Two Canberra property developers banned for two years

It has emerged that two Canberra developers were banned last year from running a company for two years after the pair lost a bid to have the decision suppressed and put on hold while they pursued a review.

The Australian Securities and Investment Commission banned 3 Property Group directors Gary Kelly and Jaime Farrelly on 28 September 2023.

They were directors of at least five companies that were wound up between 2019 and 2021, and liquidator reports identified possible mismanagement and that they had potentially broken the law.

A month later, ASIC slapped a two-year ban on Paul Hamilton, who had stepped in as a director of the five companies to allow the former directors to maintain their credit scores and continue to be directors of other companies in the group.

The pair have sought a review of the ASIC decision and, in the meantime, asked the Administrative Review Tribunal to stay the ban so they could still run certain companies and keep ASIC from making the ban public.

They also sought confidentiality orders so a hearing would be private and restrain ASIC from discussing the case.

But Deputy President Bernard McCabe this week ruled that he was not satisfied with keeping the ASIC decision secret and that a stay would not be desirable or appropriate.

Mr McCabe said the pair wanted to remain in charge of companies engaged in a significant property development that, if successful, would deliver a “handsome profit” and were concerned that refinancing would be difficult if news of the ban came out, putting the viability of the entire group at risk.

“The applicants say they need to remain in control of the companies in question so they can quietly arrange a new finance facility away from the glare of media attention,” Mr McCabe said.

But he said the pair were, in effect, asking the Tribunal to assist them in keeping third parties, such as financiers and creditors, in the dark.

“The Tribunal ventures onto dangerous ground when it starts to second-guess what strangers in a marketplace might want or need to know as they deal with an actor who happens to be a party before the Tribunal,” Mr McCabe said.

Affected parties would be understandably upset when they learned about the ban, especially if the Tribunal substantially affirmed ASIC’s findings, it said. Doing so would undermine confidence in the regulator and amount to an intervention in the market to make it less transparent.

A stay would also potentially embarrass the corporate watchdog and place it in a difficult position if the media or a financier made inquiries.

3 Property Group was involved in several disputes over rescinded contracts in 2021 that resulted in the ACT Government changing the law to better protect off-the-plan buyers.

Its townhouse projects include Form in Coombs, Debut in Wright, and Allegro and Vivace in Throsby.

In 2022, many of the 3 Property Group companies were renamed as variations of Elly Property.

An ASIC search shows that the directors of several Elly Property companies are listed as Emily Kelly, understood to be Mr Kelly’s wife, and Saphyre Ann Farrelly, understood to be Mr Farrelly’s 18-year-old niece.