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Realising the Public Potential of Corporate Law: Twenty Years of Civil Penalty Enforcement in Australia

Published online by Cambridge University Press:  01 January 2025

Michelle Welsh
Michelle Welsh*
Affiliation:
Workplace and Corporate Law Research Group, Department of Business Law and Taxation, Monash University.
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Abstract

Traditionally corporate law has been viewed as having characteristics that are commonly associated with private law. Largely this view developed as a result of the “law and economics” scholarship which dominated the corporate law debate, especially in the United States, in the last quarter of last Century. While the traditional “law and economics” approach supports the view that corporate law should be treated as a branch of private law, and that the state should have no role in its enforcement, other scholars, particularly those that adopt a progressive approach, argue that corporate law has, and should be recognised as having characteristics that are usually associated with public law. Arguably, an area of Australian corporate law that displays characteristics that are usually associated with public law is the statutory directors’ duties and the civil penalty regime that supports them. This enforcement regime gives the state through the corporate regulator, standing to take court based proceedings to enforce what are in effect, contracts that established corporate governance structures.

This article seeks to determine the appropriate role of a public regulator in these circumstances. The questions considered are: whose interests should the public regulator represent when it is tasked with the responsibility of enforcing the statutory directors’ duties that largely codify fiduciary and common law duties? Given that the duties are owed by directors to their company should the primary role of the public regulator be to represent the interests of the company, and its shareholders, who have suffered a loss as a result of the alleged contravention of the directors’ duties or should the primary role of the public regulator be to act in the interests of the members of the larger community? In these situations what are the interests of the larger community? Drawing on regulatory theory the argument advanced in this paper is that despite the fact that the statutory directors’ duties codify what are in effect private rights between directors and their companies, the primary role of a public regulator is not to utilise the enforcement mechanisms at its disposal in order to obtain compensation for companies who have suffered a loss. Rather, the regulator's primary role is to act in the interests of the larger community by utilising the enforcement mechanisms at its disposal strategically in order to encourage greater compliance.

Type
Article
Information
Federal Law Review , Volume 42 , Issue 1 , March 2014 , pp. 1 - 22
Copyright
Copyright © 2014 The Australian National University

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Footnotes

The author wishes to thank the anonymous referees for their useful comments and suggestions.

References

1 See, eg, Michael, Jensen and William, Meckling, ‘Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure’ (1976) 3 Journal of Financial Economics 305Google Scholar; Eugene, Fama and Michael, Jensen, ‘Agency Problems and Residual Claims’ (1983) 26 Journal of Law and Economics 327Google Scholar; Eugene, Fama and Michael, Jensen, ‘Separation of Ownership and Control’ (1983) 26 Journal of Law and Economics 301Google Scholar.

2 See, eg, Greenhalgh v Arderne Cinemas Ltd [1951] Ch 286; Darvall v North Sydney Brick & Tile Co Ltd (1987) 6 ACLC 154; Howard Smith Ltd v Ampol Petroleum Ltd [1974] AC 821; Aberdeen Railway Co v Blaikie Bros [1854] 1 Macq 461.

3 Greenhalgh v Arderne Cinemas Ltd [1951] Ch 286.

4 Daniels v Anderson (1995) 37 NSWLR 438.

5 Foss v Harbottle (1843) 2 Hare 461; 67 ER 189.

6 See, eg, Kent Greenfield, The Failure of Corporate Law: Fundamental Flaws and Progressive Possibilities (University of Chicago Press, 1st ed, 2006), which argues that the proper view of corporate law is that it is a branch of public law.

7 See, eg, John Edward Parkinson, Corporate Power and Responsibility: Issues in Theory of Company Law (Oxford University Press, 1st ed, 1993); Daniel Attenborough, ‘How Directors Should Act when Owing Duties to the Companies’ Shareholders: Why We Need to Stop Applying Greenhalgh’ (2009) 20(10)

International Company and Commercial Law Review 339; Elliot J Weiss, ‘Social Regulation of Business Activity: Reforming the Corporate Governance System to Resolve an Institutional Impasse’ (1981) 28 University of California Law Review 343; Abram Chayes, ‘The Modern Corporation and the Rule of Law’ in Edward S Mason (ed), The Corporation in Modern Society (Atheneum, 1st ed, 1959) 25; Lawrence E Mitchell (ed), Progressive Corporate Law (Westview Press, 1995); C A Harwell Wells, ‘The Cycles of Corporate Social Responsibility: An Historical Retrospective for the Twenty-first Century’ (2002) 51 Kansas Law Review 77; Julia Tolmie, ‘Corporate Social Responsibility’ (1992) 15 University of New South Wales Law Review 268.

8 Michael Whincop and Mary Keyes, ‘Corporation, Contract, Community: An Analysis of Governance in the Privatisation of Public Enterprise and the Publicisation of Private Corporate Law’ (1997) 25 Federal Law Review 51.

9 Ibid 54.

10 Ibid 81.

11 Ibid 95.

12 Ibid 54.

13 The public enforcement regime that is available in Australia for contraventions of the statutory directors’ duties is unusual. Similar public enforcement regimes are not available in the US and the UK for example. The advantages of public enforcement regimes have been considered elsewhere. See, eg, Renee Jones and Michelle Welsh, ‘Toward a Public Enforcement Model for Directors’ Duty of Oversight’ (2012) 45(2) Vanderbilt Journal of Transnational Law 343 in which the authors argue that there is a role for public regulation of directors’ duties.

14 Aldolf Berle and Gardiner Means, The Modern Corporation and Private Property (Transaction Publishers, 1st ed, 1932).

15 Ronald Coase, ‘The Nature of the Firm’ (1937) 4 Economica 386. For a discussion of influence of the work of Berle and Means and Coase on corporate law scholarship, see generally Greenfield, above n 6, 47–9, 248; Michael Whincop, ‘Of Fault and Default: Contractarianism as a Theory of Anglo-Australian Corporate Law (1997) 21 Melbourne University Law Review 187.

16 See, eg, Jensen and Meckling, above n 1; Fama and Jensen, ‘Agency Problems and Residual Claims’, above n 1; Fama and Jensen, ‘Separation of Ownership and Control’, above n 1.

17 Whincop and Keyes, above n 8; Greenfield, above n 6, 47–9.

18 Whincop, above n 15, 192.

19 Ibid.

20 Ibid.

21 Ibid. Whincop and Keyes, above n 8, 52: ‘Contractarians explain corporate law as a corpus of “default rules” which fills gaps where these contracts are less than fully specified, but which can be excluded by the parties’.

22 Greenfield, above n 6, 30.

23 Whincop and Keyes, above n 8, 72.

24 Daniel Fischel, ‘The Corporate Governance Movement’ (1982) Vanderbilt Law Review 1259, 1273. See also Henry Hansmann and Reiner Kraakman, ‘The End of History for Corporate Law’ (2001) 89

Georgetown Law Journal 439, 447: ‘few would assert that giving the state a strong direct hand in corporate affairs has much normative appeal’.

25 Greenfield, above n 6, 30.

26 Whincop and Keyes, above n 8, 66.

27 Greenfield, above n 6, 33. See also David Millon, ‘Theories of the Corporation’ [1990] Duke Law Journal 201; David Millon, ‘New Directions in Corporate Law: Communitarians, Contractarians and Crisis in Corporate Law’ (1993) 50 Washington and Lee Law Review 1373; Lawrence E. Mitchell, ‘A Theoretical and Practical Framework for Enforcing Corporate Constituency Statutes’ (1992) 70 Texas Law Review 579; Lyman Johnson, ‘The Delaware Judiciary and the Meaning of Corporate Life and Corporate Law’ (1990) 68 Texas Law Review 865; Cynthia Williams, ‘Corporate Social Responsibility in an Era of Economic Globilization’ (2002) 35 U C Davis Law Review 705; Kent Greenfeld, ‘Using Behavioral Economics to Show the Power and Efficiency of Corporate Law as Regulatory Tool’ (2002) 35 U C Davis Law Review 581; Lorraine Talbot, Progressive Corporate Governance for the 21st Century (Routledge, 2013); and Stephen M. Bainbridge, ‘Community and Statism: A Conservative Contractarian Critique of Progressive Corporate Law Scholarship’ (1997) 82 Cornell Law Review 856.

28 Greenfield, above n 6, 32.

29 Greenfield, above n 6, 34–5.

30 See, eg, Ian Ramsay, ‘Company Law and the Economics of Federalism’ (1990) 19 Federal Law Review 169; Robert Ian McEwin, ‘Public Versus Shareholder Control of Directors’ (1992) 10 Company and Securities Law Journal 182; M Byrne, ‘An Economic Analysis of Directors’ Duties in Favour of Creditors’ (1994) 4 Australian Journal of Corporate Law 275; Michael Whincop, ‘Gambotto v WCP Ltd: An Economic Analysis of Alterations to Articles and Expropriation Articles’ (1995) 23 Australian Business Law Review 276; Michael Whincop, ‘Developments in Directors’ Statutory Duties of Honesty and Propriety’ (1996) 14 Company and Securities Law Journal 157; Michael Whincop, ‘An Economic Analysis of the Criminalisation and Content of Directors’ Duties’ (1996) 24 Australian Business Law Review 273.

31 Whincop and Keyes, above n 8, 54.

32 The authors relied upon the modern reformation of the duty of care in Daniels v Anderson (1995) 37 NSWLR 438, which required directors to take reasonable steps to be informed about the affairs of their company. Whincop and Keyes argued that the AWA decisions represented a change in the norms underlying corporate law and allowed for more ‘intrusive’ judicial review. Where a breach of the duty to be informed about the affairs of a company is alleged the courts must review the decision making process itself. Whincop and Keyes argued that this resembled an analysis of relevant considerations often undertaken in administrative law: ibid 74–8. Further, that ‘[t]he duty to be informed is thus exerting considerable pressure on the traditional refusal by courts to review the commercial merits of decision making’: ibid 84.

33 Whincop and Keyes pointed to the High Court decision in Gambotto v WCP Ltd (1995) 182 CLR 432 as evidence of the courts increased preparedness to open corporate discretions and procedures to judicial review. In this case the High Court demonstrated that it was prepared to review the decisions of shareholders in relation to the alteration of the company's constitution and thereby constrain the property rights of the majority shareholders. According to Whincop and Keyes this decision ‘demonstrates that these corporate discretions will be reviewed according to legal principles familiar from public law’: ibid 84–5.

34 An indicator of the increasing public nature of corporate law identified by Whincop and Keyes was the interpretation of the fiduciary principle that restrains directors from acting in their own interests and its statutory embodiment. The court can order that the statutory provisions have been contravened even where no harm has been caused to the company or no benefit was obtained by the director. The authors argued that ‘the irrelevance of the transaction's benefit (either actual or in the officer's estimation) demonstrates that the section enforces interests other than, or at least in addition to, those of the shareholders: ibid 81.

35 Whincop and Keyes also considered standing for an application for injunctive relief, the revision of the rule in Foss v Harbottle and what was then the proposed statutory derivative action to be indicative of the move towards a public nature for corporate law: ibid 87.

36 Ibid 94.

37 Ibid 87.

38 S R Brown, Company Directors: A Concise Treatise on the Duties, Sources, Rights and Liabilities of Company Directors in Australia (Lawbook Co, 2nd ed, 1965) 179.

39 Companies Act 1958 (Vic) s 107. This provision was adopted following a report of the Victorian Statute Law Revision Committee on the conduct of the company directors of Freighters Ltd, a public company listed on the Stock Exchange of Melbourne: Victoria, Parliamentary Debates, Legislative Assembly, 9 September 1958, 323–5 (Mr Rylah); Arthur Rylah, ‘Report of the Inspector Appointed to Investigate the Affairs of Freighters Limited Pursuant to the Provisions of the Companies (Special Investigations) Act 1940’ (Research Paper, Attorney-General (Vic), Legislative Assembly, 1956). For a discussion of the background to the Freighters’ Report, see generally Jason Harris, Anil Hargovan and Janet Austin, ‘Shareholder Primacy Revisited: Does the Public Interest Have Any Role in Statutory Duties?’ (2008) 26 Company and Securities Law Journal 355, 360. See also G F K Santow, ‘Codification of Directors’ Duties’ (1999) 73 Australian Law Journal 366.

40 The statutory directors’ duties are now contained in Corporations Act 2001 (Cth) ss 180, 181, 182, 183, 184 (‘Corporations Act’).

41 The civil penalty regime was adopted on the recommendation of the Senate Standing Committee on Legal and Constitutional Affairs (the ‘Cooney Committee’): Senate Standing Committee on Legal and Constitutional Affairs, Parliament of Australia, Company Directors’ Duties: Report on the Social and Fiduciary Duties and Obligations of Company Directors (1989). The report highlighted deficiencies in the enforcement of the directors’ duty provisions that existed at that time. It was argued that these deficiencies led to community discontent and to a belief by some that the law had fallen into disrepute: at [13.4], [13.6]. It recommended that criminal penalties apply only where the conduct in question was ‘genuinely criminal in nature', and that civil penalties be provided for breaches by directors where no criminality was involved: at [13.12], [13.14]. See also Australian Law Reform Commission, Principled Regulation: Federal Civil and Administrative Penalties in Australia, Report No 95 (2003) [2.62]; Commonwealth, Parliamentary Debates, Senate, 28 November 1991, 3611 [55] (Graham Richardson); Roman Tomasic, ‘Corporate Crime’ in Duncan Chappell and Paul Wilson (eds) The Australian Criminal Justice System: The Mid 1990s, (Butterworths, 1994) 253, 267–8.

42 Corporations Act 2001 (Cth) ss 1317J, 1317G, 1317H(1), 206C.

43 Corporations Act 2001 (Cth) s 1317H(1).

44 Corporations Act 2001 (Cth) s 1317L.

45 Corporations Act 2001 (Cth) s 1332.

46 Whincop and Keyes, above n 8, 87.

47 Ibid 81.

48 Ibid 55.

49 Ibid 88.

50 Ibid. Whincop and Keyes referred to s 1(2) of the Australian Securities Commission Act 1989 (Cth), which required the ASC to strive to maintain and improve the ‘performance’ of corporations in the interests of ‘reducing business costs, and the efficiency and development of the economy'

51 Australian Securities and Investments Commission Act (Cth) s 1(2)(a) (‘ASIC Act’).

52 See, eg, John Lowry, ‘The Irreducible Core of the Duty of Care and Diligence of Company Directors: ASIC v Healey (2012) 75 Modern Law Review 249; Jennifer Hill, ‘Centro and the Monitoring Board — Legal Duties Versus Aspirational Ideals in Corporate Governance’ (2012) 35 University of New South Wales Law Journal 341; Greg Golding, ‘Tightening the Screws on Directors: Care, Delegation and Reliance’ (2012) 35 University of New South Wales Law Journal 266; Ian Ramsay (ed) ‘Corporate Governance and Duties of Directors’, Centre for Corporate Law and Securities Regulation, University of Melbourne, (1997); Robert Baxt, ‘The Final Chapter in the James Hardie Litigation’ (2013) 41 Australian Business Law Review 40; Roman Tomasic, ‘ASIC v Healey: Implications for the Directors’ Duty of Care and Diligence’ (2011) 26 Australian Journal of Corporate Law 234; Harry Glasbeek, ‘Contortions of Corporate Law: James Hardie Reveals Cracks in Liberal Law's Armour’ (2012) 27 Australian Journal of Corporate Law 132; Anil Hargovan, ‘Dual Role of General Counsel and Company Secretary: Walking the Legal Tightrope in Shafron v ASIC’ (2012) 27 Australian Journal of Corporate Law 112; Peta Spender, ‘The Second Michael Whincop Memorial Lecture: Weapons of Mass Dispassion: James Hardie and Corporate Law’ (2005) 14 Griffith Law Review 280.

53 See, eg, Shelley Marshall and Ian Ramsay, ‘Stakeholders and Directors’ Duties: Law, Theory and Evidence’ (2012) 35 (1) University of New South Wales Law Journal 291; Paul Redmond, ‘Directors’ Duties and Corporate Social Responsiveness’ (2012) 35 (1) University of New South Wales Law Journal 317; Stephen Bottomley and Anthony Forsyth, ‘The New Corporate Law: Corporate Social Responsibility and Employees’ Interests’ in Doreen McBarnett, Aurora Voiculescu and Tom Campbell (eds), The New Corporate Accountability — Corporate Social Responsibility and the Law, (Cambridge University Press, 2007).

54 See, eg, John Kluver, ‘Sections 181 and 189 of the Corporations Law and Directors of Corporate Group Companies’ (Paper presented at the Centre for Corporate Law and Securities Regulation seminar titled Directors’ Duties: Recent Developments, Melbourne, 8 November 2000) <http://www.law.unimelb.edu.au/files/dmfile/kluver1.pdf>.

55 For articles that compare the enforcement of directors’ duties in the United States, the UK and Australia, see generally Brian R Cheffins & Bernard S Black, ‘Outside Director Liability Across Countries’ (2006) 84 Texas Law Review 1385; John C Coffee, ‘Law and the Market: The Impact of Enforcement’ (2007)

56 University of Pennsylvania Law Review 229; Jennifer G Hill, ‘Regulatory Responses to Global Corporate Scandals’ (2005) 23 Wisconsin International Law Journal 367; Jennifer G Hill, ‘Subverting Shareholder Rights: Lessons from News Corp's Migration to Delaware’ (2010) 63 Vanderbilt Law Review 1;

57 es and Welsh, above n 13. See also Richard Williams, ‘Enlightened Shareholder Value in UK Company Law’ (2012) 35 University of New South Wales Law Journal 360.

58 See, eg, George Gilligan, Helen Bird and Ian Ramsay, ‘Civil Penalties and the Enforcement of Directors’ Duties’ (1999) 22 University of New South Wales Law Journal 417; Dimity Kingsford Smith, ‘Governing the Corporation: The Role of Soft Regulation’ (2012) 35(1) University of New South Wales Law Journal 378: Peta Spender, ‘Negotiating the Third Way: Developing Effective Process in Civil Penalty Litigation’ (2008) 26 Company and Securities Law Journal 249; Sue Streets, ‘Prosecuting Directors and Managers in Australia: A Brave New Response to an Old Problem?’ (1998) 22 Melbourne University Law Review 693; Michelle Welsh, ‘Civil Penalties and Strategic Regulation Theory: the Gap Between Theory and Practice (2009) 33(3) Melbourne University Law Review 908 (‘Civil Penalties and Strategic Regulation’); V Comino, ‘Effective Regulation by the Australian Securities and Investments Commission: The Civil Penalty Problem’ (2010) 33 (3) Melbourne University Law Review 802–32.

59 See, eg, Commonwealth Treasury, ‘Review of Sanctions in Corporate Law’ (Report, 2007) <http://archive.treasury.gov.au/contentitem.asp?ContentID=1182>; Corporations and Markets Advisory Committee ('CAMAC’), ‘Corporate Duties Below Board Level’ (Report, 28 April 2006) <http://www.camac.gov.au/camac/camac.nsf/byHeadline/PDFFinal+Reports+2006/$file/Corporate_Duties_Board_Level_Report.pdf>; CAMAC, Personal Liability for Corporate Fault (Report, 2006) <http://www.camac.gov.au/camac/camac.nsf/byHeadline/PDFFinal+Reports+2006/$file/Personal_Liability_for_Corporate_Fault.pdf>.

60 Whincop and Keyes, above n 8, 35.

61 Robert Baldwin, Martin Cave and Martin Lodge, The Oxford Handbook of Regulation (Oxford University Press, 2010) 11–12.

62 Ibid: the authors argue that these definitions can be too broad and can suffer from under-and-over inclusiveness.

63 Julia Black, ‘Critical Reflections on Regulation’ (2002) 27 Australian Journal of Legal Philosophy 1, 26.

64 Organisation for Economic Cooperation and Development, OECD Guiding Principles for Regulatory Quality and Performance (2005) <http://www.oecd.org/dataoecd/19/51/37318586.pdf>.

65 Fiona Haines, The Paradox of Regulation: What Regulation Can Achieve and What it Cannot (Edward Elgar, 2011) 8.

66 Ibid 16.

67 Ibid 8.

68 Black, above n 61, 26.

69 Robert Baldwin, Martin Cave and Martin Lodge, Understanding Regulation Theory, Strategy and Practice (Oxford University Press, 2nd ed, 2012) 247.

70 Belinda Gibson and Diane Brown, ‘ASIC's Expectations of Directors’ (2012) 35(1) University of New South Wales Law Journal 254.

71 Ibid.

72 Ibid 265.

73 Responsive regulation was developed and expanded by John Braithwaite and Ian Ayres. See, eg, Ian Ayres and John Braithwaite, Responsive Regulation: Transcending the Deregulation Debate (Oxford University Press, 1992); John Braithwaite, To Punish or Persuade: Enforcement of Coal Mine Safety (State University of New York Press, 1985) (‘Punish or Persuade’).

74 Gilligan, Bird and Ramsay, above n 56, 426.

75 One of the tenants of responsive regulation is that the actions of individuals and bodies corporate are motivated by different factors and that those motivating factors change over time. Therefore successful regulators will tailor their regulatory responses to deal with those differing motivational factors. The most successful regulators are able to appeal to different motivational factors by acting strategically in their

76 ice of enforcement mechanisms: Ayres and Braithwaite, above n 71; Braithwaite, Punish or Persuade, above n 71. See also Brent Fisse and John Braithwaite, Corporations, Crime and Accountability (Cambridge University Press, 1993); Chris Dellit and Brent Fisse, ‘Civil and Criminal Liability Under Australian Securities Regulation: The Possibility of Strategic Enforcement’ in Gordon Walker, Brent Fisse and Ian Ramsay (eds), Securities Regulation in Australia and New Zealand (LBC Information Services, 1st ed, 1994) 570; Fiona Haines, Corporate Regulation: Beyond ‘Punish or Persuade’ (Clarendon Press, 1997) 218. Since Ayres and Braithwaite's seminal work, many scholars have contributed to the responsive regulation debate: see John Braithwaite, ‘The Essence of Responsive Regulation’ (2011) 44 University of British Columbia Law Review 475, 479 n 9, in which the author provides a long list of recent publications.

77 Ariel Ezrachi and Maria Ioannidou, ‘Public Compensation as a Complementary Mechanisms to Damages Actions: From Policy Justifications to Formal Implementation’ (2012) 3 Journal of European Competition Law & Practice 536.

78 For example, the Australian Competition and Consumer Commission can seek compensation orders for victims of cartel behaviour under Competition and Consumer Act 2010 (Cth) ss 87(1A)(b), 87(1B).

79 See Ayres and Braithwaite, above n 71; Braithwaite, Punish or Persuade, above n 71.

80 John Braithwaite, Regulatory Capitalism: How it Works and Ideas for Making It Work Better (Edward Elgar, 2009) 92 (‘Regulatory Capitalism’). See also Braithwaite, ‘The Essence of Responsive Regulation’, above n 73, 487.

81 Braithwaite, Regulatory Capitalism, above n 77,77 citing Henry Pontell, ‘Deterrence: Theory Versus Practice’ (1978) 16 Criminology 3.

82 This fact has been acknowledged publicly by ASIC's current Chairman and a former Deputy Commissioner: see, respectively, Alex Boxsell, ‘Regulators Praise Private Court Actions’, Australian Financial Review, 5 April 2012, 59; Jeremy Cooper, ‘Corporate Wrongdoing: ASIC's Enforcement Role’ (Paper presented at the First International Class Actions Conference, Melbourne, 2 December 2005) 3, 11 <http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/ICAC2005_speech_021205.pdf/$file/ICAC2005_speech_021205.pdf>.

Graeme Hodge, ‘Revisiting State and Market through Regulatory Governance: Observations of Privatisation, Partnerships, Politics and Performance’ (Paper presented to Revisiting the State and the Market Conference, The University of Auckland, 28 October 2011) 11. <http://docs.business.auckland.ac.nz/Doc/NZ-Auckland-paper-fnl-hodge.pdf>.

Australian Securities and Investments Commission, Media Releases and Advisories (24 April 2014) <http://www.asic.gov.au/asic/ASIC.NSF/byHeadline/Media%20and%20information%20releases%20Home%20Page>.

See generally Welsh, ‘Civil Penalties and Strategic Regulation Theory’, above n 56, for a discussion of the CLERP reforms and their impact on the civil penalty regime. See also Grant Moodie and Ian Ramsay, ‘The Expansion of Civil Penalties under the Corporations Act’ (2002) 30 Australian Business Law Review 61.

83 For example some of the recent civil penalty applications issued by ASIC alleged that directors of the following companies breached their duties: James Hardie Industries, AWB Ltd, Storm Financial Limited, Centro Properties Ltd and Fortescue Metals Group Ltd.

84 Gibson and Brown, above n 68. See also the accompanying discussion in n 68 above.

85 Australian Security and Investments Commission, Media Releases and Advisories (24 April 2014) <http://www.asic.gov.au/asic/ASIC.NSF/byHeadline/Media%20and%20information%20releases%20Home%20Page>.

86 Abe Herzberg and Helen Anderson, ‘Stepping Stones — From Corporate Fault to Directors’ Personal Civil Liability’ (2012) 40 Federal Law Review 181.

87 Ibid.

88 Ibid 183, citing especially ASIC v Sydney Investment House Equities (2008) 69 ACSR 1; ASIC v Maxwell (2006) 59 ACSR 373; ASIC v Citrofresh International [No 2] (2010) 77 ACSR 69; ASIC v Fortescue Metals Group Ltd (2011) 190 FCR 364.

89 Ibid, citing especially James Hardie Industries NV v ASIC (2010) 274 ALR 85; ASIC v Macdonald [No 11] (2009) 256 ALR 199; ASIC v Citrofresh International (No 2) (2010) 77 ACSR 69; ASIC v Fortescue Metals Group Ltd (2011) 190 FCR 364.

90 Ibid, citing especially ASIC v Elm Financial Services (2005) 55 ACSR 533; ASIC v Maxwell (2006) 59 ACSR 373.

91 Ibid, citing especially ASIC v Elm Financial Services (2005) 55 ACSR 533; ASIC v Sydney Investment House Equities (2008) 69 ACSR 1.

92 Such a civil penalty application was issued against Mr David Hobbs and others: ASIC, ‘Ponzi Scheme ‘Mastermind’ Handed Record Penalty’ (Media Release, Media Release 13–/031, .21 February 2013).

93 Herzberg and Anderson, above n 86, 183, citing especially ASIC v Elm Financial Services (2005) 55 ACSR 533; ASIC v Sydney Investment House Equities (2008) 69 ACSR 1.

94 Ibid 184 citing especially ASIC v Sydney Investment House Equities (2008) 69 ACSR 1.

95 Harris, Hargovan and Austin, above n 39.

96 Ibid 355.

97 Ibid.

98 Ibid.

99 Harris, Hargovan and Austin, above n 39, 356.

100 Ibid 376.

101 ASIC v Adler (No 5) (2002) 20 ACLC 1146; ASC v Donovan (1998) 28 ACSR 583; Trade Practices Commission v CSR Limited (1991) ATPR ¶41–76.

102 ASIC v Adler (No 5) (2002) 20 ACLC 1146.

103 See generally Santow J in ASIC v Adler (No 5) (2002) 20 ACLC 1146 where his Honour referred to a number of cases including ASIC v Hutchings (2001) 19 ACLC 1,454; ASIC v Pegasus Leveraged Options Group P/L [2002] NSWSC 310; ASC v Forem-Freeway Enterprises (1999) 17 ACLC 511, 520; ASC v Donovan (1998) 28 ACSR 583, 602.

104 Ibid, where his Honour referred to ASC v Roussi (1999) 32 ACSR 568, 570; ASIC v Papatto (2000) 35 ACSR 107, 112.

105 Ibid. See also where his Honour referred to Re Gold Coast Holdings Pty Ltd (2000) 35 ACSR 107, 112; Tasmanian Spastics Association: ASC v Nandan (1996) 23 ACSR 743, 751, cited in Santow J in ASIC v Adler (No 5) (2002) 20 ACLC 1146.

106 ASIC v Rich (No 2) (2003) 21 ACLC 672; ASIC v Plymin (No 2) (2003) 21 ACLC 1237, 1241. See also ASIC v White (2006) 58 ACSR 261, 265–7; ASIC v Vines (2006) 58 ACSR 298, 311–2, 333, 346; ASIC v Maxwell (2006) 24 ACLC 1308, 1338; ASIC v Beekink (2007) 61 ACSR 305, 314–5.

107 In ASIC v Warrenmang Limited [2007] FCA 973, the only order sought against the defendant director was a declaration of contravention.

108 The last civil penalty application issued by ASIC seeking compensation was issued against Fortescue Metals Group and Andrew Forrest. ASIC was ultimately unsuccessful in this case as the court was not satisfied that the alleged contraventions had occurred: Forrest v ASIC (2012) 291 ALR 399.

109 One of the cases where ASIC's application for compensation was unsuccessful was Forrest v ASIC (2012) 291 ALR 399. Compensation was sought but not obtained in ASIC v McIntyre [2007] QSC 139 where ASIC's application against one defendant was dismissed for want of prosecution. ASIC subsequently withdrew its application against the second defendant.

110 ASIC, ‘ASIC Secures Compensation for Super Fund Members’ (Media Release, 02/255, 16 July 2002).

111 See ASIC, ‘Court Imposes Penalties on Former GIO Directors and Clarifies Role of Company Executives’ (Media Release, 06/261, 2 August 2006).