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Back in the day, in my home town, a local financial institution collapsed spectacularly, leaving many working people out of pocket. Some of them, their life savings. Taxpayers in my home state were also stiffed nearly a billion dollars. Yet, as everyone in my home town knew, while the former director was pleading bankruptcy, his wife and children somehow owned a string of valuable real estate, including a mansion in the best suburb in town.
The issue of business owners knowingly hiding assets, especially trusts, as bankruptcy looms has long been a contested issue. A trust is held to be a sham, when “there has been a deliberate and focused attempt by the people behind the trust to actually completely mislead and deceive anyone else that might have come into contact with it, whether it be other beneficiaries, former spouses or indeed the court”.
Where a sham trust is held to exist, courts are empowered to completely ignore it.
This is, it seems, maybe what Australian senator Linda Reynolds is asking, in relation to a trust established by her former employee, Brittany Higgins.
Linda Reynolds is preparing new legal action to set aside a trust established by Brittany Higgins that the former Liberal minister asserts may have been set up by Ms Higgins to protect the money she received in a $2.4m commonwealth compensation payout.
Senator Reynolds’ move is designed to ensure that in the event she wins her upcoming defamation case against Ms Higgins, she is able to access any assets still held by her former staffer.
For those of you who’ve lived under a rock for the past couple of years, Higgins was a staffer for Reynolds, when the latter was Defense Minister in the Morrison government. In a spectacular legal-political circus that shows no signs of letting up just yet, Higgins accused another staffer, Bruce Lehrmann, of raping her in Reynold’s office after a drunken night out. A key aspect of the scandal is that Higgins accused Reynolds and others of conspiring to “silence” her, and “cover up” the rape allegation.
Reynolds is suing Higgins and her fiancee David Sharaz, for defamation.
A judge recently ruled that the “cover up” claims had no basis in fact. Within days, Higgins did an about-face and issued a kinda-sorta “apology”. Reynolds declined to drop the case.
Now, Sharaz has declined to defend himself, arguing that he can’t afford to.
But Higgins is at least $2.4m richer courtesy of the Australian taxpayer, as a result of a compensation payout that rested largely on her claims of mistreatment by her employers. Not to mention sums of money paid by media for exclusive interviews, as well as a book deal.
Even if Reynolds loses her defamation case, there’s still a pending corruption investigation into the payout.
In a draft of an application to be filed in the Western Australian Supreme Court on Monday Senator Reynolds demands a copy of the Brittany Higgins Protective Trust deed, set up in February last year, to ascertain who is the trustee – and who to sue in the event Ms Higgins claims not to be able to meet any costs or damages awarded.
If the court grants the order, Senator Reynolds would then be able to bring an action under section 89 of the WA Property Act – or other similar provision in the relevant jurisdiction where the trust was established – to have the trust set aside.
Reynolds is arguing that the trust was established simply to sandbag Higgins’ new-found wealth.
Senator Reynolds sets out in the draft version of the affidavit her belief that the trust was set up “with knowledge of potential impending indebtedness”.
That included knowledge of her potential indebtedness to the commonwealth in circumstances when Senator Reynolds asserts she knew certain particulars of the claim were false; and when she knew she might be obliged to repay money to her publisher, Penguin Random House Australia, given the outcome of the criminal trial against Bruce Lehrmann and Senator Reynolds’ warning to Penguin that the memoir contained defamatory allegations against her.
Ms Higgins was also aware that Senator Reynolds had brought defamation proceedings against her fiance, David Sharaz.
Clearly, Reynolds doesn’t want Higgins and Sharaz to be able to sit back in their chi-chi rural French villa, pleading poor.
Indeed, Reynolds is arguing that Higgins told sections of the media exactly what she was up to.
Senator Reynolds cites an article in the Daily Mail, published in August 2023, which stated that “following the settlement, Ms Higgins took Mr Sharaz on a holiday to the Maldives, rented a house on the Gold Coast, and then set up a discretionary investment trust in February – which protects her assets from any future lawsuits”.
In a separate letter filed with the draft version of the application, Senator Reynolds’ lawyer, Martin Bennett, tells Ms Higgins’ lawyer: “This information would only have come from Ms Higgins.”
The Australian
Last year, Higgins told a court that she has a “legal minder” nowadays, “so I can’t do anything dumb.”
No doubt they’re earning their pay.
