Trustees dodge bullet as suspect PIA set aside

SV Partners’ Anne Meagher and Adam Kersey can consider themselves fortunate they’ve not been contaminated by a stinker of a Personal Insolvency Agreement (PIA) that was binned this week after precedent-setting intervention by the Inspector General in Bankruptcy (IGB).

“…. having regard to Mr Hartnett’s abuse of the processes which resulted in the PIA, any prejudice to Mr Hartnett or any associated entity which contributed the $80,000 is of their own making and does not militate against setting aside the PIA or making a sequestration order”. Justice Kylie Downes.

In Inspector-General in Bankruptcy v Hartnett [2025] FCA 111 Federal Court judge Kylie Downes on Monday ordered that the PIA entered into between Meagher and Kersey as controlling trustees and Gold Coast lawyer Beau Timothy John Hartnett on April 23, 2024 be set aside and that Hartnett’s estate be sequestered.

Mackay Goodwin director Gavin King, who offered his services on a speculative basis, was appointed trustee of Hartnett’s bankrupt estate.

The application to set aside the PIA was brought by AFSA CEO and IGB Tim Beresford, who said in a statement this week that this was “the first time the Inspector-General had made such an application to the court under the Bankruptcy Act 1966”.

This may indicate that the office of the IGB is taking amore interventionist approach under Beresford or that the PIA Hartnett proposed, and that Meagher and Kersey endorsed, was one for the record books.

Certainly on the face if it the offering – a paltry 2.7c in the dollar – looked deeply unappetising at least to participating creditors like Mr Anthony Robert Bell, who insisted during the proceedings that Hartnett sat on a mountain of assets, an assertion not contradicted by Hartnett himself, who in his own submissions in opposition to the IGB’s application described himself as a “supremely well-structured individual”.

In detailing the nine trusts to which Hartnett is registered as a beneficiary, her honour put it another way, finding Hartnett was an abuser of process and speculating in helpful detail about the mystery of how Hartnett’s lengthy career as a lawyer could generate so little in the way of assets.

“A prospect or possibility of economic advantage to creditors exists in this case having regard to the assets owned by the entities and trusts associated with Mr Hartnett,” the judge said.

“The existence of such assets begs the obvious question: how is it that these entities and trusts have accumulated assets worth many millions of dollars while he apparently has no significant assets of his own?

“In circumstances where Mr Hartnett practised as a solicitor in his individual capacity (and so was earning fees in his own name) for about two decades from 2001, further investigation is needed as to whether Mr Hartnett has “parked” assets within, or transferred assets to, these trusts for the purposes of shielding himself from paying his creditors and, if so, whether there have been transfers of assets within the meaning of, for example, ss 121(1) and 128B of the Bankruptcy Act,” she said.

For their part the controlling trustees appear to have been duped and railroaded into endorsing this runt of the Part X litter in just four weeks.

“The documentary evidence contained communications between Mr Hartnett and his accountants, Walsh Accountants, which showed that he had either drafted documents to be provided by the accountants to the Controlling Trustees (including letters) or had requested that the accountants speak to him before answering queries raised by the Controlling Trustees,” the judge said.

“For these reasons, I place little weight on Ms Meagher’s opinions and those of the Controlling Trustees in the Creditors’ Report.

“In any event, I consider that four weeks was not sufficient time to investigate affairs as complex as those of Mr Hartnett and that the circumstances call for a greater opportunity to inquire into Mr Hartnett’s affairs.”

As iNO previously reported when the IGB commenced these proceedings, the regulator’s concerns as to the trustees included their willingness to admit proofs of debt from minor creditors where evidence appears to show their claims were procured by Hartnett only shortly before creditors were to vote and what the IGB saw as Meagher and Kersey’s failure to sufficiently investigate the major claim by value of more than $3 million, lodged by a related entity controlled by Hartnett’s wife, migration lawyer Suzanne Lee Weel.

Those concerns however did not evolve into conduct or related claims against the trustees in the proceedings, for which the SV pair must be thankful. The question of their remuneration meanwhile was not canvassed.

We asked Hartnett’s lawyer Richard Cowen of CowenSchwarzMarschke if his client would seek to appeal the judgment but no reply was forthcoming prior to publication.

Further reading:

Incuriosity behind regulator’s attack on trustees