Chris Jordan probably never imagined he’d be lumped in with disgraced ex-liquidator David Iannuzzi on the same side of a legal dispute.
It was the current Commissioner of Taxation (CoT) after all who was at the helm of the ATO when the proceedings the tax office commenced in 2017 culminated with Iannuzzi consenting to Federal Court orders striking his name from the roll of registered liquidators and banning him from reapplying for registration for 10 years.
“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.” Justice Brigitte Markovic.
But Iannuzzi agreeing to relinquish his registration wasn’t the only order made back in 2019.
When Iannuzzi consented to a decade on the sidelines it meant the CoT’s application for an inquiry into his conduct – on foot since 2017 – was abandoned and the CoT could get on with chasing parties it believed were beneficiaries of illegal tax schemes perpetuated by an outfit trading under the name Banq Accountants.
As part of that pursuit the CoT required that various deregistered companies be reinstated.
To that end Federal Court judge Angus Stewart on September 2, 2019 ordered that “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”.
Justice Stewart also made orders appointing new liquidators – KPMG’s Gayle Dickerson and Stephen Vaughan – and the pair were required to serve on the Banq clients a copy of Justice Stewart’s orders if they commenced proceedings as a consequence of their investigations into the reinstated entities’ affairs.
Finally, Justice Stewart granted liberty to apply to vary his orders.
Funded by the ATO, Dickerson and Vaughan commenced proceedings in the NSW Supreme Court against various Banq clients.
Some of them responded by seeking to have order 3 dismissed, and last week the unlikely outcome that sees the CoT and Iannuzzi together facing the same undesirable issue took inconvenient root courtesy of Federal Court judge Brigitte Markovic.
In delivering her reasons in Commissioner of Taxation v Iannuzzi (No 3) [2024] FCA 45 Justice Markovic found that the reinstatement order should be discharged and revealed that certain of the successful applicants would seek indemnity costs against both the CoT and Iannuzzi.
Given Iannuzzi has told Dickerson and Vaughan that he’s impecunious and his insurance wouldn’t respond to their claims the CoT will be the one in the firing line as the successful tax evaders line up to milk the commonwealth for their legals.
“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.” Justice Markovic said.
iNO asked Dickerson and Vaughan – who’d been neutral in the proceedings – if there was any likelihood of an appeal but no response was received by deadline.
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The order by Stewart J must always have been regarded as incorrect as there was not power to alter the relation back date by reference to the period of deregistration. This is much akin to the situation with Limitations Act provisions applying during deregistration: Gerace v Auzhair Supplies.