FEDERAL COURT OF AUSTRALIA

Krejci (liquidator) v Panella, in the matter of Richmond Lifts Pty Ltd (in liq) [2025] FCA 151

ORDERS

THE COURT ORDERS THAT:

1.    The application to set aside the appointment of the provisional liquidators which is the subject of prayers 1 and 2 of the interlocutory process filed 26 February 2025 be dismissed.

2.    The application to set aside the appointment of the receivers which is the subject of prayers 3 and 4 of the interlocutory process be dismissed.

3.    The relief sought in prayers 5 and 6 of the interlocutory process to set aside or vary the freezing orders be referred for case management before the Docket Judge.

4.    This proceeding, together with NSD193/2025, be referred to the National Operations Registrar for allocation to a Docket Judge.

5.    Leave to apply, exercisable before the Duty Judge, until such time as the parties are notified of the Judge to whom the matter is allocated.

6.    Costs be costs in the substantive proceeding.

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

REASONS FOR JUDGMENT

CHEESEMAN J:

INTRODUCTION

1    These reasons concern an urgent application that came before me as the commercial and corporations duty judge on Friday, 28 February 2025. Shortly before 6pm on that day, I made orders which in substance dismissed those parts of the interlocutory process that were argued before me and otherwise referred the proceeding, and a related proceeding (NSD193 of 2025), to the National Operations Registrar for allocation to a docket judge. The two issues that were determined by these orders were the most urgent from the parties’ perspective. Although the applicants did not prevail on the relevant parts of the application, the circumstances of the application, which involved significant relief being made against them ex parte, were properly agitated as urgent matters requiring determination before a commercial and corporations duty judge: see Duty (Urgent) Applications Interim Practice Note during 3 Region Trial (GPN-DUTY) dated 31 January 2025 (Duty Practice Note).

2    By way of context, the originating process in this proceeding (NSD194 of 2025) and in NSD193 were filed on the same day. The first plaintiff in both proceedings is Peter Krejci in his capacity as liquidator of various corporate plaintiffs. There were separate interlocutory processes filed in each of these proceedings seeking urgent relief. The interlocutory processes filed in the two proceedings were both the subject of urgent ex parte applications before the duty judge then on roster which resulted in a suite of orders being made. The ex parte relief included the appointment of provisional liquidators to some of the defendants, a receiver to another defendant, freezing orders against many of the defendants and a search order in respect of premises connected with some of the defendants.

3    In broad terms, the circumstances of urgency that informed the course of this proceeding in the duty stream are as follows. The plaintiffs, who assert that they are creditors, or at least one of them is a creditor, of the companies to which provisional liquidators or interim receivers have been appointed, submit that there is a need to protect and preserve assets in circumstances where the plaintiffs contend that:

(1)    the companies are under the control of Sam Cassaniti, who is alleged to be a shadow director, and not under the control of their respective de jure directors;

(2)    the companies do not appear to have maintained proper books and records in circumstances where the response to compulsory notices issued to a variety of persons and entities connected with the companies has not yielded records that one would expect to be readily available for production in the ordinary course; and

(3)    there is a risk of asset dissipation because, amongst other things, the companies are involved in alleged schemes for the avoidance of tax which are directed to the benefit of various companies controlled by Mr Cassaniti and funds appear to be being cycled between the companies which are controlled by Mr Cassaniti.

4    Mr Krejci deposed to a concern based on the current state of his investigations that there is evidence that steps may have been put in place to move assets from Richmond Lifts Pty Ltd (in liquidation) and United Lifts Technologies Pty Ltd (in liquidation) (ULT) to Armstrong Scalisi Holding Pty Ltd (ACN 114 980 586) t/as CAP Accounting (which ought to have been paid to the Australian Taxation Office (ATO)) and then from CAP Accounting to other entities effectively owned and or controlled by Mr Cassaniti.

5    The plaintiffs allege that the circumstances at hand are analogous to those in BCI Finances Pty Limited (in liq) v Binetter (No 4) [2016] FCA 1351; 348 ALR 227 (Gleeson J) where in exposing a company to a penalty for the avoidance of tax, the director breached his duty to the company itself. The plaintiffs submit that the breaches of duty by the directors of these companies, including by the alleged shadow director of each company, are relevant to whether the appointments of the provisional liquidators and the interim receivers should be continued.

6    The Commonwealth has entered into a funding agreement with the liquidators in relation to the conduct of these proceedings, the major creditor being the ATO, and entry into that agreement has been approved pursuant to s 477(2B) of the Corporations Act 2001 (Cth).

7    The application that came before me on 28 February 2025 was made in the NSD194 proceeding. I pronounced orders at the conclusion of the hearing, the result of which was that the interim appointment of the provisional liquidators and the receivers will continue. I now provide my reasons for making those orders.

8    I have endeavoured to be economical in formulating these reasons in a way that balances the serious nature of the relief in issue, the complexity of the relevant facts and the underlying corporate relationships, and the reality of dealing with the application as an urgent duty matter which required orders to be made promptly. I have sought to provide reasons that are sufficient to explain the orders I made on 28 February 2025 and which are commensurate to what is at stake, noting that the overarching context is the continuation of interlocutory orders for a finite period.

PROCEDURAL PRELUDE

9    The substantive proceeding is brought by Peter Krejci in his capacity as liquidator of each of Sydney Exotic Aquariums Casula Pty Ltd (in liquidation) (SEAC), Richmond Lifts and ULT, and as administrator of Financial Advisory Australia Pty Ltd (administrators appointed). The proceeding was commenced by an originating process dated 17 February 2025.

10    An urgent interlocutory application was lodged on that same day, which the plaintiffs pressed as an urgent application before the duty judge on an ex parte basis (the ex parte application). The ex parte application was determined in the plaintiffs’ favour by another judge who was the rostered commercial and corporations duty judge at that time.

11    There are 26 defendants joined to the substantive proceeding. For this application, the relevant corporate defendants were:

(1)    The third defendant: CAP Accounting;

(2)    The fourth defendant: Capital Financial Advisory Pty Ltd (formerly known as Accolade Advisory Pty Ltd);

(3)    The fifth defendant: Marginata Securities Pty Ltd (ACN 610 129 630);

(4)    The sixth defendant: Reliance Financial Services Pty Ltd (ACN 146 317 919); and

(5)    The twenty-sixth defendant: Fraser Holdings NSW Pty Ltd (ACN 640 331 791) (in liquidation).

12    The relevant individual defendants were:

(1)    The first defendant: Teddy John Panella, who is the sole director of CAP Accounting and the sole director and shareholder of Fraser Holdings;

(2)    The second defendant: Mr Cassaniti, who is alleged to be the shadow director of CAP Accounting, Accolade, Marginata, Reliance and Fraser Holdings and who is the shareholder of CAP Accounting; and

(3)    The twenty-fourth defendant: Thi Linh Trinh, who is the spouse of Mr Cassaniti and the sole director and shareholder of Marginata.

13    In the substantive proceeding, the plaintiffs seek orders against the defendants in respect of alleged breaches of directors’ duties (or participation in those breaches) and the alleged receipt of funds the product of those breaches and for the winding up of certain companies connected, at least in a commercial sense, with the plaintiff companies.

14    Relevantly, the plaintiffs’ allegation of a tax avoidance scheme involves Richmond Lifts operating as a payroll company for a third party, United Lift Services Pty Ltd (ULS), and diverting funds that should have been remitted to the Deputy Commissioner of Taxation (DCT) on account of PAYG tax to CAP Accounting, Marginata, Reliance, Accolade and Fraser Holdings. The plaintiffs contend that the recipient companies are also accessorily liable. The plaintiffs allege that in an earlier period CAP Accounting acted as the payroll company, but this function was later assumed by Richmond Lifts. The plaintiffs submit that Richmond Lifts pays employees the wages and superannuation due to them, but the amount paid by ULS to Richmond Lifts for PAYG tax is not paid to the DCT. Rather, as mentioned, the plaintiffs contend that that amount was paid to entities connected with Mr Cassaniti. The plaintiffs do not presently make any allegations against ULS. ULS is not a party to the proceeding. In the evidence led on this application, Mr Krejci’s investigations have identified about $5.3 million which he says has been cycled through these companies in a way that cannot readily be explained by the commercial activities of the companies. The plaintiffs contend that the companies involved owed substantial debts to the DCT at the relevant time with the DCT having submitted proofs of debt in the winding ups of: Richmond Lifts ($1.46 million); ULT ($2.54 million); and SEAC ($120,929.42).

15    The plaintiffs also allege that there is a second tax avoidance scheme. The plaintiffs’ submissions in relation to this scheme on this application were primarily focussed on Financial Advisory, and to a lesser extent on Fraser Holdings.

16    Mr Krejci deposes that the DCT is a creditor of Financial Advisory in the sum of about $2.18 million. Based on his investigations to date, Financial Advisory appears to have paid staff of Accolade and McEvoy Legal for the year ended 2024. Mr Krejci’s deposes to a variety of payments which purport to be for wages made to Mr Cassaniti ($2.7 million), Mariolina Cassaniti, who is Mr Cassaniti’s sister-in-law ($79,999), David Cassaniti, who is Mr Cassaniti’s cousin ($65,000), and Ms Trinh ($62,400), amongst others. Mariolina Cassaniti is a defendant in the proceeding. Mr Krejci has also identified five payments described as “Bonus” totalling about $1.1 million from 16 May 2024 to 29 June 2024 paid to unknown recipients.

17    Mr Krejci also gives evidence in relation to payments by Richmond Lifts to Fraser Holdings and the subsequent dissemination of those funds. Mr Krejci notes that the DCT is a creditor of Fraser Holdings in the sum of $2,826,116. Mr Krejci notes that Mr Panella has been the director of Fraser Holdings since 14 November 2022 and is the current shareholder. Mr Krejci points to the fact that in his examination Mr Panella could not remember what Fraser Holdings did. It was put to him that it was just a “shell company”. He said he could not remember. When asked what Fraser Holdings did, he answered that it was a “shelf company”.

18    Mr Krejci exhibits to his affidavit a report to creditors in respect of Fraser Holdings dated 18 March 2024, in which Mr Richard Albarran and Ms Kathleen Vouris, the liquidators of Fraser Holdings, observe that prior to the company entering voluntary liquidation, it operated a labour hire business and that there appeared to be payments purportedly for wages made from the company’s account.

19    Mr Krejci also exhibits to his affidavit a report to creditors in respect of SEAC dated 28 February 2024 by its then voluntary liquidator, Mr Daniel Frisken. Mr Frisken was also appointed as the voluntary liquidator of ULT and Richmond Lifts at this point in time. In his report, Mr Frisken noted that he had received information in relation to certain suspicious transactions which were described as involving a “complex scheme in which there appears to be the use of labour hire entities and loan accounts to avoid payment of statutory obligations such as PAYG Withholding and Payroll Tax over a number years and for the benefit of a number of parties”.

20    Mr Krejci’s concerns in relation to the legitimacy of the ostensible wage payments arise in the context of the evidence given under compulsory examination by Mr Panella, the sole director and shareholder of Financial Advisory and Fraser Holdings. Financial Advisory and Fraser Holdings both appear to be, or at least purported to operate as, a species of labour hire company. Mr Panella was examined in December 2024. In his examination, Mr Panella agreed he was the director of Financial Advisory and Fraser Holdings but he could not shed any light on what either company did or the activities in which they were involved. The plaintiffs point to the fact that Financial Advisory and Fraser Holdings had voluntary administrators appointed, presumably on Mr Panella’s initiative as he was the signatory to the appointment documents, but in the broader sense at Mr Cassaniti’s behest. After Financial Advisory was placed in voluntary administration, Mr Panella, through McEvoy Legal, proposed a deed of company arrangement (DOCA) in respect of the company. Notwithstanding this, Mr Panella was not able to answer questions directed to anything of real substance in relation to the company or its activities.

21    I have already referred to Mr Panella’s evidence in his examination concerning Fraser Holdings. In relation to Financial Advisory, Mr Panella did not remember when Financial Advisory had last traded, the identity of its shareholders, nor what Financial Advisory actually did. He said he did not remember when or how he became a director. He said that he was not aware of anyone else involved in the management of the company. After a fairly arid string of answers, Mr Panella was asked what Financial Advisory “ever did” — he said he could not remember. That is strikingly odd given that, as mentioned, in January of this year, Mr Panella proposed a DOCA in relation to the company.

22    Mr Krejci’s concern in relation to the legitimacy of these payments is also based on an analysis of the bank statements for a St George Bank account held by Financial Advisory, which causes Mr Krejci to conclude that the source of the funds used by Financial Advisory to make the wage and bonus payments included funds transferred from CAP Accounting and Marginata, both of which in turn received transfers from Richmond Lifts.

23    Mr Krejci also raises concerns in relation to the inter-company lending which purports to be on a secured basis. He deposed to the fact that Accolade had submitted proofs of debt in the winding up of SEAC, Richmond Lifts and ULT for “accounting fees” pursuant to a “fixed fee agreement”. Despite requests being made, Mr Krejci has not been able to obtain or locate a copy of the said agreement. Further, Mr Krejci’s investigations reveal that each of Richmond Lifts, ULT and SEAC have security interests registered on the Personal Property Securities Register (PPSR) in favour of the trustees of the Accolade Trust, Marginata Trust and Reliance Trust. The security interests are alleged to arise under a "global security deed”. The relevant contact named on the PPSR for each of the relevant PPSR registrations is Raphael Grossman of McEvoy Legal.

24    In their interlocutory process, which as mentioned was pressed ex parte, the plaintiffs sought a panoply of relief. For present purposes, the relevant relief included:

(1)    an order authorising Mr Krejci to enter into a funding agreement with the Commonwealth of Australia and a costs agreement with ERA Legal;

(2)    an order that Mr Krejci and Mr Johnathan Sherwood Keenan be appointed as provisional liquidators of Marginata, Reliance and CAP Accounting;

(3)    an order that Mr Krejci and Mr Keenan be appointed as receivers without security, and on an interim basis, of Accolade; and

(4)    freezing orders against Mr Cassaniti, Ms Trinh, Mariolina Cassaniti, Mr Panella and the 17 corporate defendants.

25    Relevantly, the plaintiffs were successful in obtaining the relief that I have just summarised which was reflected in orders made on 19 February 2025 by the then duty judge. These orders were subsequently varied in some respects, the details of which are not presently relevant.

SEARCH ORDERS

26    On their ex parte application to which I have already referred, the plaintiffs also obtained search orders targeting premises in McEvoy Street, Alexandria occupied by Accolade and McEvoy Legal, an incorporated law firm. The search order was executed on 21 February 2025. The return date of the search orders at the time of the hearing of this application was 4 March 2025 and has since been extended.

27    Several issues were agitated before me on 28 February 2025 in relation to the search order. It is not necessary to address those issues in these reasons because with the assistance of Dominic Calabria and Ben Dibden, the independent solicitors appointed for the purpose of the search, a regime was agreed with counsel appearing for McEvoy Legal to bring forward any claims for privilege (legal professional privilege and or privilege against self-incrimination) after an inspection process was completed. The Court acknowledges the role of the independent solicitors in resolving an agreed process to facilitate any future privilege claims being brought forward in an orderly way. In the event that the inspection process gives rise to further applications, whether as to process or privilege, those issues should be brought to the attention of the docket judge in the first instance: see Duty Practice Note at [4.3].

28    That brings me to the interlocutory application which came before me as duty judge, and which is the subject of these reasons.

THE PRESENT APPLICATION

29    By interlocutory application dated 25 February 2025, the applicants (being the second to twenty fifth defendants and two others) sought three types of relief:

(1)    orders to set aside the appointment of the provisional liquidator to CAP Accounting, Marginata and Reliance;

(2)    orders to set aside the appointment of the receiver to Accolade; and

(3)    orders to set aside or vary the freezing orders.

30    The two additional applicants on the interlocutory process, who are not party to the substantive proceeding, are:

(1)    Carmelo (“Charlie”) Duardo, the director and shareholder of Accolade; and

(2)    Andrew Bruce Miller, the director and shareholder of Reliance.

31    The defendants and Mr Duardo and Mr Miller are represented by the same solicitors and counsel.

32    The third part of the application, relating to the freezing orders, was not determined at the hearing on 28 February 2025. That was because there were some negotiations in train that may, with a fair wind, give rise to an agreement in relation to at least some of the freezing orders. For that reason, coupled with the applicants’ desire to focus on the applications to remove the provisional liquidators and receivers, the relief sought in respect of the freezing orders was stood over for case management before the docket judge in due course. Accordingly, these reasons focus on the applications to remove the provisional liquidators and receivers.

33    At the hearing before me, the parties agreed that the application was properly characterised as an interlocutory application, such that the hearsay rule does not apply, and that, in substance, the interlocutory application was in effect the first inter partes return after the grant of ex parte relief. As a consequence, the plaintiffs accept that they bear the onus in establishing that the orders they obtained ex parte should continue.

EVIDENCE

34    On the eve of the hearing, the parties provided a seven volume court book, which was tendered on the application. I will say more about the approach I have taken to the court book below.

35    The parties also provided written submissions, including the plaintiffs’ multiple written submissions on which they relied in the ex parte application.

36    The plaintiffs relied on the following evidence:

(1)    the affidavit of Mr Krejci affirmed on 13 February 2025 (Krejci 1), and exhibits PK-1 to PK-5;

(2)    the plaintiffs’ submissions dated 17 February 2025 in support of its interlocutory applications;

(3)    the transcripts of the hearings before Shariff J on 18 February 2025 and 19 February 2025;

(4)    the affidavit of Mr Krejci affirmed on 19 February 2025 (Krejci 2);

(5)    the affidavit of Mr Krejci affirmed on 27 February 2025 (Krejci 3) and exhibit PK-6; and

(6)    the independent solicitor’s report of Messrs Dibden and Calabria dated 25 February 2025.

37    The applicants on the interlocutory application, who I will refer to for convenience as the defendants, noting that Mr Duardo and Mr Miller are not actually defendants, relied on the following evidence:

(1)    the affidavit of Alexander du Maurier affirmed on 26 February 2025 and exhibit ADM-1; and

(2)    the affidavit of Matthew Paul Sibley sworn on 27 February 2025.

38    There were also a number of documentary tenders in the course of the hearing which were in addition to the documents tendered via the court book.

39    It is necessary to briefly address three broad matters in relation to evidence.

40    First, I was informed by senior counsel for the plaintiffs at the commencement of the hearing that the defendants had provided an extensive schedule of objections which, if pressed, had the significant potential to derail the prospect of the hearing completing on 28 February 2025 (in circumstances where it had first been estimated to require about a two-hour listing). It was at this stage that I confirmed that it was common ground that the application was interlocutory in nature and that the defendants’ position was that the application should be determined as a matter of urgency. On this basis, I indicated that I would take a robust approach to any objections and encouraged senior counsel for the defendants to consider an efficient way forward.

41    As a result, senior counsel for the defendants submitted that there were two, in his submission, “egregious” themes that informed the objections that needed to be determined and the rest of the objections could, for reasons of exigency, fall away. The themes identified were first, an inadmissible reliance on a history of criminal conduct; and secondly, impermissible seeking to extract factual matters from judgments given in previous proceedings. In response, senior counsel for the plaintiffs said that he would not rely on that evidence and if he strayed into that territory, it could be raised and ruled on. That did not in fact prove necessary. I was not taken to material of this nature during the oral argument.

42    To the extent that the written submissions received before the hearing referred to such material, I did not have regard to it. Similarly, to the extent there is such material in the court book, I was not taken to it and I did not have regard to it. I have not required the parties to identify and remove that material from the court book, given the urgent circumstances attending on the hearing. Should the parties, or any of them, wish to prepare an edited version of the court book to remove this material I will consider making orders in chambers. That is a matter in respect of which the parties have leave to approach my chambers should they wish to do so.

43    Secondly, during the argument, the defendants took objection to the plaintiffs’ reliance against the companies on transcripts of evidence of individuals the subject of examination by the liquidators. The defendants contended that the transcripts were not admissible against the defendant companies because of s 597(14) of the Corporations Act which relevantly provides:

… any written record of an examination so signed by a person, or any transcript of an examination of a person that is authenticated as provided by the rules, may be used in evidence in any legal proceedings against the person.

44    The defendants’ objection as to the admissibility of the transcripts is misconceived. It is also somewhat mischievous in so far as it relies on what was said by Barrett J, as his Honour then was, in Fodare Pty Ltd v Shearn [2010] NSWSC 737; 240 FLR 187 at [39]. The defendants’ submission elided the express qualification made by Barrett J in the passage relied upon, a qualification that is reinforced by his Honour’s observations at [41].

45    The defendants’ submission proceeded on the footing that the transcripts were not admissible against the companies because the companies were not the persons who were examined. The defendants submitted that the proceedings against the corporate defendants were not legal proceedings “against the person”, that is, the relevant examinee, but were instead proceedings against the companies. The unspoken premise in the defendants’ objection assumes that s 597(14) is the sole means by which the transcripts may be admissible in evidence. It ignores that the transcripts may be otherwise admissible under the Evidence Act 1995 (Cth) as Barrett J made plain in Fodare. The relevant authorities, including Fodare, are analysed by Rees J in Harmon v Hartford [2019] NSWSC 413; 136 ACSR 94 at [2]-[6]. In this interlocutory application the hearsay rule does not apply, the plaintiffs have adduced evidence as to the source of the previous representations and the evidence is admissible against the company under s 75 of the Evidence Act. Accordingly, I admitted the evidence.

46    Finally, much of the defendants’ evidence and submissions were directed to the issue of solvency, however, the basal application is to wind up the relevant companies on the just and equitable ground. The application for a provisional liquidator to be appointed is informed by whether there are reasonable prospects for the companies to be wound up on that basis. While the plaintiffs do not concede that the companies are in fact solvent and are ardently critical of the defendants’ evidence as to solvency, they have not sought to prove that the companies are insolvent. The plaintiffs do not seek to wind up the companies on the ground that they are insolvent. Taking this into account, and conscious of the limited time available, I informed the parties that I intended to assume for the purpose of these applications that the companies were solvent. Senior counsel for each of the parties confirmed that it was appropriate that I proceed for the purpose of this application on that basis. The significance of assuming that the companies are solvent is that, as discussed below, as a matter of principle solvency generally weighs against the appointment of a provisional liquidator.

APPLICABLE PRINCIPLES

47    The defendants relied upon r 30.95 of the Federal Court Rules 2011 (Cth) as the basis for setting aside the orders made on the ex parte application. Further and in the alternative, the defendants sought orders:

(1)    under s 90 – 15 of the Insolvency Practice Schedule (Corporations) (Sch 2 to the Corporations Act), an order that Messrs Krejci and Keenan cease to be the provisional liquidators of Marginata, Reliance and CAP Accounting; and

(2)    pursuant to 1323(5) of the Corporations Act, discharging the orders made in respect of the appointment of receivers to Accolade.

48    However, as I have noted above, it was common ground that the onus of establishing that the orders made ex parte in relation to the provisional liquidators and the receivers fell on the plaintiffs. In that context, the relevant principles may be summarised as follows.

Provisional liquidation: relevant principles

49    Section 472(2) of the Corporations Act empowers the Court to appoint a liquidator to a corporation provisionally ‘at any time after the filing of a winding up application and before the making of a winding up order …’.

50    As mentioned, the present appointments were not predicated on the companies being insolvent. The following review of the authorities is therefore not directed to the principles which apply in determining whether a company is solvent. Here, the substantive application is made on the just and equitable ground, and is not predicated on the companies being insolvent.

51    The appointment of a provisional liquidator is a drastic remedy and a serious intrusion into the affairs of a company. The proper exercise of the discretion conferred by s 472(2) is informed by the seriousness of the power. There are a broad range of potential circumstances which might warrant its exercise: Grace v Grace (2007) 25 ACLC 141 at 147-149 [26]-[35]; [2007] NSWSC 6 (Brereton J as his Honour then was). Relevantly for present purposes, I emphasise the following parts of Brereton J’s analysis (citations omitted):

(1)    The power to appoint a provisional liquidator is not limited, and the circumstances which may constitute sufficient ground under which a provisional liquidator may be appointed are infinite. The court has a wide discretion;

(2)    The appointment of a provisional liquidator pending determination of a winding up application is a drastic intrusion into the affairs of the company which requires the exercise of great care. It is not to be contemplated if other measures would be adequate to preserve the status quo;

(3)    In an appropriate case, the grounds for appointment may include public interest considerations, which may operate in favour of or against the making of an appointment in particular circumstances;

(4)    The primary duty of a provisional liquidator is to preserve the status quo so as to ensure the least possible harm to all concerned and to enable the court to decide after a proper final hearing whether the company should be wound up. Thus, the usual, although not the only, purpose for which a provisional liquidator is appointed is to preserve the assets of the company and the status quo in relation to its affairs, pending a final determination of whether the company should be wound up;

(5)    The decision-making process is broadly analogous to that applicable to other forms of interim preservation, such as an application for the appointment of an interim receiver or an interlocutory injunction; and

(6)    The Court must be satisfied that there are:

(a)    good prospects of the plaintiff obtaining a winding up order; and

(b)    whether, having regard to the whole of the circumstances, and particularly the measures already in place, the assets of the company are in jeopardy such that they need to be put under the interim protection of a provisional liquidator pending determination of the winding up.

52    That there must be good prospects of the plaintiff obtaining a winding up order gives rise to a significant overlap between the matters relevant to determining whether to wind up a company and the matters that weigh in favour of the exercise of the discretion to appoint a provisional liquidator. In this case, the relevant matters relate to the just and equitable ground.

53    The balance of convenience must favour the making of the order.

54    In Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No 2) [2013] FCA 234; (2013) 93 ACSR 189 at [20]–[24], Gordon J observed:

[20]     It has long been established that a company may be wound up where there is “a justifiable lack of confidence in the conduct and management of the company’s affairs” and thus a risk to the public interest that warrants protection: Loch v John Blackwood Ltd [1924] AC 783 at 788. In Australian Securities and Investments Commission v ABC Fund Managers (2001) 39 ACSR 443 at [119], Warren J (as her Honour then was) set out three “general fundamental principles”:

First, there needs to be a lack of confidence in the conduct and management of the affairs of the company … Second, in these types of circumstances it needs to be demonstrated that there is a risk to the public interest that warrants protection. Third, there is a reluctance on the part of the courts to wind up a solvent company.

(Citation omitted.)

[21]     In relation to the first, a lack of confidence may arise where, “after examining the entire conduct of the affairs of the company” the Court cannot have confidence in “the propensity of the controllers to comply with obligations, including the keeping of books, records and documents, and looking after the affairs of the company”: Galanopoulos v Moustafa [2010] VSC 380 at [32]; see also Australian Securities Commission v AS Nominees Limited (1995) 62 FCR 504 at 532-3; ABC Fund Managers at [117]-[118]; Australian Securities and Investments Commission v International Unity Insurance Pty Ltd (2004) 22 ACLC 1416 at [135]-[139].

[22]     There is thus a significant overlap between the matters relevant to the just and equitable ground and the matters which weigh in favour of the exercise of the Court’s discretion to appoint a provisional liquidator. For example, matters which indicate “the propensity of the controllers to comply with obligations, including the keeping of books, records and documents, and looking after the affairs of the company” might also demonstrate that “the company’s affairs have been conducted in a manner without regard to legal requirements or accepted principles of corporate management”.

[23]     In relation to the second, a risk to the public interest may take several forms. For example, a winding up order may be necessary to ensure investor protection or where a company has not carried on its business candidly and in a straightforward manner with the public: International Unity Insurance at [138]; see also Australian Securities and Investments Commission v Finchley Central Funds Management Ltd [2009] FCA 1110 at [3]. Alternatively, it might be justified in order to prevent and condemn repeated breaches of the law: Kingsley Brown Properties at [96]; see also AS Nominees at 527; Australian Securities and Investments Commission v Chase Capital Management Pty Ltd (2001) 36 ACSR 778 at 793. Again, there is an overlap between matters which would pose a risk to the public interest for the purpose of s 461(1)(k) and which are relevant to the appointment of a provisional liquidator.

[24]     In relation to the third, it has been said that “a stronger case might be required where the company was prosperous, or at least solvent”: Kingsley Brown Properties at [96]. Solvency, however, is not a bar to the appointment of a liquidator on the just and equitable ground, particularly where there have been serious and ongoing breaches of the Act: ABC Fund Managers at [124]-[130].

55    The principles relevant to the appointment of a provisional liquidator were similarly canvassed in Australian Securities and Investments Commission v AGM Markets Pty Ltd [2018] FCA 1119; 129 ACSR 335 (Beach J) at [78] to [93]. The additional matters that I note from the analysis in AGM Markets are that:

(1)    an applicant for the appointment of a provisional liquidator must show that there is some good reason for intervention prior to the final hearing of the winding up application, for example that the appointment is needed in the public interest or to preserve the status quo or to protect the company’s assets and affairs;

(2)    while the appointment of a provisional liquidator pending the determination of a winding up application is a drastic intrusion into the affairs of a company and should not be ordered if other measures would be adequate to preserve the status quo those considerations although important, do not of themselves necessarily limit the Court’s jurisdiction or exercise of power to appoint a provisional liquidator;

(3)    factors relevant to the exercise of the Court’s discretion to appoint a provisional liquidator include:

(a)    whether the affairs of the company have been conducted casually without due regard being given to the applicable legal requirements so as to cause me to have no or little confidence that the affairs of the company are being carried out properly;

(b)    whether the assets of the company will be dissipated in the interim period between the filing of the application to wind up and the winding up order being made; and

(c)    whether in the public interest there is a need for an examination of the state of the accounts of the company; and

(d)    whether, if the appointment was not made, there was a strong possibility that there would be further acts, omissions or events which would be detrimental to creditors or shareholders.

(4)    by way of elaboration, Beach J observed that a consideration which may, together with other factors, justify the appointment of a provisional liquidator is a need for an examination of the books and accounts of the company by someone other than the directors and independent of the company however that purpose is not sufficient of itself to justify an appointment.

56    In the present context, the following additional considerations, drawn from some of the authorities, are also relevant:

(1)    whether there is a demonstrated lack of control over the assets of the companies arising from the intermingling of moneys between the corporate respondents;

(2)    whether there are proper books and records in circumstances where money has been lent to or distributed between the corporate respondents;

(3)    whether the affairs of the company are in fact being controlled by a person or persons other than the de jure directors; and

(4)    whether a provisional liquidator might be able to undertake investigations which might be fruitful.

57    An illustration of the third consideration may be taken from the decision in Fourteen Consulting Services Pty Ltd (in liq) v Boon Business Consultants Pty Ltd [2023] FCA 376 (Yates J), in which the relevant company’s affairs appeared to have been under the control of persons other than its appointed company officers and the person who appeared to have had the primary control had died. In those circumstances, the Court regarded it as appropriate to intervene because there could be no confidence that the company’s affairs would be properly conducted.

58    The considerations that are relevant to whether a provisional liquidator should be appointed are many and varied. It is important to recognise that commercial affairs are infinitely complex and various and it is inappropriate to limit the power by restricting its exercise to fixed categories or classes of circumstances or fact: Australian Securities Commission v Solomon [1996] FCA 28; 19 ACSR 73 at 80 (Tamberlin J) cited in ActiveSuper at [16].

59    In ActiveSuper at [18], Gordon J noted that there is arguably one qualification to the heavy burden borne by an applicant in an application for the appointment of a provisional liquidator and that is engaged when the application is made inter partes and the relevant company appears. Her Honour quoted the observations made by Young J (as his Honour then was) in Riviana (Aust) Pty Ltd v Laospac Trading Pty Ltd (1986) 10 ACLR 865 at 866:

… the court takes into account the fact that the company is present, so that the company has an opportunity of putting before the court any relevant factors as to why a provisional liquidator should not be appointed. If the plaintiff’s affidavits raise matters to which a court would expect there to be some answer and there is no answer provided then that in itself raises a matter of suspicion that it may well be in the public interest to put in a provisional liquidator.

60    A similar observation was made by Beach J in AGM Markets at [87].

61    I adopt and apply these principles.

Interim receiver: relevant principles

62    Section 1323 of the Corporations Act relevantly provides:

Where:

(a)     an investigation is being carried out under the ASIC Act or this Act in relation to an act or omission by a person, being an act or omission that constitutes or may constitute a contravention of this Act; or

(b)     a prosecution has been begun against a person for a contravention of this Act; or

(c)     a civil proceeding has been begun against a person under this Act;

and the Court considers it necessary or desirable to do so for the purpose of protecting the interests of a person (in this section called an aggrieved person) to whom the person referred to in paragraph (a), (b) or (c), as the case may be, (in this section called the relevant person), is liable, or may be or become liable, to pay money, whether in respect of a debt, by way of damages or compensation or otherwise, or to account for financial products or other property, the Court may, on application by ASIC or by an aggrieved person, make one or more of the following orders:

…

(h)     an order appointing:

…

(ii)     if the relevant person is a body corporate — a receiver or receiver and manager, having such powers as the Court orders, of the property or of part of the property of that person;

63    The principles governing the operation of s 1323 of the Corporations Act are well known and have been summarised on a number of occasions, including by French J (as his Honour was then) in Australian Securities and Investments Commission v Carey (No 3) [2006] FCA 433; (2006) 57 ACSR 307 (ASIC v Carey (No 3)) at [21] to [29] and McDougall J in Australian Securities and Investments Commission v Krecichwost [2007] NSWSC 948; (2007) 64 ACSR 411 (ASIC v Krecichwost) at [22] to [48].

64    The Court has jurisdiction under s 1323 when one or more of the circumstances provided for in ss 1323(1)(a) to (c) are satisfied: Australian Securities and Investments Commission v Adler [2001] NSWSC 451; 38 ACSR 266 (ASIC v Adler) at 268 [7(a)] (Santow J). The plaintiffs rely on s 1323(1)(c) in support of the relief they seek. The purpose served by the appointment of provisional liquidators under s 1323(c) is to preserve the status quo and the assets of potential wrongdoers for the benefit of the aggrieved person, pending the outcome of civil proceedings: ASIC v Carey (No 3) at [25]; ASIC v Adler at 268.

65    Section 1323 is concerned with protecting the interests of aggrieved persons: Australian Securities and Investments Commission v Burnard [2006] NSWSC 611 at [14] (Barrett J). As McDougall J observed in ASIC v Krecichwost at [26] (citations omitted):

The focus of the section is on the protection of aggrieved persons. … Assuming the existence of the jurisdictional fact …, the question of protection of aggrieved persons is the question to which the Court then turns. Each of the specified orders is to be tested by reference to the question: is it necessary or desirable for the protection of aggrieved persons?

66    In Australian Securities and Investments Commission v Mauer-Swisse [2002] NSWSC 684; 20 ACLC 1530, Palmer J said at [36] to [37]:

The words in s.1323(1) “protecting the interests” of an aggrieved person are as wide as they could be, and deliberately so. What “the interests” of aggrieved persons may be and how they ought to be protected are matters incapable of categorisation or of precise definition. Indeed, it would have been folly on the part of the legislature to attempt to define or limit what interests should be protected or how: to do so would have been to ignore the sad reality that the ingenuity of fraudsters is inexhaustible, their snares for the gullible pitiless and of infinite variety, and the eagerness of the foolish to be parted from their money irrepressible. Accordingly, in any particular case, where the Court determines that the interests of aggrieved persons are or may be prejudicially affected, it will be a matter for the Court, in the exercise of a discretionary judgment, to decide what sort of protection available within the parameters afforded by s.1323(1) should be given.

67    Given the nature of an application made under s 1323, the Court engages in risk assessment and risk management process in deciding whether to grant relief, including where the available evidence is limited and may be inadmissible. As French J said in ASIC v Carey (No 3) at [30]:

The section does not require concluded findings of fact about liability or whether assets have been dissipated. For the reasons already canvassed the Court, in making orders under s 1323, engages in a risk assessment and management process. The logic of the section assumes that the Court will not always have before it evidence of the kind that would be necessary and admissible in proceedings to establish definitively the nature and extent of the assets of the persons under investigation and their liability to aggrieved persons. Nor will it necessarily have before it evidence of the kind that would establish definitively that dissipation of assets has occurred or is likely to occur or that flight is imminent.

68    The risk assessment must take into account not only the interests to be protected, but also the threats to those interests and, consequently, the usual indicia for asset preservation orders: ASIC v Krecichwost at [27] to [30] (McDougall J).

69    The plaintiff is not required to demonstrate a prima facie case of liability or that the assets have been or are about to be dissipated. Nonetheless, the fact of dissipation supports the exercise of a discretion in favour of appointing a receiver: ASIC v Adler at [7(b)] (Santow J); Australian Securities and Investments Commission v Linchpin Capital Group Ltd [2018] FCA 1104 at [62] (Derrington J). As Atkinson J said in Australian Securities and Investments Commission v Arafura Equities Pty Ltd [2005] QSC 376; 56 ACSR 429; at [34]:

The criterion of whether or not a receiver should be appointed when an investigation is under way is that the court considers it necessary or desirable in order to protect the interests of creditors. In this case, there is, prima facie, a huge shortfall between the moneys invested in the scheme and the moneys left in the scheme. There are therefore significant sums of money owing to creditors and moneys that need to be traced. Although the appointment of a receiver may be considered, as Finn J observed, a “drastic remedy”, a receiver will be appointed on an interim basis where to do so will protect the interests of persons who might have claims against the respondents and a lesser remedy is not adequate. If the allegations that the respondents are operating an unregistered managed investment scheme are proved to be true, there is no doubt that it will be wound up.

CONSIDERATION

Provisional liquidators

70    In the present application, the plaintiffs’ standing was not challenged. It is well established that a creditor has standing to seek a winding up order under s 462(2)(b) of the Corporations Act, and therefore has standing to seek the appointment of a provisional liquidator under s 472(2): Allstate Exploration v Batepro [2004] NSWSC 261 at [21] (Austin J). To confirm the standing requirement is met, it is sufficient to note that Richmond Lifts is relevantly a creditor of each of the corporate defendants on this application.

71    The authorities make plain that there is considerable overlap between the matters relevant to determining whether to wind up a company and the matters that weigh in favour of the exercise of the discretion to appoint a provisional liquidator.

72    In the case of each of the three companies, I was satisfied that there are good prospects that the companies will be wound up on the just and equitable ground. I was further satisfied that the appointment is needed in the public interest, to preserve the status quo, and to preserve and protect each company’s assets or affairs for the benefit of their creditors, including by facilitating an effective investigation to enable the company’s assets, including choses in action, being identified and preserved. The evidence led on this interlocutory application amply supported that conclusion.

73    In reaching this conclusion, I had particular regard to the fact that none of the directors of the companies concerned put on direct evidence to address or explain the evidence against them and the concerns articulated in the plaintiffs’ submissions. In doing so, I have not overlooked the impact that the execution of the search warrant was likely to have on the defendants’ ability to marshal their evidence. However, the defendants were given access to the records that had been seized and to their computer servers in order to put on their evidence. They elected to put on an affidavit on the basis of information and belief through Mr du Maurier, their solicitor.

74    Mr du Maurier’s primary source of information was Mr Cassaniti, not the directors. Mr du Maurier does not refer to obtaining information from Mr Miller or Mr Panella, notwithstanding they are directors of the companies concerned and applicants on the interlocutory application. Mr du Maurier’s evidence was directed to establishing that the entities were solvent and did not seek to engage with the serious allegations which motivated the plaintiffs’ original application. Those allegations extended to claims of serious corporate misconduct, involving the failure to report and pay taxes, and the payment of funds which should have been paid in respect of taxation liabilities, to the benefit, either directly, or through Marginata, Reliance, Accolade and CAP Accounting, to various companies owned by Mr Cassaniti. Notwithstanding that Mr Cassaniti was the primary source for Mr du Maurier’s affidavit he does not grapple with these allegations or the material relied upon by the plaintiffs in support of those allegations. He acknowledges that he has not read all of the material, but he does not respond to any of it. This is a case where, to borrow from Young J, the plaintiffs’ affidavits “raise matters to which a court would expect there to be some answer and there is no answer provided then that in itself raises a matter of suspicion that it may well be in the public interest to put in a provisional liquidator”: Riviana at 866 (see paragraph [59] above). In the event that the plaintiffs make good on their allegations at the final hearing, there are strong prospects that the companies will be wound up on the just and equitable ground.

75    The evidence established that each of the companies appeared to be controlled by Mr Cassaniti, and not the de jure directors appointed to them. The evidence was particularly strong in relation to Mr Panella, the director of CAP Accounting. The evidence was similarly strong in relation to Mr Miller, the de jure director and shareholder of Reliance. Although Mr Miller was named as an applicant on this interlocutory application, he did not provide any evidence. The evidence that was put on by the applicants’ solicitor on the basis of information and belief was not informed by any information that was attributed to Mr Miller.

76    The evidence in relation to Ms Trinh, the director of de jure director and shareholder of Marginata, was not as stark as that in relation to Mr Panella and Mr Miller, but it was clear that Mr Cassaniti, her husband, was effectively in control of the company.

77    Senior counsel for the plaintiffs submitted that Ms Trinh had not “completely abdicated all her responsibility” and that it was necessary to “contextualise it, this is a woman who has two children, and who frankly acknowledges that her priority are the children”. Further, that in the context of a small proprietary company, Ms Trinh’s approach was not unusual. I rejected that submission. The submission was hyperbolic. The measure of breach of a director’s duty is not to ask whether the director has completely abdicated the responsibility they owe to the company. That a director has family responsibilities does not narrow the scope of the duty that a director owes to the company. In so far as the submission is predicated on an analogy being drawn between Marginata and small proprietary family companies generally, even if that would be useful, the analogy is inapt and does not seek to engage with the present circumstances as detailed in the plaintiffs’ evidence.

78    Ms Trinh’s evidence in her examination in relation to Marginata, when read in its entirety, demonstrated that although she said she had sought to prepare for the examination by going through a folder of documents, she had the barest of familiarity with its affairs (including loans it had made purportedly on a secured basis), she could not remember many matters at all and those matters that she purported to recall were described by her at a high level of generality. It is not an overstatement to characterise her evidence as the affairs of Marginata as being both highly general and very superficial.

79    Although she said that she made decisions on behalf of Marginata, she said that Mr Cassaniti helped her. She provided the login details for Marginata’s bank account to Mr Cassaniti. When asked how he helped her, she said that she had two children and that they were her first priority. She repeated that answer more than once. She then said that her husband gave her advice. She later said that it was her husband that negotiated with Richmond Lifts and that he would tell her “after he would negotiate”. She acknowledged that the standard process for Marginata making loans was that Mr Cassaniti would go and negotiate the loan and then he would tell her what had been agreed. She oscillated on this, later saying that she was also involved in the negotiations but could not remember exactly. She could not recall having heard of a global security deed between Marginata on the one part and, relevantly, Richmond Lifts and ULT on the other. She was unable to provide any substantive detail in relation to Marginata’s role as a financier and could not describe, even in broad terms, the size of its loan book or the current amount outstanding. She asserted that she inspected the books and records of Marginata about every two months but could not remember when she last did that or even in rough terms the company’s asset and liability position.

80    Taking all of this into account, I accept that the plaintiffs have established for the purpose of this application that Marginata is under the control of Mr Cassaniti, rather than Ms Trinh.

81    That each of these companies appear to be under the control of persons other than their appointed company officers is a factor that weighs in favour of making or maintaining the appointment of the provisional liquidators.

82    The plaintiffs have also demonstrated that the three companies appear to be conducting their affairs in a casual manner and in neglect of their obligations under the Corporations Act. The plaintiffs point to the following matters.

83    First, in relation to CAP Accounting, I have already mentioned that Mr du Maurier does not appear to have based his affidavit on information supplied by Mr Panella about CAP Accounting’s affairs. Mr Panella’s evidence in his public examination was that he could not recall ever hearing of the company, he did not recall if he was a director of that company, and that he was a director in name only. Mr Cassaniti, who the plaintiffs allege is in fact in control of CAP Accounting said in his examination that he did not “know what [CAP Accounting did] anymore” but for the purpose of this application appears to have given Mr du Maurier information with a level of detail about what CAP Accounting is said to do. There is little supporting documentation to the account given on information and belief by Mr du Maurier. In addition, CAP Accounting has failed to comply with its taxation obligations, including to lodge activity statements for the March 2023 to September 2024 quarters and income tax returns for the years ending June 2022 to June 2024.

84    Second, in relation to Reliance, there is no evidence by or sourced from Mr Miller, the de jure director of Reliance, who is an applicant on this application. Again, Mr du Maurier has obtained information as to its operations from Mr Cassaniti. Mr Miller has failed to provide books and records of reliance to the provisional liquidators as requested from at least 21 February 2025. Reliance has not complied with its taxation obligations, including to lodge activity statements for the June 2022 to September 2024 quarters and income tax returns for the years ending June 2018 to June 2024.

85    Third, in relation to Marginata, Mr du Maurier has obtained information from not only Ms Trinh but also Mr Cassaniti. The plaintiffs point to this as another factor that highlights her lack of knowledge and involvement in the affairs of the company. In her examination she purported to regularly check the books and records of Marginata, but the books and records have not been produced to the provisional liquidators and Mr Cassaniti denied the provisional liquidators’ staff access to the business premises when they attempted to obtain the books and records of Accolade and Marginata. Marginata has not lodged its activity statements for July to September 2024 and its income tax returns for the years ending June 2023 and June 2024.

86    The lack of corporate governance, and the failure to comply with taxation obligations, that is evident on this application weighs in favour of continuing the appointment of the provisional liquidators.

87    Another relevant consideration in the Court’s discretion to appoint a provisional liquidator is whether there is a risk of dissipation in the interim period between the filing of the application to wind up, and the winding up order being made. Again, if a risk of dissipation is established, this is a factor that weighs in favour of the appointment.

88    The plaintiffs point to the dishonest nature of the alleged conduct and submit that there is a risk of dissipation inherent in that conduct, particularly when the conduct extends to cycling funds through a network of companies connected to Mr Cassaniti: Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 at 325 (Gleeson CJ).

89    They also point to the fact that Mr Cassaniti has, through Mr Panella, taken steps to appoint voluntary administrators to companies connected to him, including Financial Advisory, with Mr Panella then proposing a DOCA, secured by real property owned by a company of which Mr Panella has recently been appointed a director and of which Ms Trinh is a shareholder. There is also some evidence that Mr Cassaniti changed certain of his shareholdings in the period after he was examined by the liquidators.

90    They also point to conduct during the execution of the search order addressed to Accolade and McEvoy Legal during which Mr Cassaniti was present and is recorded by the independent solicitor as saying, amongst other things, “They're such fucking idiots, they haven't even got the company where they hid all the money”. Mr Cassaniti appears to be referring to other persons when he says “where they hid all the money” (emphasis added). But in the context of the allegation that Mr Cassaniti is in control of the presently relevant companies and having regard to the movement of funds between the companies, I place some weight on the fact that Mr Cassaniti does not appear to be surprised and appears to have some awareness of suspicious dealings, even if he seeks to lay them at the feet of others.

91    The plaintiffs also point to other conduct of Mr Cassaniti that occurred during the conduct of the search. First, in relation to movement of computer servers that were located offsite but which were ultimately seized. Secondly, in relation to Mr Grossman, a solicitor from McEvoy Legal, asserting at one point, a blanket claim for privilege against self-incrimination over all of the documents of McEvoy Legal. I have placed little weight on these last two matters.

92    Also relevant to dissipation in the present context is Mr Cassaniti’s ongoing failure to provide information and documents in respect of the external administrations of Richmond Lifts, ULT and SEAC. Having regard to the nature of the alleged conduct, a critical step in protecting the interests of aggrieved creditors is to secure and thoroughly investigate the manner in which funds have been moved between the various companies connected with Mr Cassaniti and the assets, if any, which those funds can be traced into. There is the risk of further distribution and corresponding dissipation until such time as that is done and measures to preserve any property identified are implemented.

93    I regarded the level of cooperation extended to Mr Krejci to date in relation to the production of books and records to weigh in favour of the appointments. However, I have not placed much weight on this aspect in relation to the production of the books and records of the three companies to whom provisional liquidators have been appointed because of the recency of the appointments and because of the disruptive impact of the search order on the directors unfettered access to such books and records as may have been kept. A matter to which I gave more weight was that the evidence in relation to the search order and the state of the McEvoy Legal offices strongly suggests that such books and records as do exist were in a state of disarray, at least in so far as the records were comprised of hard copy documents.

94    I have assumed for the purpose of this application that the companies are solvent. While it is unusual for a solvent company to be wound up, solvency is not a bar to the appointment of a provisional liquidator and in the present circumstances, there is a justifiable lack of confidence in the conduct and management of the companies’ affairs and the evidence supports a conclusion that there have been serious and ongoing breaches of the Corporations Act by the relevant companies.

95    There has been a noticeable absence of evidence from the defendants in response to this issue. I note that the affidavit evidence of Mr du Maurier does not attempt to respond, explain or justify the payments from the plaintiff companies the subject of this proceeding to each of Accolade, Marginata, Reliance or CAP Accounting.

96    For these reasons, having had regard to the plaintiffs’ evidence, and the lack of any cogent evidence from the defendants, I was satisfied that for the purpose of this application that there are good prospects Marginata, Reliance and CAP Accounting will be wound up on the just and equitable ground at a final hearing. Should the plaintiffs establish the tax schemes that they suspect the companies to have been involved in, and in respect of which they have led evidence at this interlocutory hearing, then the prospects of the companies being wound up will increase commensurably.

97    I now turn to consider the balance of convenience, taking into account the conclusions I have drawn above.

98    I have been conscious that the appointment of provisional liquidators, although an interim measure, will still have a seriously adverse effect on the companies and that it is a drastic step to be taken. In the present circumstances, I was satisfied that the balance of convenience weighed in favour of continuing the appointment of the provisional liquidators until such time as the final winding up application is determined by the docket judge. I was satisfied that the plaintiffs had discharged their onus in that regard.

99    In reaching that conclusion, I have not overlooked the fairly confined evidence that the defendants have adduced as to the impact that the appointment may have on Marginata’s lending activities. I have also assumed the putative prejudice that is involved in the appointment of external administrators, even on an interim basis. However, where the business is trading, the duty of the provisional liquidators is to maintain the status quo and that extends to continuing to trade any legitimate business. Accordingly, I was satisfied that the negative impact of the appointments on the companies are capable of being managed during the time the provisional liquidators are in office.

100    Having regard to the nature of the alleged conduct, which involves abuse of the corporate form and is directed to a fraud on the revenue, and the extent of the evidence available at this stage, the public interest weighed in favour of the appointments.

101    Weighing against the appointments is the inevitable risk of reputational harm attendant on the appointments. That risk is real, but it is difficult on the evidence that the defendants have led to form a view as to extent of any reputation enjoyed by the relevant companies. In the present circumstances, I was satisfied that the risk is outweighed by the need to protect, preserve and investigate the asset position of each of the three companies for the benefit of the aggrieved creditors.

102    Finally, I was not satisfied that granting a lesser form of relief will adequately protect the aggrieved creditors in the circumstances of this case. I do note however that at the heel of the application before me, senior counsel for the defendants raised that the defendants may seek at a future time to bring an application for the provisional liquidators to be removed and replaced by independent directors for each of the companies. The defendants were not in a position to put any concrete proposal forward in this regard at this stage. Should such an application be brought in the future, it will fall to be determined on its own merits. It does not at this time weigh against the appointment of the provisional liquidators.

103    For these reasons, I was satisfied that the balance of convenience weighed in favour of the appointments. I exercised my discretion to make orders accordingly.

Interim receivers

104    Despite initially challenging the plaintiffs’ standing in their written submissions, the defendants did not press this point. The plaintiffs’ standing to make this application derives from s 1323(1)(c) which was engaged upon the filing of the originating process and s 1323(1)(a) which was engaged when in a related proceeding, the Court (Jackman J) made orders under ss 596A and 596B of the Corporations Act.

105    As with the companies which are in provisional liquidation, the evidence demonstrates that Accolade does not appear to be under the control of Mr Duardo, its de jure director. Instead, Accolade appears to be under the control of Mr Cassaniti. Mr Duardo appears to have little to do with the operations of Accolade; there is no evidence that he is paid by it, whereas Mr Cassaniti appears to have received in excess of $2.5 million for the financial year ended 2024 from Accolade.

106    There was no evidence from Mr Duardo as to the affairs of Accolade – what evidence there is, is provided on information and belief by Mr du Maurier, and appears primarily to have come from Mr Cassaniti. Mr Duardo has not been examined, at least so far as the evidence reveals in this application. In Mr Panella’s examination, he accepted that Accolade was making decisions on behalf of ULT, that he had no role or involvement in Accolade’s business and that he had no understanding as to why Accolade might claim to be a creditor of Richmond Lifts and no knowledge of any security held by Accolade.

107    The plaintiffs submit that the appointment of a receiver to Accolade was a lesser remedy than, for example, the appointment of provisional liquidators or making a freezing order against it, as it enabled Accolade to continue to trade. Unlike the other three corporate entities to which provisional liquidators have been appointed, Accolade appears to have a functioning accounting business which at this stage appears to be distinct from the alleged schemes. The defendants have explained in general terms what Accolade does and the likely effect that the appointment of receivers will have. Mr du Maurier provided a general summary of Accolade’s affairs based on information provided by Mr Cassaniti and/or Mr Duardo, describing Accolade as an accounting and advisory services business which also provides some litigation support and management services. The defendants maintain that since Accolade commenced trading in around July 2015, Mr Duardo has been the sole director and registered tax agent with oversight of the day-to-day operations of Accolade and Mr Cassaniti has been engaged by Accolade as a consultant. Mr du Maurier gave evidence that as at February 2025, Accolade employs 19 staff and has approximately 1,500 clients. The defendants submit that Accolade is profitable and solvent.

108    The plaintiffs maintain that against this background, the appointment of interim receivers pending the determination of the plaintiffs’ claims for final relief is appropriate because notwithstanding Accolade’s direct part in the alleged schemes, the operation of the alleged schemes does not appear to constitute the entirety of Accolade’s business. The plaintiffs submitted that the scope of powers given to the interim receivers enables them to have oversight of Accolade’s affairs and investigate the matters of concern, without preventing Accolade from being able to legitimately trade. Accordingly, the plaintiffs contended that the appointment of the interim receivers was a less intrusive mechanism for investigating and preserving the assets of Accolade than the imposition of a freezing order, even if the freezing order was made with appropriate carve outs, or the appointment of a provisional liquidator. (As mentioned, the issue of freezing orders was not otherwise pressed before me on this interlocutory application and was only raised as a point of contrast, as a more drastic remedy than the appointment of receivers.) The plaintiffs submitted that the existing orders give powers to the interim receivers, but do not require them to step in and take over control of Accolade’s business or to freeze the ability of Accolade to trade. The plaintiffs submit that the orders give the receivers oversight and also permit investigation into the matters of concern but that the legitimate activities of the business are able to continue.

109    A key part of the interim receivers’ function to protect the assets of the company is to protect the asset that is the legitimate business of Accolade. It is trite to observe that the powers and duties of a receiver are derived from the order or instrument under which they are appointed and are supplemented by the specific powers given to a receiver by s 420 of the Corporations Act, which relevantly includes the power to carry on any business of the corporation: s 420(2)(h). A receiver’s powers are to be exercised for the purpose of the attainment of the objectives of the appointment and as officers of the company a receiver must exercise their powers with the degree of care and diligence that a reasonable person would exercise if that person were an officer of a corporation in the corporation’s circumstances consistent with s 180(1) of the Corporations Act: see Re Gondon Five Pty Limited and Cui Family Asset Management Pty Limited [2019] NSWSC 469 at [54]-[59] (Brereton J).

110    The defendants’ opposition to the appointment of interim receivers was predicated on a misapprehension of the basis upon which the order for the appointment of the receivers was sought, and which informed the continuing need for that appointment. The defendants sought to elevate as the entire purpose of the appointment that the orders made, in orthodox form, included a power to investigate the affairs of the company over which they were appointed. That function was not the sole function conferred on the interim receivers. Importantly, the receivers were charged to “take possession of, collect and protect the Property of Accolade” (order 15(b) of orders made by Shariff J on 19 February 2025). Properly understood, the power to investigate is a necessary incident of the appointment and is necessary to identify the property in order that it be possessed, collected and protected. That is particularly so, in the circumstances of this case, where the assets are likely to include choses in action. I was satisfied that the appointment of the interim receivers was necessary to protect the interests of the plaintiffs in relation to assets of Accolade.

111    The plaintiffs have identified and substantiated, for the purpose of this application, a reasonable basis for claims against Accolade based on the apparent involvement of Accolade in the transactions about which the plaintiffs complain, and the concomitant need for the assets and records of Accolade to be preserved in circumstances where Mr Cassaniti appears to be in control of Accolade. Mr Krejci has given evidence of Mr Cassaniti’s failure to comply with demands made of him for documents and his refusal to allow Mr Krejci’s staff access to the business premises for the purpose of recovering any books and records.

112    I accepted that the receivership was likely to interfere with Accolade’s business. Although the evidence was given through Mr du Maurier on information and belief, he gave a number of examples of the likely nature of that interruption. I will not recite them here. It may be accepted that interruption of that type generally weighs against the appointment. However, in the context of this being an interim appointment pending determination of the plaintiffs’ claims for final relief, and having regard to the centrality of Accolade (which appears to be under the control of Mr Cassaniti) to the alleged seriously dishonest conduct and the purpose for which the interim receivers have been appointed under s 1323(3) of the Corporations Act (which is to investigate and take possession of, collect and protect the property of Accolade including any legal or equitable estate or interest, whether present or future and whether vested or contingent, in real or personal property of any description and includes a choses in action), I concluded that this prejudice was outweighed by the need to protect the interests of creditors and to preserve the assets of the company during the interim period.

113    I also took into consideration the defendants’ submission that the appointment of interim receivers to Accolade may result in reputational damage, limiting Accolade’s ability to obtain finance now and in the future and this in turn constrains its ability to continue the business and to pay its staff and other expenses. Again, even in the absence of proof that Accolade has a relevant reputation that will be impacted in this way, I was prepared to accept that was so for the purpose of this application. However, the likely prejudice that will be occasioned in this interim period did not in my view outweigh the need to protect the creditors and take steps to preserve assets by continuing the interim appointment.

114    The duty of the interim receivers is clear. If it proves to be the case that in order to protect the asset comprised of Accolade’s legitimate business, the receivers require additional powers, then an approach may be made to the Court.

115    Accordingly, I was satisfied that it was appropriate to exercise my discretion in favour of making orders that will have the effect of keeping the interim receivers in place.

CONCLUSION

116    For these reasons, I made orders dismissing the defendants’ application to remove the provisional liquidators from CAP Accounting, Marginata and Reliance and likewise dismissing their application to remove the interim receivers from Accolade. After hearing argument on costs, and taking into account the urgency in which this application was prepared and heard, I ordered that the costs of this application be costs in the substantive proceeding.

Associate:

Dated:    10 March 2025

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