|Hall Chadwick partner|
On Tuesday, August 4, Richard Albarran and David Ross resigned as VAs of Midland HWY Pty Ltd, neutralising an application brought by the Australian Securities and Investments Commission (ASIC) in the Federal Court, which sought a ruling that their appointment was invalid.
Ross told Fairfax Media that he was disappointed that ASIC had not advised either he or Albarran that it was investigating Midland HWY "prior to them lodging an application to have us removed".
ASIC made the application after the first meeting of Midland's creditors on July 14. At the meeting a resolution to replace the company's initial VAs, Nick Martin and Craig Crosbie of PPB Advisory, with Albarran and Ross was approved. An ASIC officer attended the meeting.
Tim Mulally, ASIC's head of enforcement - financial services said the regulator became concerned after Ben Skinner, principal of Melbourne law firm Evans Ellis Lawyers, told the meeting that he referred 50 per cent of his insolvency work to Hall Chadwick.
"It's something that we looked at and decided in the circumstances it might not be the best look to have Mr Ross and Mr Albarran as the administrators and we thought it was something that we should take action on," Mulally said.
"We are concerned to ensure that the circumstances around this particular investment are looked at closely and the circumstances around what has happened to the money that's been invested into the development.
"As we understand there's approximately 700 investors and $28 million invested and there's been a number of transactions - assignments under option agreements and assignments of rights under other agreements that we're concerned are looked at to ensure that they're appropriate and legally effective and under those circumstances we consider it very important that the administrators are seen to be and are, independent and impartial.
"We do not say Mr Ross and Mr Albarran are not independent or impartial but in circumstances where Mr Skinner has indicated that he refers about 50 per cent of his insolvency work to Hall Chadwick, we were concerned that that may raise a perception," Mulally said.
The extent of the relationship was disclosed when Skinner spoke to the meeting in support of the resolution to replace Crosby and Martin. Mulally said also that the level of Evans Ellis's involvement in the scheme meant it was critical that no doubts could be raised about the independence of Midland HWY's VAs.
"Mr Skinner is a director of a number of relevant entities and the lawfirm is, as we understand, lawyers for a number of the people involved."
Skinner told the meeting that his firm has power of attorney to act for Project Management (AUST) Pty Ltd, the company managing the Midland development.
Project Management (AUST) Pty Ltd is associated with Michael Stefan Grochowski of Hampton in Victoria, who is currently serving a four year ban from providing financial services for breaches of financial services laws whilst a director and officer of Sovereign MF Limited between 2003 and 2010.
Mulally said there is no suggestion Grochowski is in breach of financial services laws in regards to the Midland HWY development, known currently as Hermitage, or even that the project had necessarily failed.
"While Midland HWY is administration, that doesn't mean all the money is lost, it doesn't mean that the development won't occur. At this stage we're not in a position to say everyone's lost their dough and we also understand that this particular development may have better prospects than some other land banking developments," he said.
"We're making enquiries into various land banking schemes which have been promoted by various entities and we're looking at the representations that have been made to investors, what has subsequently happened to the money that's been invested into those schemes and we're looking at whether or not the schemes are in fact managed investment schemes which should be registered and whether the entities involved should be licensed," Mulally said.
After reinstating Crosbie and Martin the Federal Court ordered that the second meeting of creditors be held no later than October 7.
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