It follows a decision from Justice Stewart Anderson upholding the Australian Securities and Investments Commission’s claims that the companies engaged in conduct that was misleading or deceptive.

Mayfair 101 bought Dunk Island, in the Whitsundays, in 2019 and raised an estimated $200 million from investors for a property development scheme. Dunk was later repossessed.

ASIC had submitted that penalties against the four companies, all of which had a common director, James Mawhinney,  should total $12 million.

But Justice Anderson said that was insufficient and was scathing in his comments about Mawhinney.

“I did not find Mr Mawhinney to be a credible witness,’’ Justice Anderson said. 

“Mr Mawhinney refused to make even the most obvious concessions to the failures of the Mayfair Group of companies to make disclosure to investors of the risks faced by them in investing in the Mayfair products. 

“The impression I obtained from Mr Mawhinney’s demeanour in giving evidence was that Mr Mawhinney was determined to allocate blame for the substantial losses incurred by investors to ASIC for taking enforcement action against Mr Mawhinney and the Mayfair Group of companies. Mr Mawhinney refused to accept that investors did not have first-ranking security over real property assets.’’

He said he considered that the penalties sought by ASIC were insufficient and did not fully recognise the serious nature and the extent of the loss and harm caused by the contravening conduct. 

Justice Anderson said he accepted expert evidence that one of the companies which was the  issuer of the Core Notes, M101 Nominees, “has been insolvent since inception and remains insolvent”. He also found that the defendants had no reasonable grounds for making the Bank Term Deposits Representation.

ASIC deputy chair Sarah Court said the penalty made clear that firms must do the right thing by their investors, irrespective of whether they are wholesale or retail investors.