The national corporate regulator found two Canberra developers failed to document a $7 million loan and resigned as directors to protect their credit rating, before banning them for two years.
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The Australian Securities and Investments Commission has disqualified Jaime Farrelly and Gary Kelly from managing corporations until October 23, 2025.
Mr Farrelly and Mr Kelly have applied to have the decision reviewed.
The pair were the directors of 3 Property Group and various associated companies, which developed residential and commercial projects across the ACT.
While ASIC's disqualification came into effect in October 2023, it was only made public in January after the directors' attempts to suppress and stay the decision review failed.
The regulator's investigations found Mr Farrelly and Mr Kelly resigned as directors of four companies "to protect their credit rating and allow them to manage other companies in the group".
The directors then put Paul Hamilton, 3 Property Group's sales manager, in as replacement director, who was also disqualified by ASIC in October 2023.
Director lent $7 million to related entities
ASIC found Mr Farrelly and Mr Kelly were involved in the failure of four companies between January 2019 and August 2021.
They were both involved in the following companies:
- Be Athletic Canberra Pty Ltd
- A.C.N. 601 334 749 Pty Ltd (formerly Tiger Property Group Pty Ltd)
- 3 Property Group 13 Pty Ltd.
ASIC found Mr Kelly was also a director of Lifestyle Homes Accounts (ACT) Pty Ltd.
The investigations found Mr Farrelly allowed Tiger Property Group to lend more than $7.4 million to related entities without documenting the terms of the loans.
He resigned as a director of Tiger Property Group before the loans were repaid, ASIC found.
Both directors were found to have traded 3 Property Group 13 Pty Ltd while insolvent and failed to adequately monitor the company's financial affairs.
The directors also deferred tax payments "in favour of maintaining cash flow for other companies", ASIC said.
At the time ASIC disqualified the three directors, the companies investigated owed a combined total of more than $9.4 million, including about $3 million to the Australian Tax Office.
More 3 Property Group companies in liquidation
Since the disqualifications, five more companies related to 3 Property Group have entered liquidation.
The companies are:
- KFT Group (ACT) Pty Ltd
- Stormer Building Group No 2 Pty Ltd
- Stormer Building Group Pty Ltd
- 3 Property Group 4 Pty Ltd
- Lifestyle Homes (ACT) No. 1 Pty Ltd.
The 3 Property Group portfolio of companies includes dozens of businesses, ASIC searches have revealed.
A 2021 creditor's report for one of the companies found Mr Kelly and Mr Farrelly were listed as current or former directors of more than 40 companies each at the time.
Their residential projects include Debut in Wright, Form in Coombs, Vivace and Allegro in Throsby and Avani terraces in Greenway.
The group attempted to cancel a series of off-the-plan townhouse contracts and resell the properties at a higher price in 2021 and 2022. It led to a major change in ACT legislation.
ASIC relied on reports lodged by liquidator Stephen Hundy of Worrells Solvency and Forensic Accountants to disqualify the directors.
A 2021 creditor's report for one of the companies found Mr Kelly and Mr Farrelly were listed as current or former directors of more than 40 companies each at the time.
In 2022, many of the 3 Property Group companies were renamed to variations of Elly Property.
Emily Kelly, understood to be Mr Kelly's wife, and Saphyre Ann Farrelly, understood to be Mr Farrelly's 18-year-old niece, are now listed as directors of several Elly Property companies.
When contacted by The Canberra Times on Thursday, Mr Farrelly said the construction industry had been through a "very horrible period" and the directors had suffered as a result.