Plaintiff v Defendant

1. Syndicate 13 is one of 25 connected entities known as the 'Lion Property Group Companies' ('LPG Companies'). The LPG Companies were engaged in the business of property development through Lion Property Group Pty Ltd and a series of special purpose vehicles, including Syndicate 13. Each special purpose vehicle was created in respect of individual property developments undertaken by the LPG Companies. The group's general approach was for each special purpose vehicle to: (a) own the land that was the subject of the development; and (b) raise funds from investors through the issue of shares and/or units in a trust (where a unit trust was established).
2. Messrs John Sader and Garry Pesochinsky were the directors of Lion Property Group Pty Ltd. One or both of those directors held directorship or ordinary shares in each special purpose vehicle.
3. Syndicate 13 was the trustee of the Syndicate 13 Squared Unit Trust which was established for the development at 10 Romsey Street, Noble Park in the State of Victoria ('Parkside Project'). Mr Shari was an investor in the Parkside Project.
4. The County Court Proceeding has a lengthy history in the sense that it has been on foot since the beginning of 2024. However, the record of proceeding shows that it has not progressed much beyond pleadings and mediation. Its procedural history is set out below.
5. On 6 February 2024, Mr Shari commenced the County Court Proceeding against Messrs John Sader, Garry Pesochinsky and Michael Pesochinsky in respect of his investment in Syndicate 13. At the commencement of the proceeding, Syndicate 13 was not a named party and would not be joined until much later. On 8 March 2024, the defendants issued a summons seeking summary judgment against Mr Shari or alternatively, that his statement of claim be struck out ('Defendants' Application'). At the first return of the proceeding, the Court adjourned the Defendants' Application and referred Mr Shari to the Pro Bono Barristers Scheme for assistance to draft a statement of claim.
6. On 13 June 2024, the County Court recorded that the duty barrister appointed to assist Mr Shari informed the Court that he had insufficient documents and information to support the allegations against the three defendants (or Syndicate 13) and therefore was unable to draft the statement of claim. The hearing was adjourned and Mr Shari was subsequently granted leave to issue subpoenas which sought production of documents in relation to his claim.
7. On 16 July 2024, the County Court struck out Mr Shari's statement of claim but granted him leave to file an amended statement of claim which was duly filed on 23 August 2024. The amended statement of claim contained allegations made against the three individual defendants pursuant to various provisions of the Act. Ultimately, due to the jurisdictional limitations of the County Court on claims made pursuant to the Act, Mr Shari elected to abandon those claims and on 17 September 2024, the amended statement of claim was again struck out with leave granted to file a further amended statement of claim. On 16 October 2024, Mr Shari was also granted leave to join Syndicate 13 as the fourth defendant to the County Court Proceeding.
8. On 18 October 2024, Mr Shari filed a third amended statement of claim in the County Court. On 13 November 2024, the third amended statement of claim (which sought to join Syndicate 13) was struck out for non-compliance with the County Court Procedure Rules 2018 (Vic) and the proceeding was stayed until such time as Mr Shari could produce a satisfactory statement of claim to the Court. The proceeding was listed for an administrative mention on 2 June 2025.
9. During the period the proceeding was stayed, the County Court made orders of its own motion in relation to Mr Shari's communications with the Court. The CourtConnect record shows that on 30 April 2025, Muller JR in the County Court ordered that:

Others Matters:

1. On the Court's own motion and in accordance with the Overarching Purpose under the Civil Procedure Act 2010, I am making the orders at paragraphs 1-3 below.

2. The Commercial Division Registry and the Self-Represented Litigant coordinators (SRL coordinators) do not have sufficient resources to continue to manage the volume of correspondence sent by the plaintiff.

3. Accordingly, I am making these orders to ensure that the plaintiff's prolific correspondence, proposed filings, queries for procedural advice, and any future/foreshadowed applications are dealt with appropriately, in a timely manner, in a way that this Court can manage, with the aim of not missing relevant queries or applications from the plaintiff.

4. The plaintiff may only contact the Court in writing, once per week. The Court will endeavour to respond to his email within 2 business days. The plaintiff may not call the Court (including but not limited to the Commercial Registry and the SRL Coordinators) unless an email has gone unanswered for more than 2 business days.

5. When the plaintiff is applying to the Court to make orders, he must email the Commercial Division Registry on CCVcommercialregistry@courts.vic.gov.au (cc'ing the SRL coordinators SRL@countycourt.vic.gov.au). The email must attach:

   1. A proposed summons setting out in numbered paragraphs the orders sought by the plaintiff (the plaintiff's attention is directed to section I.1 of the Commercial Division Practice Note PNCO 2-2022 (Practice Note) for further information on interlocutory application); and
   2. An affidavit in support setting out the facts that ground why the Court should make the orders the plaintiff is seeking. The affidavit must exhibit all correspondence and a draft of any pleading or documents the plaintiff wants the Court to consider in determining his application; and
   3. Any submissions made in either the body of the affidavit or the email must reference the numbered orders sought in the summons, e.g. "I am seeking order 1 because..."

6. The plaintiff's attention is directed to section F. of the Practice Note for appropriate correspondence with the Court.

7. The Court will not read or respond to emails from the plaintiff that do not comply with the procedure as set out above.

8. The plaintiff is advised to seek legal advice regarding the consequences of non-compliance with Court orders.

The Court orders that:

1. For the duration of this proceeding, or until further order, the plaintiff must not contact the Commercial Division Registry, any other division or department of the Court, any chambers, the SRL Coordinators, nor any individual in the Court in any manner other than as set out in these orders.
2. The plaintiff may only contact the Court in accordance with the procedure set out in Other Matters, paragraph D.
3. If the plaintiff's correspondence relates to an application for orders, he must follow the procedure described at Other Matters, paragraph E.
4. The Commercial Division Manager is to advise my chambers of any breach of orders 1-3.
5. Reserve liberty to the parties to apply by email to the Commercial Registry (commercial.registry@countycourt.vic.gov.au) for further directions upon giving notice to all other parties.
6. Costs reserved.

1. On 10 May 2025, Mr Shari filed a summons seeking leave to file the fourth version of the statement of claim. That summons was met with a further application by the defendants for summary judgment against Mr Shari. Mr Shari also sought leave to issue a further five subpoenas for which leave was refused. Again, the Court adjourned the respective summonses to allow a second referral to the Pro Bono Barrister Referral Scheme to assist in the drafting of an amended statement of claim.
2. On 3 July 2025, the County Court granted Mr Shari leave to file his fourth amended statement of claim. Mr Shari has exhibited a copy of that pleading to his affidavit dated 31 July 2025. At the hearing, the Liquidators raised a question as to whether this document is the filed version of the pleading because it did not contain the court seal. Mr Shari says the County Court has informed him it does not 'stamp' such documents. The version in evidence bears the name of the Pro Bono Barrister referred to Mr Shari by the County Court. I have proceeded on the basis that is the statement of claim accepted by the County Court.
3. That statement of claim makes allegations against the three aforementioned defendants and Syndicate 13, which is joined as the fourth defendant. The nature of the allegations made by Mr Shari in the County Court Proceeding can be summarised as follows.
4. Mr Shari alleges that each of the three defendants made oral representations to him about the investment shares, security of the Land, funds retention and the investment returns in respect of Syndicate 13 (collectively, the 'Representations').
5. In reliance on the Representations and pursuant to an Investment Agreement, Mr Shari paid $455,000.00 for 455 units in the Syndicate 13 Investment Trust.
6. The Investment Agreement contained the following terms (which reflected the Representations in part):

(a) the Investment Trust would only issue 1000 units;

(b) there is no outstanding liability by any mortgage and the Land would continue to be unencumbered;

(c) the trustee would undertake the development and arrange for building works;

(d) the trustee would maintain proper accounts in respect of expenditure and income of the project;

(e) the investment money would be separated into an interest bearing account and only drawn on for the sole purpose of the development.

1. In addition to the terms of the Investment Agreement, Representations were made that:

(a) unit holders would directly own the land in an proportion to their investment which would minimise the investment risk by virtue of the land being unencumbered; and

(b) the investment return would be 35%, of which half would be paid during the project and the balance on completion.

1. Mr Shari, alleges the defendants breached the terms of the Investment Agreement and/or engaged in misleading and deceptive conduct in respect of the Representations because:

(a) 1950 units were issued in the in the trust;

(b) the land was encumbered by a mortgage, first by Pepper Finance Corporation and then replaced by The Trust Company (Australia) Ltd which remain on title;

(c) Syndicate 13, in its capacity as Trustee of the Investment Trust failed to maintain proper accounts and records; and

(d) funds have been withdrawn from the account for a purpose other than completing the project (on the basis that the project is incomplete).

(a) the above conduct constitutes a breach of fiduciary duties owed by Syndicate 13 to the unit holders;

(b) the individuals defendants knowingly assisted and participated in the impugned conduct; and

(c) as a result, he has suffered loss and damage and seeks equitable compensation.

1. Mr Shari has also exhibited a copy of the third defendant, Mr Michael Pesochinsky's defence filed in the County Court Proceeding. By that defence, Mr Pesochinsky denies:

(a) involvement in the 'Parkside Investment Scheme' or 'Lion Private Equity; as he ceased all investment in the business as early as April 2018 and by 1 May 2018;

(b) the authenticity of Mr Shari's unit trust certificate and the 'matters leading to its issue';

(c) any involvement in the 'Parkside Investment Scheme' as a promoter;

(d) that the Investment Agreement has been properly executed by Syndicate 13.

1. I am not aware that any other defendant has filed a defence in the County Court Proceeding.
2. On 5 September 2025, the County Court ordered the parties to make disclosure of critical documents for the purposes of s 26 of the Civil Procedure Act 2010 (Vic) and to attend mediation.

B.2.1 Claims made by investors of LPG Companies

1. On 17 February 2025, related proceedings were commenced in the Supreme Court in matter number S ECI 2025 00784 ('Supreme Court Proceeding'). The Supreme Court Proceeding is currently before Matthews J and names Syndicate 13 as the seventeenth defendant. The relevance of the Supreme Court Proceeding is twofold: firstly, the nature of the allegations is very similar to those made by Mr Shari in the County Court Proceeding, and secondly, it is the proceeding by which Syndicate 13 was placed into liquidation.
2. In the Supreme Court Proceeding, the originating process was amended on 11 April 2025 to add the fourth to twenty-eighth plaintiffs. Each of those plaintiffs was an investor in the LPG Companies. Mr Shari was named as the twenty-second plaintiff. However, Mr Shari's participation in the proceeding was limited and short-lived. The extent to which relief was sought in respect of his investment was by an application under s 175 of the Act to correct the register of members of Syndicate 13 and accurately record his units, being 455 D Class units.[1] Mr Shari was removed as a plaintiff by consent on 12 May 2025.

B.2.2 Appointment of provisional liquidators

1. On 27 May 2025, independent accountants (John Lindholm of KPMG and Matthew Hutton of McGrath Nicol) were jointly appointed to investigate and report back to the Court on the financial position of the projects and each of the corporate defendants (including Syndicate 13).[2]
2. On 2 July 2025, the Court appointed Mr Lindholm and Ms Seeckts (both of KPMG) as provisional liquidators over the corporate defendants ('Provisional Liquidators').[3] In that decision, Matthews J summarised the parties and claims in that proceeding as follows:
   1. The plaintiffs are investors in property development projects operated by the defendants.
   2. The defendants are the Lion Property Group Pty Ltd (LPG Head Co), another entity called Lion Property Group Sales Pty Ltd (LPG Sales Co), John Sader and Garry Pesochinsky and several other defendants. Those remaining defendants are what have been described as special purchase vehicles (SPVs, each a SPV) that have been established for the purpose of individual projects, primarily for the purchase of land, development of the land into several apartments, houses or townhouses, and then sale of those properties. Mr Sader and Mr Pesochinsky are directors and shareholders of LPG Head Co and LPG Sales Co. One or the other, or both of them, are also directors and shareholders of the SPVs.

...

1. It suffices for the purpose of this ruling to summarise the claims made by the plaintiffs in the ASOC at a general level. The allegations are complex, as are the arrangements for investing in the individual projects. It is unnecessary at this stage for me to describe that in detail. In essence, the plaintiffs allege (amongst other things) that:

(a) the 'Lion Property Group' of companies (the Lion Property Group) is and was a group of companies under the common ownership and control of its founders, which included Mr Sader and Mr Pesochinsky and since December 2020, their sole control and ownership. The Lion Property Group comprises LPG Head Co, LPG Sales Co, the SPVs, and other entities which are not named as defendants in this proceeding;

(b) the Lion Property Group offers two primary services, being opportunities to invest in property development projects, and property sales;

(c) investors contribute cash for the projects, subject to an investment agreement, usually in return for shares in the SPV or where the SPV is the trustee of a unit trust, units in the unit trust. There were various arrangements for returns to be paid to investors: some of these involved monthly payments; return of the capital invested; and a share of profits;

(d) LPG Head Co entered into management agreements with some or all of the SPVs, by which LPG Head Co and the relevant SPG entered into a joint venture for the acquisition and development of the property. LPG Head Co was to undertake the management of the project and receive an agreed management fee in an amount specified, to be paid from the net proceeds of the sale of the developed residences;

(e) LPG Head Co entered into loan agreements with some or all of the SPVs, by which the relevant SPV made loans to LPG Head Co or another entity within the Lion Property Group;

(f) the management agreements and the loan agreements were not disclosed to investors prior to them making their investments;

(g) in respect of most, if not all of the projects, one or more mortgages are registered on the titles to the properties. These seem to be in respect of financing for the acquisition of the properties and for construction finance, amongst other things;

(h) management fees have been paid by some SPVs to LPG Head Co before those fees are required to be paid and in amounts in excess of the specified fees;

(i) a number of mortgagees in respect of specific projects have taken enforcement action;

(j) the terms of the plaintiffs' investment agreements have been breached by the SPV failing to pay monthly payments due since around October and November 2024; failing to apply the invested funds solely for carrying out the project; failing to maintain proper accounts and records in respect of the expenditure and income of the project or provide investors with yearly reports; and failing to manage the invested funds so as to ensure there is sufficient funds available to carry out the project and pay all related costs and expenses;

(k) by reason of those breaches, the SPVs are indebted to the investors or the investors have suffered or are likely to suffer loss and damage;

(l) for the SPVs who are trustees of unit trusts for the projects, those SPVs have breached their duties as trustees;

(m) in marketing the projects to investors and procuring the plaintiffs to invest in them, the defendants engaged in conduct which was misleading or deceptive or likely to mislead or deceive, which has caused loss and damage to the plaintiffs;

(n) the individual projects are managed investment schemes within the meaning of s 9 of the Corporations Act 2001 (Cth) (the Act), which were required to be registered under s 601EB(1) of the Act but were not so registered (Project Schemes);

(o) further or alternatively, the Lion Property Group comprised a scheme (Group Scheme) which was also a managed investment scheme required to be, but not, registered under the Act; and

(p) Mr Sader and Mr Pesochinsky were involved in the conduct of the corporate defendants and are liable to the plaintiffs.

1. In appointing the provisional liquidators, Matthews J made the following findings:
   1. All of those matters in my view satisfy the considerations typically given to whether or not to appoint a provisional liquidator.
   2. I am fortified in that view by the history of this proceeding, where the defendants have, it seems to me, studiously avoided going on affidavit or even filing a defence in which to set out their response to the allegations that are made against them by the plaintiffs. Previous orders for the provision of affidavits have come and gone without them having been met. The defence was due at various points but most recently due on 10 June. That has not been done and then the independent accountant has not been given everything that they are supposed to have been given and have been unable to finalise their report.
   3. Counsel for the plaintiffs asked the rhetorical question 'Why did the defendants consent to the orders that were made on 27 May for the appointment of an independent accountant if they were not going to fully cooperate with that process and comply with the orders?' That rhetorical question is one that is well made.
   4. There is no material before me to give me any confidence at this point in time as to the management of these companies. The fact that the explanation for failing to pay the final $40,000 to the independent accountant was said to be a lack of funds sends the alarm bells ringing.
   5. For all of these reasons, I am satisfied that it is appropriate to appoint a provisional liquidator to the companies. In many ways, this is a quintessential example of when it is appropriate to appoint a provisional liquidator to the companies.

(a) the corporate defendants may be insolvent;

(b) the winding-up application may be successful; and

(c) there is concern as to how the corporate defendants are being managed in the meantime.

1. Appointing a provisional liquidator who has the power to control the corporate defendants and to investigate them, and to report to the Court on those matters, is the appropriate step. The reason why it is appropriate that the liquidator be appointed provisionally is because at the moment those steps need to be taken before the Court can be satisfied as to whether or not a liquidator should be appointed, other than on a provisional basis.

1. Matthews J also ordered the Provisional Liquidators to provide a report to the Court on their progress within 30 days.[4]

1. On 24 July 2025, the Provisional Liquidators filed their report in the Supreme Court Proceeding on a confidential basis ('Confidential Report'). A redacted copy of the report was also provided to the Court, redacting the parts of the report over which confidentiality was claimed ('Redacted Report'). On this application, I have only been provided with a copy of the Redacted Report.
2. In the Redacted Report, the Provisional Liquidators identified that the LPG Companies adopted a consistent approach to investment across the majority of the special purpose vehicles. Key investment terms included:

(a) investment funds were raised solely for the purpose of development and construction of the subject property;

(b) investors were provided with Class A Redeemable Preference Shares proportionate to the investment amount;

(c) fixed, non-cumulative monthly returns; and

(d) return of capital/share buy-back at project completion.

1. LPG Companies entered into management agreements with all of the land special purpose vehicles pursuant to which LPG Companies would act as the project and development manager. The LPG Companies were also responsible for raising capital, progressing planning approvals, appointing builders and managing sales.
2. Ultimately, the Provisional Liquidators formed the view that the relevant entities were insolvent from a cash flow perspective. Based on early investigations, the group's financial position demonstrated 'an acute lack of liquidity'. The Provisional Liquidators reported that as of 20 June 2025, the group collectively held less than $5,000.00 in cash; unsecured creditors totalled $5.2m (excluding related party creditors); the only significant assets of the group - being the landholdings - would require additional expenditure to realise their value; across the group, there was approximately $62.9m in secured debt; and a number of financiers had cross-collateralised their security across multiple entities in the group.
3. The Redacted Report does shed some light on the workings of the LPG Companies and how investor money was used and moved around the group.
4. At [3.2] of the Redacted Report, the Provisional Liquidators describe how cash was used in the LGP Companies:

In direct contravention to the Investment Agreements and marketing materials, the Group utilised LPG as a shared treasury function, transferring raised capital to LPG and then on to other SPV's. An example of how these transactions were recorded in the accounting records is below:

• Cash is raised by investors into the SPV;

• Cash is sent to LPG (often on the same day), an inter-entity loan account is used to record the transaction. The bank balance of the SPV is generally kept at or around $0;
• As expenses are incurred by the SPV, funds are provided by LPG to the SPV to pay these expenses (reducing the LPG loan amount); and
• The net result of these movements has resulted in $26.3m of related parties loans owed by LPG to SPV's and $18.2m owed by SPV's to LPG.

1. The Provisional Liquidators explained that tracing funds through the special purpose vehicles and the broader LPG Companies will prove challenging and time consuming. At [3.3] of the Redacted Report, they say:

We have obtained the majority of the general ledgers for LPG and its SPVs but have not conducted detailed tracing due to time constraints and the complexity of the task. Complexities arise due to:

• The number of entities: 26 entities under provisional liquidation, some dating back to 2018, with over 14,000 transactions for LPG alone.
• Cash movement within the Group: while initial amounts transferred from SPVs to LPG are traceable, subsequent payments by LPG, including trading expenses and funding to other SPVs, is rarely of round sum amounts and the specific identification method appears challenging. As a result, decisions around tracing methodology (FIFO, LIFO, Pro-rata, etc) will need to be made.

1. The Provisional Liquidators analysed a series of transactions on 13 May 2022 in respect of one special purpose vehicle to demonstrate the way in which funds will need to be traced from one special purpose vehicle to the LPG Companies and then on to other special purpose vehicles. The tracing exercise was described as follows:
   • $1.0m cash payment made to LPG from Eden LandCo (booked against the LPG loan account in the general ledger). The source of these funds were investor receipts received from 15 March 2022 to 11 May 2022;
   • $1.0m of cash is receipted into the LPG bank account, $1.0m;
   • LPG makes payments on the same day in the amount of $981k, made up of:

• $30k of LPG trading expenses;

• $39k to other SPVs;

• $804k to Elster CapitalCo;

• $108k to Beacon.

• Once receipted into the Beacon bank account, the funds are utilised on the same day to fund construction costs.
• We have not yet obtained/located the general ledger for Elster LandCo so we are not able to comment on the use of funds in this entity.

Further funds are remitted to LPG from Eden LandCo as they are received from investors until the bank account is zero in November 2022. Cash ($1.7m) was then transferred by LPG back to Eden LandCo to partially fund the acquisition of land on 15 November 2022. All other material expenses appear to be funded through receipts from LPG.

1. The Provisional Liquidators have also identified the flow of funds through related party cash payments with the LPG Companies, as well as the LPG Companies related party debts. None of the entities identified at this stage of investigation include Syndicate 13.
2. Finally, the Provisional Liquidators identified criteria which suggested, in their view, that there were grounds to determine the LPG Companies were operating as a Managed Investment Scheme. Some of that criteria included: contributions of money as consideration to acquire rights to benefits produced by the scheme; that the contributions were pooled or used in a common enterprise to produce financial benefits or benefits consisting of rights or interests in property for the people who held interests in the scheme; and the members did not have day-to-day control over the operation of the scheme (whether or not they have the right to be consulted or give directions).

B.2.4 Winding up of Syndicate 13 (and related entities in the LPG Companies)

1. On 6 August 2025, Justice Matthews ordered the corporate defendants to the Supreme Court Proceeding, including Syndicate 13, be wound up. The Provisional Liquidators were appointed joint and several liquidators of each of the relevant LPG Companies ('Liquidators').[5]
2. In her written reasons delivered on 15 August 2025, Justice Matthews held:[6]

In my view, the Redacted Report, together with the Confidential Report, confirms the concerns identified as the basis for appointing provisional liquidators and more than amply demonstrates that the appropriate course for the Court to take is to wind up the corporate defendants on both the just and equitable ground and on the grounds of insolvency. I have set out the key aspects of the Redacted Report earlier in these reasons, and these matters compel the conclusion that the corporate defendants ought be wound up.

1. Whilst I do not have the benefit of the confidential matters contained in the Confidential Report, her Honour did make these observations at [43]-[44]:

Other matters

1. There are other matters concerning other allegations in the Confidential Report which I am not in a position to describe, including matters concerning the conduct of the directors. Having reviewed that material, it is apparent that many of these matters require further investigation and which themselves justify the appointment of liquidators to the corporate defendants.
2. In the Redacted Report, the Provisional Liquidators identified some 12 additional entities of which Mr Sader and/or Mr Pesochinsky were directors, some of which had received funds from one or more of the corporate defendants for which there appears to be no commercial grounds, and appeared on the LPG Head Co balance sheet as debtors. At the hearing on 25 July 2025, Mr Sader and Mr Pesochinsky gave undertakings that they would not, before the next return date, deal with or cause the Additional Entities plus Mane Property Clayfield Pty Ltd to deal with the property and assets of those companies.

1. The legal principles that apply to this application are well established.[7]
2. Section 471B of the Act provides that :

Stay of proceedings and suspension of enforcement process

(1) While a company is being wound up in insolvency or by the Court, or a provisional liquidator of a company is acting, a person cannot begin to proceed with:

(a) a proceeding in a court against the company or in relation to property of the company; or

(b) enforcement process in relation to such property;

except with the leave of the Court, and in accordance with such terms (if any) as the Court imposes.

1. The purpose of s 471B of the Act is to prevent a company's assets being dissipated by unnecessary litigation.[8] To that end, the Court must consider whether the applicant should be permitted to continue in ordinary proceedings to judgment or should they pursue their claim by lodging a proof of debt with the liquidator.[9]
2. Leave will only be granted where the applicant establishes that there is a serious question in dispute in the sense that there is a solid foundation for the claim.[10]
3. The onus falls on the party seeking leave to establish such a serious question exists, as well as demonstrating why the ordinary proof of debt and adjudication procedure is inadequate.[11]
4. In Swaby v Lift Capital Partners Pty Ltd[12] the Court said:
   1. The starting point is that a claimant must lodge a proof of debt unless that person can demonstrate there is good reason to depart from that procedure. The rationale for this approach is that a liquidator's attention and resources should not be diverted by litigation when there is a simpler procedure available, by way of proof of debt, with a right of appeal under s 1321 of the Act: Re Gordon Grant and Grant Pty Ltd at 317: Commonwealth v Davis Samuel Pty Ltd (No 5) [2008] ACTSC 124 at [33].
   2. Claims for unliquidated damages in contract, and for misleading or deceptive conduct, are admissible to proof in a liquidation: Re Gordon Grant and Grant Pty Ltd at 317; Meehan v Stockmans Australian Café (Holdings) Pty Ltd (1996) 22 ASCR 123 at 128.
5. In Unleash Solar[13], McKerracher J set out a number of factors which may be relevant to the exercise of the Court's discretion to grant leave where there is a serious question in dispute. Those factors include:

(a) the amount and seriousness of the claim;

(b) the degree and complexity of the legal and factual issues involved;

(c) the stage to which the proceedings, if commenced, may have progressed;

(d) whether a cross-claim arises out of the same factual matrix as the claims made in the primary proceedings;

(e) the risk that the same issues would be re-litigated if the claims were to be the subject of a proof of debt;

(f) whether the claim has arguable merit;

(g) whether proceedings are already in motion at the time of liquidation;

(h) whether the proceedings will result in prejudice to the creditors;

(i) whether the claim is in the nature of a test case for the interest of a large class of potential claimants;

(j) whether the grant of leave will unleash an 'avalanche of litigation';

(k) whether the cost of the hearing will be disproportionate to the company's resources;

(l) delay;

(m) whether pre-trial procedures, such as discovery and interrogatories, are likely to be required or beneficial;

(n) whether the action would interfere with the orderly winding up of the company;

(o) whether the action would serve any sufficient purpose; and

(p) whether the action would have any adverse effect upon the respondent and its shareholders.

1. It is not necessary for all of those factors to be considered in every case. In this matter, the factors that warrant consideration include the amount and seriousness of the claim; the degree and complexity of the legal and factual issues involved; the stage to which the proceedings, if commenced, may have progressed; the risk that the same issues would be re-litigated if the claims were to be the subject of a proof of debt; and, whether the cost of the hearing will be disproportionate to the company's resources.

1. In the originating process, Mr Shari relies upon the following grounds in support of his application:

**On the facts stated in the supporting affidavit(s), the plaintiff claims - **

1. That the plaintiff has a valid and arguable case involving significant allegations of misconduct and misuse of investor funds;
2. That there is a strong public interest in allowing the claim to proceed, including the possibility of tracing and recovering funds and obtaining relief against the company alongside its directors and other co-defendants;
3. That no prejudice will be caused to the liquidator or creditors by the continuation of the proceeding;
4. That relevant evidence has been provided, including bank records, unit trust documents, and communications indicating improper use of company funds during the time the company was trading;
5. That leave under section 471B is appropriate to ensure that the plaintiff's rights are not unduly extinguished due to the liquidation process.

1. Mr Shari's claim against Syndicate 13 is that representations made to him at the time of his investment constitute breaches of the terms of the Investment Agreement and/or misleading and deceptive conduct by the defendants. The conduct of Syndicate 13 is impugned in its capacity as a trustee of the trust and breach of its duties as trustee to the beneficiaries (i.e., investors).
2. I have referred previously to the Redacted Report which, whilst placed into evidence by the Liquidators, is relied upon by Mr Shari as evidence of some of the pleaded wrongdoing.
3. In addition, Mr Shari has adduced evidence of the following matters in support of his application:

(a) an email from Michael Peroumal of LPG Companies dated 18 May 2018, which said as follows:

Hi Kevin,

I'm following up to confirm the terms of your investment. These funds will be placed in a trust account for Syndicate 13 and used exclusively for the development at 10 Romsey Street. They will not be diverted to any other project, including those of Lion Property Group.

To clarify, only 1,000-unit trusts will be issued for this investment. There will be no additional investors, and once you commit, the opportunity will be closed.

I have spoken with John, Garry, and Michael, and they are fully aware of and aligned with these commitments. Your investment is secured against the land, which remain entirely unencumbered.

Garry Pesochinsky and Michael Pesochinsky will serve as the directors of Syndicate 13, holding direct responsibility for ensuring these commitments are upheld.

As required by law, the deposit for the house will also be held in trust. You have my explicit assurance that these funds will not be allocated for any other purpose.

As you know, Paul Botterill referred you to me, and I greatly value my relationship with him. I strive to be transparent and upfront, and I want you to feel completely confident throughout this process.

Additionally, I can confirm that no construction loan is required for this project, as the necessary funding is already in place. The land is fully secured and unencumbered, with no mortgage. We anticipate project completion within 18 months.

My assistant, Maya Petrusevska, will reach out to schedule a meeting next week so we can go through everything in detail. Please don't hesitate to contact me if you have questions.

Best regards,

Michael Peroumal

Director/Head of Sales.

(b) a copy of the Unitholder Registry contained in the Unit Trust Deed, which Mr Shari says shows that 1,950 total units were authorised, and that 910 units had already been issued at the time Mr Shari invested to obtain his 455 units. Mr Shari says this is evidence of the falsity of the representations made;

(c) various NAB bank statements of Syndicate 13 which record large payments out of Syndicate 13's account, including $220,000.00 on 27 November 2018 and multiple payments between 6 June 2018 and 27 June 2018 totalling $533,401.26; and

(d) caveats lodged by third parties such as '268 Growth Fund' over the property acquired by the Syndicate 13 Trust. Mr Shari says this shows that the property was encumbered in favour of related parties, which is contrary to the representations made to him about the land securing his investment.

1. Mr Shari has also produced evidence in support of multiple requests for further discovery of documents. I informed Mr Shari at the hearing that it was not within the Court's power to make discovery orders in the County Court Proceeding, however, I have taken these requests into account in the context of this application, as I consider them to have some relevance.

(a) In his affidavits of 21 August and 1 September 2025, Mr Shari has exhibited the following documents:

(i) a NAB bank statement for Syndicate 13 Squared, which records a transaction on 27 November 2018 of a debit of $220,000.00;

(ii) an email from AJ & Co Lawyers to Mr Shari on 8 August 2025, denying that the firm received any payment from Syndicate 13 Squared and that, to the extent funds were received into the firms trust account, the circumstance surrounding such payments would be subject to legal professional privilege; and

(iii) an extract from a financial report prepared for Syndicate 13. Note 4 to the financial statements record a loan to Mr Garry Pesochinksy in the sum of $220,000.00 in the 2019 and 2021 financial years.

(b) Mr Shari says the payment recorded in the NAB statement was made to AJ & Co Lawyers in connection with a loan arranged by Mr Garry Pesochinsky. It is not evident on the face of the bank statement to whom the payment was made, and AJ & CO Lawyers has denied receiving such a payment. Mr Shari says these statements by AJ & Co Lawyers are untrue, and the funds were in fact applied as a personal loan to Mr Garry Pesochinsky.

(c) Mr Shari says that he does not have access to communications and documents surrounding this 'transaction', but that the documents will be in the possession custody and control of the Liquidators.

(a) Mr Shari has produced an email from Charmaine Offer, Legal Counsel at Lion Property Group dated 5 June 2018, where Ms Offer states 'There are a 1000 units each unit is worth 1,000 equally $1mil'.

(b) Mr Shari says this email evidences the promise made to investors that only 1,000 units would be issued in Syndicate 13 and that all funds were to be held in trust.

(c) Mr Shari seeks discovery of:

all communications (including emails, letters, text messages, or file notes) between Ms Offer and the directors of Lion Property Group - namely Garry Pesochinsky, Michael Pesochinsky, Michael Peroumal and John Sader - concerning:

(i) the number of unit trusts to be issued;

(ii) the representation that investor funds would be held in trust;

(iii) the use, application, or disbursement of investor funds; and

(iv) any dealings with AJ & Co Lawyers in connection with investor funds.

(a) Mr Shari has produced NAB bank statements which he says show payments made to entities described as '268 Growth Fund' and 'The Trust Company'. Mr Shari says these entities advanced funds to Syndicate 13 at a time when the company was already insolvent and its units oversubscribed. In an email dated 5 June 2025, the CEO and director of 268 Growth Fund, Mr Albert Callegher told Mr Shari that Mr Shari's complaints had nothing to do with Mr Callegher's business. In his affidavit of 21 August 2025, Mr Shari says:

I say that the role of 268 Growth Fund and The Trust Company is significant in this proceeding. If either entity received investor funds, or funds traceable to investor contributions, they may be liable in equity for knowing receipt, on the basis that such funds were transferred in breach of trust and not applied for their represented purpose.

...

Accordingly, discovery of correspondence between 268 Growth Fund, The Trust Company, and the directors of Lion Property Group is directly relevant to the question of whether those entities:

(a) knowingly received trust property in breach of trust;

(b) knowingly assisted the directors in a dishonest and fraudulent design; and

(c) breached statutory obligations in connection with the misapplication of investor funds.

1. Mr Shari also deposes to the emotional suffering and stress he has suffered by reason of this failed investment. Mr Shari has provided the Court with a letter from a Dr Chris Olszewski which says that Mr Shari has been under a lot of stress due to ongoing financial and legal issues. Whilst I understand the litigation process has been stressful for Mr Shari, I do not consider that to be a factor relevant to my consideration as to whether leave should be granted.
2. Mr Shari did not put on any written submissions in advance of the hearing. At the hearing, the Liquidators objected to certain paragraphs of Mr Shari's affidavits on the basis that they were either matters of submission not evidence or otherwise hearsay or opinion evidence. In fairness to Mr Shari, I have taken those paragraphs into account so as to understand his application. Mr Shari also made oral submissions to the Court consistent with the grounds set out in his originating motion and other submissions, and sought leave to put on further brief supplementary written submissions identifying the case law he wished to draw to my attention (and which I allowed).
3. Mr Shari's supplementary written submissions cite a series of authorities which he says support the granting of leave in this case, including in respect of the discretionary factors the Court may take into consideration. I have had regard to those authorities and generally, they do not advance the basis upon which Mr Shari says leave to proceed should be granted. I do however, intend to address those discretionary factors, but do not intend to address every authority Mr Shari refers to in detail, unless necessary.

1. The current circumstances in which Mr Shari brings and seeks to prosecute his claim against Syndicate 13 are challenging. Mr Shari asserts there is a serious question to be tried in that he claims the defendants (including Syndicate 13) have engaged in misleading and deceptive conduct. He interchangeably refers to this conduct as 'fraudulent', although the statement of claim makes no express plea of fraud. Despite that, the allegations of breaches of contract and fiduciary duties, misleading and deceptive conduct and knowing assistance are all, in the circumstances of this case, serious allegations. The question, is whether Mr Shari has demonstrated, through his evidence, there is a solid foundation for those claims.
2. First, there is some reason to believe that the allegations made in the statement of claim in the County Court Proceeding have a proper foundation. The extant statement of claim has been drawn by counsel, and leave granted in the County Court in circumstances where previous versions of the claim have been struck out or refused leave. It is reasonable to assume, given Mr Shari had the benefit of additional documents obtained through subpoenas, and counsel's involvement, there is a proper basis for the claims made as required under the Civil Procedure Act 2010 (Vic).
3. Secondly, the allegations made by Mr Shari in the County Court are, to some extent, mirrored in claims made by other investors in the Supreme Court Proceeding. With the exception of the allegations raised as to the existence of a Managed Investment Scheme, each of the investors in the LPG Companies and Mr Shari claim breaches of the Investment Agreements, misleading and deceptive conduct, misappropriation of funds invested, and loss and damage suffered. Those pleadings were also drawn by counsel and it is fair to assume they have a proper basis.
4. Thirdly, on the Liquidators' own investigations, the manner in which cash was used in the LPG Companies was 'in direct contravention to the Investment Agreements and marketing materials'. It might reasonably be inferred that such a contravention could found a claim of misleading or deceptive conduct in respect of representations made to Mr Shari at the time he invested. These matters are also supported by the materials Mr Shari has obtained, including the email from Michael Peroumal on 18 May 2018, the email from Charmaine Offer dated 5 June 2018 and the Unitholder Register. That is not to say those documents prove Mr Shari's case, simply that they appear capable of supporting some of the claims made.
5. The Liquidators submit that they are still in the process of investigating claims and consider it too early to form a view whether or not there is 'substance to the allegations put by [Mr Shari] in his Statement of Claim'. There is force in that submission. The Redacted Report and the observations of Justice Matthews in respect of the Confidential Report all point to further investigations being necessary to identify and determine the claims available.
6. Whilst it is finely balanced, I do consider the evidence before the Court sufficient to say there is an arguable case made by Mr Shari in respect of some of his claims. That is, however, as high as I believe it can be put. It remains incumbent on Mr Shari to demonstrate that the proceedings in the County Court should be preferred over the ordinary proof of debt and adjudication procedure. Determining that issue requires consideration of some of the discretionary factors I referred to earlier.

E.2 The amount and seriousness of the claims, and the degree and complexity of the legal and factual issues involved

1. It is convenient to deal with these factors together.
2. There can be no doubt given the number of investors involved, the potential value of loss suffered, and the nature of the possible impugned conduct of the directors and officers of the LPG Companies, that claims commenced in respect of these investments are serious and of real import.
3. Since 2018, the LPG Companies have raised $122.2 million from 600 investors to fund the projects for the special purpose vehicles against approximately $62.9 million in secured debt (although the Liquidators consider this amount could be higher taking into account default fees and charges). As a result of the 'shared treasury function', the movement of funds across the LPG Companies has resulted in some $26.3 million of related party loans owed by LPG to the special purpose vehicles.
4. Mr Shari's claim is but one of those claims. As the owner of 455 units in the Syndicate 13 Squared Unit Trust, Mr Shari invested $455,000.00 into Syndicate 13 Squared to purchase those units. This investment is important to Mr Shari and he is personally invested in the outcome of the County Court Proceeding.
5. It is also the case that the allegations made by Mr Shari are serious. They involve allegations of misleading and deceptive conduct, breaches of fiduciary duties and other contractual breaches.
6. Much of Mr Shari's submissions make reference to 'fraudulent conduct'. In particular, Mr Shari contends that the proof-of-debt process could not, in this case, be substituted for judicial determination by a Court where claims of proprietary relief and fraud are involved.
7. Now, Mr Shari relies upon a number of authorities in support of his application. I have set out the authorities cited below, with Mr Shari's submission in quotation marks. At the hearing, I told Mr Shari I would consider the authorities he referred me to and I have done so. The Liquidators submit, and I agree, these authorities bear little to no relevance to the present application, or are otherwise distinguishable on the facts. Whilst I appreciate that Mr Shari may rely upon them as authorities for how the various causes of action he pursues might operate at law, they do not stand for the legal propositions in support of an application for leave to proceed against a company in liquidation. The summary of each decision below highlights how it is inapplicable to the present application:

(a) 'fraud unravels everything': Vervaeke v Smith[14]. This decision concerns the effect that a fraud may have on a marriage decree;

(b) 'dishonest assistance and fraud claims maintained despite liquidation': Re Dalma No 1 Pty Ltd (in liq)[15]. This decision is concerned with determination of questions arising in a winding up as to whether available assets should be distributed to a third party which voluntarily paid certain employee entitlements in relation to the company after the commencement of the winding up or to other creditors;

(c) 'fraudulent conduct required full court scrutiny': Re HIH Insurance Ltd; ASIC v Adler.[16] This case is the judgment in the civil prosecution proceeding commenced by ASIC against the former directors of HIH Insurance Ltd and related entities for various breaches of the Act and Corporations Law;

(d) 'trust assets not part of liquidation': Octavo Investments Pty Ltd v Knight.[17] This decision concerned the validity of payments made to an undischarged bankrupt by a liquidator in preference to other creditors, where the liquidation involved a trustee company and other related family trusts;

(e) 'trust property quarantined from unsecured creditors': Re Suco Gold Pty Ltd (in Liq);[18] This decision concerns trustee's right of indemnity in the context of trading trusts and how a liquidator might property apply monies and assets held by the trust as opposed to the general liquidation including in respect of the liquidator's remuneration.

(f) 'proprietary relief claims permitted to run despite liquidation': Groom v Leafbusters Pty Ltd (in liq).[19] This decision concerns a claim for a declaration of common intention constructive trust over real property based on the principles of proprietary estoppel. The claim was made in the context of a winding up where the liquidator sought to sell the property and distribute to creditors under the Act.

1. In relation to the final case of Groom v Leafbusters, the case itself does not deal with the principles associated with proceeding against a company in liquidation. I can only assume that Mr Shari relies upon this decision as demonstrative that a proceeding can be continued against a company in liquidation in certain circumstances. That principle is not in doubt, rather, the question is whether on the facts of this case leave should be granted.
2. Now, I do accept that where allegations of dishonesty, fraud and proprietary interests are made it may be desirable for such issues to be determined judicially.[20] It is also the case that if Mr Shari makes good his allegations against Syndicate 13 and, in turn, the individual defendants, the consequences of successful claims for those individuals are serious.
3. Moreover, Mr Shari's statement of claim seeks relief impugning the conduct of Syndicate 13 and that the individual defendants knowingly assisted in that conduct by their actions. To that end, it will be necessary for a Court to make findings as to Syndicate 13's conduct in order to determine the knowing assistance case against the individual defendants. Now, it is not necessarily the case that a Court will require Syndicate 13 to be a party to the proceeding in order to make such findings. However, there is a risk that any determination by the Liquidator in respect of Syndicate 13's conduct is inconsistent with any findings made by the County Court. It may therefore be desirable that all matters be determined in one judicial forum which would weigh in favour of leave being granted.
4. However, I must balance these considerations against the particular circumstances of this case. Allegations of the kind made by Mr Shari require proper evidence as to what took place, not just at the time Mr Shari invested in the Parkside Project but after that through the conduct of Syndicate 13, its directors and officers and the LPG Companies. The potential breadth of that evidence, which is not presently in Mr Shari's possession, custody or control, underpins the complexities associated with the legal issues to be determined, as well as highlighting the challenges faced by Mr Shari to run such claims against Syndicate 13.
5. I have previously referred to the sections of the Redacted Report which confirm that the LPG Companies and each of the special purpose vehicles were managed in more of a consolidated manner, where funds were intermingled and redistributed amongst the LPG Companies by way of payments and inter-party loans. Significant third-party loans have been identified, and there is little evidence of where funds have ultimately been paid.
6. The Liquidators have explained the complexities of tracing these funds, and it is clear that in order to do so, any tracing exercise will require consideration of the LPG Companies as a whole. Indeed, given the apparent co-mingling of funds across the LPG Companies, the complexity of the transactions involved, and the possibility the LPG Companies may in fact be a Managed Investment Scheme, it may well be impossible for a Court to determine the issues pleaded in Mr Shari's statement of claim without the benefit of knowledge of the wider transactions. It also seems unlikely, if not impossible, for the funds invested in Syndicate 13 to be able to traced (for the purposes of establishing liability in respect of any of the claims made) without access to the wider group's financial information and records. That is a difficult and complex task which will duplicate the work being undertaken in the liquidation.
7. The reality of the County Court Proceeding as against Syndicate 13 is whilst the allegations made are serious, Mr Shari (with the sporadic assistance of counsel) has spent 19 months trying to plead a claim against the defendants and Syndicate 13 without, until recently, any success. I say that without criticism of Mr Shari but simply to note that ultimately, what Mr Shari lacks is both the legal expertise to properly plead and prosecute these complex legal causes of action, as well as the factual information upon which to progress his claim. The inquiries and investigations that Mr Shari is undertaking in the County Court Proceeding are very similar to those which the Liquidator will need to undertake in the liquidation. Moreover, the Liquidator is far better placed to undertake such investigations. The Liquidator has the benefit of statutory powers of inquiry of each of the LPG Companies, the special purpose vehicles and the relevant directors and officers. The Liquidator also has the requisite professional knowledge and experience to undertake what will be a very time consuming and complex tracing exercise for the benefit of all creditors. The courts have also accepted that causes of action such as misleading and deceptive conduct and contractual claims of the type sought in the County Court Proceeding are matters which are entirely appropriate for adjudication in a proof of debt scenario.
8. In my view, the consideration of these factors weighs in favour of leave to proceed against the company in the County Court being refused.

1. The proceedings are at a relatively early stage. Notwithstanding the County Court Proceeding has been on foot for some two years, it has not progressed beyond pleadings. Orders have been made for the production of critical documents under s 26 of the Civil Procedure Act 2010 (Vic) and a mediation to take place. Despite that, the proceeding is somewhat in its infancy.
2. It is also clear there is a significant amount of work still to be done in the proceeding. The documents that Mr Shari has produced to the Court go a very small way towards demonstrating some of the impugned conduct but fall well short of what will be required to progress the matter to trial.
3. Now, Mr Shari has been attempting to do the work of obtaining documents in the proceeding. He has issued a number of subpoenas in the County Court which have assisted him in preparing his Amended Statement of Claim. He has, however, sought to issue many more subpoenas for which leave has not been granted. He continues to seek access to the records of Syndicate 13 as held by the Liquidator. His material filed in this application suggest that he will seek documents which go well beyond Syndicate 13's books in order to pursue a tracing exercise of his investment monies. He has also made extensive requests for discovery in this application which I have previously described. Those requests demonstrate the scope of the exercise Mr Shari may still need to undertake to make good the allegations in his statement of claim however, some of them go beyond the scope of the existing litigation and implicate the conduct of third parties. Most relevantly for the purposes of this application, in his affidavit sworn 1 September 2025, Mr Shari says:

Need for discovery

1. The fraudulent scheme cannot be proved without access to trust records, unit registers, banking records, and correspondence under the control of the liquidators, KPMG.

...

1. Despite repeated requests, KPMG have never provided discovery of Syndicate 13's records. I have even offered to pay reasonable costs, yet disclosure has been refused.
2. KPMG's participation in discovery is essential, because they hold the central databases, trust registers and accounting records. Without Court-ordered discovery directed to KPMG, the Defendant's dishonesty will remain concealed and the fraud will not be properly exposed.

1. Similarly, the Liquidators investigations into the LPG Companies and each of the special purpose vehicles are still at an early stage.
2. The Redacted Report (at a high level) demonstrates that investors in the special purpose vehicles were assured that moneys would be quarantined within the special purpose vehicle they invested in and that the general practice of the directors' was to transfer material amounts of investor funds from the special purpose vehicles (including Syndicate 13) to the LPG Companies' bank account to pay expenses and then redeploy those funds across the wider property development group.
3. Insofar as the investigations into Syndicate 13 are concerned, the Liquidators have now confirmed that construction project remains incomplete. The balance sheet for Syndicate 13 shows the company holds less than $200.00 cash at bank; a secured debt owed of approximately $2.5 million and trade creditors of approximately $123,920.00. The Liquidator's view is that on a cashflow and balance sheet basis Syndicate 13 is insolvent and does not have sufficient assets available to provide a return to creditors.
4. In my view, there remains significant work to do in both the liquidation and the County Court Proceeding. The relatively early stage of the County Court Proceeding weighs in favour of leave being refused.

E.4 The cost of the hearing will be disproportionate to the company's resources and distract from the orderly winding up of Syndicate 13 and the LPG Companies

1. Presently, the LPG Companies have 18 projects located across Victoria and Queensland all at varying stages of construction. Five of these projects are partially built (construction was halted in 2024); six projects are in the planning stage; and six have been sold (both as completed and partially completed stages). Only one project within the LPG Companies has reached completion.
2. The Liquidators are presently unfunded and acknowledge that they would require to be in funds in order to realise the value of any of these projects, as well as pursue the directors and officers in respect of any possible claims.
3. The effect of granting leave for Mr Shari to continue his claim against Syndicate 13 will be to place a significant burden on the Liquidators, much of which will duplicate the work being undertaken in the liquidation itself.
4. The Liquidators have reported that, to date, the directors and officers of the LPG Companies have not been forthcoming with information about the operation of the group or responsive to requests for books of the various entities and information about its operation.
5. In the Supreme Court Proceeding, the director defendants have demonstrated notable recalcitrance in the filing of material (including defences). Mr Shari submits that in the County Court Proceeding he has had great difficulty obtaining documents from the defendant directors (although I accept that may have been in circumstances where there was not a competent pleading on file).
6. Given this conduct to date, it is reasonable to assume that if leave is granted to proceed against Syndicate 13 in the County Court Proceeding, the burden of document production (such as discovery) and evidence will fall on Syndicate 13 (and therefore the Liquidator). Indeed, in his submissions, Mr Shari proposed that leave could be granted to proceed against Syndicate 13 for the limited purpose of discovery in the County Court Proceeding. That is not a practical solution. Discovery is given by reference to the issues in dispute between the parties, which is framed by pleadings. Those steps would be required to be taken by Syndicate 13 (and the other defendants) before discovery could be given. It also highlights the focus that will be placed on Syndicate 13 as the repository of the information Mr Shari seeks and the burden and cost that will ensue.
7. Mr Shari has proven to be a determined and persistent litigant. Whilst I appreciate this matter is very important to him, his conduct in the County Court Proceeding to date (as recorded in the CourtConnect record) suggests that he will conduct this litigation vis-à-vis the company in a way that will generate significant amounts of work for the Liquidator.
8. In my view, that is a burden and cost that cannot be afforded in this liquidation. It would divert time and resources away from the investigations and liquidation of the LPG Companies as a whole. In my view, this weighs against the granting of leave.

1. I am of the view that leave for Mr Shari to proceed against Syndicate 13 should be refused because:

(a) the claims that Mr Shari makes in the County Court Proceeding are claims which are more than capable of being the subject of adjudication as a proof of debt in the liquidation. Mr Shari has not demonstrated a good reason to depart from that procedure;

(b) whilst there may be a serious question to be tried, both the proceedings and liquidation are at an early stage and the Liquidators themselves cannot attest to the substance of Mr Shari's claims. The complexities associated with investigating the LPG Companies (both as a group, individual special purpose vehicles and a managed investment scheme) and tracing investors funds, give rise to difficult legal issues and make investigations time consuming and costly. The investigation and adjudication of these claims is best placed with the Liquidators who have the statutory powers, skills and experience to do so;

(c) the Liquidators' attention and resources should not be diverted into spending funds on defending the County Court Proceeding when the proof of debt procedure is available to Mr Shari. That is a cheaper and more efficient way of resolving Mr Shari's claims; and

(d) the cost of the County Court Proceeding will be disproportionate to Syndicate 13's resources. Syndicate 13 is likely insolvent and, in particular, the burden of discovery will fall to the Liquidators.

1. Leave for Mr Shari to proceed against Syndicate 13 in the County Court Proceeding is refused. I will make the appropriate orders.

[1] In the matter of Lion Property Group Pty Ltd, Statement of Claim, (Supreme Court of Victoria, S ECI 2025 00784, 10 April 2025).

[2] Order of Matthews J In the matter of Lion Property Group Pty Ltd (Supreme Court of Victoria, S ECI 2025 00784, 27 May 2025).

[3] Re Lion Property Group Pty Ltd [2025] VSC 401.

[4] I should note, by reason of the operation of the 2 July 2025 orders, s 471B of the Act was operative on and from that date. As it transpired, Mr Shari was granted leave by the County Court on 3 July 2025 to file his amended statement of claim and join Syndicate 13 as the fourth defendant the day after Syndicate 13 was placed into provisional liquidation. At the hearing before me, Mr Shari informed me that he was not aware, when he attended the County Court hearing on 3 July 2025, that Justice Matthews had made orders appointing Provisional Liquidators.

[5] Order of Matthews J In the matter of Lion Property Group Pty Ltd (Supreme Court of Victoria, S ECI 2025 00784, 6 August 2025).

[6] Re Lion Property Group (No 2) [2025] VSC 493, 18 [63].

[7] See Timbercorp Finance Pty Ltd (ACN 054 581 190)(in liq) v Vivian [2016] VSC 338, [21] per Derham AsJ, identifying the principles in the context of an application for leave under section 500 of the Act.

[8] Guo v Song [2018] NSWSC 12 at [92] (Guo); Ogilvie-Grant & Anor v East (1983) 7 ACLR 669, 672 (Ogilvie- Grant).

[10] Guo (n 8) [92]; Commissioner for Consumer Protection v Unleash Solar Pty Ltd (in Liq) [2015] FCA 348, [13] (Unleash Solar) citing Vagrand Pty Ltd (In Liq) v Fielding [1993] FCA 179; (1993) 41 FCR 550, 556.

[11] Guo (n 8) [92]; Ogilvie-Grant (n 8) 672.

[12] [2009] FCA 749.

[13] Unleash Solar (n 10) [22] and the cases cited therein.

[14] [1983] 1 AC 145.

[15] [2013] NSWSC 1335.

[16] [2002] NSWSC 171; (2002) 41 ACSR 72.

[17] [1979] HCA 61; (1979) 144 CLR 360.

[18] (1983) 33 SASR 99.

[19] [2021] VSC 765.