ASIC in legal battle with NSW property developer

The Australian Securities and Investment and Commission has claimed a partial victory over a New South Wales property developer after the NSW Supreme Court found the company has breached the Corporation’s Act in the way it sold debentures to fund its property development.

Great Northern Developments is based in the NSW town of Richmond, but concentrates on property developments in Queensland. Its website lists developments including a retirement village in Gympie and apartment blocks in Brisbane and on the Sunshine Coast.

ASIC alleged the company was raising funds via debentures from individual investors, and was running an unregistered managed investment scheme in contravention of the Corporation’s Act. The watchdog had asked the court to wind up the scheme.

However, GND denied the claim that it was running a managed investment scheme and was therefore not required to produce disclosure documents that are required under the Corporations Act.

In the end, the case ended in a something of a legal tie.

NSW Supreme Court judge Justice Richard White found GND was selling debentures, and found that the company had breached the Corporations Act by not appointing a trustee and entering into a trust deed, as companies that sell debentures are required to do. GDN has been given 52 days to comply.

However, White dismissed ASIC’s claims that the company was operating a managed investment scheme.

White also stood over ASIC’s application to wind up GND to date later to be fixed. However, if GND complies with Court’s orders, the application will be dismissed.

GND was contacted for comment, but was unable to reply prior to publication.

The matter will return to court on November 12.