Two court rulings this month have paved the way for the continued investigation of property developers Allen Caratti and Tina Bazzo, who are being pursued by the Australian Tax Office, the Federal Police, and liquidators.
Two court rulings this month have paved the way for the continued investigation of property developers Allen Caratti and Tina Bazzo, who are being pursued by the Australian Tax Office, the Federal Police, and liquidators.
The Supreme Court has given McGrathNicol partners Rob Kirman and Jamie Harris an extra 18 months to continue their investigations, in their capacity as liquidators of six companies associated with Mr Caratti and Ms Bazzo.
The extension, to October next year, was believed to the longest ever granted to a liquidator in Western Australia, reflecting the complexity of their task.
Separately, the Court of Appeal has upheld an earlier ruling that allowed for an examination of Mr Caratti and Ms Bazzo by the liquidators to be held in public.
In their appeal, Mr Caratti and Ms Bazzo had cited special circumstances, according to the published judgement.
These included “the strong likelihood” they will face “serious criminal charges” arising from the financial and trading affairs of their companies.
They also said they were “the main targets of the largest and most complex fraud investigation that the (ATO) in Perth has encountered”.
The ATO began an investigation of Mr Caratti, his brother John Caratti, and Ms Bazzo in 2008, under the name Project Caballus.
In 2014, the investigation was expanded to include the AFP, with the two entities operating under the name Operation Caballus.
The scale of Mr Caratti’s and Ms Bazzo’s business dealings was outlined in the separate ruling by Master Craig Sanderson.
“The broader Caratti/Bazzo group consists of an aggregation of proprietary companies, family trusts and bare trusts involved in real estate in Western Australia,” Master Sanderson wrote.
“Primarily in the business of the development of lots for residential, commercial and industrial purposes in addition to investment in commercial and farming properties leased to third parties.”
The liquidators have calculated that the liabilities of the eight Caratti/Bazzo companies that are in liquidation is more than $310 million, with the ATO claiming about half that.
“The extent of the insolvency gives some indication of the size and complexity of the business,” Master Sanderson stated.
The companies in liquidation include GH1 Pty Ltd and MNWA Pty Ltd, which Master Sanderson described as the main trading entities for the group.
GH1, formerly known as Gucce Holdings, held most of the group’s land for development and Ms Bazzo was its sole director.
MNWA, formerly Mammoth Civil, owned the group’s plant and equipment and conducted much of the development work. Mr Caratti was its sole director.
Another entity in liquidation is Whitby Land Company, which was behind one of Mr Caratti’s largest projects – the development of Piara Waters estate in Perth’s south.
All the liquidated entities went into administration or liquidation after April 5 2017, which meant the liquidators were about to pass the three-year time limit to launch proceedings.
Master Sanderson approved an extension of time, after assessing a confidential affidavit from the liquidators that included 43 pages of evidence.
He also noted the extensive investigative efforts undertaken by the liquidators so far.
These include issuing more than 200 statutory notices to the directors and other persons to produce books and records, applying for more than 50 court orders for the production of documents, conducting three examinations, and reviewing 250 archive boxes of documents seized by the ATO and AFP after they executed search warrants.
Master Sanderson accepted the claim by the liquidators that they needed more time.
“The plaintiffs consider the volume of documents produced by the directors and officers to date has been minimal, particularly in light of the extent of the commercial activities and revenues that were generated by the liquidation entities,” his judgement stated.
“The interested parties (Mr Caratti and Ms Bazzo) dispute that that is the case.
“Taking into account the extent of the insolvency and what that indicates about the income generated by the liquidation entities’ business activities, I am satisfied the plaintiffs have made good this point.”
Master Sanderson also noted the liquidators and interested parties had taken numerous court actions.
Without apportioning blame or responsibility, he said the litigation had caused delays, which was another reason to grant an extension.
Meanwhile, the Court of Appeal has rejected the arguments put forward on behalf of Mr Caratti and Ms Bazzo, that the liquidator’s public examination should be held in private.
“In our view, the material before the primary judge fell well short of establishing any real or substantial risk that a publication of reports of the appellants’ examinations will interfere with the administration of justice in any future criminal trial,” the judgement stated.
In reaching this conclusion, the appeal judges said the potential impact of a public examination on a criminal trial had to be balanced against the legislative policy that public examinations are generally beneficial to the commercial and general community.
They noted there were no pending charges against Mr Caratti or Ms Bazzo, adding it was unclear if they would ever be charged and, if so, what those charges may be.
"The ATO investigation has been ongoing since 2008 and the joint ATO/AFP investigation since 2014," the Court of Appeal judgement stated.
"The absence of any charges in 2020 suggests that the investigation has not yet identified evidence establishing a prima facie case with reasonable prospects of success against either appellant.
“Even if charges were to be brought against the appellants in the near future, it would inevitably be a long time before any trial occurred,” the appeal judges concluded.
“Given the litigious history of the present proceedings, and those challenging the validity of the search warrants, it may be inferred that any prosecution will be tenaciously defended.
“A trial would likely be years rather than months away.
“Even if charges were instituted in the near future, the prospects of any juror recalling a media report of an examination of the appellants in relation to the affairs of Mammoth Civil and Gucce Holdings would be extremely remote.
“In so saying, we reject the appellants’ submission that their, especially Mr Caratti’s, notoriety would lead to a high level of publicity with an enduring effect.”
