Two Canberra property developers disqualified – January 12, 2024
Jamie Charles Farrelly and Gary James Kelly have both been disqualified from managing corporations for two years each – due to their involvement in the failure of four companies between January 2019 and August 2021.
Farrelly and Kelly were directors of:
- Be Athletic Canberra Pty Ltd;
- A.C.N. 601 334 749 Pty Ltd – formerly Tiger Property Group Pty Ltd (TPG); and
- 3 Property Group 13 Pty Ltd.
Kelly was the also a director of Lifestyle Homes Accounts (ACT) Pty Ltd.
In its investigation, ASIC found that Farrelly allowed TPG to lend A$7,437,710 ($4,982,060) to related entities without documenting the terms of the loans. He also resigned before ensuring the loans were repaid. Kelly failed to ensure that Lifestyle Homes complied with its tax obligations to lodge activity statements and payment summaries.
Both failed to adequately monitor the financial affairs of some of the companies, and also let some trade while insolvent. They also deferred tax payments to maintain the cashflow of other companies.
ASIC also found that both resigned as directors in order to protect their credit rating yet still allow them to manage other companies in the group. They also caused harm to the credit rating of the replacement director Paul Kenneth Nimal Hamilton by exposing him to being disqualified as a director under the Corporations Act s206F.
At the time of ASIC’s decision, the companies owed a total of A$9,435,642 ($6,318,297) to unsecured creditors, including A$3,084,593 ($2,065,506) to the tax office and A$19,652 (13,160) to ACT Office of Revenue.
Since ASIC’s decision to disqualify Kelly and Farrelly in October 2023, these five companies within the group have also entered liquidation:
- KFT Group (ACT) Pty Ltd;
- Stormer Building Group No 2 Pty Ltd:
- Stormer Building Group Pty Ltd;
- 3 Property Group 4 Pty Ltd; and
- Lifestyle Homes (ACT) No. 1 Pty Ltd
Both Kelly and Farrelly are seeking a review of ASIC’s decision by the Administrative Appeals Tribunal.
Hamilton was also earlier disqualified from managing corporations for two years due to his involvement in the failure of five companies where Kelly and/or Farrelly were previous directors.
Four directors fined A$390,000 – January 10, 2023
Four current and former directors of Endeavour Securities (Australia) Ltd and Linchpin Capital Group Ltd (both in liquidation) have been ordered by the Federal Court to pay A$390,000 ($261,345) in directors’ duties penalties.
Ian Williams, Paul Raftery, Paul Nielsen and Peter Daly were earlier found to have breached their officer’s duties, by not complying with its compliance plan, not acting in the best interests of members, and more. Daly and Raftery were also found to have improperly used their positions by receiving unsecured loans – A$130,000 vs A$40,000 – ($86,963 and $26,758) from the unregistered Investport Income Opportunity Fund for personal use.
Nielson and Williams will each pay a A$100,000 ($66,965) penalty and be banned from managing corporations for four years. Raftery will pay a A$40,000 ($26,786) and be banned for three years.
Daly, who was the only one to contest ASIC’s case, will pay A$150,000 ($100,212) and be banned for five years.
Nielsen, Raftery and Williams have also agreed to each pay A$175,000 ($117,052) towards ASIC’s costs. Daly has also been ordered to pay the same sum.
Besides the new bans, all four already received banning orders in November 2019, preventing each of them from providing any financial services for five years.
“The lack of remorse or contrition demonstrated by Mr Daly … is relevant in that it suggests a higher penalty is warranted for the penalty to achieve the objective of specific deterrence.”
Justice Cheeseman
ASIC news weeks 1-2
Extended product intervention orders
The product intervention orders made in relation to short-term credit and continuing credit contracts have been extended to remain in force until they are revoked or sunset on October 1, 2032.
The orders came into effect in July 2022, and have reinforced consumer protections by preventing the provision of short-term credit and continuing credit contracts that involve unreasonably high fees.
“Extending these product intervention orders ensures continued protection in the market against these high-cost lending products,” said ASIC deputy Chair Sarah Court.