Reynolds v Higgins - [2024] WASC 260

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   REYNOLDS -v- HIGGINS [2024] WASC 260
CORAM:   QUINLAN CJ
HEARD:   17 JULY 2024
DELIVERED          :   17 JULY 2024
PUBLISHED           :   18 JULY 2024
FILE NO:   CIV 1513 of 2024
BETWEEN:   LINDA KAREN REYNOLDS
Plaintiff
AND
BRITTANY MAE HIGGINS
Defendant

Catchwords:

Civil procedure – Discovery – Application for pre-action discovery to identify a potential party – Proposed action under s 89 of the Property Law Act 1969 (WA) – Whether proposed action merely speculative – Discretionary considerations – Turns on own facts

Legislation:

Bankruptcy Act 1996 (Cth), s 116
Property Law Act 1969 (WA), s 89
Rules of the Supreme Court 1971 (WA), O 26A r 3

Result:

Application for pre-action discovery allowed

Category: B

Representation:

Counsel:

Plaintiff	:	M L Bennett
Defendant	:	R Young SC and K A T Pedersen

Solicitors:

Plaintiff	:	Bennett
Defendant	:	Carmel Galati

Cases referred to in decision:

Briginshaw v Briginshaw (1938) 60 CLR 366
Chen v Marcolongo [2009] NSWCA 326; (2009) 260 ALR 353
Commissioner of Taxation v Oswal (No 6) [2016] FCA 762
Cox v Journeaux (No 2) (1935) 52 CLR 713
Federal Commissioner of Taxation v Oswal [2012] FCA 1507; (2012) 91 ATR 684
Marcolongo v Chen [2011] HCA 3; (2011) 242 CLR 546
NW v Bechtel (Western Australia) Pty Ltd [2014] WASC 375
The Hancock Family Memorial Foundation Ltd v Fieldhouse [No 2] [2008] WASC 147
Zaravinos v Houvards [2004] NSWCA 421; (2004) 32 Fam LR 490

QUINLAN CJ:

(This judgment was delivered extemporaneously and has been edited to correct grammar and infelicities of language and to include full references to relevant evidence and authorities.)

Introduction

The parties to this application need no introduction.
The plaintiff, Senator Linda Reynolds, is currently suing the defendant, Ms Brittany Higgins, seeking damages for defamation (defamation proceedings). The defamation proceedings, which were commenced on 31 July 2023, are listed for a trial before Tottle J commencing on 2 August 2024.
On 13 December 2022, Ms Higgins entered into a deed of settlement and release with the Commonwealth of Australia in relation to various claims made by Ms Higgins arising out of her employment by the Commonwealth (Deed). The settlement sum, pursuant to the Deed, was a total of $2,445,000 (inclusive of costs) (Settlement Sum).
The following day, 14 December 2022, a trust was established to hold the net proceeds of the Settlement Sum (Trust). The name of the Trust is the Brittany Higgins Protective Trust.
Senator Reynolds now wishes to commence fresh proceedings to set aside the Trust (or more accurately, the capitalisation of the Trust) pursuant to s 89 of the Property Law Act 1969 (WA) (or any equivalent legislation under the law governing the Trust). Section 89 provides that an alienation of property made with intent to defraud creditors is voidable, at the instance of any person thereby prejudiced.[1]
[1] There are provisions equivalent to s 89 of the Property Law Act throughout Australia. Senator Reynolds' application is brought on the basis that she intends to commence proceedings under whichever provision applies as the law governing the Trust. References in these reasons to s 89 of the Property Law Act should be read as references to that provision, and any equivalent provision in the other States and Territories.
The trustee of the Trust would be a necessary defendant to any such action. Senator Reynolds does not, however, know the identity of the trustee of the Trust.
The application before me today is an application for pre-action discovery by Senator Reynolds for discovery of the trust deed of the Trust or, if necessary, such other documents that identify the trustee.
That is all today's application is about.
I am not required to determine whether Senator Reynolds has a good claim to set aside any transaction relating to the Trust. Nor, as I will come to, am I required to finally determine whether any such claim by Senator Reynolds will be to her ultimate benefit, although the utility in making the proposed order is a relevant consideration.
I am only concerned with whether Senator Reynolds has satisfied the conditions for making an order for pre-action discovery and that the Court should exercise its discretion to order discovery of the documents sought for the limited purposes identified by her.
Before turning to the relevant legal principles, I will briefly summarise the background facts to the application.

Factual background

The evidence in relation to the application consisted of the following.
Senator Reynolds relied on:
(a)her own affidavit sworn 5 May 2024 (Senator Reynolds' affidavit), and
(b)an affidavit of Andrew James Filing affirmed on 4 July 2024 (Mr Filing's affidavit).
Ms Higgins relied upon an affidavit of Leon Zwier sworn on 28 June 2024 (Mr Zwier's affidavit).
Salient facts arising from the evidence include the following.
In March 2019, Ms Higgins was employed by the Commonwealth as an administrative assistant and junior media advisor in Senator Reynolds' office.[2] Later that year, she worked in the office of Senator Michaelia Cash.[3] During her employment in Senator Reynolds' office, Ms Higgins made a disclosure of sexual assault by another employee in Senator Reynolds' office, Bruce Lehrmann. That disclosure was later made public in 2021, following which Mr Lehrmann was charged with sexually assaulting Ms Higgins.[4] A trial of that charge was held in the Supreme Court of the Australian Capital Territory in October 2022.[5] On 27 October 2022, the trial was aborted due to juror misconduct.[6]
[2] Mr Zwier's affidavit [8].
[3] Mr Zwier's affidavit [10].
[4] Mr Zwier's affidavit [12] - [14].
[5] Mr Zwier's affidavit [19].
[6] Mr Zwier's affidavit [18], [21].
On 2 December 2022, the criminal proceedings against Mr Lehrmann were discontinued, as a result of concerns by the Director of Public Prosecutions as to the impact of the proceedings on Ms Higgins.[7] The evidence before me deposes to health issues experienced by Ms Higgins and treatment that she has received in relation to those issues.[8] It is not necessary for me to set out that evidence in detail. It is sufficient that I find that Ms Higgins has, and continues to experience, significant health challenges.
[7] Mr Zwier's affidavit [22].
[8] Mr Zwier's affidavit [11], [20], [23], [30].
In the meantime, in December 2021 Ms Higgins instructed solicitors, who wrote to the Commonwealth, Senator Reynolds and Senator Cash in relation to potential personal injuries claims by Ms Higgins pursuant to various statutory causes of action and in common law negligence (personal injuries claims).[9] The personal injuries claims were, at least in part, based upon the manner in which Senator Reynolds was alleged by Ms Higgins to have dealt with her allegation of sexual assault.
[9] Senator Reynolds' affidavit, Attachment LKR-1; Mr Zwier's affidavit [15].
On 13 December 2022, Ms Higgins and the Commonwealth took part in a mediation in relation to the personal injuries claims. On that day Ms Higgins and the Commonwealth entered into the Deed. As noted above, the Settlement Sum under the Deed was a total of $2,445,000 (inclusive of costs).[10]
[10] Senator Reynolds' affidavit, Attachment LKR-1; Mr Zwier's affidavit [28].
On 14 December 2022, the Trust was established to hold the net proceeds of the Settlement Sum.[11] An ABN for the Trust was registered, in the name of the Brittany Higgins Protective Trust, on 9 February 2023.[12] While Senator Reynolds deposed in her affidavit that she believed, based on media reports (and the registration of an ABN for the Trust), that Ms Higgins had established a trust in February 2023,[13] Mr Zwier's affidavit confirms both the existence of the Trust and the date upon which it was created.
[11] Mr Zwier's affidavit [33].
[12] Senator Reynolds' affidavit [14]; Attachment LKR-6.
[13] Senator Reynolds' affidavit [22].
The evidence before me, nevertheless, does not identify, with any precision, when the net proceeds of the settlement were transferred to the Trust. I infer that those proceeds were transferred and that it was some time after 14 December 2022 and likely before the end of February 2023, based on those media reports.
Since the settlement of the personal injuries claim, including in June and July 2023, Senator Reynolds is reported to have questioned the fairness, transparency and impartiality of the process leading to the settlement.[14] Senator Reynolds' affidavit expressly alleges that, at the time of the settlement, Ms Higgins knew that the particulars referred to in the Deed 'including especially in relation to the handling of the allegations of sexual assault by my office, were false'.[15]
[14] Mr Zwier's affidavit [41] - [42].
[15] Senator Reynolds' affidavit [22.1.2].
On 31 July 2023, Senator Reynolds commenced the defamation proceedings against Ms Higgins, being CIV 1840 of 2023.[16] Those proceedings relate to statements alleged to have been made by Ms Higgins concerning Senator Reynolds' handling of Ms Higgins' allegations of sexual assault.[17] Senator Reynolds' handling of those allegations will therefore be an issue for consideration in the trial of the defamation proceedings. I make no findings in relation to any matters relevant to the defamation proceedings.
[16] Senator Reynolds' affidavit [6], Attachment LKR-4.
[17] Senator Reynolds' affidavit, Attachment LKR-6; Mr Zwier's affidavit, Attachment LZ-7.
Senator Reynolds deposes that she is concerned that Ms Higgins will not be able to satisfy a potential judgment debt in the event that she is successful in the defamation proceedings due to part of Ms Higgins' assets being transferred to the Trust.[18]
[18] Senator Reynolds' affidavit [18].
Senator Reynolds deposes that she intends to bring an application under s 89 of the Property Law Act to set aside the Trust as a voidable disposition made with intent to defraud creditors.[19] In that context, Senator Reynolds deposes that her belief that the Trust may be set aside is based on Ms Higgins' knowledge of future creditors at the time that the Trust was created, including:
(a)potential indebtedness to the Commonwealth arising from Ms Higgins' warranties in the Deed that matters referred to in the Deed were true and correct when Senator Reynolds alleges they were false;[20]
(b)potential indebtedness to Penguin Random House Australia (Penguin) to repay amounts advanced pursuant to a publishing agreement between Penguin and Ms Higgins;[21]
(c)potential indebtedness to Mr Lehrmann, who publicly foreshadowed potential defamation proceedings following the discontinuation of the criminal proceedings;[22] and
(d)potential indebtedness to Senator Reynolds, who had commenced proceedings against Ms Higgins' then-fiancé, David Sharaz, on 20 January 2023.[23]
[19] Senator Reynolds' affidavit [21].
[20] Senator Reynolds' affidavit [22.1].
[21] Senator Reynolds' affidavit [22.2].
[22] Senator Reynolds' affidavit [22.3].
[23] Senator Reynolds' affidavit [22.4].
Mr Zwier deposes that he has been informed by Ms Higgins that, as at 14 December 2022 and since, neither the Commonwealth, Penguin, nor Mr Lehrmann have made any claim, or notified her of any claim against her.[24]
[24] Mr Zwier's affidavit [34].
Mr Zwier also deposes that he has been informed by Ms Higgins that her current net assets, meaning the assets held by her personally less her liabilities, are less than $10,000 and that her only contingent liabilities are connected to Senator Reynolds' claims in the defamation proceedings, including exposure to costs.[25] In that regard, Mr Filing's affidavit reveals that there is an outstanding costs order made on 30 April 2024 in the defamation proceedings, pursuant to which Ms Higgins is liable for Senator Reynolds' costs of an unsuccessful application to vacate the trial of those proceedings.[26]
[25] Mr Zwier's affidavit [67] - [68].
[26] Mr Filing's affidavit [4] - [5].
By letter dated 22 March 2024, Senator Reynolds' solicitors wrote to Ms Higgins' then-solicitors requesting a copy of the trust deed in relation to the Trust.[27] That letter identified the purpose of the request in terms consistent with Senator Reynolds' affidavit, namely her intention to bring proceedings under s 89 of the Property Law Act. Senator Reynolds' solicitors repeated the request by email dated 8 April 2024.[28]
[27] Senator Reynolds' affidavit [26], attachment LKR-13.
[28] Senator Reynolds' affidavit [27], attachment LKR-14.
There is no evidence that Ms Higgins' then-solicitors responded to that correspondence. Senator Reynolds' solicitors have not been provided with the trust deed and the identity of the trustee remains unknown to her.[29]
[29] Senator Reynolds' affidavit [23], [28].
Mr Zwier's affidavit also deposes to media reports in relation to this application, including a draft of Senator Reynolds' affidavit, appearing in newspaper articles before the application was filed in this Court or served on the defendant.[30]
[30] Mr Zwier's affidavit [61] - [65].

Pre-action discovery under O 26A r 3 - legal principles

The principles relating to O 26A r 3 of the Rules of the Supreme Court 1971 (WA) are well settled. Order 26A r 3 empowers the Court to order a non-party to give discovery to identify a potential party to an action where the following conditions are satisfied:[31]
(a)the plaintiff wants to commence proceedings against the potential party;
(b)the plaintiff has made reasonable enquiries;
(c)the plaintiff has not been able to ascertain a description of the potential party sufficient for the purposes of taking proceedings against that potential party; and
(d)there are reasonable grounds for believing that the non-party had, has or is likely to have had or to have, possession of information, documents or any object that may assist in ascertaining the description of the potential party.
[31] The Hancock Family Memorial Foundation Ltd v Fieldhouse [No 2] [2008] WASC 147 (Hancock Family Memorial Foundation Ltd v Fieldhouse) [19] (Le Miere J); NW v Bechtel (Western Australia) Pty Ltd [2014] WASC 375 (NW v Bechtel) [13] (Sanderson M).
An order for discovery to identify a potential party is nevertheless a discretionary one, even where these conditions are met. In exercising that discretion, the Court will have regard to the nature of any proposed cause of action. As Le Miere J said in Hancock Family Memorial Foundation Ltd v Fieldhouse:[32]
An order for discovery to identify a potential party is not made unless it would be reasonable for the applicant to bring a proceeding against the prospective defendant. A prima facie case need not be shown, but there must be some indication that the applicant has a cause of action. An order for discovery will not be made if the prospective action is merely speculative: Stewart v Miller [1979] 2 NSWLR 128.
[32] Hancock Family Memorial Foundation Ltd v Fieldhouse [20] (Le Miere J).
Similarly, in NW v Bechtel, Master Sanderson said:[33]
It is clear the plaintiff does not have to demonstrate a prima facie case. It is not even necessary for the plaintiff to establish there is a serious question to be tried: see Wyeth v Secretary, Department of Health and Ageing [2009] FCA 313 [25] (Jacobsen J). Although it is difficult to identify a consistent thread through the myriad of decisions it would seem discovery will not be ordered where the potential action is no more than speculative. Moreover if there is a defence which must succeed there would be no utility in making an order and the application could not succeed.
[33] NW v Bechtel [16] (Sanderson M).
The considerations relevant to the exercise of the Court's discretion are not closed. Ultimately, an applicant must show that the order sought is necessary in the interests of justice: that is, that the making of the order is necessary to provide the applicant with an effective remedy in respect of the actionable wrong of which they complain.[34]
[34] Hancock Family Memorial Foundation Ltd v Fieldhouse [31] (Le Miere J).
Turning then to the issues in the application before me.

Issues in this application

Ms Higgins quite properly accepts that the four preconditions to the exercise of the Court's discretion under O 26A r 3 are satisfied in the present case.[35]
[35] Defendant's Submissions dated 28 June 2024 (Defendant's Submissions) [8].
I accept that concession and am satisfied that the Court's power to order discovery is enlivened. In brief, I am satisfied that:
(a)Senator Reynolds wants to commence proceedings against the trustee of the Trust to set aside the disposition to the Trust of the net proceeds of the Settlement Sum under the Deed (see [25] above);
(b)Senator Reynolds has made reasonable enquiries to determine the identity of the trustee of the Trust, including by undertaking searches of public records (see [20] above) and requesting a copy of the trust deed from Ms Higgins' solicitors (see [28] above);
(c)despite those enquiries Senator Reynolds does not know the identity of the trustee of the Trust, who would be a necessary party to the proceedings she intends to bring (see [29] above); and
(d)there are reasonable grounds for believing that Ms Higgins is likely to have had or to have, possession of documents, including a copy of the trust deed, that may assist in ascertaining the description of the trustee. Ms Higgins, having received the Settlement Sum under the Deed, will have been the person who transferred any part of that sum to the Trust.
Ms Higgins submits that the Court should, nevertheless, not exercise its discretion to grant the application. In particular Ms Higgins submits that:
(a)the intended cause of action under s 89 of the Property Law Act is merely speculative;[36]
(b)the proposed action under s 89 of the Property Law Act, even if successful, would be futile and lack utility, because Senator Reynolds will never be able to access the settlement monies held by Ms Higgins. In this regard, Ms Higgins relies upon s 116 of the Bankruptcy Act 1996 (Cth);[37]
(c)the proposed action under s 89 of the Property Law Act is premature and unnecessary, as the Bankruptcy Act has its own regime for dealing with fraudulent dispositions entered into for the purpose of defeating creditors;[38] and
(d)there is a tension between, on one hand, Senator Reynolds' public statements querying the payment of the Settlement Sum by the Commonwealth and, on the other, her desire to access those funds herself to satisfy a potential judgment against Ms Higgins.[39]
[36] Defendant's Submissions [9] - [34].
[37] Defendant's Submissions [36] - [45].
[38] Defendant's Submissions [46].
[39] Defendant's Submissions [47] - [49].
Each of these matters are, I accept, relevant considerations in relation to the exercise of the Court's discretion whether to make an order for pre‑action discovery in this case. I will address each of them in turn, before addressing the discretion as a whole.

Is the intended cause of action under s 89 of the Property Law Act merely speculative?

As reflected in the principles set out above, an order for discovery will not be made if the prospective action is merely speculative.[40] This does not mean that the plaintiff seeking discovery as to the identity of a prospective party must demonstrate that it has a prima facie case. To use the words of O 26A r 3, the plaintiff must 'appear' to have a cause of action; it is not necessary, under the rule, to find that the plaintiff in fact has a good cause of action. Nevertheless, the strength of the plaintiff's prospective claim will be a factor relevant to the exercise of the Court's discretion.
[40] In this regard, Ms Higgins counsel accepted at the hearing before me that this was a discretionary factor, albeit that where the proposed action is merely speculative, that factor will be decisive.

The cause of action that Senator Reynolds seeks to bring is an application pursuant to s 89 of the Property Law Act. The parties variously described the elements of that cause of action. I accept, as accurate, the summary of the elements that appears in Ms Higgins' submissions, namely that:[41]
(a)there is an alienation of property;
(b)the alienation was done by a person with intent to defraud creditors; and
(c)the person bringing the cause of action under s 89 of the Property Law Act is prejudiced by that alienation with intent to defraud.
[41] Defendant's Submissions [10].
Ms Higgins does not dispute that the capitalisation of the Trust by disposition of monies from the Settlement Sum may satisfy the first element, namely that there was an alienation of property.[42]
[42] Defendant's Submissions [12].
Ms Higgins, however, submits that the proposed claim by Senator Reynolds is merely speculative because:
(a)Senator Reynolds cannot show an intent to defraud creditors because there were no creditors or future creditors at the time of the Trust's creation;[43] and
(b)Senator Reynolds does not have standing to bring an action under s 89 (that is, she is not a 'person thereby prejudiced') because she is not currently (and may never be) a creditor of Ms Higgins.[44]
[43] Defendant's Submissions [22] - [29].
[44] Defendant's Submissions [30] - [34].
In relation to the relevant intention required to be proven in a claim under s 89 of the Property Law Act, the parties referred to various authorities in relation to the relevant principles. For present purposes, I adopt the summary of those principles set out by Gilmour J in Federal Commissioner of Taxation v Oswal:[45]
[45] Federal Commissioner of Taxation v Oswal [2012] FCA 1507; (2012) 91 ATR 684 [22] - [24] (Gilmour J).
In Marcolongo v Chen (2011) 242 CLR 546 (Marcolongo), the High Court considered the application of s 37A of the Conveyancing Act. Accordingly, the reasoning in Marcolongo is of equal application to s 89 of the Property Law Act. The principles derived from Marcolongo as applied to s 89 are as follows:
(a)s 89 of the Property Law Act applies to conveyances and assignments made with intent to hinder or delay creditors and renders void against all creditors so hindered or delayed the conveyance or assignment, that being the language of the Statute of Elizabeth (at [12], [19], [22] ‑ [23] and [28]);
(b)there is no superadded requirement to be found in s 89 of the Property Law Act to show dishonesty or fraud over and above an intention to hinder or delay creditors and there is no requirement to find an animus against a particular creditor: an intention to hinder or delay creditors is the relevant species of fraud (at [29] ‑ [33] and [56]);
(c)the fact that a conveyance or assignment of property is made voluntarily is a fact which may, on its own, support an inference of the existence of the intention to hinder or delay creditors, but need not do so (at [25]-[26]). At the same time, the fact that the conveyance was made for value does not necessary establish the absence of the relevant intention (at [12]). The intention required by the statute is an actual intention, but ordinarily the existence of the actual intention will be inferred from the objective facts ([26]); and
(d)there is no requirement in s 89 of the Property Law Act that the intent to hinder or delay creditors be the sole or even the predominant purpose of the conveyance or assignment and it does not matter if the relevant intention was formed because of or at the instigation of another (at [57]).
The reasoning in Marcolongo was applied to s 89 of the Property Law Act by Lee AJA at [529] in Westpac Banking Corporation v The Bell Group Ltd (in liq) [No 3] [2012] WASCA 157.
Earlier, at first instance in Bell Group Ltd (in liq) v Westpac Banking Corporation (2008) 39 WAR 1 (Bell v Westpac) Owen J, prior to Marcolongo, had reviewed in detail at [9082]-[9192] the authorities relevant to s 89 of the Property Law Act. Owen J at [9146] collected together a number of principles. Excising those propositions affected by Marcolongo and the Court of Appeal's decision, Owen J said:
…
3.Intention can be established by inference.
4.If the natural and probable consequences of the disposition are such that its effect will be to defeat or delay creditors, the necessary inference can be drawn and a court might more readily do so. But a finding to that effect is a finding of an actual or real intention, not one that is imputed to the disponor by virtue of a legal presumption.
5.The essence of the concept of defrauding creditors lies in a disposition which subtracts from the property which is the proper fund for the payment of the debts, an amount without which the debts cannot be paid …
6.Other relevant circumstances from which the necessary inferences might be drawn include:
(a)the insolvency or difficult financial circumstances of the disponor (although establishing insolvency at the time of the disposition is not a necessary element); and
(b) whether the transaction was voluntary or the consideration was colourable, negligible or trivial.
…
8.It is not necessary that the disposition affects creditors as a class generally; it is sufficient if one or some creditors are adversely affected. In this context 'creditor' is not confined to those to whom a debt is (at the time of the disposition) presently due and owing. It extends to impending liabilities and future creditors.
Ms Higgins' first submission, namely that there were no present or future creditors at the time of the Trust's creation, relates to the last of these principles. In that regard, Ms Higgins submits that none of the persons identified by Senator Reynolds as potential creditors (see [25] above), were in fact impending or future creditors, relying upon Mr Zwier's evidence referred to at [26] above. Accordingly, Ms Higgins submits that there cannot have been any intention to defraud creditors (current, contingent or future) at the time of the creation (or capitalisation) of the Trust.
I do not accept this contention. What is necessary for the plaintiff to prove in an application under s 89 of the Property Law Act is the relevant intention to defeat, hinder or delay creditors, including future creditors. In my view, the inclusion of 'future creditors' within the scope of 'creditors' does not necessarily require, as Ms Higgins' submissions tend to assume, that the defendant had in mind some particular future creditor (or creditors) at the time of alienating the property. If an actual intention is proven, it may be sufficient to prove that the defendant had in mind future creditors generally (namely those that may arise due to the defendant's current or future activities but from whom they wish to put their assets beyond reach). In submissions before me Ms Higgins' counsel accepted that to be the case, although she submitted that such a case would be very rare. At the very least, it is arguable that s 89 operates in this way and therefore a claim based on such an intention cannot be said to be merely speculative.
For example, in Commissioner of Taxation v Oswal (No 6), Gilmour J said:[46]
As the Commissioner submits, correctly, the word 'creditors' in s 89(1) does not refer to any one or more particular creditors of a defendant at the time the impugned alienation occurred. Rather, 'creditors' includes present and future creditors, whether individually or collectively: Cannane at 566, 574; Barton v Deputy Federal Commissioner of Taxation (1974) 131 CLR 370 at 374; Chen v Marcolongo (2009) 260 ALR 353 at [180]. As Young JA noted in Chen at [180] in a passage not doubted by the High Court on appeal and agreed with by the other members of the New South Wales Court of Appeal:
'The word "creditors" in the section has been held on more than one occasion to mean present or future creditors, so that if a person fears that his or her activities may generate creditors and puts property out of the reach of such possible persons, the transfer of the property can be attacked under the section.'
Illustrative of this, in Trustees of the Property of Cummins v Cummins (2006) 227 CLR 278 at [32], the Court accepted that the Commissioner was a 'creditor' for the purposes of s 121 of the Bankruptcy Act 1966 (Cth) in respect of impugned transactions occurring in August 1987. This conclusion was reached notwithstanding that notices of assessment were not issued by the Commissioner to the defendant until 2000 and those assessments related to years postdating August 1987 (being the 1992 to 1999 income years).
[46] Commissioner of Taxation v Oswal (No 6) [2016] FCA 762 (Oswald (No 6) [68] - [69] (Gilmour J).

Of course, it would still be necessary for Senator Reynolds to prove that Ms Higgins had an actual intention to defeat future creditors at the time of the alienation. Such a serious matter may well be difficult to prove in a particular case and in determining whether it is satisfied that the relevant intention has been proven the court would, no doubt, have regard to the gravity of that allegation.[47] Nevertheless, as the authorities make clear, a court may more readily infer such an intention where the alienation is made voluntarily and the natural and probable consequence of the alienation is to defeat or delay creditors.[48] Similarly, the intention to hinder or delay creditors need not be the sole or even the predominant or primary purpose of the alienation.[49]
[47] Briginshaw v Briginshaw (1938) 60 CLR 366, 362-363 (Dixon J).
[48] Marcolongo v Chen [2011] HCA 3; (2011) 242 CLR 546 (Marcolongo v Chen) [24] - [25] (French CJ, Gummow, Crennan & Bell JJ); Oswald (No 6) [66(2)] (Gilmour J).
[49] Marcolongo v Chen [57] (French CJ, Gummow, Crennan & Bell JJ); Oswald (No 6) [63] (Gilmour J).
There is, in the evidence before me, no direct evidence as to Ms Higgins' intention in creating or capitalising the Trust. It is clear that Senator Reynolds' proposed action is based, as is ordinarily the case in such actions,[50] on inferences she seeks to draw from all of the relevant circumstances. The name of the Trust (that is, the Brittany Higgins Protective Trust), certainly suggests that it is intended to protect Ms Higgins from something or someone. The real question, however, is 'protection from what, or from whom'?
[50] See Oswald (No 6) [62] (Gilmour J).
Senator Reynolds clearly contends that the protection is, at least in part, from future creditors. She relies upon the circumstances in which the Trust was formed, including potential future creditors and the likely voluntary nature of the alienation. Whether the potential creditors identified by Senator Reynolds ultimately made claims against her (which I accept they did not), does not make the existence of those persons irrelevant for the purposes of determining whether there was the relevant intention at the time of the transfer. The circumstances identified by Senator Reynolds are capable of supporting an inference that one of the purposes of the Trust was to delay, hinder or defeat future creditors. I would put it no higher than that.
There is, however, at least one other available inference as to the purpose of the Trust, namely, that its purpose is to protect Ms Higgins from exploitation by other persons, including by reason of her potential vulnerability arising from her health challenges. As I have said, there is no direct evidence to that effect, although Mr Zwier's affidavit hints at it by deposing, in a different context, that during periods of ill health Ms Higgins has been 'concerned to better protect herself'.[51]
[51] Mr Zwier's affidavit [31].
There are therefore, on the limited evidence before me, competing inferences available in relation to Ms Higgins' intention in transferring the net proceeds of the settlement to the Trust. It would be inappropriate for me, on this application, to reach any final conclusion as to which inference (if either) should be drawn, or even which is more likely to be drawn. For the purposes of this application, however, I cannot conclude that the inference for which Senator Reynolds contends is 'merely speculative'; it is one of the competing available inferences.
The second basis upon which Ms Higgins contends that the proposed claim by Senator Reynolds is merely speculative is that Senator Reynolds does not have 'standing' to bring an action under s 89 of the Property Law Act because she is not currently (and may never be) a creditor of Ms Higgins. Ms Higgins submits that the application is 'premature'.[52]
[52] Defendant's Submissions [32].
I do not accept this submission. For two reasons.
First, albeit that it may be for a relatively small sum, Mr Filing's affidavit establishes that Ms Higgins is, at least, indebted to Senator Reynolds for an undetermined sum in respect of the costs order made in Senator Reynolds' favour in the defamation proceedings on 30 April 2024.[53] Those costs will not become due and payable unless, and until, a taxing officer certifies a bill of costs in relation to them. Nevertheless, Senator Reynolds is, at the very least, a contingent creditor in relation to those costs.
[53] Mr Filing's affidavit [4] - [5].
Secondly, and more significantly, Ms Higgins' potential liability to Senator Reynolds in the defamation action itself is, in my view, likely sufficient to entitle her to bring an application under s 89 of the Property Law Act (i.e. as a 'person thereby prejudiced').
In that regard, the leading High Court authority in relation to provisions such as s 89, Marcolongo v Chen, concerned an application under the equivalent provision in New South Wales by the plaintiff in a separate action for damages in the District Court of New South Wales.[54] It is clear, from the history of that litigation, that the application, and indeed the decision, to set aside the relevant transaction occurred prior to the conclusion of the District Court proceedings. While it allowed the appeal on other grounds, a majority of the Court of Appeal in that case concluded that the phrase 'any person thereby prejudiced' included a bona fide claimant for unliquidated damages.[55] The High Court, which allowed the appeal and restored the orders setting aside the transaction, did not directly address this issue, although it agreed with the conclusion of the trial judge that the appellant was 'a person prejudiced' and entitled to bring the proceedings.[56]
[54] Marcolongo v Chen [2] (French CJ, Gummow, Crennan & Bell JJ).
[55] Chen v Marcolongo [2009] NSWCA 326; (2009) 260 ALR 353 [27] (Allsop P), [28] (Giles JA agreeing). Young JA came to a different view, although his Honour conceded that 'there are some solid arguments the other way' and so determined the appeal on other grounds (see [207] - [208]).
[56] Marcolongo v Chen [53] (French CJ, Gummow, Crennan & Bell JJ).
In those circumstances, I could hardly find that Senator Reynolds' proposed action is 'merely speculative' on the basis that the prejudice she relies upon as standing to bring the action arises from a claim for unliquidated damages.
In all of the circumstances, I am not satisfied that Senator Reynolds' proposed action is merely speculative. Given the gravity of the allegation she intends to make against Ms Higgins, the action may have its real difficulties and challenges. I am not required to determine, however, whether Senator Reynolds has a prima facie case, only that there appears that there is some basis for the claim, such that it is not speculative. I am satisfied that there is some basis for the claim, given the competing inferences open on the available evidence.

Futility - s 116 of the Bankruptcy Act?

The second discretionary factor raised by Ms Higgins is the contention that proceedings to set aside the Trust would be futile because, even if the Trust was set aside, Senator Reynolds 'would still not be able to access the monies which [Ms Higgins] obtained from her settlement with the Commonwealth'.[57]
[57] Defendant's Submissions [37].
This is because, Ms Higgins submits, the settlement monies are protected from recovery by Senator Reynolds by reason of the Bankruptcy Act.
In that regard, s 116(1) of the Bankruptcy Act provides that certain property is 'divisible amongst creditors of [a] bankrupt'. A 'bankrupt' is a person against whose estate a sequestration order has been made or who has become a bankrupt by virtue of the presentation of a debtor's petition.[58]
[58] Bankruptcy Act, s 5.
Section 116(2) of the Bankruptcy Act, however, provides that certain property is not property 'divisible' in the bankruptcy. Relevantly, this includes, in s 116(2)(g)
any right of the bankrupt to recover damages or compensation:
(i) for personal injury or wrong done to the bankrupt, …
…
and any damages or compensation recovered by the bankrupt (whether before or after he or she became a bankrupt) in respect of such an injury or wrong.
The Settlement Sum, Ms Higgins submits, is properly characterised as damages or compensation recovered by her in respect of a personal injury or wrong done to her, and so falls within s 116(2)(g) of the Bankruptcy Act. Accordingly, Ms Higgins submits that the Settlement Sum, or any part of it, 'could never be accessed by [Senator Reynolds]',[59] even if the Trust was set aside and the settlement monies returned to Ms Higgins personally.
[59] Defendant's Submissions [37].
It is an ingenious submission and one to which I have given real weight. In particular, without finally deciding the point, there appears to me to be considerable force in the contention that the settlement monies (if returned to Ms Higgins' hands) would fall within s 116(2)(g) of the Bankruptcy Act, and so would not be divisible property in the event of a bankruptcy.[60]
[60] See Cox v Journeaux (No 2) (1935) 52 CLR 713, 721 (Dixon J).
It is at this point, however, that Ms Higgins' reliance on s 116(2)(g) in my view breaks down (or at least loses much of its force for the purposes of the present application). That is because Ms Higgins' reliance on s 116(2)(g) assumes that she will, in the future become a bankrupt, and that the only circumstances in which Senator Reynolds might seek to enforce any judgment debt from the defamation proceedings would be as a creditor in a bankruptcy.
There is no reason to make that assumption. While, on the basis of Mr Zwier's affidavit (which I accept for the purposes of this application), Ms Higgins currently has net assets of less than $10,000, the whole point of Senator Reynolds' proposed action under s 89 of the Property Law Act is to have returned to Ms Higgins' personal estate the balance of a Settlement Sum in excess of $2,000,000. While there is no evidence as to the amount of those funds still remaining, it may reasonably be inferred (particularly as they have been held by a trustee) that there remains a considerable sum standing to the credit of the Trust. Accordingly, if the proposed action under s 89 of the Property Law Act were successful Ms Higgins personal estate would be considerably greater than it is now.
In those circumstances, particularly given that the outcome of the defamation proceedings, and the quantum of any judgment sum in those proceedings is unknown, it cannot be assumed that Ms Higgins will, or could, enter bankruptcy following the defamation proceedings. It may well be that a judgment debt could be satisfied from the remaining settlement monies without any prospect of Ms Higgins entering bankruptcy.
In this regard, the fact that, in a bankruptcy, damages for personal injuries are not divisible property does not mean that damages for personal injuries held by a person who is not a bankrupt cannot be accessed by a judgment debtor (as if damages were somehow immune from responding to all of the person's liabilities). On the contrary, the Civil Judgments Enforcement Act 2004 (WA) makes extensive provision for the recovery of monetary judgments that are not limited in that way.

The prospect that a judgment debt might or might not be satisfied is always an important consideration for any litigant embarking on expensive litigation. It is also, I accept, a relevant consideration in the present case. If it were indeed the case that proceedings under s 89 of the Property Law Act would ultimately be futile, that would provide a good reason for denying relief in the present application. There are, however, too many contingencies to be able to reach that conclusion in the present case. It is not possible to predict whether any judgment debt would result in Ms Higgins' bankruptcy, or the circumstances in which that might occur.
Indeed, as matters currently appear, it would appear that the success of an application under s 89 of the Property Law Act is the only way in which Senator Reynolds might have any hope of recovery of any sum that may be ultimately owing to her.
Which brings me to the next consideration relied upon by Ms Higgins.

Necessity and alternative remedies?

The next discretionary factor relied upon by Ms Higgins is, in one sense, the inverse of the previous one. Ms Higgins submits that Senator Reynolds' application is 'not only premature but unnecessary' because '[a]ny concerns about fraudulent dispositions or preferential payments can and should be investigated by the (independent) trustee in bankruptcy and pursued for the benefit of all creditors to ensure that they receive rateable returns from the bankrupt's divisible property (such as that may be) under the provisions of the Bankruptcy Act'.[61]
[61] Defendant's Submissions [46].
That is, Ms Higgins submits that it is not necessary for Senator Reynolds to apply to set aside the Trust or its capitalisation because the Bankruptcy Act makes void against a trustee in bankruptcy any transactions that might be avoided pursuant to s 89 of the Property Law Act.
This consideration, in my view, carries little weight.
First, it has never been supposed (at least where the putative debtor is not bankrupt) that the Bankruptcy Act's regime for dealing with fraudulent dispositions, has rendered inoperative the existing provisions in all of the Australian States and Territories equivalent to s 89 of the Property Law Act.[62] The existence of an alternative remedy, available to another person (i.e. a trustee in bankruptcy), does not provide a good reason to deny a person in Senator Reynolds' position the opportunity to pursue a remedy to which they might be independently entitled.
[62] See Zaravinos v Houvards [2004] NSWCA 421; (2004) 32 Fam LR 490 [37] - [44] (Sheller JA, Handley & Ipp JJA agreeing).
Secondly, and more significantly, Ms Higgins' argument based on s 116(2)(g) of the Bankruptcy Act, in my view, illustrates why Senator Reynolds' proposed action does have utility and why it is a preferable course of action, from her perspective, than relying upon the regime in the Bankruptcy Act. That is because, as Ms Higgins' counsel persuasively argues, in the event that Ms Higgins goes into bankruptcy the settlement monies may well be unavailable to her general creditors. In that sense, if Senator Reynolds leaves the enforcement of any judgment debt from the defamation proceedings to the regime under the Bankruptcy Act, it may be too late.
For this reason, as I said in relation to the previous discretionary factor, a successful application under s 89 of the Property Law Act, and the enforcement of any judgment otherwise than in the context of Ms Higgins becoming bankrupt, may be the only way in which Senator Reynolds has any hope of recovery.

Senator Reynolds' attitude towards the settlement with the Commonwealth?

Finally, Ms Higgins relies upon the apparent tension between Senator Reynolds' public statements criticising the Commonwealth's settlement with Ms Higgins (see [22] above) and her proposed action to enable her to have access to the fruits of that settlement. I accept that, at least on the face of it, there is a certain tension in Senator Reynold's attitude to the settlement and the proposed action. After all, if, as might be the consequence of breaches of the Deed, Ms Higgins was required to repay the Settlement Sum to the Commonwealth, it could hardly benefit Senator Reynolds' prospects of recovery from Ms Higgins.
Nevertheless, it is difficult to see how the tension identified by Ms Higgins should play any significant part in the exercise of the Court's discretion whether to order discovery for the purpose of Senator Reynolds commencing an action under s 89 of the Property Law Act. The fact that litigants sometimes have multiple, conflicting motivations, or that they occasionally adopt positions that appear to be self‑defeating, is not unusual. Generally speaking, these are matters for the litigants and their advisers; they are not generally the Court's concern.
In this case Senator Reynolds has deposed to her intention to commence the proceedings under s 89 of the Property Law Act. It is not suggested that she has some ulterior purpose for seeking discovery of the trust deed. Her ultimate aim is to seek to satisfy any judgment that she might obtain against the money currently held to the credit of the Trust. If she succeeds in doing so, the fact that she has previously criticised the payment of those monies by the Commonwealth might be a matter for Senator Reynolds to address in some other forum. It is not a reason for the Court to prevent her from exercising any legitimate legal rights that she may have.

Disposition - exercise of discretion

In all of the circumstances, I am satisfied that the interests of justice favour an order for pre-action discovery of the trust deed of the Trust or such other documents that identify the trustee.
Senator Reynolds seeks to bring a bona fide claim to set aside the Trust pursuant to s 89 of the Property Law Act. That claim is (a) not merely speculative, and (b), on the evidence before me, may be the only prospect of Senator Reynolds ever satisfying a potential judgment debt in the defamation proceedings. Those two matters in my view weigh strongly in favour of Senator Reynolds at least having discovery so as to enable such a claim to be formulated, and having received further advice including as to the prospects of success, commencing that claim.
The other discretionary considerations identified by Ms Higgins do not, in my view, outweigh these matters. Insofar as Ms Higgins relied upon the operation of the Bankruptcy Act, it cannot be assumed that Ms Higgins will, at any time in the future, be declared bankrupt. Indeed, for the reasons identified by Ms Higgins, avoiding such a bankruptcy, including by the proposed action under s 89 of the Property Law Act, would be very much in Senator Reynolds' interests.
For these reasons I will make orders for pre-action discovery.

Confidentiality

Ms Higgins submitted that, in the event that I made an order for pre‑action discovery, reliance upon the implied undertaking (i.e., the so‑called Harman undertaking) in relation to the use of discovered documents would not be sufficient and that I should make particular orders to protect the confidentiality of the document (or documents) discovered.
I am satisfied that I should do so. The evidence before me confirms, and I would have to be living under a rock not to know, that litigation involving Ms Higgins is litigated as much in the public arena as it is in the courts: court documents are provided to media outlets prior to their being served or even filed, speeches and 'door-stop' interviews are regularly conducted on the doors of the courts and self‑appointed experts dissect, analyse and predict the outcome of court proceedings before they have even begun. Much of this public discourse is, of course, a feature of an open and transparent justice system. Save where it interferes with the administration of justice, the courts cannot, and should not, exercise any control over it.
The Court, however, can and should control the dissemination of private and sensitive documents that have neither been tendered nor adduced in evidence. This is particularly so in relation to documents produced under compulsion such as will occur in this case. Given the history of this and related matters, and the voracious appetite for such documents concerning Ms Higgins, I consider that it is in the interests of justice to require express, rather than implied, undertakings as to the possession and use of any documents discovered pursuant to my orders.
While I will hear the parties as to the precise terms of the orders, my preliminary view is that the document or documents discovered should be provided to a single nominated practitioner from the solicitors acting for Senator Reynolds, following the provision by the practitioner of a signed undertaking to the Court that he or she will retain possession and control of the document, not copy the document and not communicate the contents of the document, save for the purpose of taking instructions from Senator Reynolds and commencing the proposed proceedings (and for no other purpose).
If there was some legitimate reason for further dissemination arising at a later time, there could be liberty to apply.

Conclusion

I will hear the parties as to the precise form of orders, including as to costs.

I certify that the preceding paragraphs comprise the reasons for decision of the Supreme Court of Western Australia.
KT
Principal Associate to the Hon Chief Justice Quinlan
18 JULY 2024