Over recent days, I have had the opportunity of meeting, speaking with and assessing James Mawhinney.

While he is an “ambitious dreamer” who has had big ideas and believed he had a pathway to achieve them, that pathway was surely blocked from early 2020.  Funds were raised by the Mayfair Group in circumstances where the marketing information did not adequately reflect the riskiness of the undertakings for which Noteholders’ money was being used.

The fact that this could occur without Noteholders being fully informed was in part due to the unsatisfactory nature of the law, given the very loose and inappropriate definition of what makes a “sophisticated” or “wholesale” investor and waives the requirement for you to be properly protected by receiving full disclosure at the get-go.

My impression is that Mr Mawhinney lacked the capacity to be able to carry into effect Mayfair’s investment schemes without relying substantially on others.  The identify of those “others” and the extent of their respective responsibility to the Noteholders, remains to be fully investigated and assessed by me and my team at Levitt Robinson.  This will depend on a detailed analysis of what they should have done, what they did do, the lawfulness of their actions and the consequences.  Who knew? what? and when?

How much the moneylender, Naplend, knew and the basis for an attack on the integrity of the loan, remains to be explored.

There is a reasonable view that ASIC acted like a “bull in a China shop” and then let “the kids (insolvency practitioners) into the candy store“.  We need to look at how the problem could have been approached, with an eye to preserving the funds of those who had placed their money with Mayfair.  The Naplend loan, which could prove to be a financial cancer, was allowed to metastasise by ASIC’s crackdown, which effectively halted all treatment.

While the way in which the promoters of Mayfair operated, afforded nowhere near the security that a bank would offer, what Mayfair did have in common with a bank was that it was effectively using depositors’ funds, for which it promised a fixed return, in exchange for being able to use those funds to make a profit – a profit which would then only accrue to the benefit of Mayfair’s shareholders, not for the people whose funds were being used, who could only expect to receive a fixed return.

There are some among those who placed their funds with Mayfair, who misunderstood, believing that they would thereby gain a stake in the profits of Mayfair, beyond the return for which they had bargained.  In this they were and are mistaken.  They are justly aggrieved that Mayfair did not provide them with the level of protection which they were led to expect from its marketing campaigns.

I have accepted instructions to act for Mawhinney and his group on the limited basis that, while respecting his solicitor-client privilege, he will, at his discretion and at my request, waive such privilege only to the extent necessary to facilitate information which would not otherwise be generally available, for the purpose of my utilising it for the advancement of the claims of the M Core Noteholders and M+ Investors.

I will be acquiring unique insights from acting for them, which I will be able to deploy to your advantage.  However, this will only occur if you recognise that, unless I am able to reconcile your interests with Mawhinney’s interests, there will be a conflict of interest and you would need to waive any claim that I am acting in conflict of interest.

However, the respective interests of the debenture holders, the unsecured investors in the M+ product, and of Mawhinney and others, will have to be under continuous review and at some point it could arise that I cannot act for both groups or either group.  However, I consider the benefits to you now, well outweigh any detriment, namely, that I will potentially be able to acquire such a level of insight, knowledge, and information, that I will be able to deploy it for your benefit with the consent of the source.

I suspect that it will take my competitors a very long time to be in the same position as I expect to be.

Events may unfold in a way that your own and Mawhinney’s positions and interests are substantially aligned.
I reserve the right to stand aside from acting for all or some of the clients whom I will represent, in the event that a potential conflict of interest chrystallizes or becomes unmanageable.

Of course, this is not a personal conflict but rather a conflict between clients whose interests I would be entrusted to manage.  I have no personal stake in the matter other than reputational, as a professional fee earner.

However, what has to be considered here is the potential advantage of gaining intelligence concerning what went on and who did what to whom and when, as against treating Mawhinney and his associates as villains.

This is a trade-off which I-and-you-should be prepared to make.

However, my position is provisional and will be the subject of continuous review.

I note that under Clause 11.3 of the Legal Profession Uniform Law, Australian Solicitor’s Conduct Rules, 2015 “Where a solicitor or law practice seeks to act for 2 or more clients in the same or related matters where their clients’ interests are adverse and there is a conflict or potential conflict of their duties to act in the best interests of each client, the solicitor or law practice may, subject always to each solicitor discharging their duty to act in the best interest of their client, only act if each client:

James Mawhinney has assured me that he is committed to working with me to ensure that Noteholders and M+ investors obtain the maximum return, notwithstanding the devastating effect that the events which have occurred since around April 2020, have had on their prospects for recovery.  If it were not for this, I would not have entertained James Mawhinney’s overtures.  As has been often said, “The proof of the pudding is in the eating“.  That is true for all of us.

Senior Partner
Levitt Robinson