Commissioner of Taxation v Iannuzzi

Federal Court of Australia|2024-09-19|Before: Markovic J

The plaintiff and the third, fifth, seventh, ninth, eleventh, thirteenth and fifteenth respondents to the proceeding are to pay the costs: (a) of the first, third, fourth, fifth, sixth and seventh applicants to the proceeding on the interlocutory application filed 28 September 2022; (b) of the eighteenth and nineteenth respondents to the proceeding on the interlocutory application filed 19 December 2022; (c) of the twenty-ninth and forty-sixth respondents to the proceeding on the interlocutory application filed 25 February 2023; and (d) of the twentieth, twenty-first and twenty-second respondents to the proceeding on the interlocutory application filed 28 February 2023, on a party and party basis as agreed or taxed, with those costs payable forthwith. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

MARKOVIC J: 1 On 2 February 2024 I delivered reasons on interlocutory applications filed by four groups of defendants to various proceedings commenced by Gayle Dickerson and Stephen Ernest Vaughan in their capacity as joint and several liquidators (Liquidators) of the Companies defined in orders made on 2 September 2019 (referred to as the Reinstatement Orders) and an interlocutory application filed by the plaintiff, the Commissioner of Taxation, on 9 December 2022. At the time I made orders requiring the parties to provide either their proposed agreed orders giving effect to my reasons, or if they could not agree, their respective competing forms of orders: see Commissioner of Taxation v Iannuzzi (No 3) [2024] FCA 45. 2 The background to the interlocutory applications is set out in Iannuzzi (No 3). In summary, pursuant to the Reinstatement Orders, among other things, the registration of nine companies (together, the Companies) was reinstated pursuant to s 601AH of the Corporations Act 2001 (Cth), the Liquidators were appointed as the joint and several liquidators of each of the Companies and an order was made pursuant to s 601AH(3)(d) of the Corporations Act that, 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 the Reinstatement Orders was to be disregarded (Order 3). 3 In reliance on Order 3 of the Reinstatement Orders, the Liquidators commenced a number of proceedings in the Supreme Court of New South Wales (Supreme Court Proceedings). Upon doing so and as required by the Reinstatement Orders they served a copy of those orders on the defendants to those proceedings. The interlocutory applications which were the subject of my reasons in Iannuzzi (No 3) were brought by four sets of defendants to the Supreme Court Proceedings (collectively, Applicants) seeking, as principal relief, discharge of Order 3. The Applicants were successful on their respective interlocutory applications. 4 On 23 February 2024 I made orders giving effect to my reasons including orders that: 1. Order 3 made on 2 September 2019 is discharged, nunc pro tunc to 2 September 2019. 2. The interlocutory application filed by the first respondent/plaintiff on 9 December 2022 (9 December IA) is dismissed. 3. The first respondent/plaintiff is to pay the costs of the: (a) first, third, fourth, fifth, sixth and seventh applicants to the proceeding on the 9 December IA; and (b) eighteenth, nineteenth, twentieth, twenty-first, twenty-second, twenty-ninth and forty-sixth respondents to the proceeding on the 9 December IA, as agreed or taxed. 4. In relation to costs of the interlocutory applications filed by the first to seventh applicants on 28 September 2022, the eighteenth and nineteenth respondents on 19 December 2022, the twenty-ninth and forty-sixth respondents on 25 February 2023 and the twentieth to twenty-second respondents on 28 February 2023, and on the issue of whether the costs in Order 3 should be expressed to be taxable and payable forthwith: (a) by 7 March 2024, any applicant wishing to be heard on the question of costs is to file and serve submissions, not exceeding eight pages in length, and any evidence upon which the party intends to reply; (b) by 21 March 2024, any respondent wishing to be heard on the question of costs is to file and serve submissions in response, not exceeding eight pages in length, and any evidence upon which the party intends to reply; (c) by 28 March 2024, any applicant wishing to be heard on the question of costs is to file and serve any submissions in reply, not exceeding four pages in length; and (d) the question of costs to be determined on the papers. 5 In accordance with Order 4 made on 23 February 2024, the first and third to seventh applicants (Tabuso Applicants), the 18th and 19th respondents (Kito Applicants), the 20th to 22nd respondents (Borg Applicants) and the 29th and 46th respondents (Givana Applicants) (collectively, Borg and Givana Applicants) have filed submissions as have the Commissioner and the Liquidators. 6 These reasons address the outstanding questions of costs.

The Applicants' claims for costs 7 In summary: (1) the Tabuso Applicants: (a) seek an order that the costs of their application be paid forthwith on an indemnity basis by the Commissioner and the Liquidators. They say that such an order is appropriate, despite the Liquidators not having had a role in obtaining the Reinstatement Orders, because they actively resisted the applications despite being put on notice in July 2022 of the substance of the arguments which ultimately succeeded and they are indemnified by a creditor whom it would be inferred is the Commissioner in any event; and (b) in the alternative say that it may be preferable for costs to be apportioned in some sensible way, raising by way of example an apportionment of 80% payable by the Commissioner on an indemnity basis and 20% payable by the Liquidators on a party and party basis; (2) the Kito Applicants seek orders that: (c) the Commissioner pay the Applicants 80% of their respective costs of and incidental to their respective applications on an indemnity basis, such costs to be taxable and payable forthwith; and (d) the Liquidators pay to the Applicants 20% of their respective costs of and incidental to their respective applications on the ordinary basis, such costs to be taxable and payable forthwith; and (3) the Borg and Givana Applicants seek an order that the Commissioner pay their costs on an indemnity basis to be taxed and payable forthwith with such costs to include the costs of the costs argument. 8 The Commissioner does not oppose an order that he and the Liquidators pay the Applicants' costs of their respective applications as agreed or taxed and payable forthwith. However, the Commissioner opposes any application that those costs be paid on an indemnity basis. He submits that the Applicants have not established the existence of any circumstance sufficient to warrant departure from the usual rule that an order for costs is to be made on a party and party basis. 9 The Liquidators contend for the same orders as the Commissioner. 10 As is apparent from the above summary, the central question to be determined is whether an order should be made that the Commissioner and the Liquidators pay the Applicants' costs on an indemnity basis.

Should orders be made that the costs are to be paid on an indemnity basis?

Applicants' submissions 11 The Tabuso Applicants submit that the Commissioner's conduct on which they rely to ground an order for indemnity costs is comprehensively set out at [239]-[248] and [252] of Iannuzzi (No 3). In summary they contend that: (1) no response was ever given to Stewart J's enquiry concerning whether there was a need to notify third parties of an intention to seek orders for reinstatement of some of the companies: Iannuzzi (No 3) at [241]; (4) the Commissioner was aware of the companies to be reinstated and that an order was to be sought with the effect of extending time to bring proceedings under s 588FF(1) of the Corporations Act against third parties: Iannuzzi (No 3) at [242]; (5) the Reinstatement Orders in the form made were raised at the last minute, made in the absence of known (or reasonably knowable) third parties and, for all practical purposes, were made ex parte: Iannuzzi (No 3) at [242], [247]; (6) as the period under s 588FF(3) of the Corporations Act had already expired at the time of the making of the Reinstatement Orders, there was no reason why steps could not have been taken by the Liquidators on reinstatement to attempt to identify the parties likely to be affected by Order 3 before making any application for it: Iannuzzi (No 3) at [247]; (7) Order 3 was made with no real contradictor to assist the Court: Iannuzzi (No 3) at [247]; and (8) Justice Stewart's satisfaction that the Reinstatement Orders could be made, in the context of consent by those parties who were present at the time, was reached on the "barest of submissions", going only to the person aggrieved question in s 601AH of the Corporations Act, without identification of the Applicants as persons who might be affected by the order and without raising with the Court any authorities of relevance: Iannuzzi (No 3) at [156]-[157], [252]. 12 The Tabuso Applicants submit that it is sufficiently clear that Stewart J was deprived of critical information needed to properly determine whether Order 3 should be made, despite having drawn the parties' attention at an earlier stage to the question of notice to affected third parties. They contend that this is a relevant non-disclosure contrary to the Commissioner's duty of candour to the Court on ex parte applications. The Tabuso Applicants also submit that it is sufficiently clear that the Applicants were unreasonably denied procedural fairness in the process, which is implicit in Order 3 being set aside as of right. They contend that this flows from the issue of notice having previously been raised by the Court but apparently ignored by the Commissioner. 13 The Tabuso Applicants contend that the Court need look no further than the fact that no reasonable explanation has been given to date by the Commissioner or Mr Iannuzzi as to why Order 3 was put before the Court on a non-urgent basis at the last minute without notice. While the Commissioner only received the draft Reinstatement Orders containing Order 3 for the first time at 1.22 pm on the day those Orders were made and, accepting that it is conceivable that the Commissioner did not turn his mind to the question of whether potential defendants should be given notice, those circumstances do not ameliorate the unreasonableness of his consenting to Order 3. The Commissioner knew or should have known that consent was given on uncertain legal footing where known, or readily knowable, third parties' economic interests were directly and predictably affected. 14 The Kito Applicants submit that the relevant circumstance which warrants the making of an order for indemnity costs against the Commissioner is his failure to make full and proper disclosure to Stewart J when moving the Court to make Order 3. They submit that Order 3 was made ex parte in relation to the Applicants, without a real contradictor to assist the Court and "on the barest of submissions, without identification of the Applicants as persons who might be affected by the Order and without raising with the Court those authorities of most relevance…": see Iannuzzi (No 3) at [252], [247]-[251]. 15 The Kito Applicants submit that the non-disclosures by the Commissioner included: (1) that there was, on the face of the statutory wording of s 601AH(3) and s 588FF(3) of the Corporations Act, serious doubts as to whether the former gave the power to make Order 3 (or whether that Order would be effective); (2) that there was recent High Court authority in Grant Samuel Corporate Finance Pty Ltd v Fletcher (2015) 254 CLR 477 which, although in a slightly different context, held that s 588FF(3)(b) of the Corporations Act was the only power to vary the period in s 588FF(3)(a) of the Act; (3) failing to refer Stewart J to Spigelman CJ's remarks in BP Australia Limited v Brown (2003) 58 NSWLR 322 at [133]-[137]; (4) in relation to the RC Group, that the s 588FF(3)(a) period had expired on 17 August 2017 and Mr Iannuzzi had not made an application under s 588FF(3)(b) prior to that date; (5) as early as June or August 2015 the Commissioner had serious concerns about Mr Iannuzzi's conduct as liquidator of the Companies and considered applying to have him removed as liquidator but had ultimately not done so prior to 17 August 2017; and (6) Mr Iannuzzi was not prejudiced and stood to benefit from the making of Order 3. 16 The Kito Applicants submit that if the Commissioner had disclosed, as he ought to have done, those matters to Stewart J, his Honour would not have made Order 3 and, it follows, the Applicants would not have incurred the legal costs of the applications to set aside Order 3. The Kito Applicants submit that they do not seek an indemnity costs order to punish or penalise the Commissioner but rather to ensure that the Applicants are put back in the position, so far as possible, they would otherwise have been in if the Commissioner had made the proper disclosure. 17 The Kito Applicants submit that the Liquidators should be ordered to pay the Applicants' costs on the ordinary basis as they actively resisted the applications but played no role in the making of Order 3. 18 The Borg and Givana Applicants submit that failure to properly assist the Court is conduct deserving of criticism, particularly so when the orders sought affect the rights and obligations of persons not party to the proceeding. They contend that the Court's findings at [36], [156], [157], [242], [247] and [248] of Iannuzzi (No 3) establish that the conduct of the Commissioner is deserving of criticism. The Borg and Givana Applicants submit that this is particularly so because the Court did not obtain the assistance it ought to have received and therefore was led into error, an error it would not have made if properly assisted. The Borg and Givana Applicants submit that this circumstance provides an objective factor why the discretion to award indemnity costs ought to be exercised. 19 The Borg and Givana Applicants submit that the right to be heard is so well entrenched in the common law of Australia it can be inferred that the Commissioner made a deliberate decision to deny them an opportunity to be heard and that expediency, not fairness, informed the Commissioner. They contend that this can be the only reason why the Commissioner persisted with the argument recorded at [238] of Iannuzzi (No 3) that the onus was on the parties denied procedural fairness to show a material change in circumstances as a precondition to setting aside Order 3 of the Reinstatement Orders. 20 The Borg and Givana Applicants refer to s 55ZF of the Judiciary Act 1903 (Cth) and the Legal Services Directions 2017 issued by the Attorney General. They observe that Appendix B of the Legal Service Directions requires the Commissioner to act fairly and submit that, acting fairly, the Commissioner ought not to have sought Order 3 without notice to them. The Borg and Givana Applicants submit that the Commissioner's own standard fairly informs the Court how to exercise its discretion as to costs.

Legal principles 21 The principles were not in dispute. 22 In Federal Commissioner of Taxation v Rawson Finances Pty Ltd [2024] FCA 19 Perry J summarised the principles applicable to the exercise of the discretion to award indemnity costs at [11]-[13]: 11 This Court has a broad discretion to order costs under s 43 of the Federal Court of Australia Act 1976 (Cth): Wills v Chief Executive Officer of the Australian Skills Quality Authority (Costs) [2022] FCAFC 43 at [20] (Logan, Griffiths and Perry JJ). That discretion includes power to order that costs be paid on an indemnity, rather than a party/party, basis: Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 232-233 (Sheppard J). 12 The ordinary rule is that a party is entitled to costs on a party/party basis only. However, the ordinary rule may be departed from where there is "some special or unusual feature in the case to justify the Court in departing from the ordinary practice": Colgate-Palmolive at 233 (Sheppard J). That said, as the applicant submits, references in the cases to general rules or ordinary practices for the award of costs should not be understood as fettering the discretionary nature of such decisions: GR Vaughan (Holdings) Pty Ltd v Vogt [2006] NSWCA 263 at [20] Bryson JA at [20] (with whose reasons Hodgson and Santow JA agreed at [1] and [2]). Thus, the "categories in which the discretion may be exercised are not closed": Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd [1991] FCA 187 at [8] (French J). "The question", as Sheppard J explained in Colgate-Palmolive at 234, "must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis". 13 It is also well-established that "costs are awarded to indemnify a successful party in litigation, not by way of punishment": Oshlack v Richmond River Council (1998) 193 CLR 72 (Oshlack) at [1] (Brennan CJ). As Gray J helpfully explained in Hamod v New South Wales [2002] FCA 424; (2002) 188 ALR 659 at [20] (Carr J at [26] and Goldberg J at [27] agreeing): Indemnity costs are not designed to punish a party for persisting with a case that turns out to fail. They are not awarded as a means of deterring litigants from putting forward arguments that might be attended by uncertainty. Rather, they serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the Court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs. 23 In Graham Barclay Oysters Pty Ltd v Ryan (No 2) [2000] FCA 1220 a Full Court of this Court (Lee, Lindgren and Kiefel JJ) relevantly observed at [13] that: While the special circumstances in which indemnity costs may be ordered are not to be circumscribed, in all the cases in which they have been ordered of which we are aware, the party ordered to pay them has been guilty of conduct having a relevant connection with the litigation which has been unreasonable or has otherwise attracted criticism…

Consideration 24 At the heart of the Applicants' submissions is a contention that the application for Order 3 was, in effect, made ex parte and that in seeking those orders the Commissioner breached his duty of candour to the Court. 25 The Commissioner contends that Order 3 was not made ex parte and that, even if it was, there is no rule that, on a successful application to set aside an ex parte order, costs should be awarded on an indemnity basis. The Commissioner says that no special circumstances exist which would warrant such a course. 26 In order to resolve that question it is necessary to return to Iannuzzi (No 3). Relevantly at [240]-[242] and [247] of Iannuzzi (No 3) I found that: 240 The Reinstatement Orders were not made ex parte in the sense that they were made having regard to the fact that at the time the only parties to the proceeding were the Commissioner and Mr Iannuzzi and both of those parties were given an opportunity to be heard in relation to the proposed orders. Indeed, they were made by consent with only the Commissioner providing submissions. At the time those submissions only identified Mr Iannuzzi as a party potentially affected by the Reinstatement Orders. This was so despite, as I have found to be the case (see [209] above), those Orders contemplating that the period in s 588FF should, in effect, be extended to permit the bringing of claims in relation to alleged voidable transactions. 241 The proposal to reinstate the registration of some of the companies was in mind and discussed briefly at the hearing on 17 July 2019 but seemingly in the context of those companies, once reinstated, seeking compensation from Mr Iannuzzi (see [30] above). At that time no response was given to Stewart J's query as to whether other parties needed to be notified of the intention to seek orders for reinstatement of registration for some of the companies and the Commissioner suggested that the Court's power to make the proposed order came from s 536 of the Corporations Act (now repealed). That exchange between his Honour and senior counsel for the Commissioner was focussed on recovery from Mr Iannuzzi. 242 The Reinstatement Orders in the form made were, it seems, raised at the last minute. It is conceivable, given the way in which they came about (see [32]-[35] above), that neither the Commissioner nor Mr Iannuzzi turned their minds to the question of whether potential defendants should be given notice. However, both the Commissioner and Mr Iannuzzi were aware of the companies to be reinstated and that an order was to be sought with the effect of extending time to bring proceedings under s 588FF(1) of the Corporations Act. Those proceedings would not be against Mr Iannuzzi but against third parties. The Reinstatement Orders were made in the absence of those third parties including the Applicants. To that extent they were made ex parte. … 247 Order 3 of the Reinstatement Orders was made in the absence of the Applicants and, to that extent, as the Applicants submit, it was made ex parte. There was no particular urgency to the making of Order 3 of the Reinstatement Orders. The time prescribed by s 588FF(3) of the Corporations Act for the bringing of an application under s 588FF(1) had already expired and therefore there was no reason why steps could not have been taken by the Liquidators upon reinstatement to attempt to identify the parties likely to be affected by that Order before making any application for it to be made. Seemingly Mr Iannuzzi in fact benefitted from Order 3. Any funds recovered in proceedings brought under s 588FF(1) will reduce any amount for which he is found to be liable in the Negligence Proceedings. There was no real contradictor to assist the Court at the time the Orders were made. 27 As is evident from the extracts set out above, I found that Order 3 was not made ex parte in the strict sense. That is because the parties to the proceeding, the Commissioner and Mr Iannuzzi, were present and had the opportunity to be heard on the application for Order 3. However, Order 3 was made ex parte in the somewhat unusual circumstances of this case to the extent that the Applicants were not present and were not given an opportunity to be heard. 28 The next question that arises is whether the Commissioner knew the identity of any of the Applicants. Contrary to the submission of the Borg and Givana Applicants, I do not accept that it can be inferred that the Commissioner made a deliberate decision to deny any of the Applicants an opportunity to be heard. Rather the question is to be resolved by what the Commissioner knew at the time that Order 3 was made. 29 In the substantive proceeding the Commissioner sought, among others: by way of interlocutory relief, 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) into the external administration by Mr Iannuzzi of each of the companies listed in Sch A to the amended originating process (Inquiry Application); and, by way of final relief, orders pursuant to s 90-50 of the IPS or, alternatively, s 536 of the Corporations Act for Mr Iannuzzi's removal as liquidator of the companies listed in Pt 1 of Sch A to the amended originating process and for the appointment of a different person as liquidator of those companies. 30 At the hearing of the Inquiry Application Mr Iannuzzi relied on a document titled "Agreed Statement of Facts". Despite its title, it was not agreed by the Commissioner and was treated as a statement of concessions or admissions made by Mr Iannuzzi: see Iannuzzi (No 3) at [24], [26(1)]. The content of the Agreed Statement of Facts insofar as it concerned the Tabuso Group, a group of eight companies, and RC Group Aust Pty Ltd is set out at [28] and [29] of Iannuzzi (No 3). Notably these were all companies in relation to which Mr Iannuzzi and his former partner, Murray Godfrey, were appointed as liquidators and in relation to which the following admissions were made by Mr Iannuzzi: 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]. 31 Justice Stewart also made findings touching upon the Tabuso Group in Commissioner of Taxation v Iannuzzi (No 2) [2019] FCA 1818. As noted in Iannuzzi (No 3) at [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. 32 At the time of making Order 3 the companies in relation to which it was alleged that Mr Iannuzzi had failed to discharge his duties were known and Mr Iannuzzi had admitted to conduct which amounted to breach of duty in carrying out the liquidations of those companies. However, at the time Order 3 was made by the Court no competent liquidation had been carried out. The findings made by the Court in Iannuzzi (No 2) confirmed as much: see eg Iannuzzi (No 3) at [39]-[41]. 33 Accordingly, at the time Order 3 was made the Commissioner, a third party creditor and a stranger to any investigations undertaken or to be undertaken, could not have known the identity of the potential defendants to any proceedings to be brought under Div 2 of Pt 5.7B of the Corporations Act with any certainty. Potential defendants could only be identified once investigations had been completed as part of a competent liquidation. Any attempt by the Commissioner to identify third parties who might be affected by Order 3 would have been speculative. 34 That said, there are other relevant factors: first, given that the period in s 588FF(3) of the Corporations Act had already expired at the time Order 3 was made, there was no urgency to seek Order 3; secondly, it must have been clear at the time that any proceeding brought pursuant to s 588FF(1) of the Corporations Act would be brought against third parties who would be affected by Order 3; and thirdly, one of the orders made at the time of making Order 3 was for the reinstatement of the Companies and the appointment of the Liquidators with the intent that competent liquidations would be carried out, investigations undertaken and any causes of action identified including the putative defendants to any proceedings. It follows that the application for Order 3 could have been made at another time when the parties likely to be affected by it had been identified and could be given notice of the application. 35 To the extent that Order 3 was made ex parte and was set aside, this is not of itself a factor which automatically entitles the Applicants to their costs on an indemnity basis. Rather, there must be some "special or unusual feature" to justify departure from the usual rule and entitle the Applicants to an award of costs on an indemnity basis. I am not satisfied that there is any such special or unusual feature in the circumstances of this case. 36 As the Commissioner submits, at the time Order 3 was made he disclosed to the Court the facts then known to him and the legal principles as he understood them at the time. He and Mr Iannuzzi also sought an order in the form of Order 3 together with a further order (Order 4) which entitled any party against whom a proceeding may be brought in the future to approach the Court for variation or discharge of Order 3. That is what occurred. The Commissioner did not shut affected third parties out. 37 True it is that none of the arguments that were raised on the applications for discharge or variation of Order 3 were raised by the Commissioner or Mr Iannuzzi on their application at the time Order 3 was made. However, when Order 3 was made those arguments had not been identified and, given the power which the Court was asked to exercise at the time, a number of the authorities were not then directly relevant to the Court's consideration. 38 Even if I had been satisfied to the contrary, I would not exercise my discretion in favour of making an order for indemnity costs against the Commissioner. That is for two principal reasons. 39 First, the circumstances that existed at the time Order 3 was made. In particular, there had been no competent liquidation carried out in relation to the Companies, the Commissioner was not empowered to carry out the necessary investigations to identify potential causes of action and defendants and it was only after the appointment of the Liquidators that that could occur. Order 4 was included in the Reinstatement Orders as a means to seek to ameliorate any prejudice to any future defendant who might be disadvantaged by Order 3. 40 Secondly, the delay on the part of the Applicants is a ground for refusing to make an order for indemnity costs: see Redwin Industries Pty Ltd v Feetsafe Pty Ltd [2002] VSC 448 at [5]. Here the earliest that an application was brought for discharge of Order 3 was approximately 11 months after receiving notice of the making of the Reinstatement Orders. That application was brought by the Tabuso Applicants. I note that those applicants first signalled the arguments on which they ultimately relied before me to the Liquidators by letter dated 8 July 2002, which was still some eight months after becoming aware of Order 3. 41 The remaining Applicants brought their applications approximately 14 months after receiving notice, in the case of the Kito Applicants, and 16 months after receiving notice, in the case of the Borg and Givana Applicants. 42 The Applicants' delay caused prejudice to the Commissioner and more so to the Liquidators (as explained below) in terms of time and increased cost. Had the applications been brought earlier some of those costs (which were incurred in the Supreme Court Proceedings brought by the Liquidators) would have been avoided as those proceeding would have been adjourned at an earlier time pending the outcome of the applications for discharge of Order 3. The Applicants have provided only limited explanation for the delay and, in particular, why the applications could not have been brought at the same time they filed their defences in the Supreme Court Proceedings in which they raised the issue of whether the proceeding had been brought within time for the purposes of s 588FF(3) of the Corporations Act. 43 As the Commissioner submits this occurred in circumstances where the Applicants were relying on the passage of time as a source of alleged prejudice to them in their defence of the Supreme Court Proceedings and thus any delay operated to their forensic advantage. 44 The Tabuso Applicants also seek an order that the Liquidators pay their costs on an indemnity basis. I would also decline to make such an order. The issue of delay looms large as between the Tabuso Applicants and the Liquidators and is a powerful reason why I would not make an order for indemnity costs in their favour. As set out above, the Tabuso Applicants did not file their application for discharge of Order 3 in this Court until 11 months after they were served with the pleadings in the Supreme Court Proceedings and the Reinstatement Orders. In the meantime, the Liquidators incurred significant costs in connection with the Supreme Court Proceedings. 45 Nor can the Liquidators' opposition to the interlocutory applications of itself give rise to the special or unusual circumstances required to ground an order for indemnity costs. The Liquidators acted reasonably in resisting the applications and, as officers of the Court, attempted to assist in the resolution of complex issues that arose for determination. That they did so is, as the Liquidators submit, confirmed by the Order made on 23 February 2024 that their costs should be costs in the liquidation of the relevant Companies. No party, including the Tabuso Applicants, sought to resist that order. 46 Finally, that the Liquidators are indemnified by a creditor is not in my view a relevant consideration on the question of whether there should be an order for indemnity costs in this case. 47 No order for indemnity costs will be made in favour of the Applicants. It follows that it is not necessary for me to consider the applications to the extent they seek orders for apportionment of costs payable as between the Commissioner and the Liquidators.

Conclusion 48 The Commissioner and Liquidators are to pay the Applicants' costs of their respective interlocutory applications on a party and party basis as agreed or taxed, such costs to be payable forthwith. 49 I will make orders accordingly. I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Markovic.

Associate: Dated: 19 September 2024 SCHEDULE OF PARTIES No: NSD 1510 of 2017 Applicants Fourth Applicant: DIESEL DAN (NSW) PTY LTD ACN 165 673 101 Fifth Applicant: JOHN TABUSO Sixth Applicant: MIRJANA TABUSO Seventh Applicant: MAURIZIO LIGORI

Respondents Third Respondent: GAYLE DICKERSON AND STEPHEN ERNST VAUGHAN IN THEIR CAPACITY AS THE JOINT AND SEVERAL LIQUIDATORS OF RC GROUP AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 164 000 462 Fourth Respondent: ACN 128 613 016 PTY LTD (IN LIQUIDATION) (FORMERLY KNOWN AS SILVERHILLS HAULAGE AUSTRALIA PTY LTD) ACN 128 613 016 Fifth Respondent: GAYLE DICKERSON AND STEPHEN ERNST VAUGHAN IN THEIR CAPACITY AS THE JOINT AND SEVERAL LIQUIDATORS OF ACN 128 613 016 PTY LTD (IN LIQUIDATION) (FORMERLY KNOWN AS SILVERHILLS HAULAGE AUSTRALIA PTY LTD) ACN 128 613 016 Sixth Respondent: ACN 110 905 774 PTY LTD (IN LIQUIDATION) (FORMERLY KNOWN AS CO-ORDINATED TRANSPORT SOLUTIONS PTY LTD) ACN 110 905 774 Seventh Respondent: GAYLE DICKERSON AND STEPHEN ERNST VAUGHAN IN THEIR CAPACITY AS THE JOINT AND SEVERAL LIQUIDATORS OF ACN 110 905 774 PTY LTD (IN LIQUIDATION) (FORMERLY KNOWN AS CO-ORDINATED TRANSPORT SOLUTIONS PTY LTD) ACN 110 905 774 Eighth Respondent: DIESEL DAN PTY LTD (IN LIQUIDATION) ACN 127 303 682 Ninth Respondent: GAYLE DICKERSON AND STEPHEN ERNST VAUGHAN IN THEIR CAPACITY AS THE JOINT AND SEVERAL LIQUIDATORS OF DIESEL DAN PTY LTD (IN LIQUIDATION) ACN 127 303 682 10th Respondent: ACN 146 285 029 PTY LTD (IN LIQUIDATION) (FORMERLY KNOWN AS FARA LOGISTICS (AUST) PTY LTD) ACN 146 285 029 11th Respondent: GAYLE DICKERSON AND STEPHEN ERNST VAUGHAN IN THEIR CAPACITY AS THE JOINT AND SEVERAL LIQUIDATORS OF ACN 146 285 029 PTY LTD (IN LIQUIDATION) (FORMERLY KNOWN AS FARA LOGISTICS (AUST) PTY LTD) ACN 146 285 029 12th Respondent: INTER MANAGEMENT GROUP PTY LTD (IN LIQUIDATION) ACN 105 115 759 13th Respondent: GAYLE DICKERSON AND STEPHEN ERNST VAUGHAN IN THEIR CAPACITY AS THE JOINT AND SEVERAL LIQUIDATORS OF INTER MANAGEMENT GROUP PTY LTD (IN LIQUIDATION) ACN 105 115 759 14th Respondent: ACN 133 636 414 PTY LTD (IN LIQUIDATION) (FORMERLY KNOWN AS ITS - INTERFREIGHT TRANSPORT SOLUTIONS PTY LTD) 15th Respondent: GAYLE DICKERSON AND STEPHEN ERNST VAUGHAN IN THEIR CAPACITY AS THE JOINT AND SEVERAL LIQUIDATORS OR ACN 133 636 414 PTY LTD (IN LIQUIDATION) (FORMERLY KNOWN AS ITS - INTERFREIGHT TRANSPORT SOLUTIONS PTY LTD) 16th Respondent: GEORGE KHALIL 17th Respondent: FRED KHALIL 18th Respondent: KATHERINE KHALIL 19th Respondent: KITO INVESTMENTS PTY LIMITED 20th Respondent: MICHAEL BORG 21st Respondent: BORG FAMILY PTY LIMITED 22nd Respondent: 746 GREENDALE ROAD GREENDALE PTY LTD 23rd Respondent: THE GREAT BROTHERS PTY LTD 24th Respondent: AKA CIVIL AUSTRALIA PTY LTD (IN LIQUIDATION) 25th Respondent: AKA (NSW) PTY LTD (IN LIQUIDATION) 26th Respondent: MAGIC GLASS PTY LIMITED 27th Respondent: LEVEL 33 PROPERTY GROUP PTY LIMITED 28th Respondent: THE HADD GROUP PTY LIMITED 29th Respondent GIVANA (HOLDINGS) PTY LIMITED 30th Respondent: CANER DOGAN 31st Respondent: BORN PTY LTD 32nd Respondent: EASTBORN PTY LTD 33rd Respondent: SONIA HADDAD 34th Respondent: JONATHON COOPER 35th Respondent: ACE GADIS 36th Respondent: ANNIE CRABBIE 37th Respondent: NIZAR HAIDAR 38th Respondent: MIRVAT HAIDAR 39th Respondent: MONICA ABBOUD 40th Respondent: PASCKAL MITRY 41st Respondent: VICTOR PACE 42nd Respondent: CATHERINE PACE 43rd Respondent: SLAVEN SURLA 44th Respondent: MARIAN RAHME 45th Respondent: PETER ABBOUD 46th Respondent GIVANA PTY LTD 47th Respondent: MAGGIE CHAN IN HER CAPACITY AS THE EXECUTRIX OF THE ESTATE OF THE LATE MURRAY RODERICK GODFREY 48th Respondent: VERITAS ADVISORY PTY LTD 49th Respondent: DAVID NICHOLAS IANNUZZI

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