Mayfair 101 has won a case brought by a former investor in a finding it believes will be “problematic” for ASIC.
The Supreme Court of NSW found that Mayfair 101 investor Stuart Klees was not misled or deceived by the conduct of M101 Holdings, with Justice Hammerschlag saying the case “fails at every hurdle”.
“This is an important win for our noteholders. It highlights that ASIC’s case against us was off the mark from inception and that our staff acted compliantly at all times,” said Mayfair managing director James Mawhinney.
“The court has also recognised our right to suspend redemptions. It was inhumane for us and our noteholders that ASIC used the excuse of our redemption freeze to justify taking us to Court in April last year.”
Mr Klees alleged he had been misled into thinking a three-month term was not capable of being extended under the governing note documents that provided an ability to delay repayment during periods of tight liquidity.
“The Court disagreed with Klees and stated ‘The COVID-19 pandemic had not hit and there is nothing to suggest that either the plaintiff or O’Keefe had any inkling that there would be any future liquidity difficulty’. This finding is problematic for ASIC’s case against Mayfair 101 for misleading and deceptive conduct,” Mayfair said, adding that Justice Hammerschlag said that liquidator Grant Thornton’s report appeared to be “prepared on incomplete information”.
“This is consistent with Mayfair 101’s position that the report cannot be relied upon after it was identified that 9 out of the 10 statements in the Executive Summary were flawed.”
A former Mayfair staff member, Devin O’Keefe, was also cleared of wrongdoing when the court found that he did disclose the existence of the “caveat to repayment”.
ASIC was contacted for comment, but did not reply by deadline.