WA Supreme Court denies ATO right to intervene in $71 million tax dispute

The Supreme Court of Western Australia has refused to allow the Australian Taxation Office to intervene in proceedings concerning whether liquidators should abandon challenges to approximately $71 million in tax liabilities, ruling that the Commissioner's financial interest as a creditor was insufficient to justify participation.

The dispute concerns GH1 Pty Ltd and MNWA Pty Ltd, two companies that have been in liquidation since April 2017. Their liquidators, Robert Kirman and William Harris of McGrathNicol, are seeking directions under section 90-15 of the Insolvency Practice Schedule confirming that they would be justified in discontinuing four proceedings before the Administrative Review Tribunal (ART).

The proceedings, commenced between 2014 and 2016, challenge tax assessments relating to MNWA for the financial years ending 30 June 2011, 2012 and 2013, including the disallowance of deductions for interest and development expenditure. The disputed liabilities total approximately $71 million, excluding the General Interest Charge.

No substantive steps have been taken in the ART proceedings since the liquidators' appointment in 2017. In August 2026, the Commissioner applied to have the proceedings dismissed, while the liquidators separately sought the Court's approval to bring them to an end.

Allen Caratti and Tina Bazzo, who oppose the proposed discontinuance, subsequently obtained leave to participate in the Supreme Court proceedings and filed applications seeking authority to continue the tax challenges on behalf of the companies. Caratti and Bazzo are Western Australian property developers and de facto partners who formerly controlled MNWA and GH1, respectively, and have been involved in longstanding disputes with the ATO over the tax affairs of their property development businesses. They also sought to be joined to the ART proceedings.

The Commissioner applied for leave to be heard as an interested party in the Supreme Court proceedings, arguing that he had a direct financial interest because the disputed assessments represented debts owed by the companies and a substantial economic interest in the operation of any orders made.

Justice Hill accepted that the Commissioner was a creditor and that the Court had the power to grant him leave to participate under rule 2.13 of the Supreme Court (Corporations) (WA) Rules 2004. However, she held that those considerations did not warrant the exercise of the Court's discretion.

The judge distinguished between the Commissioner's commercial interest in recovering the disputed tax liabilities and the question actually before the Court, namely whether the liquidators or Mr Caratti and Ms Bazzo should be authorised to control the ART proceedings.

Justice Hill acknowledged that discontinuing the tax challenges would have a significant impact on the Commissioner's claims as an unsecured creditor, but concluded that this financial interest alone did not justify granting leave.

The Court also found that the existing parties were capable of properly contesting the applications. The liquidators were already participating in the proceedings, and there was no suggestion that they would fail to raise relevant issues.

Importantly, the Commissioner retained an opportunity to oppose Mr Caratti and Ms Bazzo's applications to join the ART proceedings, where he was already a party. Justice Hill considered that tribunal an appropriate forum for determining objections concerning their proposed participation.

The Court also addressed notices to produce served on the Commissioner by Mr Caratti and Ms Bazzo. The notices were ineffective because the Commissioner was not a party to the Supreme Court proceedings, a position Mr Caratti and Ms Bazzo ultimately accepted.

Justice Hill dismissed the Commissioner's application for leave to be heard. The substantive applications concerning whether the tax challenges should be discontinued or pursued by Mr Caratti and Ms Bazzo remain unresolved, with a hearing scheduled for 11 November 2026.

Read the decision here.

HWL Ebsworth Lawyers acted for the liquidators, Robert Kirman and William Harris of McGrathNicol, while Biyara Legal acted for Mr Caratti and Ms Bazzo.