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[2009] FCA 63
procedural. Interim orders were granted ex parte. The respondent was restrained from dealing with his divisible property, subject to enumerated exceptions; Jason Walter Bettles was appointed receiver without...
The Federal Court temporarily protected a UK bankrupt's interests in Australian property so that the UK trustee could preserve them for the foreign bankruptcy administration. The Court relied on s 29 of the Bankruptcy Act, not on the UK order operating by itself as an assignment of Australian land. The orders were made without first hearing from the respondent because the evidence showed a prima facie risk that advance notice could lead to disposal. They were limited to the respondent's divisible property, allowed specified ordinary and necessary payments, appointed a receiver, and preserved a right for the respondent or an affected third party to seek variation or directions. The decision concerned interim assistance, not a final determination of ownership, realisation, or creditor entitlement.
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2,501 words · generated 01/10/2026
2 cited instruments linked from this judgment.
In Levy v Reddy [2009] FCA 63, Collier J considered an ex parte interlocutory application by Peter Maurice Levy, a UK insolvency practitioner appointed trustee of Mark Reddy's UK bankruptcy. The application sought Australian court assistance to preserve Reddy's Australian property for the UK bankruptcy administration. The orders were made on 6 February 2009 in the Federal Court of Australia, Queensland District Registry.
The evidence before the Court was that Reddy was declared bankrupt by the High Court of Justice of England and Wales on 25 July 2008, and Levy was appointed trustee on that date ([3], [8]). Before the bankruptcy, Reddy had been subject to an Individual Voluntary Arrangement under UK insolvency legislation. Levy's evidence was that Reddy disposed of UK assets and relocated to Australia before July 2007. Enquiries traced him to Robina, Queensland, and identified two residential properties jointly owned by Reddy and another person, subject to mortgages. The evidence was that the properties had a potential cumulative sale price exceeding $1 million and that the equity was substantial ([3]).
Levy also gave evidence that he and an employee had written to Reddy on 23 September and 7 November 2008 seeking proposals for payment of creditors and the trustee's remuneration and expenses, without receiving a response ([3]). The application was supported by affidavits from Levy, his solicitor, and Jason Walter Bettles, an Australian registered trustee who consented to appointment as receiver ([5]). A certified copy of a letter from a Registrar in Bankruptcy of the UK High Court requested the Australian Court's assistance ([4]).
The Court granted interim orders. Reddy was restrained from dealing with his divisible property in a way that would be prohibited if he were bankrupt under the Australian Bankruptcy Act. The restraint included exceptions for reasonable legal expenses, ordinary and proper business and living expenses, tax liabilities, statutory requirements, and pre-existing mortgage or loan commitments (order 2). Bettles was appointed receiver without security, including over Reddy's interests in the two specified Robina properties, and was authorised to lodge caveats over their titles (orders 3-4).
The orders were not final. Reddy had to provide a statement of affairs within 14 days after the specified service and notification steps (order 6). Reddy and any affected third party retained liberty to apply to discharge or vary the orders or seek directions (order 7). The Court also required the original UK request letter to be delivered to the District Registrar and listed a further hearing for 6 March 2009 (orders 9-10; [18]).
The central statutory provision was s 29 of the Bankruptcy Act 1966 (Cth). As set out by Collier J at [6], it provides for courts to act in aid of other courts in bankruptcy matters. It requires assistance in the circumstances described in s 29(1), provides for assistance to courts of prescribed countries under s 29(2), and permits the Australian Court, where a foreign letter of request is filed, to exercise powers it could exercise if the matter had arisen within its own jurisdiction under s 29(3). The United Kingdom was identified as a prescribed country ([6], [9]).
The Court distinguished assistance under s 29 from automatic recognition of the foreign bankruptcy as transferring Australian land. At [12], Collier J noted that the UK orders were not recognised as operating as an assignment of Reddy's Australian land, citing Australian Mutual Provident Society v Gregory (1908) 5 CLR 615. The Court nevertheless considered that s 29 empowered it to make Australian property available to the foreign trustee so that it could be realised for the benefit of creditors in the UK bankruptcy. Thus, the local court's order supplied the domestic legal mechanism for assistance.
The Court treated the nature and extent of assistance as discretionary. It referred to authorities for the proposition that the Court was to give assistance when the statutory conditions were satisfied but retained discretion about what assistance to provide and what conditions to attach ([12]). It also referred to authorities supporting the power to appoint a receiver over Australian property in aid of a foreign bankruptcy administration ([13]).
Collier J recognised the competing considerations. An order restraining a person from dealing with their own property was described as an “extreme measure”, particularly when sought ex parte and when the assets were jointly owned with someone else ([16]). The countervailing evidence was that Reddy had previously disposed of assets in the UK, had not responded to communications, and held interests in substantial Australian property. The Court considered there was a prima facie real risk that giving advance notice could allow the Australian assets to be disposed of before they could be preserved ([16]).
The Court also addressed safeguards and scope. Its reasons state that the orders applied only to Reddy's assets and interests, not the co-owner's interest, and that no undertaking as to damages was required in respect of the third party's interest at that stage. The order expressly allowed any affected third party to apply to vary or discharge it or seek directions (order 7; [16]). The permitted-payment exceptions in order 2 likewise meant the restraint was not absolute.
The Cross Border Insolvency Act 2008 (Cth) was considered but did not displace the s 29 route on the material before the Court. Section 21 of that Act, quoted at [14], provides for the Model Law or a provision of the Act to prevail over s 29 to the extent of inconsistency. The applicant submitted that the application was not made under the Model Law. Collier J found no prima facie inconsistency on the facts, and considered the applicant was not required to proceed under the Cross Border Insolvency Act ([15]-[16]).
The judgment describes the legal position through the provisions and authorities before Collier J in February 2009. It does not set out a comprehensive account of the law before the cited authorities, and it does not decide the law for all later circumstances. The points below therefore describe the framework as the judgment presents it, rather than claiming a general historical or subsequent development.
The judgment's starting point was that a UK bankruptcy order did not itself operate as an assignment of Australian land. Collier J cited Australian Mutual Provident Society v Gregory for that proposition ([12]). That limitation did not prevent Australian assistance: s 29 supplied a basis for the Federal Court to act locally in aid of the UK bankruptcy administration and make relevant property available to the trustee.
The judgment also described s 29 as involving both a statutory basis for assistance and judicial discretion. Collier J said that the Court should provide assistance when the conditions of the section were satisfied, while retaining discretion as to what assistance was appropriate and what conditions should accompany it ([12]). The receiver appointment was presented as a power available under s 29, supported by the authorities discussed at [13].
The Cross Border Insolvency Act added a priority rule for inconsistency: under s 21, the Model Law as given force in Australia, or a provision of the Act, prevails over s 29 to the extent of any inconsistency ([14]). On the particular application, the Court found no prima facie inconsistency and accepted that the applicant could proceed under s 29 ([15]-[16]). The reasons do not determine how a conflict would be resolved in a different case, nor do they analyse in detail the Model Law's operation.
The decision's practical outcome was an interim, locally made restraint and receivership order, rather than recognition of the UK order as independently transferring Australian land. The orders were limited to Reddy's divisible property and remained open to variation or discharge. The reasons do not report any later decision in this proceeding or subsequent judicial treatment of Levy v Reddy. Accordingly, this supplied judgment alone cannot establish how later courts have applied, limited, or developed its reasoning.
At [12], Collier J said the UK orders were not recognised as operating as an assignment of Australian land, but the Court could use s 29 “to make property in Australia available to the trustee in bankruptcy”. In plain English, the foreign bankruptcy did not itself complete the domestic transfer or control of the land. The Australian Court could make orders here to support the foreign administration.
At [12], the Court described its discretion over the assistance it would give and any conditions attached. This matters because s 29 was not treated as automatically producing the precise orders the foreign trustee requested. The Court considered what form of help was appropriate in the circumstances.
At [16], the Court called a restraint on dealing with a person's property an “extreme measure”. The observation signals that the order was serious, not routine. The ex parte nature of the application and the joint ownership of the properties were expressly recognised as relevant concerns.
Also at [16], the Court identified a “prima facie, a real risk” that prior notice could have enabled Reddy to dispose of Australian assets. “Prima facie” indicates that this was a provisional assessment on the evidence for the interlocutory application, rather than a final finding after hearing from both sides.
At [17], Collier J concluded that the Court had power under s 29 to make the interim orders and should do so. That conclusion was limited to the interim application and the evidence then before the Court. It was not a final ruling on the ultimate realisation of the properties or the respondent's full divisible estate.
The orders themselves are important to reading the reasons. The restraint contained specific exceptions for legal expenses, ordinary and proper business and living expenses, tax, statutory requirements, and loan commitments entered into before the order (order 2). The receiver's appointment applied to the respondent's divisible property and, specifically, his interests in the two properties (orders 3-4). The order did not purport to appoint the receiver over the co-owner's interest.
The judgment is most directly relevant to a situation with the following features, as reflected in its reasoning:
These features explain the fit between the evidence and the order in this case. The judgment does not establish that every foreign trustee, request, or Australian asset automatically warrants a restraint or receivership. It expressly treats the type and conditions of assistance as matters for the Court's discretion ([12], [16]).
The joint ownership point is particularly important. The Court was aware that the identified properties were jointly owned and characterised restraint as extreme, but regarded the orders as limited to Reddy's interests. It also preserved the ability of an affected third party to return to Court (order 7; [16]). The case therefore concerns interim protection of the respondent's interest, not a determination of the co-owner's rights.
The supplied judgment does not contain any later judicial decisions, and no later authorities are included in the material provided. It is therefore not possible, on this source alone, to say whether later courts followed, distinguished, limited, or otherwise treated Levy v Reddy.
Within this judgment, Collier J relied on earlier authorities. Australian Mutual Provident Society v Gregory was applied to the proposition that the foreign bankruptcy order did not itself operate as an assignment of Australian land, while also supporting the possibility of local assistance under s 29 ([12]). Radich v Bank of New Zealand was cited in support of the Court's ability to assist and its discretion over the assistance and conditions ([12]-[13]). Re Ayres; Ex parte Evans, Ayres v Evans, and Dick as Trustee in Bankruptcy v McIntosh were cited for the discretionary approach and the power to appoint a receiver ([12]-[13]).
Those are relationships stated in Levy v Reddy itself. They are not evidence of how later courts treated Levy. A later-treatment account would require later decisions not present in the supplied text.
Several matters remained open at the end of this interlocutory decision. First, the Court had not made a final determination of the respondent's divisible property, the amount or value of his interest in the jointly owned properties, or what assets might ultimately be realised. The orders appointed a receiver over the relevant interests pending further order (orders 3-4).
Second, the UK trustee's authority and the ultimate administration of the Australian property were not finally resolved in the reasons. The Court accepted, for the interim application, that the UK estate vested in the applicant under s 306(1) of the UK Insolvency Act 1986 and that Australian land fell within the UK statute's definition of property ([10]). Its local orders were nonetheless made through s 29.
Third, the respondent and any affected third party had not been heard before the orders were made. The Court expressly preserved liberty to apply, making later consideration of their evidence or objections possible (order 7; [16]). The reasons do not say whether an application to vary or discharge was later made or how it was decided.
Fourth, the original UK request letter had not yet been delivered to the District Registrar. The Court made the orders on the basis of a certified copy for that day's application but directed that the original be produced expeditiously ([18]; order 9). The record provided does not show what followed.
Finally, the judgment's brief discussion of the Cross Border Insolvency Act did not resolve the operation of the Model Law in other factual settings. It found only that there was prima facie no inconsistency with s 29 on the facts before it and that the applicant was not required to proceed under that Act in this application ([14]-[16]). Questions about a case involving an actual inconsistency, or a different route under the Model Law, were not decided.
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REASONS FOR JUDGMENT 1 This is an ex parte application for interlocutory relief by the trustee in bankruptcy of the respondent appointed pursuant to the Insolvency Act 1986 (UK). 2 Interim orders sought by the applicant in the application are as follows: 1 That the hearing in respect of these Interim Orders sought be heard ex parte. 2. The Respondent, Mark Reddy, by himself and, where applicable, his employees, agents or otherwise, be restrained until such time as any further or other order is made by this Court from disposing of or dealing with in any way his divisible property (within the meaning of Section 116 of the Bankruptcy Act 1966 (Cth) and ascertained by reference to the commencement of his bankruptcy in the United Kingdom on 25 July 2008), as would be prohibited if the Respondent was bankrupt under the Bankruptcy Act 1966 (Cth), other than for the following purposes: (a) to enable him to pay and to continue to pay reasonable legal expenses of defending or responding to these proceedings; (b) to pay ordinary and proper business expenses bona fide incurred by him; (c) to pay ordinary and proper living expenses bona fide incurred by him; (d) to meet his taxation liabilities; (e) to comply with any statutory requirements to which he is subject; (f) to meet any mortgage or other loan commitment entered into prior to the date of this order. 3. Jason Walter Bettles (of Worrells Solvency and Forensic Accountants, Level 6, 50 Cavill Avenue, Surfers Paradise in the State of Queensland) be appointed Receiver without security of that divisible property pending further or other order of this Honourable Court. 4. In particular, Jason Walter Bettles is appointed Receiver without security of the Respondent's interest in land described as Lot 22 on SP 106487, County of Ward, Parish of Gilston, Title Reference 50262349 (46 Peach Drive, Robina in the State of Queensland) and Lot 21 on SP 406487, County of Ward, Parish of Gilston, Title Reference 50262348 (48 Peach Drive, Robina in the State of Queensland) (the "Respondent's Land") and the Receiver is entitled to lodge caveats with the Registrar of Titles over the titles of the Respondent's Land to protect and note the Receiver's interest in the Respondent's Land. 5. There be served on the Respondent a sealed copy of these Interim Orders along with a copy of the Application and the Supporting Affidavits as soon as possible hereafter. 6. Within 14 days of service of these Interim Orders (along with a copy of the Application and the Supporting Affidavits) and of notification to the Respondent by the Receiver of his appointment, the Respondent is to deliver to the Receiver a Statement of Affairs in respect of the Respondent's divisible property. 7. The Respondent and any third party affected by this Order shall have liberty to apply on notice to the Applicant to discharge or vary this Order, or to seek directions hereunder. 8. The Applicant's costs of and incidental to obtaining this Order be the Applicant's reserved costs. 9. Further hearing in this matter be set down for…………………..2009. 3 The applicant is a partner and licensed insolvency practitioner in the United Kingdom. The applicant deposes in an affidavit sworn 12 January 2009 that, following the presentation of a bankruptcy petition to the High Court of Justice of England and Wales and its service effected upon the respondent, the respondent was declared bankrupt at a hearing on 25 July 2008. The applicant deposes further (in summary) that: · The applicant was appointed by the High Court of Justice of England and Wales as the respondent's trustee in bankruptcy on 25 July 2008. · Prior to the respondent's bankruptcy, the respondent was subject to an Individual Voluntary Arrangement ("IVA") under the Insolvency Act 1986 (UK) of which was the applicant was the supervising insolvency practitioner. Notwithstanding the IVA, some time before 9 July 2007 the respondent disposed of all of his assets within the United Kingdom and relocated to Australia. · The enquiry agent engaged by the applicant traced the respondent to an address in Robina, Queensland, and has also discovered that the respondent is a joint owner of two residential properties in Robina. Annexed to the applicant's affidavit are copies of title searches in respect of those two properties showing that they are jointly owned by the respondent with another person (although subject to a mortgage), and evidence that the properties have a potential cumulative sale price in excess of $1 million. The applicant deposes that inquiries have been made of the relevant mortgagees and that the equity of the respondent and his co-owner in the properties is substantial. · The applicant and an employee wrote to the respondent on 23 September 2008 and 7 November 2008 requesting that the respondent provide his proposals for payment of his creditors and the applicant's remuneration and expenses, however no response has been received from the respondent. · Due to the absence of communication from the respondent, and because the respondent had disposed of his assets in the United Kingdom and now has assets in Australia, the applicant proposes to take steps to safeguard those assets for the benefit of the bankrupt estate, and cause those assets to be recovered and realised into the bankrupt estate. In particular, the applicant has appointed solicitors in Australia and nominated an insolvency practitioner whom he wishes to be appointed as base receiver to the divisible property of the respondent and to act on the applicant's behalf in gathering the respondent's assets. 4 Annexed to the applicant's affidavit is a certified copy of a letter from a Registrar in Bankruptcy of the High Court of Justice in the United Kingdom reciting a number of facts also found in the applicant's affidavit, and requesting the assistance of the Court in relation to the application. 5 Three additional affidavits have been filed supporting the application. They are: · two affidavits sworn by Michael Anthony Coates, the solicitor of the applicant, on 21 January 2009 and 6 February 2009. Mr Coates has deposed, inter alia, that he has received instructions from the applicant (subsequent to the execution of the applicant's affidavit) seeking orders that Jason Walter Bettles of Worrells Solvency and Forensic Accountants, a registered trustee in Australia, be appointed interim receiver of the divisible property of the respondent situated in Australia; and · an affidavit sworn by Jason Walter Bettles consenting to being appointed as a receiver of the divisible property of the respondent situated in Australia.
CONSIDERATION 6 This matter came before me this morning on an ex parte basis. At the hearing it became clear that orders sought by the applicant were pursuant to s 29 Bankruptcy Act 1966 (Cth). Section 29 provides as follows: (1) All Courts having jurisdiction under this Act, the Judges of those Courts and the officers of or under the control of those Courts shall severally act in aid of and be auxiliary to each other in all matters of bankruptcy. (2) In all matters of bankruptcy, the Court: (a) shall act in aid of and be auxiliary to the courts of the external Territories, and of prescribed countries, that have jurisdiction in bankruptcy; and (b) may act in aid of and be auxiliary to the courts of other countries that have jurisdiction in bankruptcy. (3) Where a letter of request from a court of an external Territory, or of a country other than Australia, requesting aid in a matter of bankruptcy is filed in the Court, the Court may exercise such powers with respect to the matter as it could exercise if the matter had arisen within its own jurisdiction. (4) The Court may request a court of an external Territory, or of a country other than Australia, that has jurisdiction in bankruptcy to act in aid of and be auxiliary to it in any matter of bankruptcy. (5) In this section, prescribed country means: (a) the United Kingdom, Canada and New Zealand; (b) a country prescribed by the regulations for the purposes of this subsection; and (c) a colony, overseas territory or protectorate of a country specified in paragraph (a) or of a country so prescribed. 7 On the evidence before me a number of issues are clear. 8 First, the respondent is a bankrupt in the United Kingdom pursuant to an order of the High Court of Justice of the United Kingdom. 9 Second, the High Court of Justice is a court of a prescribed country for the purposes of s 29 Bankruptcy Act. 10 Third, upon the commencement of the respondent's bankruptcy, the bankrupt's estate as defined in the Insolvency Act 1986 Act (UK) vested in the applicant immediately upon the appointment taking effect: s 306(1) Insolvency Act 1986 Act (UK). The bankrupt's property as defined by the Insolvency Act 1986 Act (UK) includes money, goods, things in action, land and every description of property wherever situated: s 436 Insolvency Act 1986 Act (UK). Real property of the respondent situated in Australia as described in the applicant's affidavit falls within this statutory definition and is potentially subject to the bankruptcy administration by the applicant. 11 Fourth, prima facie there is evidence before me that the respondent has previously acted to the detriment of his creditors to dispose of property which was properly the subject of an insolvency administration. 12 Fifth, although the orders made in respect of the respondent's property by the High Court of Justice in the United Kingdom are not recognised in this Court as operating as an assignment of the respondent's Australian lands (Australian Mutual Provident Society v Gregory (1908) 5 CLR 615), the Court may act in aid of the foreign court under s 29 Bankruptcy Act to make property in Australia available to the trustee in bankruptcy to enable it to be realised for the benefit of the creditors in the foreign bankruptcy: Australian Mutual Provident Society v Gregory (1908) 5 CLR 615 at 623, 625, 628, 630; Radich v Bank of New Zealand (1993) 45 FCR 101 at 109, 115, 119; Dick as Trustee in Bankruptcy v McIntosh [2001] FCA 1008 at [7]. Indeed, s 29(1) requires this Court to give all assistance it can to a requesting Court if the conditions of the section are satisfied, leaving this Court with a discretion as to what assistance ought to be given (including discretion as to any conditions attach to the provision of assistance): Re Ayres; Ex parte Evans (1981) 51 FLR 395 at 405-407 esp at 407 per Lockhart J; Ayres v Evans (1981) 56 FLR 235 (FC) at 240, 247, 254-255; Radich v Bank of New Zealand at 105, 118; Dick as Trustee in Bankruptcy v McIntosh at [8]. 13 Sixth, it is clear that under s 29 Bankruptcy Act the Court has power to appoint a receiver of the respondent's property in Australia in aid of the administration of the respondent's insolvent estate in the United Kingdom: Re Ayres; Ex parte Evans (1981) 51 FLR at 408-409; Ayres v Evans (1981) 56 FLR at 240, 247, 255; Radich v Bank of New Zealand at 121-122; Dick as Trustee in Bankruptcy v McIntosh at [19]. 14 Finally, I note that s 21 Cross Border Insolvency Act 2008 (Cth) provides: If the Model Law (as it has the force of law in Australia) or a provision of this Act is inconsistent with section 29 of the Bankruptcy Act 1966 , the Model Law or the provision of this Act prevails, and that section has no effect to the extent of the inconsistency. 15 In this case Mr Coates for the applicant has submitted that the present application is not made in terms of the Model Law on Cross Border Insolvency as enacted in Australia by the Cross Border Insolvency Act 2008 (Cth). On the facts before me there is prima facie no inconsistency between s 29 and either the Model Law on Cross Border Insolvency or the Cross Border Insolvency Act 2008 (Cth) 16 An order restraining a person from dealing with his or her own property is an extreme measure, particularly where the properties identified by the applicant are owned jointly with a third party, and the application is made ex parte. However in the circumstances I consider that: · the applicant is obliged to take steps, for the benefit of the bankrupt estate, to safeguard and cause to be recovered and realised into the bankrupt estate of the respondent assets of the respondent in Australia; · in view of the history of this case there is, prima facie, a real risk that, had the respondent been given prior notice of these ex parte proceedings, he could have acted to dispose of his Australian assets so as to prevent those assets being realised for the benefit of his UK creditors; · as the proposed orders apply only to assets of the respondent, including the respondent's interests in the relevant real properties at Robina, at this stage no undertaking as to damages need be given by either the applicant or the interim receiver in respect of the interests of the third party co-owner of the real properties. The proposed orders contemplate liberty to apply to the respondent and any third party affected by the orders; · the applicant is entitled to make application pursuant to s 29 Bankruptcy Act, and in these circumstances is not required to proceed under the Cross Border Insolvency Act 2008 (Cth). 17 Were the respondent a bankrupt within the meaning of the Bankruptcy Act I consider that, on the evidence before me, the Court would have both jurisdiction and cause to make a freezing order to prevent frustration or abuse of the Court's process pursuant to O 25A Federal Court Rules. In my view, and in light of the facts and principles I have set out in this judgment, the Court has power pursuant to s 29 Bankruptcy Act to make the interim orders sought by the applicant, and should make those interim orders. 18 In conclusion however, I understand that the original letter from the Registrar of the High Court of Justice in the United Kingdom requesting aid, a certified copy of which was annexed to the affidavit of the applicant, has not yet been produced to the District Registrar of Queensland Registry of the Federal Court. I am prepared for the purposes of today's application to make the orders sought on the basis of the certified copy of that letter, however I also direct the applicant's solicitors to ensure that letter be produced expeditiously and delivered to the District Registrar to whom it is addressed. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier.
Associate: Dated: 6 February 2009 Solicitor for the Applicant: Mr Michael Coates of Bennett & Philp
Solicitor for the Respondent: The Respondent did not appear
Levy
Reddy
Interim orders were granted ex parte. The respondent was restrained from dealing with his divisible property, subject to enumerated exceptions; Jason Walter Bettles was appointed receiver without security, including over the respondent's interests in two identified Robina properties. The respondent was required to provide a statement of affairs within 14 days after service of the orders and supporting material and notification of the receiver's appointment. The orders allowed the respondent and affected third parties to apply to vary or discharge them or seek directions. The applicant's costs were reserved, and a further hearing was listed for 6 March 2009.