ATO’s nominees at odds with predecessor’s lawyer

The ATO might fairly be criticised for paying, seemingly without concern or question, tens of millions of dollars in GST refund claims which have turned out to be utterly bogus.

But in attempting to turn around this bulk carrier of maladministration the tax office, or more particularly its private sector agents are encountering plenty of obstacles.

The most recent shoal encountered by McGrathNicol’s Kathy Sozou, Anthony Connelly and Jamie Harris takes the form of ERA Lawyers‘ Simon Gallant, the legal representative for Aston Chace partner Steven Naidenov, who in turn is the former liquidator of Clarkbrook Pty Ltd.

The McGrathNicol trio were appointed to replace Naidenov as liquidators of Clarkbrook in late 2024 after the ATO as largest unsecured creditor persuaded Naidenov to step aside.

Clarkbrook is one of 11 entities to which the ATO has intervened to have incumbent liquidators replaced by its preferred nominees, the motivation being suspicion that the entities are part of a scheme to rip off taxpayers designed by those encouraged by the ATO’s inadequate screening and the paucity of consequences meted out to the few who are caught.

Before he was punted however, Naidenov made some progress, identifying $5.3 million in payments to third parties during the 11 months the labour hire firm traded for which no discernible commercial purpose could be ascertained, at least based on the bank statement descriptions Naidenov had available.

Among the unexplained transactions was $3.717 million paid into the trust account of Kings Cross law firm Green and Associates.

iNO understands that material relating to the payment was produced to the court consequent to a notice to produce obtained by Naidenov prior to the commencement of public examinations which he’d commenced.

We emailed principal Dominic Green asking if he’d received any inquiries from the current liquidators in respect of the funds but received no reply prior to our publication deadline.

Despite Naidenov’s progress the ATO wasn’t prepared to fund him but for its preferred nominees, getting access to the material produced to the court has been problematic.

When they initially sought to access the material they were told by the NSW Supreme Court registry that they would need to make an application to re-open the court file.

On Monday that application came on for hearing before Justice Peter Brereton but the applicants, represented by Norton Rose Fullbright and Eight Selbourne’s Bernice Ng, encountered more opposition.

Gallant, who was also attending told the judge ” … it would be entirely inappropriate to reopen these proceedings while my client remains named as the plaintiff”.

The file, Gallant told the judge, had been closed “by the effluxion of time”.

Gallant also told the court it was inappropriate for the incumbent liquidators to gain access to the material disgorged by the notices to produce so they could determine whether or not to apply for the issue of fresh summonses for examination.

“What a liquidator is not allowed to do is have access to documents for the purpose of determining whether or not to examine the persons producing those documents,” he said.

Gallant said the McGrathNicol trio were going about the process the wrong way and they should be required to issue new summonses for examination.

Deliberating on this the judge then told Ng “… it might be a little unusual for a matter to be reopened by someone who is not a party to the proceedings.”

But Gallant wasn’t finished. He had, he told the court, put the liquidators and their lawyers on notice in April 2025 of the need to make an application for substitution “and those concerns have fallen on deaf ears”.

Contending that he should not have had to turn up at the court for the hearing he asked for a lump sum costs order in the amount of $1500, to which the judge agreed.

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