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Thursday, 15 August 1974
Page: 988

Senator GREENWOOD (Victoria) - I do not know whether the persons for whom this debate primarily is being conducted- not primarily really- or those whom we are interested to persuade by discussion, are amenable to persuasion because we have not heard from them. However I raise for the consideration of the Attorney-General (Senator Murphy) this relevant circumstance. I have in front of me section 124 of the Companies Act. The AttorneyGeneral will recall this provision when I mention it to him. It states:

(1)   A director shall at all times act honestly and use reasonable diligence in the discharge of the duties of his office.

(2)   An officer of a company shall not make use of any information acquired by virtue of his position as an officer to gain . . . an improper advantage . . .

The section also states:

(3)   An officer who commits a breach of any of the provisions of this section shall be-

(a)   liable to the company for any profit made by him or for any damage suffered by the company as a result of the breach of any of those provisions; and

(   b) guilty of an offence against this Act.

Then a penalty is imposed. There we have the 2 types of situation embraced in the one provision. If a director acts improperly he is guilty of an offence, and so he should be. If he causes loss to the company, under this section it can recover from him the amount of loss sustained because of his misconduct. It is a civil action which is brought by the company against the delinquent director. The action brought by the State against a director for an offence is a criminal action. There is a different standard of proof. I suggest that that ought to be the approach which we adopt here. I do not believe that the offence ought to be on a civil standard just as an ordinary civil action is based on the civil standard. I invite the Attorney's attention to that consideration. We are creating a new offence in this area which clearly would indicate that a company or a company director may be liable for a very heavy penalty, and those penalties will be payable to the State. Whether he is liable to pay the penalty will be determined on the standard which is applicable to a civil action. It is unusual, and I would say to the Attorney-General that it is a backward step.

Senator Murphy - It is not unusual.

Senator GREENWOOD - It is unusual. I do not know these so-called civil offences. It is a concept, I think, unknown to the law and generally unknown to those who practise. There are such things as civil wrongs.

Senator Murphy - The revenue laws and the industrial laws are full of them.

Senator GREENWOOD - My experience and practice with the industrial offences with which I have been concerned is that they have been offences which have had to be proved according to the criminal standard. I just invite the Attorney-General's consideration of these matters. He has got his legislation in the way in which he has looked for it. I think it is a blemish on the legislation if this standard of proof to be applied is to be the civil standard of proof. I invite his reconsideration of it in that light.

Question put:

That the words proposed to be left out be left out.

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