Alleged fraud scores debatable win in conflict case

A Federal Court judge has decided an tax fraud case cannot suffer the presence of potentially conflicted insolvency practitioners, ordering this morning that BRI Ferrer’s Peter Krejci and John Keenan be replaced as receivers and provisional liquidators appointed to several companies within the impugned group linked to Sydney accountant Sam Cassaniti.

iNO does not suggest the allegations in respect of Sam Cassaniti or other defendants are true. Rather iNO is reporting on allegations put in the public domain by the liquidators and the courts.

“I would not order that the replacement provisional liquidators or receivers be the persons nominated by Mr Cassaniti. Having regard to the prima facie evidence propounded by the Liquidators as to the control exercised by Mr Cassaniti over the plaintiffs and the defendants (although I emphasise and take into account that I have not yet heard Mr Cassaniti’s version of events), it would be prudent to ensure that any appointment is of a person not nominated by Mr Cassaniti.” Justice Cameron Moore.

Commenting on the complex position in Krejci (liquidator) v Panella, in the matter of Richmond Lifts Pty Ltd (in liq) (No 3) [2025] FCA 1114 Justice Moore said Krejci and Keenan could, once claims had been formulated, find themselves both as plaintiffs and defendants.

“It is not appropriate that an officer of the Court be placed in that position of conflict,” he said.

The problem entities for Krejci and Keenan, who are being funded by the tax office, are Marginata Securities Pty Ltd (Marginata), Reliance Financial Services Pty Ltd (Reliance) and Capital Financial Advisory Pty Limited, formerly known as Accolade Advisory Pty Ltd (Accolade).

“The Liquidators are therefore, in a relevant sense, on both sides of the proceedings,” the judge said.

“They are the liquidators of the Relevant Plaintiffs and the provisional liquidators or interim receivers of Marginata, Reliance and Accolade (the Relevant Defendants).

“There is an obvious conflict between the position of the Liquidators, in their role controlling the Relevant Plaintiffs who are making claims for knowing involvement in breaches of directors’ duties against Marginata and Reliance, and their role as provisional liquidators controlling (inter alia) Marginata and Reliance in defending those claims.

“Liquidators acting on one side of the record might formulate a contention as to the liability of Marginata and Reliance which the Liquidators, acting in their other role, might be expected to find uncommonly persuasive, given that it is their own contention.

“A further potential issue is that the Liquidators, as provisional liquidators of Marginata and Reliance, have the right to take possession of the books and records of those companies, rather than being limited to accessing such documents as they would receive on discovery or other document production process as plaintiffs in the ordinary course.

“That would include any documents the subject of legal professional privilege where the holder of the privilege is Marginata or Reliance, because the Liquidators are standing in the shoes of Marginata and Reliance.

“The document risk is not merely theoretical,” the judge added.

“Numerous privilege claims have been made in respect of documents that were captured on the execution of the search orders at the address of McEvoy Legal, who acted as lawyers for Mr Cassaniti and various of the corporate entities. These include privilege claims made on behalf of Marginata and Reliance,” he said.

Ordering that Krejci and Keenan be replaced on certain appointments his honour turned his attention to the identity of their replacements and made observations that should’ve have disabused Cassaniti of any notion that his victory was other than pyrrhic.

“I would not order that the replacement provisional liquidators or receivers be the persons nominated by Mr Cassaniti,” the judge said.

“Having regard to the prima facie evidence propounded by the Liquidators as to the control exercised by Mr Cassaniti over the plaintiffs and the defendants (although I emphasise and take into account that I have not yet heard Mr Cassaniti’s version of events), it would be prudent to ensure that any appointment is of a person not nominated by Mr Cassaniti.

“Further, having regard to the close working relationship that will need to subsist between the Liquidators and the replacement provisional liquidators and receivers, it is sensible that the replacements be persons who the Liquidators are comfortable will be able to work with them efficiently and effectively.”

Although appointees have yet to be confirmed iNO’s mail is that Jason Stone from RSM and the crew from Wexted Advisors are among those nominated by the incumbents.

The identity of Cassaniti’s unsuccessful nominees is at this time unknown.