Why ASIC banned 3 Property Group directors

Banned company directors Gary Kelly and Jaime Farrelly failed to pay tax and continued to trade while insolvent.

The corporate watchdog has released its reasons for banning the Canberra developers from running a company for two years after the pair failed in their bid in the Administrative Appeals Tribunal to keep the action secret.

The Australian Securities and Investment Commission banned the pair on 28 September last year, but they have sought a review of the decision in the AAT.

They had asked the AAT to suppress ASIC’s decision and stay the ban while it was under review so as not to jeopardise the refinancing of a development project.

Mr Kelly of Wright and Mr Farrelly of Kingston were directors of a number of companies related to 3 Property Group, which was behind several townhouse developments across Canberra, including Form in Coombs, Debut in Wright, and Allegro and Vivace in Throsby.

ASIC said the ban was due to their involvement in the failure of companies between January 2019 and August 2021.

Mr Farrelly and Mr Kelly were directors of Be Athletic Canberra Pty Ltd (Be Athletic); A.C.N. 601 334 749 Pty Ltd, formerly Tiger Property Group Pty Ltd (TPG); and 3 Property Group 13 Pty Ltd (3PG13).

Mr Kelly was also a director of Lifestyle Homes Accounts (ACT) Pty Ltd (Lifestyle Homes).

The companies were involved in developing commercial and residential properties in Canberra.

ASIC found that Mr Farrelly and Mr Kelly failed to manage the companies to the standard expected of company directors.

It said Mr Farrelly allowed TPG to lend $7,437,710 to related entities without documenting the terms of the loans and resigned as a director of TPG before ensuring the loans were repaid.

He also failed to adequately monitor the financial affairs of 3PG13, traded while insolvent and deferred payment of tax in favour of maintaining the cash flow of other companies he managed.

Mr Kelly failed to ensure Lifestyle Homes complied with its Australian Taxation Office (ATO) obligations to lodge activity statements and payment summaries.

He also failed to adequately monitor the financial affairs of Lifestyle Homes and 3PG13, traded 3PG13 while insolvent and deferred the payment of tax in favour of maintaining cash flow for other companies managed by him.

ASIC also found that Mr Farrelly and Mr Kelly resigned as directors of the companies to protect their credit rating and allow them to manage other companies in the group.

The man who stepped into the roles, Paul Kenneth Nimal Hamilton, was also banned by ASIC from running a company for two years, saying he showed a lack of commercial morality.

At the time of ASIC’s decision, the companies owed a combined total of $9,435,642 to unsecured creditors, including $3,084,593 to ATO and $19,652 to the ACT Office of Revenue.

Since then, five more companies within the group have entered liquidation – KFT Group (ACT) Pty Ltd, Stormer Building Group No 2 Pty Ltd, Stormer Building Group Pty Ltd, 3 Property Group 4 and Lifestyle Homes (ACT) No. 1 Pty Ltd.

Mr Farrelly, Mr Kelly and Mr Hamilton are disqualified from managing corporations until 23 October 2025.

In 2022, a number of other 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.