Linda Reynolds’ bankruptcy push against Brittany Higgins could rewrite legal precedent
A Federal Court judge weighs whether bankruptcy papers can be served through lawyers rather than directly, as Linda Reynolds pursues almost $2m from Brittany Higgins.
Linda Reynolds’ attempted bankruptcy of her former staffer Brittany Higgins looks set to rewrite legal precedent around the way bankruptcy papers are served in Australia.
The Federal Court is now weighing up whether to allow Ms Reynolds’ legal team to serve the papers on Ms Higgins through her lawyers, rather than to Ms Higgins directly, as the former senator continues to pursue almost $2m in defamation damages and legal costs owed to her by Ms Higgins.
At a hearing in the Federal Court in Perth on Monday, Justice Michael Feutrill heard arguments from Ms Reynolds’ lawyer Martin Bennett on why his client should be allowed to serve the papers through Ms Higgins’ lawyer Carmel Galati.
Mr Bennett told the court his firm had given Ms Higgins the option of being served at her home or her office at a time of her choosing or through Ms Galati, saying the flexibility was designed to account for Ms Higgins’ “mental fragility”.
He said Ms Higgins had consented to the papers being served through Ms Galati, but the Federal Court must now decide whether that is valid under the Bankruptcy Act.
Mr Bennett on Monday said his firm had sought to serve the papers through Ms Higgins’ lawyers out of respect for her “mental fragility”.
He told the court that there had been no payment whatsoever of any of the sum owed to Ms Reynolds by Ms Higgins.
The WA Supreme Court earlier this year found Ms Higgins had defamed Ms Reynolds in a series of social media posts, and ordered her to pay her former boss $340,000 in damages and interest.
Ms Higgins has also been ordered to pay Ms Reynolds’ legal costs, which are estimated to exceed $1.5m.
Justice Feutrill did not make any orders about the serving of the papers, saying that he needed time to consider the issue.
Speaking outside the court, Mr Bennett said he was confident that the court would approve the proposed method of service.
“Because this is an unusual novel point and there’s no precedent for it, his honour is, correctly I think, going to write reasons for his decision in the next few days,” he said.
Mr Bennett said he did not believe that Ms Higgins had deliberately tried to obstruct or contest the serving of the papers.
Instead, he said his team was trying to find a way to serve the papers without the need to knock on her door or confront her in public.
“What we’re trying to do is to facilitate a service in a manner respecting mental health and fragility. That’s proving more difficult than just blindly crushing on oblivious to the effect,” he said.
Ms Reynolds is also pursuing bankruptcy proceedings against Ms Higgins’s husband David Sharaz over the $92,000 in damages found to be owed to her over other defamatory social media posts. He is also liable for legal costs that are likely to be worth more than $500,000.
Mr Bennett said he did not envisage any such complications to arise in passing the bankruptcy petition against Mr Sharaz next week given he had been served conventionally.
The proceedings against Ms Higgins will likely eventually reveal how much if any is left of the more than $2.4m settlement paid to her by the commonwealth in 2022 after claiming mistreatment and a political cover-up by her former boss.
Those political cover-up claims have now been found by both the Federal Court and Supreme Court to be unjustified.
Most, if not all, of the controversial payout is believed to have been spent on legal costs, travel and lifestyle expenses.
Mr Bennett said the bankruptcy trustee that is expected to eventually be appointed to Ms Higgins would examine what if any assets sit within the Brittany Higgins Protective Trust that was established in the wake of that commonwealth compensation payment.
He estimated that process would take around three months.
“A person who’s made bankrupt has an obligation to assist the trustee in bankruptcy; there are very severe consequences if they don’t, so I think inquiries being made immediately will produce an answer,” he said.
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