Defamation – a nationwide conversation on law reform

On Monday 27 July 2020 the Australian Law Reform Commission co-hosted with the University of Sydney a webinar with a panel of experts discussing the potential for a future ALRC inquiry into reform of defamation law. Over 350 people viewed the event “live” and hundreds more have registered to view the recording at a later time. The live streaming of the webinar, facilitated by Wolters Kluwer CCH Learning, provided the opportunity for a nationwide, interactive conversation, with questions welcomed on registration and taken during the event.

An initial survey of the audience revealed that most participants felt that social media and other emerging ‘publication’ technologies were the main reason that defamation law requires further reform. Just over a quarter of participants suggested that defamation law is in need of a comprehensive overhaul.

Defamation panel

Defamation panel

Professor Simon Bronitt, Dean of Sydney Law School, gave a warm welcome on behalf of the University of Sydney, partially delivered in the local Gadi language, and acknowledged the importance of updating and reforming the law.

Justice Sarah Derrington, President of the ALRC, emphasised that the event is designed to generate discussion about the need for law reform, and the ALRC does not have set views on how any future inquiry into defamation law should be framed. Consequently, she encouraged all participants to actively contribute ideas.

Professor David Rolph of Sydney Law School expressed support for an ALRC inquiry, and noted some of the many legal and technological changes that have occurred since the ALRC last reviewed defamation law in the 1970s. In particular, internet technologies have made it easier for private individuals to damage reputations internationally, and have challenged basic concepts of defamation law, such as ‘publication’. In addition, a federal review of defamation law may be beneficial in light of:

  • the implied freedom of political communication in the Australian Constitution;
  • related provisions in other federal legislation such as the Broadcasting Services Act;
  • the increasing defamation caseload in the Federal Court;
  • defamation law reform conducted in other jurisdictions.

Judge Judith Gibson of the NSW District Court urged that, to achieve greater consistency, defamation reform should be considered in conjunction with other areas of the law that also face challenges relating to liability for online methods of publication, including copyright, torts, civil content regulation, criminalised speech, and misleading and deceptive conduct. She advocated for an ALRC inquiry to “extend the cyber re-boot of defamation law” envisaged by the Council of Attorneys-General.

Bruce McClintock SC from the NSW Bar generally concurred, and added that an ALRC inquiry would be beneficial because the Commonwealth has legislative responsibility for the most common methods of communication. He expressed reservations about introducing a public interest defence, and described many cases as illustrating “failures of journalism”, rather than failures of the law.

Georgia-Kate Schubert, representing the Right to Know Coalition, noted that media outlets have sought defamation law reform for a long time, and that public discussions such as this webinar would be a welcome part of any reform process. She agreed that updating the law to reflect technological changes is desirable, but suggested that it may be preferable to observe how the amendments agreed by the Council of Attorneys-General play out before considering any ALRC inquiry into potential further reform.

 

A number of questions from the participants were put to the panel, and discussion points included:

  • the current extent of inconsistency in application of the law between states and territories;
  • the proper role of pleadings and imputations;
  • complexities regarding the application of defences;
  • chilling effects on freedom of speech, and on allegations of sexual abuse; and
  • reducing the cost, duration, and complexity of proceedings.

The ALRC is accepting further comments on the need for defamation law reform until 31 August 2020, by email to reformpriorities@alrc.gov.au.

View a recording of the webinar: https://www.cchlearning.com.au/catalogue/780-the-future-of-law-reform-defamation/

Register for upcoming Future of Law Webinars: https://bit.ly/CCH-ALRC-WEBINAR

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Pathways to Justice CoverThe Government is currently considering justice targets as part of a refresh of closing the gap.[1] In this context, last week Pauline Wright, President of the Law Council of Australia stated

Governments must commit to the most ambitious justice targets possible, and to implementing the recommendations of the ALRC seminal Pathways to Justice report, which sets out the framework for how to achieve change.

In March 2018, the Australian Law Reform Commission report, Pathways to Justice–Inquiry into the Incarceration Rate of Aboriginal and Torres Strait Islander Peoples, was tabled in parliament. On the release of the report His Honour Judge Matthew Myers AM, Commissioner in charge of the Inquiry, said that while the problems leading to the over-representation of Aboriginal and Torres Strait Islander peoples in prisons are complex, they can be solved

Law reform is an important part of that solution. Reduced incarceration, and greater support for Aboriginal and Torres Strait Islander people in contact with the criminal justice system, will improve health, social and economic outcomes for Aboriginal and Torres Strait Islander peoples, and lead to a safer society for all.[2]

Given the renewed focus on addressing the over-incarceration Aboriginal and Torres Strait Islander people, it is timely to consider the nature of the problems in detail and the solutions the ALRC identified.

The statistics

Aboriginal and Torres Strait Islander peoples are the most incarcerated population on earth.[3] A December 2017 report by the ALRC found that while Aboriginal and Torres Strait Islander adults make up around 2% of the national population they constitute 27% of the national prison population.[4]  Aboriginal and Torres Strait Islander people are over-represented in our prisons by a factor of 12.5.[5] That is, an Aboriginal and Torres Strait Islander person is 12.5 times more likely to be in prison than a non-indigenous Australian. The over-representation of Aboriginal and Torres Strait Islander people in our prisons is growing. In the decade to 2016, the over-representation grew from a factor of 11 to 12.5, while over the same period the number of Aboriginal and Torres Strait Islander persons in prison grew by 41%.[6] Aboriginal and Torres Strait Islander women are most significantly over-represented in our prisons by a factor of 21.2.[7] 

ALRC Graphic

Can these statistics be explained simply by the fact that Aboriginal and Torres Strait Islander Australians commit more crime?

No. Over-representation increases with the stages of the criminal justice system. In 2016, Aboriginal and Torres Strait Islander people were seven times more likely than non-Indigenous people to be charged with a criminal offence and appear before the courts; 11 times more likely to be held in prison on remand awaiting trial or sentence; and 12.5 times more likely to receive a sentence of imprisonment.[8] This means that even if we adjust for the increased likelihood of an Aboriginal and Torres Strait Islander person being charged with an offence, an Aboriginal and Torres Strait Islander person is much more likely to end up in prison than a non-Indigenous person – the criminal justice system itself is disproportionately jailing Aboriginal and Torres Strait Islander people. We also know that the disparity in likelihood in being charged with a criminal offence is not simply about crimes being committed. We know that Indigenous people are more likely to come to the attention of police than non-Indigenous Australians.[9] In addition, Aboriginal and Torres Strait Islander people are less likely to be given a caution and are more likely to be charged than non-Indigenous Australians.[10]

Are Aboriginal and Torres Strait Islander people more likely to go to prison because they commit more serious and violent crimes?

No. A detailed breakdown of the type of offence charged is provided by the ALRC, in the Pathways to Justice Report.[11] That report shows that such a simplistic assessment is not true. Aboriginal and Torres Strait Islander peoples are less likely to be charged with serious offences such as illicit drug offences and sexual assault and related offences than non-Indigenous peoples.[12] While a high percentage of Aboriginal and Torres Strait Islander people are charged with offences within the category of ‘acts intended to cause injury’; 35% of these charges relate to ‘serious assaults not causing injury’. That is, in 35% of cases there was no bodily injury involved. [13]

Does Aboriginal and Torres Strait Islander status impact on sentencing?

Yes. An Aboriginal and Torres Strait Islander person is much more likely to receive a sentence of imprisonment and much less likely to receive a community based sentence or fine than a non-Indigenous person.[14]  Aboriginal and Torres Strait Islander persons are significantly over-represented in receiving short sentences of imprisonment, in part due to the unavailability or unsuitability of community based alternatives.[15] Short sentences of imprisonment are not only ineffective in reducing offending but are particularly damaging for Aboriginal and Torres Strait Islander offenders. Short terms of imprisonment:

  • expose minor offenders to more serious offenders in prison;
  • do not serve to deter offenders;
  • have significant negative impacts on the offender’s family, employment, housing and income; and
  • potentially increase the likelihood of recidivism through stigmatisation and the flow on effects of having served time in prison.[16]

The imposition of a short term of imprisonment would appear to be inconsistent with the principle of ‘imprisonment as a last resort’ which ought to be reserved only for those offenders who represent a serious risk to the community, and for whom no other penalty is appropriate. Most Aboriginal and Torres Strait Islander offenders who receive a short sentence of imprisonment do so when convicted of minor or low-level offending.

Prisoners serving short sentences are less likely to be able to access programs or training, and in that regard, the time in prison does little to address offending behaviour or to develop skills that might later promote desistence from offending.[17] Offenders on short sentences are generally released into the community without supervision or supports to assist reintegration into the community on release.[18]

Way forward

While the Pathways to Justice Report paints a bleak picture as to the state of over-incarceration of Aboriginal and Torres Strait Islander peoples in Australia, it also suggests a way forward. The ALRC made 35 recommendations for reform to address the scourge of over-incarceration. Implementing these recommendations would:

  • promote substantive equality before the law for Aboriginal and Torres Strait Islander peoples;
  • promote fairer enforcement of the law and fairer application of legal frameworks;
  • ensure Aboriginal and Torres Strait Islander leadership and participation in the development and delivery of strategies and programs for Aboriginal and Torres Strait Islander people in contact with the criminal justice system;
  • reduce recidivism through the provision of effective diversion, support and rehabilitation programs;
  • make available to Aboriginal and Torres Strait Islander offenders alternatives to imprisonment that are appropriate to the offence and the offender’s circumstances; and
  • promote justice reinvestment through redirection of resources from incarceration to prevention, rehabilitation and support, in order to reduce reoffending and the long-term economic cost of incarceration of Aboriginal and Torres Strait Islander peoples.[19]

[1]           Tom McIlroy, ‘Closing the gap progress can’t take 73 years: Ken Wyatt’, The Australian Financial Review (3 July 2020).

[2]           Australian Law Reform Commission, ‘Report: Pathways to Justice – Incarceration Rate of Aboriginal and Torres Strait Islander Peoples’ (Media Release, 27 March 2018).

[3]           Thalia Anthony, ‘FactCheck Q&A: are Indigenous Australians the most incarcerated people on Earth?’, The Conversation (online, 6 June 2017) <https://theconversation.com/factcheck-qanda-are-indigenous-australians-the-most-incarcerated-people-on-earth-78528>.

[4]           Australian Law Reform Commission, Pathways to Justice – An Inquiry into the Incarceration Rate of Aboriginal and Torres Strait Islander Peoples (Report No 133, 2017) 90.

[5]           Ibid 95, Figure 3.2.

[6]           Australian Law Reform Commission, Pathways to Justice – An Inquiry into the Incarceration Rate of Aboriginal and Torres Strait Islander Peoples (Summary Report No 133, 2017), 7–8.

[7]            Australian Law Reform Commission (n 4) 98, Figure 3.5.

[8]           Australian Law Reform Commission (n 6) 12.

[9]           Australian Law Reform Commission (n 4) 451.

[10]          Ibid 447.

[11]          Ibid 100-102.

[12]          Ibid 101, Figure 3.8.

[13]          Ibid 101–2.

[14]          Ibid 107.

[15]          Ibid 230.

[16]          Ibid 268.

[17]          Mark Hughes, ‘Prison Governors: Short Sentences Do Not Work’, The Independent (20 June 2010).

[18]          NSW expressly precludes prisoners serving prison terms of 6 months or less from parole supervision on release. See, eg, Crimes (Sentencing Procedure) Act 1999 (NSW) s 46. The NSW Sentencing Council has recommended repeal or amendment of s 46: NSW Sentencing Council, Abolishing Prison Sentences of 6 Months or Less (2004) 5. Other jurisdictions restrict parole to prisoners sentenced to terms over 12 months: Crimes (Sentencing) Act 2005 (ACT) s 65; Sentencing Act 1997 (NT) s 53; Criminal Law (Sentencing) Act 1988 (SA) s 32(5)(a); Sentencing Act 1991 (Vic) s 11; Sentencing Act 1995 (WA) s 89(2).

[19]          Australian Law Reform Commission (n 2).

In 2014 the ALRC published a report on “Serious Invasions of Privacy”. The report included a recommended legislative design for a new tort (a right to seek orders in court) relating to breaches of privacy.

In April 2020, ALRC Principal Legal Officer Micheil Paton spoke with broadcaster Toby Halligan from Triple RRR radio about the privacy report as part of a program on “surveillance capitalism”. The audio of the full radio program can be accessed via Triple RRR radio

 

What are the most pressing areas for law reform in Australia today?

In 2019, the Australian Law Reform Commission undertook research and broad public consultation to address this question.

Join expert panels including judges, legal scholars and industry leaders in a series of online conversations to unpack some of the key areas identified by the ALRC, including:

View the ALRC Report: The Future of Law Reform: A Suggested Program of Work 2020-25

These free, interactive webinars in partnership with Wolters Kluwer CCH Learning will present an opportunity to elicit new perspectives and ideas, enabling individuals with diverse views to contribute to potential law reform.

REGISTER FOR THIS FREE SERIES

 

The Future of Law Reform – Defamation Webinar

Monday 27 July 2020
1.00pm – 2.00pm

 

Co-hosted with the University of Sydney

Welcome: Professor Simon Bronitt, Head of School and Dean, The University of Sydney Law School

Panel:

  • The Hon Justice SC Derrington, President, Australian Law Reform Commission
  • Professor David Rolph, The University of Sydney
  • Judge Judith Gibson, District Court of NSW
  • Bruce McClintock SC, NSW Bar
  • Georgia-Kate Schubert, Australia’s Right to Know coalition.

Automated Decision Making and Administrative Law Webinar

Monday 10 August 2020
1.00pm – 2.00pm

 

Co-hosted with the Queensland University of Technology Faculty of Law and and the ARC Centre of Excellence for Automated Decision-Making and Society

Welcome: Professor Dan Hunter, Executive Dean, Queensland University of Technology (QUT) Law Faculty

Panel:

  • The Hon Justice SC Derrington, President, Australian Law Reform Commission
  • Professor Dan Hunter, ARC Centre of Excellence for Automated Decision-Making and Society
  • Professor Marek Kowalkiewicz, QUT Business School
  • Dr Anna Huggins, QUT Law
  • Lisa Keeling, Services Australia.

Reform of Legal Structures for Social Enterprises Webinar

Monday 17 August 2020
1.00pm – 2.00pm

 

Co-hosted with the University of Melbourne

Welcome: Professor Pip Nicholson, Dean of Law, The University of Melbourne Law School

Panel:

  • The Hon Justice SC Derrington, President, Australian Law Reform Commission
  • Professor Matthew Harding, The University of Melbourne
  • Associate Professor Rosemary Langford, The University of Melbourne
  • Michael Ryland, Centre for Social Finance Law
  • Trevor Danos AM, Advisor
  • Andrew Davies, B Lab

Law Reform Relating to Press Freedom Webinar

Monday 24 August 2020
1.00pm – 2.30pm

 

Co-hosted with the University of Queensland

Welcome: Professor Patrick Parkinson AM, Academic Dean and Head of School, TC Beirne School of Law, The University of Queensland

Panel:

  • The Hon Justice SC Derrington, President, Australian Law Reform Commission
  • Professor Peter Greste, Alliance for Journalists’ Freedom
  • Jacinta Carroll, Australian National University
  • Georgia-Kate Schubert, Australia’s Right to Know coalition
  • Dr Rebecca Ananian-Welsh, The University of Queensland.

Download the ALRC Future of Law Reform Webinar Series Leaflet

Further information regarding coronavirus (COVID-19) can be found on the Australian Government website: www.aus.gov.au.

 

Update – 20 May 2020

Due to the current COVID-19 restrictions and social distancing requirements, the ALRC remains closed to visitors. As the situation evolves, the ALRC will continue to monitor government advice and respond to any changes as required.

Please direct all questions to info@alrc.gov.au or +61 7 3248 1224, Monday to Friday, 8:30am – 5.00pm AEST.

 

Posted – 25 March 2020

From Wednesday 25 March, the Australian Law Reform Commission will action enquiries by email only, due to the current status of COVID-19.

The health and well-being of our staff and visitors is paramount, and to help stop the spread of disease, the ALRC business office will be temporarily closed. While the physical office is closed, the team will remain busy, working on the Inquiry into Australia’ corporate criminal responsibility regime.

Please direct all questions to info@alrc.gov.au

As this situation unfolds, the ALRC will continue to monitor government advice and respond to any changes as required.

Thank you for your understanding and cooperation.

 

Further advice and information regarding COVID-19 

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State government COVID-19 information and updates:

The ALRC welcomed over 290 attendees to the Corporate Criminal Responsibility Seminar Series held earlier this year. Each location featured an expert panel who delved into the most contentious issues raised from the Corporate Crime Discussion Paper, drawing discussion from the submissions received and consultations with regulatory bodies and stakeholders. The key aspects of the Discussion Paper considered at each seminar were the regulatory model, attribution and individual liability. Attendees from the judiciary, bar, law firms, regulators, law enforcement, industry, government and civil society had the opportunity to ask questions of the panel, and to continue the discussions over refreshments. The lively debate in each seminar has provided the ALRC with further ‘food for thought’ as we progress with writing the final report.

Download the Corporate Crime Slide Presentation.

Download the Individual Liability for Corporate Misconduct Paper.

Thank you to the panellists for the generosity of their time and expertise in participating in the seminars. Our thanks are also extended to our partners in Perth, the University of Western Australia, and in Melbourne, Monash University, for hosting well-attended and informative sessions.

Perth

Perth – 24 February 2020

 

Melbourne – 26 February 2020

Sydney – 27 February 2020

Brisbane – 2 March 2020

24, 26, 27 February, 2 March 2020
Perth | Melbourne | Sydney | Brisbane

Join fellow stakeholders to deep dive into the inquiry of Australia’s corporate criminal responsibility regime prior to the completion of the ALRC’s Final Report.

The ALRC is holding a series of seminars in Perth, Melbourne, Sydney and Brisbane to provide an update and to encourage additional feedback into the current inquiry. Presentations will focus on the Discussion Paper, released in November, which sought input from stakeholders about Commonwealth corporate criminal law.

The seminars will be led by a panel of judges, academics and practitioners focusing on the ALRC’s proposed model of corporate regulation, the attribution of criminal responsibility to corporations and individual liability for corporate fault, while also discussing other aspects of the proposals.

The interactive seminars present the opportunity to highlight key issues identified in submissions received, indicate the ALRC’s potential direction following those submissions and to seek further feedback on the position the ALRC may adopt in its Final Report.

Registrations now closed.

For queries regarding your registration, please contact corporatecrime@alrc.gov.au.
Registrations will close 24 hours prior to each seminar.

Perth Seminar

24 February 2020 | 5.00pm-7.00pm | State Library of WA, 25 Francis Street, Perth

UWA Law School Logoco-hosted with the University of Western Australia

Panel:
The Hon Justice SC Derrington, President, Australian Law Reform Commission
Professor Elise Bant, The University of Western Australia
Paul D Evans, Quinn Emanuel Urquhart & Sullivan
Rebecca Faugno, The University of Western Australia
Joe Longo, Senior Advisor, Herbert Smith Freehills


Melbourne Seminar

26 February 2020 | 5.00pm-7.00pm | Monash University Chambers, Lonsdale Street, Melbourne

co-hosted with the Transnational Criminal Law Group, Monash University

Panel:
The Hon Justice SC Derrington, President, Australian Law Reform Commission
The Hon Justice RJ Bromwich, Part-Time Commissioner, Australian Law Reform Commission
Professor Liz Campbell, Monash University
Professor Jonathan Clough, Monash University
Michael Wyles QC, Barrister


Sydney Seminar

27 February 2020 | 5.00pm-7.00pm | Federal Court of Australia, 184 Phillip Street, Sydney

Panel:
The Hon Justice SC Derrington, President, Australian Law Reform Commission
The Hon Justice RJ Bromwich, Part-Time Commissioner, Australian Law Reform Commission
Dr Penny Crofts, University of Technology Sydney
Dr Olivia Dixon, The University of Sydney
Dean Jordan SC, Barrister


Brisbane Seminar

2 March 2020 | 5.00pm-7.00pm | Federal Court of Australia, 119 North Quay, Brisbane

Panel:
The Hon Justice SC Derrington, President, Australian Law Reform Commission
The Hon Justice RJ Bromwich, Part-Time Commissioner, Australian Law Reform Commission
Dr Vicky Comino, The University of Queensland
Lincoln Crowley QC, Barrister
Justin McDonnell, Partner, King & Wood Mallesons

2020 Seminar Series Corporate Criminal Responsibility Leaflet

Download 2020 Seminar Series Corporate Criminal Responsibility

The ALRC monitors the media for references to the Commission and its inquiries. This list is not comprehensive.

On 15 November, the ALRC released a Discussion Paper as part of its Corporate Criminal Responsibility Inquiry. In the Discussion Paper, the ALRC proposed reforms to individual liability for corporate criminal conduct. The proposals are set out in Chapter 7 of the Discussion Paper, and a shorter summary is available here.

These proposals respond to stakeholder concerns that the current regulatory framework undermines genuine efforts at compliance by individual corporate officers, while simultaneously failing to hold errant senior executives to account.

One of the key objectives of these proposals was to ensure that senior executives – including the CEO, CFO, and heads of department – can be held accountable for corporate misconduct, in light of their critical role in managing the conduct of the corporation (or the parts for which they have oversight). Compared to directors, who are already subject to considerable regulation, ‘C-suite’ executives (and those senior executives immediately below them) are less likely to be held responsible for corporate misconduct, despite often being in a position of greater influence over the day-to-day operations of corporations.

In preparing the Discussion Paper, the ALRC considered various approaches to individual liability for corporate misconduct that might address this gap, including variations on managerial liability, deemed liability, and a ‘failure to prevent’ approach. The ALRC also considered an approach modelled on the Banking Executive Accountability Regime (BEAR), which commenced in 2018 and applies to Authorised Deposit-taking Institutions (ADIs), which are licensed financial and banking institutions.[i] Given the infancy of that regime and the reservations expressed by stakeholders, the ALRC did not pursue that approach in the Discussion Paper.

However, the ALRC considers it may be helpful for stakeholders reviewing the Discussion Paper to revisit the BEAR approach, particularly in light of the decision earlier this week by the Australian Prudential Regulation Authority (APRA) to commence an investigation into possible breaches of the BEAR by directors and senior officers of Westpac.[ii] To the ALRC’s knowledge, this is the first such investigation of a corporation or its officers under the new regime, and as such will be closely watched.

 

What has the ALRC proposed?

The ALRC’s proposals would make an executive officer liable for a civil penalty where they were in a position to influence the conduct of a corporation in relation to an offence, and they cannot prove that they took reasonable measures to prevent that offence.

 

What is the BEAR?

Under the new regime, ADIs must identify ‘accountable persons’ within the corporation, and provide documentation identifying these persons and their respective responsibilities to the regulator (APRA). An ‘accountable person’ is any person who, as a result of their position in the ADI or a subsidiary, has actual or effective senior executive responsibility for management or control of the ADI, or a significant or substantial part of the operations of the ADI or group.[iii]

The Act additionally sets out various responsibilities that may be identified with an accountable person, such as senior executive responsibility for anti-money laundering, compliance, internal audit, or overall risk controls.[iv] ADIs must ensure that all aspects of their business operations are covered by one or more accountable persons, and that those persons have clear lines of responsibility.[v]

The regime sets out specific obligations for accountable persons in the performance of their responsibilities (which are similar to the obligations of the ADI itself under the regime). These include:

  • Acting with honesty and integrity, and with due skill, care, and diligence;
  • Dealing with APRA in an open, constructive, and cooperative way; and
  • Taking reasonable steps in conducting their responsibilities to prevent matters from arising that would adversely affect the prudential standing or reputation of the ADI.[vi]

‘Reasonable steps’ include – but are not limited to – implementing or overseeing:

  • Appropriate governance, control, and risk management;
  • Safeguards against inappropriate delegations of responsibility; and
  • Appropriate procedures for identifying and remediating problems that do or may arise in relation to the matter.[vii]

 

How does the BEAR relate to the ALRC’s proposals for individual liability?

There are some clear overlaps between the BEAR and the ALRC’s proposals, including the obligation of senior executives to take reasonable steps or measures to prevent misconduct by the corporation and to ensure that appropriate compliance and risk-management procedures are in place. Both approaches also reflect an expectation that senior executives act with honesty and due diligence, though these standards are incorporated in different ways.

The ALRC has proposed a form of functional managerial liability, in which any senior officer who was in a position to influence misconduct in practice may be civilly liable unless they can prove that they took reasonable measures to prevent the misconduct. The BEAR, in contrast, adopts a hybrid form of liability that is both positional and functional: accountable persons are identified based on their position in the ADI, but liability arises in relation to the functional responsibilities of that person in the corporation.

Another key distinction is that while the BEAR creates stand-alone duties for accountable persons, the ALRC proposals would deem an executive officer liable where they have failed to prevent an offence by the corporation. The ALRC’s proposed liability model is tied to the corporation committing one of a specified set of serious offences. In that way, it is narrower than the BEAR, which creates standalone duties and does not expressly require the ADI to have committed an offence in order for an accountable person to be in breach. At the same time, the ALRC’s proposed model may in fact be broader than the BEAR, as liability may attach to a broader range of corporate misconduct, and not just matters that would affect the prudential standing of an ADI.

Finally, in terms of enforcement, the BEAR provides that an accountable person found in breach of their obligations may be disqualified by APRA from acting as an accountable person. This may have serious consequences in preventing a person from taking on senior roles within an ADI. APRA may also make orders for reduction of an accountable person’s variable remuneration (bonuses). Only the ADI itself may be liable for pecuniary penalties.

The ALRC’s proposals, on the other hand, would make an executive officer liable for a civil penalty where they were in a position to influence the conduct of a corporation in relation to an offence, and they cannot prove that they took reasonable measures to prevent that offence. Additionally, where the officer has done so knowingly, intentionally or recklessly, they may be criminally liable.

 

Could the BEAR provide an alternative model for individual liability?

The BEAR has attracted a mix of supporters and detractors in its short life. In the Final Report of the Financial Services Royal Commission, Commissioner Hayne recommended that the BEAR should be extended to the superannuation industry, noting that:

Those responsibilities should either already be identified or, at least, be readily identifiable. If that is correct, and it should be, preparation of accountability statements and accountability maps, though a burden, should not be a large burden. Performance of the obligations would then entail no reporting or recording beyond what prudent administration would require anyway.[viii]

However, early consultations raised concerns about the regime’s replicability beyond ADIs, particularly where business risk is not subject to prudential oversight. Concerns were also expressed about the administrative burden imposed by the regime.

While the current investigation by APRA into the conduct of senior executives at Westpac is unlikely to be concluded before the ALRC is due to report to the Attorney-General in April 2020, that investigation will nonetheless be closely watched, as it may provide valuable insight into the potential appropriateness or otherwise of extending the BEAR to non-financial corporations.

 

[i] Banking Act 1958 (Cth).

[ii] Australian Prudential Regulation Authority, APRA launches Westpac investigation and increases capital requirement add-ons to $1 billion, APRA (17 December 2019), <https://www.apra.gov.au/news-and-publications/apra-launches-westpac-investigation-and-increases-capital-requirement-add-ons>.

[iii] Banking Act 1958 (Cth) s 37BA(1).

[iv] Banking Act 1958 (Cth) s 37BA(3).

[v] Explanatory Memorandum, Treasury Laws Amendment (Banking Executive Accountability and Related Measures) Bill 2017 (Cth), [1.11]–[1.13].

[vi] Banking Act 1958 (Cth) s 37CA. The responsibilities of ADIs are set out in s 37C.

[vii] Banking Act 1958 (Cth) s 37CB.

[viii] Financial Services Royal Commission, Final Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (2019) 265.

When sentencing an offender key objectives include:

  • denouncing the conduct of the offender;
  • ensuring that the offender is punished justly for the offence;
  • deterring the offender and others from committing the same or similar offences;
  • promoting the rehabilitation of the offender;
  • protecting the community by limiting the capacity of the offender to re-offend; and
  • promoting the restoration of relations between the community, the offender and the victim.

Each of these objectives may be relevant to sentencing corporate offenders. However, the ALRC has found that there are limitations on the ability of courts to pursue relevant objectives when sentencing corporations. This blunts the force of the criminal law as a regulatory tool for addressing corporate wrongdoing.

In Chapter 10 of its recent Discussion Paper on Australia’s corporate criminal responsibility regime, the ALRC makes proposals to improve the process and outcomes of sentencing corporations. The ALRC proposes to enhance the court’s sentencing toolkit by:

  • providing for a range of non-monetary penalty options for corporations; and
  • strengthening the information base available to courts when sentencing corporations.

The ALRC suggests that court-imposed penalties should be supplemented by a national debarment regime, which would limit the involvement of criminally convicted corporations in contracting for government work.

Proposals also aim to promote consistency between the processes of sentencing and imposing civil penalties on corporations.

Finally, the ALRC invites stakeholder views on the desirability of reforms to maximum penalties for corporations and improving the availability of compensation for victims of corporate wrongdoing.

Figure 1 provides an overview of the effect of the ALRC’s proposals and questions on sentencing. The proposals relating to non-monetary penalties and statutory guidance on sentencing corporations are discussed in more detail below.

Figure 1: Overview of proposals and questions from Chapter 10 of Discussion Paper (Sentencing Corporations)

Expanding the court’s sentencing toolkit for corporate offenders

The ALRC proposes to equip the court with a general power under the Crimes Act 1914 (Cth) to make a range of non-monetary penalty orders when sentencing corporations that have committed a Commonwealth offence (Proposal 15).

The desirability of a general power to make non-monetary penalty orders stems from the well-known limitations of monetary penalties for corporations. Setting monetary penalties at a level that deters corporations is a fraught exercise, and the costs of monetary penalties are liable to be passed on to parties who were not involved in the wrongdoing (consumers, employees, shareholders). Furthermore monetary penalties are poorly adapted to promoting the sentencing purposes of rehabilitation and restoration, and may be viewed as insufficiently denunciatory.

Empowering courts to impose non-monetary penalties in addition to or, in appropriate instances, instead of monetary penalties would strengthen the court’s ability to impose a sentence that best promotes the aims of sentencing in respect of the corporation and offending in question. A centralised source of power to make these orders promotes consistency and avoids unnecessary duplication across statutes.

Figure 2: Overview of proposed non-monetary penalty options (Proposal 15) 

Each of these orders could be imposed by the court for any relevant sentencing purpose. This differs from existing provisions, which confine the imposition of non-monetary penalty orders to ‘non-punitive’ purposes.[ii]

Where court supervision of these orders would be inappropriate, an independent monitor might be appointed to supervise compliance with the orders, and report to the court as required.

The ALRC also proposes the introduction of an equivalent power to make non-monetary penalty orders for corporations in respect of civil penalty provision contraventions (Proposal 16). The proposed provision would be located in the Corporations Act 2001 (Cth). The power to make orders dissolving a corporation would be excluded from this provision.

These proposals are not novel. The ALRC has made similar recommendations in previous reports.[iii] As has the New South Wales Law Reform Commission.[iv] There is also precedent for the availability of these types of orders in overseas jurisdictions (namely, the US, UK, and Canada).

Statutory guidance on sentencing corporations

The ALRC proposes further amendments to the Crimes Act 1914 (Cth) and the Corporations Act 2001 (Cth) to facilitate the provision of consistent and appropriately adapted statutory guidance on sentencing and imposing civil penalties on corporations.

Existing statutory guidance on the factors relevant to sentencing Commonwealth offenders (Crimes Act 1914 (Cth) s 16A(2)) is primarily targeted to sentencing natural persons. While a number of the existing statutory factors may be relevant to sentencing corporations, others will not apply and, more critically, s 16A(2) does not provide for a number of factors that are highly relevant to sentencing corporations. The courts have instead drawn on the case law relating to imposing civil penalties on corporations to fill the gaps in the existing statutory guidance.

The ALRC proposes the introduction of a non-exhaustive list of statutory factors for courts to consider when sentencing corporations for a Commonwealth offence (Proposal 13, see below). Consideration of these factors would be mandatory to the extent that they are relevant and known to the court.

In addition to the introduction of specific guidance for sentencing corporate offenders, the ALRC reiterates previous recommendations for wholesale reform of s 16A(2).[v] Implementation of these recommendations would involve restructuring the statutory guidance on sentencing Commonwealth offenders to:

  • introduce separate provisions setting out the purposes and principles of sentencing;
  • provide a non-exhaustive list of eight broad categories of factors relevant to the purposes and principles of sentencing, with examples of the types of factors under each category; and
  • separately require the court to consider factors pertaining to the administration of the federal criminal justice system (such as guilty pleas and cooperation with authorities).

The ALRC also proposes the introduction of guidance for the imposition of civil penalties on corporations (Proposal 14). As there is currently no general statutory guidance on the imposition of civil penalties, introducing a list of factors relevant to imposing civil penalties on corporations that merely mirrors Proposal 13 is not possible. The ALRC’s proposed list of factors for the imposition of civil penalties on corporations therefore incorporates the corporations-specific factors identified in Proposal 13, in addition to the types of general factors that are currently furnished by s 16A(2) in the criminal context.

In the absence of an effective legislative scheme for civil penalties, it is beyond the scope of the ALRC’s current inquiry to recommend a statutory provision that would govern both individuals and corporations. Nonetheless, the ALRC has previously recommended the introduction of such a legislative scheme, which would have incorporated a provision governing the civil penalty setting process for individuals and corporations.[vi] The ALRC reaffirms its view that this would be a sensible approach.


[i] Carol Beaton-Wells and Brent Fisse, Australian Cartel Regulation: Law, Policy and Practice in an International Context (Cambridge University Press, 2011) 458–9.

[ii] Competition and Consumer Act 2010 (Cth) s 86C; Australian Consumer Law s 246; and Australian Securities and Investments Commission Act 2001 (Cth) s 12GLA.

[iii] Australian Law Reform Commission, Same Crime, Same Time: Sentencing of Federal Offenders (Report No 103, 2006) rec 30-1; Australian Law Reform Commission, Principled Regulation: Federal Civil & Administrative Penalties in Australia (Report No 95, 2002) recs 27–1, 28–3. See also Australian Law Reform Commission, Compliance with the Trade Practices Act 1974 (Report No 68, 1994) [10.9].

[iv] New South Wales Law Reform Commission, Sentencing Corporate Offenders (Report 102, 2003) rec 4.

[v] Recommendations 4–1, 5–1, 6–1, and 6–8 from Australian Law Reform Commission, Same Crime, Same Time: Sentencing of Federal Offenders (Report No 103, April 2006).

[vi] Australian Law Reform Commission, Principled Regulation: Federal Civil & Administrative Penalties in Australia (Report No 95, 2002) rec 29-1.