LHK Nominees Pty Ltd v Kenworthy

LHK Nominees Pty Ltd and Mr Kenworthy were parties to a dispute concerning the interpretation of a clause within a deed of settlement. The matter came before the High Court of Australia.

The central legal issue before the High Court was whether the clause in the deed, which stipulated that a party's entitlement to a share of net profits was contingent upon that party "continuing to be employed by the Company", required actual employment or merely the status of being employed. This distinction was critical to determining Mr Kenworthy's entitlement to a share of profits after his employment with the company had ceased.

The High Court, in its joint judgment, reasoned that the phrase "continuing to be employed" denoted a state of being, rather than an ongoing obligation to perform duties. The Court considered the context of the deed and the ordinary meaning of the words used, concluding that the clause did not impose a condition of active service. Instead, it referred to the status of being an employee. Therefore, Mr Kenworthy's entitlement to a share of net profits was not extinguished by the cessation of his active employment, provided he remained an employee in status.

The High Court allowed the appeal, setting aside the orders of the Full Federal Court and remitting the matter to the Federal Court for determination of the amount of net profits due to Mr Kenworthy.