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VOLUME 47(1)

 

The Legal Personality of the Commonwealth of Australia

SEBASTIAN HOWARD HARTFORD DAVIS

The article analyses legal materials concerning the legal personality of the Commonwealth of Australia under domestic law. It argues that the Commonwealth as legal person has an existence, as a unit of the legal system, which is conceptually distinct from the Commonwealth of Australia as a nation, and the Commonwealth as federal government of that nation. Current idioms (eg ‘polity’ and ‘body politic’) have a tendency to confuse these distinctions. The article suggests, as a more appropriate way to denote the Commonwealth as legal person, the term ‘constitutional person’.

What the Australian Public Knows About the High Court

INGRID NIELSEN AND RUSSELL SMYTH

Existing studies for the United States examine the extent to which the public is knowledgeable about US courts, arguing that knowledge of the courts is linked to public support for their role. We know little, though, about the Australian public’s awareness of the High Court of Australia. We report the results of a survey of a representative sample of the Australian adult population, administered in November 2017. We find that few Australians know the names of the Justices, the number of Justices on the Court, how the Justices are appointed or for how long they serve. Awareness of recent cases decided by the Court is mixed. We find that age and education are better predictors of awareness levels than is gender. Our findings are important because in the absence of awareness of the High Court, the potential exists for the public to see the Court as having a more overt political role than it has, which may lower esteem for the Court. The potential for this to occur is exacerbated if, and when, politicians attempt to drag the High Court into the political fray, by attributing political motives to it that it does not have.

Credit Advisers, Consumer Credit and Equitable Fiduciary Obligations

SIMONE DEGELING AND JESSICA HUDSON

Consumers use financial intermediaries such as brokers and other credit advisers to navigate complex financial markets and to provide guidance on credit products. In 2017 ASIC reported that ‘[b]rokers … are responsible for arranging … half of all home loans in Australia’ (Australian Securities & Investments Commission, Report 516: Review of Mortgage Broker Remuneration (2017) 8 [18]). The National Consumer Credit Protection Act 2009 (Cth) (‘Credit Regime’) regulates the conduct of such advisers including requiring disclosure of fees and some commissions. The Credit Regime also permits conflicts between the interest of the adviser and the client, provided that the adviser has in place ‘adequate arrangements to ensure … [that the client is] … not disadvantaged by any conflict of interest’ and that the conflict does not breach the adviser’s obligation to act ‘efficiently, honestly and fairly’. This article demonstrates that equitable fiduciary obligations also operate to regulate the conduct of the adviser in his or her dealings with the client. Such conflict and other conduct may breach any equitable fiduciary obligation thus exposing the adviser to equitable remedies. Equitable fiduciary obligations may thus be an as yet under-exploited avenue of protection for consumers and a concomitant zone of compliance risk for those subject to the Credit Regime.

Restoring Confidence in Consumer Financial Protection Regulation in Australia: A Sisyphean Task?

ANDREW SCHMULOW, KAREN FAIRWEATHER AND JOHN TARRANT

Consumer financial protection and the integrity of the Australian financial system are critical to the Australian economy in many ways, including the provision of an effective banking system, and the security of Australia’s significant superannuation savings. This is especially the case in an environment where financial products have become more complex and difficult for consumers to understand. In recent years there have been several scandals in Australia’s financial sector that have undermined confidence in the financial system, and exposed regulatory failure. The authors argue that there needs to be a more effective oversight of the key regulators in the Australian financial system to maintain confidence in the system, and prevent capture of the regulators by the financial services industry. The authors contend that the recommendation of the Financial System Inquiry for the establishment of an Assessment Board to provide continuous oversight of the financial regulators is an effective solution to the poor regulatory outcomes encountered in Australia in recent years. The consequences of not having such oversight are likely to be more financial scandals, and further instability in the financial system. These deficiencies must be addressed as a matter of urgency.

Deconstructing Digital Currency and Its Risks: Why ASIC Must Rise to the Regulatory Challenge

PAUL LATIMER AND MICHAEL DUFFY

Digital currency is a ‘disrupter’ of financial services and currency markets, and as such presents new regulatory challenges. International regulatory responses to digital currency range from being largely ignored in some jurisdictions to being banned in others, with most jurisdictions charting a middle course of ‘wait and see’ while attempting to deal with pressing issues (such as taxation liability and potential money laundering and terrorism financing issues). This article explains digital currency, its benefits, its problems, its risks and the regulatory response so far. It analyses the extent to which the Australian Securities and Investments Commission (ASIC, the national securities regulator) may or may not have regulatory power and jurisdiction under existing Australian law, and the role of other relevant regulators and institutions. It concludes that digital currency may well be a ‘financial product’ under Corporations Act 2001 (Cth) s 763A (though many suppliers/issuers of that product will be website operators located outside Australia). If it is a financial product, ASIC would also have jurisdiction over issuers and markets that trade in that product. This conclusion could easily be fortified by legislative confirmation; however, it is suggested that ASIC should in all events test its powers to determine whether any legislative change is needed. Regulation by ASIC would add to recent moves to deal with digital currency by the Australian Transaction Reports and Analysis Centre (AUSTRAC) and the Australian Taxation Office (ATO). In all cases, this article argues that the time has come for Commonwealth regulation of digital currencies by ASIC as the relevant regulator. This would then trigger the obligations set out in the Corporations Act and the ASIC Act, including Australian Financial Services Licensing, Australian Market Licensing, standards of efficiency, honesty and fairness, disclosure provisions, possible market offences and corporate regulation generally. The suggested jurisdiction of ASIC would build on its existing role as well as the roles of the Australian Competition and Consumer Commission, the ATO and AUSTRAC.

A Step Too Far? Rethinking the Stepping Stone Approach to Officers' Liability

ALICE ZHOU

In recent years, the Australian Securities and Investments Commission has placed considerable emphasis on the stepping stone approach as a device to establish officers’ liability in respect of corporate contraventions of the law. The approach represents a novel interpretation of the general duties of officers under the Corporations Act 2001 (Cth) (‘CA’). Despite the seriousness of the consequences for an officer that may follow from a finding of liability, the content and boundaries of the approach remain undefined. Critically, the courts’ heightened receptiveness to the approach and the judicial expansion of its scope departs from earlier judicial statements of caution sounded against using the general statutory duties as a mechanism to secure corporate compliance with the law. At a more fundamental level, it is doubtful whether the approach represents a legitimate interpretation of the general statutory duties, to the extent that it subverts several existing routes to officers’ liability and remedies under the CA. It is incumbent on the legislature to correct these inconsistencies by recalibrating the role envisaged for officers under the CA in line with contemporary expectations.

 

Updated:  19 May 2017/Responsible Officer:  FLR Business Managers/Page Contact:  FLR Web Publishers