2016 the Trucking Business purchased new computers and installed new accounting software which was used in connection with Diesel Dan 2 and Interfreight 2. However, it became apparent in cross-examination that it was possible in 2020, in response to orders for production issued by the Liquidators, to produce from computer records material dating back to 2014. I pause to observe that Mr Tabuso’s evidence on this topic is difficult to accept.

104    It is apparent that he simply ignored Mr Iannuzzi’s request for the provision of the books and records of the Tabuso Group companies. He attempts to explain that attitude by his evidence that he did not have access to any documents relating to those companies as they were with Banq Accountants. Assuming that to be the case, I do not accept that, if requested to do so, those accountants would not provide the material sought. The dispute with Banq Accountants did not, on Mr Tabuso’s evidence, arise until “about 2016” so that could not have been a reason for the failure to produce the material. In any event, as became apparent in cross-examination, computer records were held which enabled production of material from 2014.

The reinstatement of the registration of the Tabuso Group and subsequent events

105    Neither Mr Tabuso, Interfreight 2 or Diesel Dan 2 were given an opportunity to be heard in relation to the Reinstatement Orders.

106    In about September 2020 Mr Tabuso was served with a summons for public examination (Tabuso Summons) which he attended on 30 September 2020. The Tabuso Summons also required Mr Tabuso to produce the documents listed in the schedule to it. Mr Tabuso said that he undertook a thorough review of all books and records in his possession at that time and produced to the Court all records in his possession in answer to the Tabuso Summons. He was put to significant personal and legal expense in that process for which he was not reimbursed by the Liquidators.

107    Mr Tabuso was also served with an order for production dated 15 February 2021 (Tabuso Order for Production). On 13 April 2021 Mr Tabuso produced what he described as a “small number of documents” in answer to the Tabuso Order for Production. In response to the Tabuso Order for Production Mr Tabuso located and produced documents relating to Interfreight 2 and Diesel Dan 2 as negotiated between his solicitor and the Liquidators’ solicitor.

108    On 9 August 2021 Mr Tabuso was served with the statement of claim filed in the Silverhills Haulage Proceeding. Mr Tabuso has filed a defence in the Silverhills Haulage Proceeding and has caused a defence to be filed by each of Interfreight 2 and Diesel Dan 2 who are also defendants to that proceeding.

109    Interfreight 2 and Diesel Dan 2 are also defendants to the Interfreight Proceeding (see [44] above) and Mr Tabuso has caused those companies to file a defence in that proceeding.

110    Mr Tabuso’s evidence is that:

(1)    he was not requested at any time to preserve his records relating to the allegations made in the Interfreight Proceeding or the Silverhills Haulage Proceeding;

(2)    he has undertaken a thorough review of all of his records and has reviewed his computer records and stored files, including with the assistance of his solicitor at the time, Ms Perry, and his banks. He believes that he no longer has records relevant to the claims the subject of the Interfreight Proceeding or the Silverhills Haulage Proceeding. They were either destroyed in the ordinary course or are with Banq Accountants, which no longer exists, or Mr Iannuzzi;

(3)    he has contacted his accountant, Mr Dunstan, who confirms that he does not hold records in relation to the 2011, 2012 or 2013 financial years in relation to his affairs, Interfreight 2 or Diesel Dan 2; and

(4)    he has contacted his bank to try to obtain banking records going back to the period from 2011 to 2013.

111    Mr Tabuso says that the Silverhills Haulage Proceeding and the Interfreight Proceeding are causing him and his wife significant stress and anxiety, which is also affecting their five children. He explains that he is not educated but has built a successful business that provides a valuable service, while also allowing him to support his family. In doing so he has relied upon professional advisors in relation to how to structure his business and meet its financial, accounting and taxation obligations.

112    The events the subject of the Silverhills Haulage Proceeding and the Interfreight Proceeding occurred nearly a decade ago. The Trucking Business has moved on but it was difficult for the business to be profitable during the COVID-19 period when interstate transportation was curtailed. As far as Mr Tabuso understands the “old companies” through which the Trucking Business used to operate did not have any substantial creditors other than other companies in that business.

Mrs Tabuso

113    Mirjana Tabuso is the sole director and shareholder of Calabro Real Estate and the sole director and shareholder of Runcity. She is the fifth defendant in the Silverhills Haulage Proceeding and the first defendant in the Interfreight Proceeding.

114    In cross-examination Mrs Tabuso accepted that until liquidators were appointed to Runcity in 2014, she had access to the books and records for Runcity and, at least until liquidators were appointed to Calabro Real Estate in January 2023, she had access to the books and records for Calabro Real Estate.

115    Mrs Tabuso also accepted in cross-examination that, although she did not deal directly with Banq Accountants in her capacity as a director of Runcity and of Calabro Real Estate, she provided information about those companies to Banq Accountants for the purpose of preparing their income tax returns and financial reports. She said however that requests for information would have gone to Mr Tabuso.

116    On or about September 2020 and 15 February 2021 respectively Mrs Tabuso was served with: a summons for public examination filed on 4 September 2020 in this Court (Mrs Tabuso’s Summons) which included a schedule of documents to be produced; and an order for production dated 15 February 2021 (Mrs Tabuso’s Order for Production).

117    Mrs Tabuso believes that she undertook a thorough review of all books and records in her possession at the time of Mrs Tabuso’s Summons and produced all records to the Court in her possession in answer to it. She was put to significant personal and legal expense in relation to that process, for which she was not reimbursed by the Liquidators.

118    In response to Mrs Tabuso’s Order for Production, Mrs Tabuso was able to locate some documents that she says were produced on 15 September 2020.

119    Mrs Tabuso attended for examination on 30 September 2020.

120    On or about 15 November 2021 a statement of claim was served on Mrs Tabuso’s solicitor, although Mrs Tabuso does not identify in which proceeding. Nonetheless there is no dispute that Mrs Tabuso is aware of both the Silverhills Haulage Proceeding and the Interfreight Proceeding. She has caused defences to be filed on her behalf and on behalf of Runcity in the Silverhills Haulage Proceeding and on her behalf in the Interfreight Proceeding. Mrs Tabuso makes no reference in her affidavit to the RC Group Voidables Proceeding to which Runcity is a defendant, but it was clear from her cross-examination that she is also aware of that proceeding.

121    Mrs Tabuso notes that the plaintiffs in the Interfreight Proceeding make claims pursuant to s 588FF(1)(a) and/or s 588FF(1)(c) of the Corporations Act and seek payment of the sum of $84,345 from her. Mrs Tabuso gives the following evidence:

(1)    she believes that the amounts she received from Interfreight 1 were for “employee rental”, reimbursement of expenses and wages;

(2)    she understands that at, or at about the, time of any expense being incurred, all paperwork relating to any expense, including tax invoices, was provided to Mr Tabuso or the then bookkeeper for the Tabuso Group; and

(3)    she was paid wages from time to time but no longer has any payslips. She understands that all wages she received were declared to the ATO in her tax returns.

122    Mrs Tabuso was not requested at any time to preserve her records relating to the allegations made in the Silverhills Haulage Proceeding or the Interfreight Proceeding. She has:

(1)    reviewed all of her available records. At about the time of service of the Silverhills Haulage Proceeding in September 2021, she had a conversation with Mr Tabuso who said to her words to the following effect:

All of the company records were either given to the liquidator or kept by Banq Accountants under a claimed lien for made up account fees or were destroyed in the ordinary course of business. I have nothing going back to 2010-2013.

(2)    contacted her tax agent, Mr Dunstan, and believes that he does not hold any of her records for the 2011, 2012 or 2013 financial years;

(3)    contacted her bank to obtain records for the period 2011 to 2013; and

(4)    undertaken a thorough examination of all of her records but has been unable to locate any records referring to the claims against her in the proceedings.

123    The Silverhills Haulage Proceeding and the Interfreight Proceeding are causing Mrs Tabuso significant stress and anxiety.

Application for deregistration of Runcity

124    In evidence was an “Application for voluntary deregistration of a company” for Runcity dated 23 May 2022 which was lodged by Strategic Accounting Advisers Pty Ltd and which named Mrs Tabuso as applicant and included Mrs Tabuso’s name as signatory, although the document was not signed (Runcity Deregistration Application). It also included a declaration that, among other things, “the company is not a party to any legal proceedings”.

125    Mrs Tabuso does not specifically recall signing the Runcity Deregistration Application. She did not lodge any documents electronically with ASIC, as it appears was the case for that form, although she does recall signing some ASIC documents in early 2022 but cannot recall to what those documents related. That said, Mrs Tabuso accepts that she may have signed or approved “deregistration paperwork” for Runcity but that would have occurred because Mr Tabuso first spoke to her about it. Mrs Tabuso did not appreciate that she may have signed or approved any “paperwork” that may have impacted any of the Supreme Court proceedings to which Runcity is a party. She understands that her accountant has withdrawn the Runcity Deregistration Application and that Runcity remains registered.

126    In cross-examination, when taken to the Runcity Deregistration Application, Mrs Tabuso gave the same evidence. She said that she did not know if she had signed a copy of that form on 23 May 2022 and that she “signed pretty much everything that everyone has asked [her] to” but she could not recall if she had signed this form.

127    Mrs Tabuso was also taken to letters dated 5 October 2022 and 10 November 2022 from Norton Rose Fulbright, the Liquidators’ solicitors, to Ms Perry of Pure Legal, who at the time was the solicitor for Mrs Tabuso. In those letters Norton Rose Fulbright sought an explanation for the lodgement of the Runcity Deregistration Application given that it relied on “declarations that are false” and sought to have that application withdrawn. Mrs Tabuso could not recall seeing those letters prior to her cross-examination.

128    Nor could Mrs Tabuso recall seeing the response from Ms Perry sent by email dated 18 November 2022 in which Ms Perry informed Norton Rose Fulbright that she had spoken to her client who “informs me that there has been no steps taken nor is there any intention of deregistering [Runcity]”. Mrs Tabuso said that she did not tell Ms Perry in November 2022 that no steps had been taken to deregister Runcity, she did not discuss that matter with Mr Tabuso at the time and she was not asked after 25 November 2022, when Norton Rose Fulbright sent a further letter to Ms Perry stating that her instructions were incorrect, to explain whether any steps had been taken to deregister Runcity.

Mr Ligori

129    Maurizio Ligori is a diesel motor mechanic, having completed an apprenticeship as a motor mechanic in about 1980, and the sixth defendant to the Silverhills Haulage Proceeding. From 2004 to 2021 he was employed by Interfreight 1 and from time to time other companies associated with Mr Tabuso. From about late 2014 Mr Ligori’s wages were paid by a labour hire company, RC Group.

130    From about 2007 to 2013 Mr Ligori managed the operations of Diesel Dan 1, which performed maintenance and mechanical work on trucks and made tyre sales. His tasks involved mechanical repairs to, and maintenance of, trucks and equipment, trailers, forklifts, etc, purchase and sale of tyres and fuel, purchase of parts and consumables for repairs and maintenance and supervision of staff. From time to time Mr Ligori paid expenses personally, including with his own credit card, and was reimbursed by Mr Tabuso or entities in the business including Diesel Dan 1.

131    As far as Mr Ligori is concerned, he has never had possession, custody or control of Diesel Dan 1’s books and records. He understood that Diesel Dan 1’s financial records were kept in the office on the premises occupied by administrative staff.

132    In about September 2020 Mr Ligori was served with a summons for public examination which also included a requirement that he produce certain specified documents. At the time, at his own expense, Mr Ligori undertook a review of all books and records in his possession and produced all records in his possession to the Court in answer to the summons. In doing so Mr Ligori located what he described as a “small number of documents” concerning his current assets, assets he had recently sold, some ASIC forms, his tax return for the financial year ended 30 June 2019 and St George Bank statements dating from November 2019 onward.

133    Mr Ligori attended for public examination on 30 September 2020.

134    In November 2021, at the time Mr Ligori was served with the statement of claim in the Silverhills Haulage Proceeding, he also received a copy of the Reinstatement Orders. Mr Ligori has filed a defence in the Silverhills Haulage Proceeding.

135    Mr Ligori explains that Sch 4 to the statement of claim filed in the Silverhills Haulage Proceeding sets out the payments alleged to have been made to him and which, I infer, the plaintiffs in that proceeding seek to impugn. In relation to those payments Mr Ligori gives the following evidence:

(1)    he believes that the amounts of $974, which he says comprise most of the payments listed in the schedule, are for wages and the remaining payments are reimbursement of sundry expenses which he had paid;

(2)    his practice was that at the time of an expense being incurred he would provide all paperwork relating to any expense, including tax invoices, to Mr Tabuso or the then bookkeeper of the Tabuso Group;

(3)    other than wages and reimbursement of expenses he paid to third parties, Mr Ligori has no recollection of receiving any other moneys from any of the companies associated with Diesel Dan 1 or any of the companies named in Order 1 of the Reinstatement Orders;

(4)    as best he can recall, in the period 2011 to 2013 payslips were printed and handed to Mr Ligori at work and wages and reimbursement of expenses were electronically transferred to his St George Bank account (number XXXXXX581). Mr Ligori cannot recall which of Mr Tabuso’s entities paid his wages; and

(5)    Mr Ligori was aware that from time to time Mr Tabuso caused his wages to be paid by different companies, depending on the time he allocated in carrying out tasks for the various companies.

136    Mr Ligori says that at no time prior to or after the making of the Reinstatement Orders until the commencement of the Silverhills Haulage Proceeding was he directed by the plaintiffs in that proceeding to preserve his records relating to the allegations made against him. Insofar as his records are concerned Mr Ligori:

(1)    believes that he reviewed all of his records and at about the time of service of the statement of claim in the Silverhills Haulage Proceeding contacted Mr Tabuso who informed him that he no longer had any of the wage or reimbursement of expense records in relation to Diesel Dan 1;

(2)    contacted his bank, St George Bank, to try to obtain banking records for the period 2011 to 2013 but was informed by St George Bank that it no longer holds any credit card or bank account statements for the period covered by the statement of claim in the Silverhills Haulage Proceeding; and

(3)    has examined all of his stored records but has not been able to locate any wage or reimbursement expense records, including credit card statements, or any documents which on his understanding refer to the claims against him in the Silverhills Haulage Proceeding.

137    The Silverhills Haulage Proceeding is causing Mr Ligori significant stress and anxiety.

STATUTORY FRAMEWORK AND SOME LEGAL PRINCIPLES

138    Chapter 5A of the Corporations Act concerns, among other things, deregistration of a company. Sections 601AA, 601AB and 601AC provide for how a company may be deregistered: either voluntarily at the instigation of the company; initiated by ASIC; or following amalgamation or completion of a winding up.

139    Section 601AD of the Corporations Act sets out the effect of deregistration and relevantly provides that a company ceases to exist on deregistration: see s 601AD(1).

140    The Reinstatement Orders were made pursuant to s 601AH of the Corporations Act which concerns reinstatement of the registration of a company. It provides:

Reinstatement by ASIC

(1)    ASIC may reinstate the registration of a company if ASIC is satisfied that the company should not have been deregistered.

(1A)    ASIC may reinstate the registration of a company deregistered under subsection 601AB(1B) if:

(a)    ASIC receives an application in relation to the reinstatement of the company’s registration; and

(b)    the levy imposed on the company by the ASIC Supervisory Cost Recovery Levy Act 2017 is paid in full; and

(c)    the amount of any late payment penalty payable in relation to the levy is paid in full; and

(d)    the amount of any shortfall penalty payable in relation to the levy is paid in full.

Reinstatement by Court

(2)    The Court may make an order that ASIC reinstate the registration of a company if:

(a)    an application for reinstatement is made to the Court by:

(i)    a person aggrieved by the deregistration; or

(ii)    a former liquidator of the company; and

(b)    the Court is satisfied that it is just that the company’s registration be reinstated.

(3)    If:

(a)    ASIC reinstates the registration of a company under subsection (1) or (1A); or

(b)    the Court makes an order under subsection (2);

the Court may:

(c)    validate anything done during the period:

(i)    beginning when the company was deregistered; and

(ii)    ending when the company’s registration was reinstated; and

(d)    make any other order it considers appropriate.

Note:    For example, the Court may direct ASIC to transfer to another person property vested in ASIC under subsection 601AD(2).

…

Effect of reinstatement

(5)    If a company is reinstated, the company is taken to have continued in existence as if it had not been deregistered. A person who was a director of the company immediately before deregistration becomes a director again as from the time when ASIC or the Court reinstates the company. Any property of the company that is still vested in the Commonwealth or ASIC revests in the company. If the company held particular property subject to a security or other interest or claim, the company takes the property subject to that interest or claim.

…

141    As set out above, an application to the Court under s 601AH(2) for an order to reinstate a company’s registration can only be made by a “person aggrieved” or a former liquidator of the company in question.

142    The expression “person aggrieved” is said to be of wide import and is to be construed liberally. It includes a person who has been damaged in a legal sense: see Re European Metal Recyclers Pty Ltd (in liq) (deregistered) [2018] NSWSC 946 at [17]-[18]. In Re Regional Planners Developments Co Pty Ltd (2015) 110 ACSR 457; [2015] NSWSC 1996 at [11] Brereton J held that a person is aggrieved by the deregistration of a company if they are thereby precluded from suing the company and it may be just for the company’s registration to be reinstated for the purpose of enabling that applicant to pursue its remedies.

143    The second requirement for the Court to make an order directing ASIC to reinstate the registration of a deregistered company is that the Court must be satisfied that the reinstatement of the company’s registration is just. In relation to that requirement in Re Austral Bronze Co Pty Ltd (No 2) (2020) 149 ACSR 221; [2020] NSWSC 1633 at [129] Rees J explained that:

The second matter to consider is whether it is “just” that the company’s registration be reinstated. His Honour Austin J succinctly explained this requirement in Australian Competition and Consumer Commission v Australian Securities and Investments Commission (2000) 174 ALR 688; 34 ACSR 232; [2000] NSWSC 316 at [27]:

The wording of the section is very broad, and the cases confirm that it gives the court a wide discretion. The court takes into account the circumstances in which the company came to be dissolved, whether, if the order were made, good use could be made of it, and whether any person is likely to be prejudiced by the reinstatement: Re Kilkenny Engineering Pty Ltd (in liq) (1976) 13 SASR 258; 1 ACLR 285; Drysdale v Australian Securities Commission (1992) 8 ACSR 563; 10 ACLC 1427; Re Steelmaster Pty Ltd (in liq); Kenney v McCann (as liquidator of Steelmaster Pty Ltd) (1992) 6 ACSR 494.

144    In CGU Workers Compensation (NSW) Ltd v Rockwall Interiors Pty Ltd (2006) 201 FLR 296; [2006] NSWSC 690 at [6] Barrett J observed the following about the operation of s 601AH(2):

The court has little if any discretion when an application of this kind comes before it. Under s 601AH(2), it must inquire into whether the plaintiff is “a person aggrieved by the deregistration” and whether it is “just” that the registration be reinstated. If positive findings are made on those matters, it should normally follow that an order for reinstatement is made. That course is indicated by the decision of the Court of Appeal (Mason P, Sheller and Ipp JJA) in WorkCover Authority (NSW) v Picton Truck and Trailer Repairs Pty Ltd (2004) 51 ACSR 102.

145    Section 601AH(5) of the Corporations Act sets out the effect of an order reinstating the registration of a company. In Allianz Australia Insurance Ltd v Viksne (2021) 106 NSWLR 306 Meagher JA (with whom White JA and Simpson AJA agreed) explained (at [34]) that by its use of the expression “is taken to have” s 601AH(5) deems the reinstated company to have continued in existence, contrary to the fact, and thereby creates a statutory fiction which countermands the otherwise unqualified application of s 601AD(1) of the Corporations Act.

146    However, s 601AH(5) provides “only a limited measure of retrospectivity”: see White v Baycorp Advantage Business Information Services Ltd (2006) 200 FLR 125; [2006] NSWSC 441 at [115]; Re Austral Bronze at [64]. In White v Baycorp at [115] Campbell J said the following about the operation of s 601AH(5):

Approaching the matter purely as one of statutory construction, the effect of s 601AH(5) is that, now, the statute requires everyone to treat Capital Corporate as though it had never been deregistered. However, that does not mean that anything which purported to be done on behalf of Capital Corporate during the period of its deregistration is thereby regarded as valid. If a director had purported to act on behalf of a deregistered company during the period of deregistration, mere reinstatement would not validate his action, because s 601AH(5) provides only a limited measure of retrospectivity, so that the director regains his office only from the time of reinstatement. Similarly, s 601AH(5) provides only a limited measure of retrospectivity concerning title to the property of the company, so that the property revests in it only from the time of reinstatement. …

147    In Rockwall Interiors at [16] Barrett J held that “[t]he deemed continuity created by s 601AH(5)” could not “support a fiction that, in the period after deregistration, there was both service of and non-compliance with a statutory demand”. At [17], among other things, his Honour said:

… Section 601AH(5) creates only a limited form of retrospectivity. It recognises expressly that the persons who were directors at the time of deregistration are not to be regarded as having continued as directors throughout the period of the company’s non-existence. It likewise recognises expressly that property of the company at the time of deregistration (which, by force of the Act, thereupon becomes vested in ASIC under s 601AD(2)) is not to be regarded as owned by the company throughout the period of the company’s non-existence. I adopt, in this respect, the thorough analysis appearing in the judgment of Campbell J in White v Baycorp Advantage Business Information Services Ltd [2006] NSWSC 441 at [115] and following. Section 601AH(5) cannot, in a retrospective way, give efficacy to active steps taken in relation to a company which, because of the company’s non-existence, were, when taken, simply devoid of legal effect.

148    At the heart of the applications before me for consideration is the operation of s 601AH(3) of the Corporations Act which empowers the Court to make ancillary orders. I consider that provision in detail below.

149    The Supreme Court Proceedings each make claims under Div 2 of Pt 5.7B of the Corporations Act which concerns voidable transactions. In each case the Liquidators seek relief under s 588FF(1) of the Corporations Act which provides:

Where, on the application of a company’s liquidator, a court is satisfied that a transaction of the company is voidable because of section 588FE, the court may make one or more of the following orders:

(a)    an order directing a person to pay to the company an amount equal to some or all of the money that the company has paid under the transaction;

(b)    an order directing a person to transfer to the company property that the company has transferred under the transaction;

(c)    an order requiring a person to pay to the company an amount that, in the court’s opinion, fairly represents some or all of the benefits that the person has received because of the transaction;

(d)    an order requiring a person to transfer to the company property that, in the court’s opinion, fairly represents the application of either or both of the following:

(i)    money that the company has paid under the transaction;

(ii)    proceeds of property that the company has transferred under the transaction;

(e)    an order releasing or discharging, wholly or partly, a debt incurred, or a security or guarantee given, by the company under or in connection with the transaction;

(f)    if the transaction is an unfair loan and such a debt, security or guarantee has been assigned—an order directing a person to indemnify the company in respect of some or all of its liability to the assignee;

(g)    an order providing for the extent to which, and the terms on which, a debt that arose under, or was released or discharged to any extent by or under, the transaction may be proved in a winding up of the company;

(h)    an order declaring an agreement constituting, forming part of, or relating to, the transaction, or specified provisions of such an agreement, to have been void at and after the time when the agreement was made, or at and after a specified later time;

(i)    an order varying such an agreement as specified in the order and, if the Court thinks fit, declaring the agreement to have had effect, as so varied, at and after the time when the agreement was made, or at and after a specified later time;

(j)    an order declaring such an agreement, or specified provisions of such an agreement, to be unenforceable.

150    Section 588FF(3) sets out the time in which an application under s 588FF(1) is to be made. It provides:

An application under subsection (1) may only be made:

(a)    during the period beginning on the relation‑back day and ending:

(i)    3 years after the relation‑back day; or

(ii)    12 months after the first appointment of a liquidator in relation to the winding up of the company;

whichever is the later; or

(b)    within such longer period as the Court orders on an application under this paragraph made by the liquidator during the paragraph (a) period.

The “relation-back day” is defined in s 91 of the Corporations Act.

APPROACH TO THE APPLICATIONS

151    Before proceeding to consider both the Applicants’ and the Commissioner’s respective applications it is necessary to say something about the approach to them.

152    As set out above, Order 4 of the Reinstatement Orders provides that, in the event that proceedings are commenced by the Liquidators in their capacity as liquidators of any of the Companies (as defined in Order 1) in reliance upon Order 3, which has occurred, among other things, each of the defendants to those proceedings is granted liberty to apply to vary or discharge Order 3 insofar as it affects that defendant.