J.M. Kelly executives’ assets frozen as liquidators sue for $9 million

ASSETS of key executives in the collapsed J.M. Kelly Group have been frozen by the Supreme Court as liquidators launch court action to recover more than $9 million for creditors.

THE Supreme Court has frozen the assets of two key players in the $50 million collapse of J.M. Kelly Group as liquidators move to sue them for more than $9 million.

Liquidators Derrick Vickers and Michael Owen of PwC successfully applied to the Supreme Court last week to freeze the assets of John Murphy, the general manager of the Rockhampton-based group, and Elizabeth Murphy, the group’s financial controller.

The liquidators also have lodged a combined claim for damages of $9.26 million from the two executives for allegedly providing misleading advice about the financial health of the group to the Queensland Building and Construction Commission (QBCC).

Mr and Ms Murphy, who are the son and daughter of company founder Geoff Murphy, have both been questioned in the Federal Court this month as part of a public examination into the company’s collapse last year.

JM Kelly financial controller Elizabeth Murphy leaves Federal Court with her lawyers. (AAP Image - Richard Waugh)

Supreme Court Judge David Boddice ordered that the Murphys not remove from Australia or dispose of assets up to the value of $9.3 million.

The order also applies to properties owned by John Murphy, including two houses in the Rockhampton suburb of Park Avenue and a unit in the Empire Apartment building in the central Queensland city.

A house in Yeppoon jointly owned by Elizabeth Murphy and several of her siblings also is the subject of the order. The freezing order will be the subject of a further hearing on Friday.

The liquidators claimed the Murphys breached their duties under the Corporations Act by providing incorrect financial figures to the QBCC as part of an audit into whether the company could retain its building licence, according to the court documents.

The QBCC was told in June 2016 that J.M. Kelly Builders had net tangible assets of $5.623 million when the correct figure was a liability of more than $150,000.

“The QBCC would have suspended or cancelled (the company’s) licence had the correct figure been disclosed and would not have been able to continue operating its construction business,” the liquidators allege in their claim lodged in the Supreme Court. From March 30, 2017 until it was put into liquidation last year the company ran up debts of $7.667 million.

Both Ms Murphy and Mr Murphy have denied deliberately providing misleading information to the QBCC and claim the building watchdog set an unreasonable deadline to provide the information. The Murphys have filed a notice of defence to the claim.