Brittany Higgins has been bankrupted by her former boss, bringing Linda Reynolds one step closer to discovering where her former political staffer’s $2.4m compensation payout went.
Reynolds, a former Liberal senator, launched bankruptcy proceedings in October against Higgins after successfully suing her for defamation.
The federal court judge Michael Feutrill on Friday made orders to sequestrate Higgins’ estate under the Bankruptcy Act after a series of minor setbacks and technical difficulties that slowed the process.
The date of the act of bankruptcy was backdated to 8 October.
“[The estate will] be handed over to the trustee of the bankruptcy who will take control of her affairs and deal with the creditors in due course,” Reynolds’ lawyer Rachel Ross told reporters outside the court in Perth.
Reynolds’ high-profile defamation victory over Higgins concerned a series of social media posts the former defence minister believed damaged her reputation.
Reynolds was awarded damages of $315,000 plus $26,109 interest after Western Australia’s supreme court in August found some of the posts were defamatory.
Higgins was also ordered to pay 80% of her former boss’s legal costs, which are estimated to be more than $1m.
In a statement, Reynolds said it was not a victory and was an “inevitable consequence” of Higgins’ actions.
“This is not a step that I wanted to take or have taken lightly,” she said.
“I was put to the cost of an expensive supreme court trial to prove Ms Higgins egregiously lied about my conduct and to put an end to the continuation of these lies.”
Reynolds said that Higgins had failed to pay any of the court-ordered damages.
“She has failed to engage at all and this is the unfortunate consequence,” she said.
Reynolds’ lawyer Martin Bennett previously said the bankruptcy would allow Reynolds to find out how much of Higgins’ commonwealth settlement remained as she attempted to recoup her legal costs for the defamation case.
Arthur Carney, a partner at commercial law firm Carneys Legal, explained the trustee would now stand in Higgins’ shoes, and take control of her estate and assets.
“Their job is to administer her assets, call them in, and satisfy the creditors,” he said. This could involve selling any properties in her name, investigating any money held in trust or overseas, and potentially garnishing her earnings.
Carney said that where her $2.4m compensation payout went would be of interest to the trustee.
“The trustee would have to investigate what she did with the money,” he said.
If it has been “legitimately spent” on expenses – whether that be flights, Higgins’ own legal bills, or her wedding to David Sharaz in 2024 – that money cannot be recouped, says Carney. But the trustee would investigate any property, shares or trusts that could be liquidated to pay her creditor.
Carney said that there was also significant “reputational damage” that came with a declaration of bankruptcy.
“You can’t hold a credit card, you can’t obtain credit of any kind, you can’t travel overseas without the permission of your trustee,” he said.
Bankruptcy typically lasts for five years, after which period the remaining debt is wiped, though if the debt is settled earlier, the bankrupt person can apply to be released early from bankruptcy.
Higgins apologised to Reynolds after the former senator emerged victorious from the duo’s high-profile five-week defamation trial.
Sign up: AU Breaking News email
Justice Paul Tottle found Higgins’ social media posts carried an array of imputations.
They included that Reynolds engaged in a campaign of harassment against Higgins, mishandled her rape allegation and engaged in questionable conduct during Bruce Lehrmann’s aborted criminal trial for rape.
The 360-page judgment made factual findings about the events involving Reynolds and Higgins, including her alleged 2019 rape and the events in the years after it.
Higgins made 26 false or misleading statements in media interviews after her alleged sexual assault, the judgment said.
She alleges former co-worker Lehrmann raped her in the senator’s ministerial suite.
A federal court judge overseeing a defamation case launched by Lehrmann against Network Ten found Higgins was, on the balance of probabilities, raped by her former colleague in the office.
Lehrmann has lost an appeal against that finding but has flagged taking the case to the high court.
He denies the rape allegation and his criminal trial was derailed by juror misconduct.
Higgins’ husband, David Sharaz, was also served with a bankruptcy notice by Reynolds and is expected to declare bankruptcy.
He was also found to have defamed the former politician and was ordered to pay $85,000 in damages plus interest and costs.
