ASIC court win against developer but Mayfair 101 boss James Mawhinney beats some claims

The Federal Court has found James Mawhinney was involved in legal breaches linked to misleading investment products but the Mayfair 101 director did score some wins.

Mawhinney’s Mayfair 101 once hoped to transform Dunk Island into a $1.5bn tourism mecca

James Mawhinney, the high-profile director of property finance company Mayfair 101 Group, has been found by the Federal Court to have been associated with or involved in contraventions of the law by his development companies after proceedings brought by the corporate regulator.

Despite the property entrepreneur defeating parts of the case put up by the Australian Securities & Investments Commission, the watchdog is seeking injunctions restraining him from advertising and fundraising through financial products, and from ­removing from Australia any assets acquired with funds received in connection with a financial product.

He has been embroiled in litigation and public stoushes with ASIC for the past five years. Mayfair 101’s hopes of transforming Dunk Island into a $1.5bn tourism mecca were left in tatters in 2020, after the same court appointed Grant Thornton as provisional liquidators of key parts of its empire. A judgment in 2020 showed that ASIC believed the firm may have been running a Ponzi scheme and Mr Mawhinney was restrained from leaving Australia, though he always denied wrongdoing and has won some cases. But in late 2021, the Federal Court ordered four companies in the Mayfair 101 Group to pay a combined penalty of $30m for misleading or deceptive advertising

The island resort was bought in 2022 by Annie Cannon-Brookes for about $23.6m. She has since worked on restoring the island.

The latest court decision determined that Mayfair 101 Group companies broke the law when they made multiple false or misleading representations in the marketing of the M+ Fixed Income Notes, M Core Fixed Income Notes and Australian Property Bonds across various periods in 2019 and 2020. Mayfair 101 Group companies were also found to have engaged in misleading or deceptive conduct in early 2020 by failing to disclose in marketing material that investor redemptions had been suspended.

The court also found that Mayfair 101 Group company IPO Capital carried on a financial services business from 2016 to late 2017 without an Australian Financial Services Licence. Mr Mawhinney was also found to be associated with or involved in the above contraventions.

He had a minor win, as the court determined Mayfair 101 companies did not represent that its Core Notes and M+ Notes were comparable to, and of similar risk profile to bank term deposits.

The court also found that while the companies made certain representations relating to the use of funds invested in the Core Notes, and the security to be granted to an investor in the Australian Property Bonds, those representations were not misleading or deceptive, as ASIC had alleged. It also rejected that family trusts ­associated with Mr Mawhinney received amounts traceable to funds invested in the Core Notes.