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Monday, 27 June 1994
Page: 2056

Senator ELLISON (7.12 p.m.) —At the outset, might I say that I am in agreement with the majority of the Corporations Legislation Amendment Bill 1994. I think the government has addressed adequately some aspects of corporations law which needed looking at. In passing, I touch on the subject that Senator Spindler raised, and that is the extension of jurisdiction in relation to the hearing of matters under this legislation. I believe that is a good move and one which accords with making access to justice less costly.

  However, I join with Senator Vanstone in taking exception to schedule 4, which deals with the corporation and securities panel. Before embarking on some observations in relation to that schedule, I draw to the Senate's attention how this came to be. The panel was set up as a peer group review body to regulate behaviour in relation to company takeovers. Throughout the 1980s we have seen the takeover of companies achieve notoriety and, in fact, in Western Australia, the state that I represent, these activities have achieved more than just notoriety. So some sort of review of the standard of behaviour in this regard is no bad thing.

  However, the question is: what power will this peer group review body have and how should it be conducted? It was a result of the takeover of Titan Hills by Precision Data Holdings that brought this all to the fore. As stated in the explanatory memorandum, the following technical problems in relation to the structure of the panel were identified as a result of that case:

.the hearing powers do not discourage time wasting litigation between the parties;

.the requirements of the rules of natural justice for the parties hinders the Panel from coming to quick commercial decisions;

.the Panel's jurisdiction in relation to takeovers does not cover unfair conduct connected with some takeovers; and

.the Panel cannot enforce undertakings that are given by the parties to its proceedings.

Accordingly, the government set about to rectify what it saw as these defects which arose from that one takeover which was referred to the panel. The government has stated that to meet these concerns a number of changes were required to the current operations of the panel. So it proposes to amend the corporations law to improve the capacity of the members of the panel to better control the panel's proceedings. The conduct of procedural fairness to be applied by the panel and the panel's procedures are to be expressly set out in regulations. Of course, the government's amendment states that natural justice is to be governed by these regulations.

  As Senator Vanstone stated, that is not entirely satisfactory because when we take that course of action we are really delegating legislation to a lower order of things. We are really delegating an important aspect such as natural justice to be dealt with by way of regulation. The procedure of such a panel, with the power that it has, should really be looked at by this Senate. That is one objection I would make in relation to the argument that natural justice can be looked at by regulation. The other matters that are being proposed are:

.The Panel's jurisdiction is to be extended to encompass certain conduct associated with a takeover; and

.the Panel will be empowered to accept undertakings from the parties which will be enforceable by the Court.

I can understand why the government wants matters to be conducted in an expeditious fashion. When one is dealing with commercial decisions, any delay can be costly. But, nonetheless, the rights of various parties are being affected, be they the rights of directors or shareholders and, indirectly perhaps, the rights of the consumer.

  When we affect these rights of people in such a way we need to approach the matter with the utmost caution. Indeed, I do not believe we can simply say, `Well, let the regulations take care of it.' Natural justice requires that if one's rights are affected or if there is some prejudice that an individual can suffer, there should be an opportunity for that individual to present his or her own argument or case, there should be some opportunity to test the case that is presented against them and, furthermore, there should be a right to representation.

  We are not just dealing with representation here by ruling out the assistance of third parties. As Senator Vanstone said, we could be looking at the use of stockbrokers, accountants and the like. When we are dealing with takeovers we might need to call an accountant to give assistance to the panel as to the figures of the company or how a matter might by affected. A stockbroker, similarly, might cover an area which a lawyer is not competent or qualified to adequately put forward. By the use of such qualified people we might end up assisting the panel to reach a speedy and informed conclusion as to the method of the takeover. I think it is highly desirable that we have the assistance of such third parties there.

  It has been suggested that submissions could be made in writing and that that could add to the informal nature of the panel. But the problem is this: the panel is embarking on regulating behaviour in a most complex area of the law. The area of takeover of companies is indeed complex and it is not a subject that is approached in a cavalier or trite manner. I am not saying that is how the panel would approach it but such informality could well result in an ill-informed decision and that could result in perhaps untoward behaviour being overlooked in a takeover. I am sure that that is not what the government or the Democrats who have spoken on this matter are after in this case.

  If we are dealing with a complex area and we say we will make it informal, I believe we are creating a recipe for disaster. I believe that informality should be the goal, wherever possible. I believe that we do not have to include lawyers in every tribunal or every panel. Nonetheless, where we have such complexity, we could well be throwing out the baby with the bathwater by excluding any avenue of representation or advice.

  Debate interrupted.