ASIC has caused two property developers, JCF and GJK, from the ACT to be banned as company directors. The disqualification stems from their involvement in the failure of several companies between January 2019 and August 2021.
The companies involved were Be Athletic Canberra Pty Ltd ACN 619 049 740, Tiger Property Group Pty Ltd ACN 601 334 749, 3 Property Group 13 Pty Ltd (ACN 621 691 932), and Lifestyle Homes Accounts (ACT) Pty Ltd (ACN 625 959 097).
ASIC found that JCF and GJK did not manage the companies to the standard expected of directors. Specifically, in the case of JCF, ASIC determined that he:
- 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.
- Failed to adequately monitor the financial affairs of 3PG13 and traded while insolvent.
- Deferred the payment of tax in favour of maintaining the cash flow of other companies managed by him.
As for GJK, ASIC determined that he:
- Failed to ensure Lifestyle Homes complied with its ATO obligations.
- Failed to adequately monitor the financial affairs of Lifestyle Homes and 3PG13 and trading 3PG13 while insolvent.
- Deferred the payment of tax in favour of maintaining cash flow for other companies managed by him.
ASIC also decided that JCF and GJK resigned as directors of the companies to protect their credit rating. This, ASIC found, allowed them to manage other companies in the group, causing harm to the credit rating of PKNH, the replacement director.
ASIC also disqualified PKNH from managing corporations for two years for his involvement in the failure of five companies where JCF and/or GJK were previous directors.
At the time of ASIC’s decisions, the companies owed a combined total of $9,435,642 to unsecured creditors, including significant amounts to the ATO. Since the disqualification of JCF and GJK in October 2023, five more companies within the group have entered liquidation.
JCF, GJK, and PKNH are ineligible to oversee corporations until 23 October 2025. ASIC employs s206F to disqualify directors engaged in the management of two or more companies undergoing liquidation. In essence, the burden of proof is reversed, requiring directors to demonstrate that ASIC’s disqualification is unjustified. In building its justification for the banning, ASIC assesses the director’s behaviour regarding entity management, considers the public interest, and examines any relevant factors that ASIC considers appropriate. JCF and GJK are pursuing a reassessment of ASIC’s decision through the Administrative Appeals Tribunal.