Sarah Key, bankrupt solicitor Russell Keddie's repentant wife, offers creditors $4.5 million

Jonathan ChancellorOctober 18, 2012

The back-pain specialist Sarah Key, the wife of bankrupt Sydney solicitor Russell Keddie, has offered $4.5 million to settle claims against her and her associated entities, according to the trustee of her husband’s bankrupt estate, Max Donnelly of Ferrier Hodgson.

The claims against her husband's bankruptcy estate total about $22 million. 

"I have recently become embroiled in circumstances not of my own choosing. In repaying my debts, I wish to make apology for any injustice or ill suffered," the physiotherapist says.

Key, who has been providing physiotherapy to the British royal family for 25 years, has offered:

  •  The bankrupt’s 50% share in the Bungan Beach and Double Bay properties
  • Funds contributed by the bankrupt in capital improvements to the family trust property
  • Recovery of livestock sales banked to Fernleigh Enterprises
  • Recovery of 50% of assets owned by the Fernleigh Partnership
  • Keddie’s 2006 Range Rover
  • Plant and equipment valued at $26,000.

The financial woes of the Keddies' law firm, which was sold to Slater & Gordon in 2010, stemmed from a Kate McClymont-reported Sydney Morning Herald investigation in 2008 that revealed the firm had previously overcharged many of its crippled and injured clients. About 100 clients have launched legal action. 

As the firm's principal, Russell Keddie was subsequently struck off for gross misconduct and declared himself bankrupt.

In August his bankruptcy trustee informed creditors that Keddie's attempt to ''defeat'' his obligations by transferring millions of dollars worth of property to his wife before his bankruptcy for $1 was likely to be overturned. For the sum of only $1 each, Russell Keddie transferred his half of his Double Bay home and a beach house overlooking Bungan Beach to his wife. She also took control of the couple's extensive rural interests, including Uloola, their cattle stud near Scone.

Taking pride of place at the end of an exclusive Double Bay cul-de-sac, the picturesque Wistonville was built in 1904 and recreated in the 1960s by distinguished architect Professor Leslie Wilkinson with harbour views. Set in gardens by Harris Hobbs Landscape Architects, it was briefly listed for sale in 2010 and could now fetch anywhere between its suggested $3.5 million value and $5 million. There is no suggestion yet of the likelihood of its relisting. It last traded at $430,000 in 1985.

The settlement does not include any claim the trustee may have on the London apartment that was transferred from Keddie to Key one month prior to his bankruptcy.

"This is a matter for further investigation," Donnelly says.

Donnelly says the payment will be in two tranches: $3 million within seven days and the balance of $1.5 million over a six-month period.

He expects the first dividend to be paid in December and the following dividend to be paid around May next year. A report to creditors detailing the situation is being sent out today.

"This is a very satisfying result, representing almost 100% of the claim the trustee had against Mrs Keddie and her entities without the cost or delay associated with litigation," Donnelly says.

"Mrs Keddie has been extremely cooperative and accepted the reality of the situation."

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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