Judge in Federal Court case for Gold Coast lawyer Beau Hartnett orders him into bankruptcy

A landmark Federal Court case examining how a Gold Coast lawyer used a personal insolvency process to avoid debts has been decided. Read the explosive findings

Gold Coast lawyer Beau Hartnett, with his barrister Richard Cowen, leaves the Federal Court where he was attending a hearing into his personal insolvency. Picture: NewsWire / John Gass

A Gold Coast lawyer who claimed he was broke to avoid paying his debts while living in a mansion and being linked to valuable trust funds has been called an unreliable witness and ordered into bankruptcy.

Beau Timothy John Hartnett’s bankruptcy will be backdated to December 19, 2024, with his assets frozen. Gavin King was appointed his bankruptcy trustee.

In a landmark Federal Court case, Justice Kylie Downes rejected all Mr Hartnett’s evidence.

“Because of the manner in which Mr Hartnett gave his evidence under cross-examination (which gave me no confidence that his answers were correct) and because I consider that the vote in favour of the PIA was a contrived one for which he was responsible, as I address below, I do not accept any evidence given by Mr Hartnett in this proceeding (whether oral or written),” she wrote.

“In short, Mr Hartnett is not a reliable witness.”

The unregistered Gold Coast solicitor faced a three-day Federal Court hearing brought by the Inspector-General in Bankruptcy, which succeeded in his quest to have a Personal Insolvency Agreement (PIA) set aside.

It is the first time the Inspector-General has brought this kind of action under the Bankruptcy Act 1966.

One of the creditors, Lismore pensioner Anthony Robert Bell, filed a cross-claim in the matter, seeking to bankrupt Mr Hartnett and appoint a trustee if the agreement was dumped.

The cross claim was granted. Ms Downes ordered the Inspector-General pay the costs of the insolvency trustees in the matter, Anne Meagher and Adam Kersey of SV Partners.

The Inspector-General’s costs, and those of Mr Bell, will be paid from Mr Hartnett’s estate.

Mr Hartnett has been contacted for comment.

The case heard creditors had been “contrived” for the sole purpose of having the PIA voted through and that Mr Hartnett’s financial status needed more thorough investigation by a bankruptcy trustee.

In her 41-page decision, Ms Downes agreed.

The Judge also lambasted Mr Hartnett’s “furtive removal” during the hearing of an important file, which he took home after waiting for everyone else to leave.

“Mr Hartnett’s conduct in the furtive removal of the folder from the courtroom while he is being cross-examined was unacceptable, and he knew it was, and that he behaved in this manner only serves to strengthen my view that I cannot accept any evidence given by Mr Hartnett,” she wrote.

Gold Coast lawyer Beau Hartnett (left), with his barrister Richard Cowen, leaves the Federal Court. Picture: NewsWire / John Gass

Under the now-defunct agreement, creditors were paid less than three cents of every dollar the lawyer owed.

The agreement was voted through by creditors including a trust controlled by Mr Hartnett’s wife Suzanne Weel.

Justice Downes said: “There is a serious question as to whether the debt claimed to be owed to the Hartnett Service Trust is a bona fide one, either in the amount claimed or at all”.

Julianne Jacques KC, for the Inspector-General, said during the hearing the agreement was “a contrived PIA” because Mr Hartnett had put creditors in place for the express purpose of voting in favour of it.

Ms Jacques said the “friendly creditors” including Walsh Accountants, MPB Investments and the McCallum-Henry Family Trust, received less than $40 each under the agreement.

Justice Downes said she had “very serious concerns about the validity of the debts claimed by the minor creditors and about Mr Hartnett’s conduct relating to them leading up to the PIA being entered”.

The judgment said Mr Hartnett had “caused” invoices to be written by the minor creditors, who subsequently voted in favour of the PIA.

It said Mr Hartnett was “not being transparent” with the trustees controlling his estate and that “four weeks was not sufficient time to investigate affairs as complex as those of Mr Hartnett”.

Mr Bell was owed $580,000 after Mr Hartnett charged an elderly client $288,000 to enforce a $30,000 mortgage.

Mr Hartnett then spent years in court trying to avoid repaying the money before declaring insolvency.

The court action against Mr Hartnett came after the Gold Coast Bulletin broke the story and sent questions to the bankruptcy watchdog.

Originally published as Judge in Federal Court case for Gold Coast lawyer Beau Hartnett orders him into bankruptcy