Victorian Court blocks investor’s bid to sue Lion Property Group entity, directs claim to liquidation process

The Supreme Court of Victoria has delivered a further ruling in the fallout from the Lion Property Group collapse, this time refusing an application by investor Kevin Shari for leave to continue separate litigation against Syndicate 13 Squared Pty Ltd. The decision reinforces the Court’s earlier findings that the group’s affairs must be untangled through the liquidation process, not through piecemeal claims that risk diverting scarce resources from the wider investigation.

Shari had invested $455,000 for 455 units in the Parkside Project and alleged he was misled about unit caps, land security, and assurances that investor funds would be held in trust and applied solely to the Noble Park development. The Court acknowledged that these allegations raise serious questions and mirror the now well-established pattern of conduct identified by the provisional liquidators, including widespread commingling of investor funds, undisclosed intercompany loans, and funds being swept into the group’s head entity rather than staying within project-specific SPVs.

Since we last wrote about this matter in August, the provisional liquidators’ findings have been borne out through the formal winding up of all Lion Property Group entities, including Syndicate 13. Their report confirmed that the group had raised about $122.2 million from more than 600 investors, operated with almost no liquidity, and held around $62.9 million in secured debt, with some projects only partially built and others seized by financiers. Syndicate 13 is insolvent, holds less than $200 in cash, and carries secured debt of about $2.5 million, leaving no practical capacity to fund litigation.

Judicial Registrar Gitsham held that although Shari had an arguable case, pursuing it in the County Court would duplicate the liquidators’ work, impose disproportionate cost on an entity with negligible assets, and risk fracturing the investigation into the group-wide fund flows. The liquidators are already tracing thousands of transactions across 25 SPVs and assessing investor claims, including potential misleading conduct and breach-of-trust claims of the type Shari advances. The Court noted that these claims can be determined through the proof-of-debt process, which allows for adjudication and appeal without compromising the liquidation’s broader objectives.

Read the decision here. Mark Pennini of Hall & Wilcox represented Syndicate 13 Squared Pty Ltd acting through its liquidators, John Lindholm and Emily Seeckts of KPMG.