In the matter of O’Keeffe Heneghan Pty Ltd (in liquidation); Aus Life Pty Ltd (in liquidation) and Rocky Neill Construction Pty Ltd (in liquidation); AND IN THE MATTER OF:; O’Keeffe Heneghan Pty Ltd (in liquidation); Aus Life Pty Ltd (in liquidation) and Rocky Neill Construction Pty Ltd (in liquidation) trading as KNF Group (a firm) [2019] NSWSC 106

In the matter of O’Keeffe Heneghan Pty Ltd (in liquidation); Aus Life Pty Ltd (in liquidation) and Rocky Neill Construction Pty Ltd (in liquidation); AND IN THE MATTER OF:; O’Keeffe Heneghan Pty Ltd (in liquidation); Aus Life Pty Ltd (in liquidation) and Rocky Neill Construction Pty Ltd (in liquidation) trading as KNF Group (a firm) [2019] NSWSC 106

The priority regime under ss 556 and 561 of the Corporations Act 2001 (Cth) does not apply to payments of debts and liabilities of a partnership from partnership assets even where the partners are corporations in liquidation. Further, the OzForex Monies held by the liquidators of Rocky Neill Construction Pty Ltd are held on constructive trust for the partnership, subject to the charge in favour of Commonwealth Bank of Australia. Competing security interests rank according to established priorities, and costs are not ordered as between the parties for the Priority Application, with only limited recovery for certain costs out of the OzForex Monies.

Jurisdiction
Australia
Judgment Date
18 February 2019
Procedural Posture
Corporations Priority Dispute and Partnership Asset Distribution / Post Judgment: Determination of Form of Orders and Costs
Outcome
Declarations and orders made for the distribution of partnership assets, recognition of constructive trust, payment priorities, and costs. No order as to costs in the Priority Application. Specific cost orders in the Rocky Neill Application.
Legal Topics
['liquidation of Companies' 'priority of Debts' 'partnerships Involving Companies in Liquidation' 'constructive Trusts in Insolvency' 'voidable Transactions' 'costs in Corporate Insolvency']
['insolvency' 'corporations Law' 'equity'] ['liquidation of Companies' 'priority of Debts' 'partnerships Involving Companies in Liquidation' 'constructive Trusts in Insolvency' 'voidable Transactions' 'costs in Corporate Insolvency']

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Procedural Posture

Corporations Priority Dispute and Partnership Asset Distribution / Post Judgment: Determination of Form of Orders and Costs

Legal Issues

  1. 1 ['Does the priority regime under ss 556 and 561 of the Corporations Act 2001 (Cth) apply to the payment of partnership debts from partnership assets where the partners are corporate entities in liquidation?' 'Who is entitled to the OzForex Monies received by the liquidators of Rocky Neill Construction Pty Ltd, and in what order of priority do competing security interests (CBA and IFG) rank?' 'How should costs be apportioned as between the parties for the Priority Application and the Rocky Neill Application?']

Ratio Decidendi

The priority regime under ss 556 and 561 of the Corporations Act 2001 (Cth) does not apply to payments of debts and liabilities of a partnership from partnership assets even where the partners are corporations in liquidation. Further, the OzForex Monies held by the liquidators of Rocky Neill Construction Pty Ltd are held on constructive trust for the partnership, subject to the charge in favour of Commonwealth Bank of Australia. Competing security interests rank according to established priorities, and costs are not ordered as between the parties for the Priority Application, with only limited recovery for certain costs out of the OzForex Monies.

Court Disposition

Declarations and orders made for the distribution of partnership assets, recognition of constructive trust, payment priorities, and costs. No order as to costs in the Priority Application. Specific cost orders in the Rocky Neill Application.

Orders

  • ['Declaration that the priority regime in Corporations Act 2001 (Cth) sections 556 and 561 does not apply to payment of partnership debts from partnership assets of the KNF Group.' "Commonwealth's Interlocutory Process (14 Nov 2017) dismissed." "Liquidators' Interlocutory Process (28 Nov 2017) dismissed." "No order...