Brittany Higgins will be financially wiped out if she is forced to personally pay Linda Reynolds $341,000 in damages and millions of dollars in legal costs but experts believe her trust fund may be legally protected setting the scene for a fresh legal fight.
There’s also the question of how much money is actually left after she was awarded $2.4 million by the Commonwealth in 2022 raising the prospect that the defamation case could be financially ruinous for all parties.
While the $341,000 in damages is substantial, it is the legal costs of Senator Reynolds, who the WA Supreme Court found was defamed by Ms Higgins social media posts, that is likely to impose a far greater financial cost to Ms Higgins and Mr Sharaz.
The real question is whether Senator Reynolds’ court victory will actually see her get any money out of Ms Higgins.
Two issues emerge as barriers to that – either because there’s none left and the money has been spent or it is legally protected through a trust structure.
Ms Higgins’ own legal costs for the case to defend the case are likely to be in the vicinity of $500,000 to $1 million.
That would have put a serious dent in whatever is left of her $2.4 million payout. She has stated she received $1.9 million from taxpayers three years ago after tax.
Mr Sharaz has already indicated he is likely to go bankrupt and did not have the funds to pay for a legal defence.
As a result of the WA Supreme Court judgment she now faces a damages bill of $341,000. But that is the tip of the iceberg.
It’s Senator Reynolds’ legal costs that are likely to be triple that amount.
Linda Reynolds reacts to victory
Former senator Linda Reynolds said her reputation has been “finally and fully vindicated” after being awarded $341,000 in her defamation case against Brittany Higgins and David Sharaz and that it was never about the money.
On Wednesday, Justice Paul Tottle handed down his judgment, siding largely with Ms Reynolds, but she did not win every aspect of the case.
The damages related to two of the three social media posts, which he found to be defamatory.
Regarding Ms Reynolds’ conspiracy claim, Justice Tottle said her claims of damages failed but her breach of contract claim was established.
“This action was always about the dishonest and devastating attack of my reputation that was based on very carefully curated lies by Ms Higgins, Mr Shiraz and the well documented co-conspirators with them,” Linda Reynolds told reporters.
“Those lies cost me my reputation, it cost me my health and my career.
“This has been an incredibly emotionally and financially taxing journey, but I never gave up on the truth and on seeking justice.
“The gross, the very gross, politicisation of this matter by Labor allowed Ms Higgins to procure a multimillion dollar settlement, a settlement that is clearly based on a litany of lies.”
Ms Reynolds said Justice Tottle found there was no conspiracy and there was no political cover up of a rape.
“It is a great relief that my reputation has been finally and fully vindicated,” she said.
“However, it is disappointing that it took four-and-a-half years, multiple court actions and millions of dollars.
“I was falsely accused of conspiring with the then prime minister to cover up the rape of a young woman in my office.
“This lie was so shocking, it was so despicable and so devastating that I had no choice but to stand up tall and keep fighting no matter how many times I was knocked down.”
“I’m not expecting an apology from the Labor government for their role in this completely fabricated ‘me too’ political hit job,” she said.
“However, I do call on the Labor government, on the Australian government, solicitors and HWL Ebsworth to carefully review Justice Tottle’s findings.
In a statement after the judgment, Ms Higgins said she was grateful the matter had finally reached a conclusion.
“I was 24 years old when I was sexually assaulted in Parliament House,” she said.
“Six years have passed — years marked by challenge, scrutiny and change.
“I accept that Linda Reynolds’ feelings were hurt by these events and I am sorry for that. I wish her well for the future.
“My family and I now look forward to healing and rebuilding our lives.”
Justice Tottle finds Brittany Higgins cover up claim “dishonest”
In handing down his judgment, Justice Paul Tottle made a number of sharply critical findings about Brittany Higgins’ account of the aftermath of the alleged rape.
She did not give evidence in the defamation trial.
“My impression is that by 2021 the defendant had persuaded herself she had been the victim of a cover up and inextricably bound up with the notion of a cover up, and a necessary element of it, was the notion she had been treated poorly by (Linda Reynolds) and (Fiona) Brown,’’ he said.
“In critical respects the defendant’s view of what had occurred did not accord with the reality of what occurred as established both by contemporaneous communications and reliable evidence.
“The existence of a cover up was a vital part of the defendant’s story. I have concluded the defendant was dishonest in aspects of the account given by her of the alleged cover up.
Justice Tottle said in doing so he had carefully considered the impact of “trauma” on memory.
“I accept the disruptive effect of trauma may have contributed to the inconsistencies between the defendant’s account of events and my findings as to what occurred,’’ he said.
“The second preliminary observation is that while the defendant’s evidence must be evaluated in the context of the trauma she has suffered, her evidence must be evaluated entirely dispassionately.
“Feelings of sympathy for the victim of a very serious crime must be set aside.
“I accept during this period the defendant experienced episodes of psychological distress which may have subsequently coloured her memory of events but, as I will explain, I do not consider this can adequately account for the disparity between the defendant’s version of events and the objective facts.”
Brittany Higgins’ trust fund
One significant question that arises is whether or not any of the money in the Brittany Higgins Trust Fund is in her name personally in a legal sense.
If the Trust fund that her compensation payout was placed in was used to pay ex-senator Reynolds, there wouldn’t be much change – if any money left at all – once the $341,000 in damages and her former employers legal costs are included.
Senator Reynolds’ own lawyer Martin Bennett has repeatedly told the court that she was “mortgaged to the hilt” to pay for the legal case. Her costs are estimated to be over $1 million.
In other words, Ms Higgins would be forced to pay her own legal costs of over $500,000 to $1 million, damages of $341,000 and the legal costs of Sen Reynolds as determined by the WA Supreme Court which might also amount to $1m.
All up it could conservatively reach $2.4m – the same amount taxpayers awarded her for the alleged rape in the minister’s office and the aftermath.
News.com.au has previously reported that legal experts believe Sen Reynolds could struggle to recover her costs if she wins her defamation case against Ms Higgins because a $2.4m compensation payout may be “protected” if the former political staffer is forced into bankruptcy.
The legal question may turn on a section of the Bankruptcy Act and whether or not damages for personal injury or a wrong done to the bankrupt are recoverable in these circumstances
Linda Reynolds attempts to ‘freeze’ Ms Higgins assets
It follows Senator Reynolds’ legal attempts to “freeze” Ms Higgins’ assets, seek legal advice on the status of her French home and gain information about a trust established to manage the payout.
The French home was recently sold after spending months on the market.
Emeritus Professor Christopher Symes is one of Australia’s pre-eminent insolvency law researchers. While Prof Symes is not involved in the case, he said the issue of whether or not Ms Higgins could ever be forced to hand over the money if she loses the defamation case was a fascinating legal question.
Prof Symes said he was surprised after reading the relevant case to law to surmise that the money probably was protected.
“I would lean towards it being protected,” he said.
“Look, I reckon, the trustee in bankruptcy would take it on, they would sort of say, you know, ‘I’ve got this property. I want to grab it’.”
But he said the whole matter would likely end up back in the court.
The legal question that would arise if Ms Higgins loses and is forced into bankruptcy is whether or not funds received from a 2022 compensation payout from the Commonwealth could be accessed by her former boss.
“I think it probably comes down to is this damages and compensation or is it something else?” Prof Symes said.
Brittany ‘doesn’t have deep pockets’
“Before you sue anybody, you basically do a search of property registers to see whether they own any land and so you know, you want to sue the people with deep pockets,” Prof Symes said.
“Brittany Higgins is hardly a person with deep pockets because you know, she was 23 (when it happened) and OK she got a payout but you know, that’s about it. You tip her upside down and she’s not going to have a lot more.”
Ms Higgins told the Federal Court she received around $1.9 million after taxes and legal fees and has not worked since 2021 and is living off the proceeds of the payout. She has been repeatedly hospitalised for mental health reasons since that time.
Justice Michael Lee in the Federal Court previously found that the former Liberal staffer was raped in Senator Reynolds’ ministerial office by Bruce Lehrmann on the balance of probabilities. Mr Lehrmann has always denied the allegation and is appealing the judgment.
Professor Jason Harris, a specialist in corporate law, insolvency law and commercial law in the Sydney Law School and director at the Ross Parsons Centre of Commercial, Corporate and Taxation Law said that his reading of the deed of settlement suggests the proceeds could be protected even if Senator Reynolds wins the case.
“A payment of compensation for a wrong done to a person (either before or during bankruptcy) is exempt from distribution to creditors if the person becomes bankrupt,” Prof Harris said.
“A wrong done to the person would include actions such as personal injury or defamation. The deed … shows the claims are for victimisation and discrimination rather than, say, unfair dismissal, so they would be likely to come within the exception.”
Prof Harris said assets bought with exempt money – such as compensation funds – were also “exempt from distribution to creditors”.
“A settlement deed would still involve payment of compensation for personal wrongs, you don’t need a formal court order of payment in order to come within the exception.”
Prof Harris said there were ways however to exit bankruptcy early, like the method that businessman Alan Bond had used.
“If (Brittany Higgins) declared bankruptcy in anticipation of an adverse order or was made bankrupt by Ms Reynolds following a successful outcome and a court order for payment and costs, then Ms Higgins would remain bankrupt for three years,” he said.
“There is an option to provide creditors with a deal by including non-distributable assets/money (this is called a s73 composition, and was used by Alan Bond years ago to exit bankruptcy), which if accepted by the creditors (which would include Senator Reynolds) will allow the bankrupt to exit bankruptcy early.
“So she could go bankrupt and then propose a composition to get out of bankruptcy early. Bankruptcy would require Ms Higgins to come under the supervision of her bankruptcy trustee and she would have to report her income and may need to make annual contributions to her creditors out of her income for each of the years that she is bankrupt. She would also have to disclose all of her assets and liabilities.”
Higgins’ husband did not fight case
Senator Reynolds’ lawyer has previously predicted Mr Sharaz will end up “bankrupt” and criticised Ms Higgins’ husband for crying poor while living in a French “chateau”.
Mr Sharaz announced last year that he was throwing in the towel and no longer had the financial resources to fight the defamation case.
The unemployed expat had not held a full-time job since he parted ways with a Brisbane radio station shortly after Senator Reynolds announced she was suing him for defamation over social media posts in 2023.
However, he was recently employed by a PR and advocacy firm in Melbourne.
Senator Reynolds’ defamation lawyer Mr Bennett said Mr Sharaz had defamed his client and that the case against him would proceed regardless of whether or not he was legally represented.
“If he’s impecunious as he asserts in France, he’ll go bankrupt,” he said.
“He defamed my client. You can jump off litigation but it’s a costly exercise.”
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