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Wednesday 6 February 2019

19-021MR Federal Court disqualifies officers involved in land banking scheme

The Federal Court of Australia has disqualified Michael Grochowski and Ian Stephens from managing corporations for five and a half years and four years respectively, due to their being officers of companies that had failed and been wound up by the Court.

The Court found that while Grochowski was not a named director of Bilkurra Investments Pty Ltd and Foscari Holdings Pty Ltd (both in liquidation), he was an officer of the companies until they were wound up by the Court, on application filed by ASIC, in April 2016. 

Both Bilkurra Investments and Foscari Holdings operated land banking schemes in Victoria, known as Hermitage Bendigo and Foscari. Promoters of the land banking schemes used Bilkurra and Foscari to raise approximately $24 million from investors (16-114MR).

In deciding the period of banning, the Court considered an earlier decision of a delegate of ASIC, made in April 2012, prohibiting Grochowski from providing financial services for four years. The Court was also satisfied with ASIC’s claim that the way both companies were managed was the reason for their failing.

The Court found that the appointment of Stephens as a director of both companies, who was an experienced chartered accountant, presented a false facade of meaningful oversight and governance of the companies’ affairs.

Further, the Court found Stephens failed to exercise any meaningful decision making and management responsibility for the companies, which had obtained large amounts of investment from the public.

‘These bannings will help protect the public from further investing with officers of companies that repeatedly fail. ASIC will continue to investigate failed land banking schemes and take whatever action is necessary to ensure failed schemes do not continue,’ said ASIC Commissioner John Price.


This proceeding is part of ASIC’s wider and ongoing investigation into land banking schemes. These banning orders were made in proceedings filed by ASIC in March 2018 to wind up five companies for their role in offering land banking schemes, namely:

  • Brookfield Riverside Pty Ltd
  • Bilkurra West Pty Ltd
  • Bilkurra South Pty Ltd;
  • Gillies Road Pty Ltd; and
  • Project Management (Aust) Pty Ltd.

Those companies were wound up by the Court in July 2018 (18-221MR). 

ASIC provided funding from the Assetless Administration Fund (AAF) that assisted the liquidators to undertake further enquiries that were subsequently used by ASIC for the disqualification.

The two land banking schemes are known as Hermitage Bendigo (formerly Acacia Banks) were located at Midland Highway, Bagshot, Victoria 3551 and Foscari, located at 99 Palmers Road, Truganina, Victoria 3029.

Further information on how land banking is sold to investors and what
can go wrong can be found on ASIC's MoneySmart website. If investors have any questions regarding ASIC’s investigation, they can contact ASIC on 1300 300 630.

A copy of the judgment can be found here.

Last updated: 14/02/2019 01:47