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

Published online by Cambridge University Press:  01 January 2025

Alice Zhou
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Abstract

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.

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Articles
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Federal Law Review , Volume 47 , Issue 1 , March 2019 , pp. 151 - 174
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Copyright © 2019 The Author(s)

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Footnotes

I would like to thank Professor Jennifer Hill for her guidance and supervision of this research, as well as the anonymous reviewers for their thoughtful feedback.

References

Notes

1. See generally Parliamentary Joint Committee on Corporations and Financial Services, Parliament of Australia, Inquiry into Financial Products and Services in Australia (2009) 19–50.

2. ASIC v Cassimatis [No 8] (2016) 336 ALR 209, 217 [2] (Edelman J) (‘Cassimatis’).

3. Ibid 217–18 [1]–[6].

4. (2011) 190 FCR 364, 370 [10] (‘Fortescue’).

5. Abe Herzberg and Helen Anderson, ‘Stepping Stones — From Corporate Fault to Directors’ Personal Civil Liability’ (2012) 40 Federal Law Review 181, 181–2. The CA prescribes four main duties: s 180(1) imposes a duty of care; s 181 imposes a duty to act in good faith and for a proper purpose; and ss 182 and 183 impose prohibitions on the improper use of officers’ positions and information.

6. Ibid 182.

7. See, eg, Re Caremark International Inc Derivative Litigation, 698 A 2d 959 (Del Ch, 1996).

8. Jennifer Arlen, ‘The Story of Allis-Chalmers, Caremark, and Stone: The Directors’ Evolving Duty to Monitor’ in J Mark Ramseyer (ed), Corporate Law Stories (Foundation Press, 2009) 323, 326–7; Michael J Borden, ‘Of Outside Monitors and Inside Monitors: The Role of Journalists in Caremark Litigation’ (2013) 15 University of Pennsylvania Journal of Business Law 921, 924–5.

9. Rosemary Teele Langford, ‘Stakeholder Interests and the Duty of Care’ (2017) 35 Company and Securities Law Journal 342, 343.

10. See, eg, ASIC v Sino Australia Oil and Gas Ltd (in liq) (2016) 115 ACSR 437 (‘Sino’); ASIC v Padbury Mining Ltd (2016) 116 ACSR 208 (‘Padbury’); Cassimatis (2016) 336 ALR 209; ASIC v Ostrava Equities Pty Ltd [2016] FCA 1064 (1 September 2016) (‘Ostrava’); ASIC v Drake [No 2] (2016) 340 ALR 75 (‘Drake’); ASIC v Avestra Asset Management Ltd (in liq) (2017) 348 ALR 525 (‘Avestra’).

11. See generally CA s 1317E.

12. See generally Justice Ashley Black, ‘Directors’ Statutory and General Law Accessory Liability for Corporate Wrongdoing’ (2013) 31 Company and Securities Law Journal 511, 521–2.

13. Ibid 512–18.

14. CA s 79(c).

15. Yorke v Lucas (1985) 158 CLR 661, 670 (Mason ACJ, Wilson, Deane and Dawson JJ).

16. Ibid; ASIC v Maxwell (2006) 59 ACSR 373, 395 [92] (Brereton J) (‘Maxwell’).

17. Corporations and Markets Advisory Committee, Parliament of Australia, Personal Liability for Corporate Fault: Discussion Paper (2005) 1.

18. Herzberg and Anderson, above n 5, 182.

19. On a proper construction, this is the end point of the approach. However, academic commentators have widely referred to this as the second stepping stone. This article will adopt this terminology.

20. ASIC v Elm Financial Services Pty Ltd (2005) 55 ACSR 411 (‘Elm (1)’); ASIC v Elm Financial Services Pty Ltd [2005] NSWSC 1033 (13 October 2005) (‘Elm (2)’); ASIC v Elm Financial Services Pty Ltd (2005) 55 ACSR 544 (‘Elm (3)’); ASIC v Preston [2005] FCA 1805 (13 December 2005) (‘Preston’); Maxwell (2006) 59 ACSR 373; ASIC v Warrenmang Ltd (2007) 63 ACSR 623 (‘Warrenmang’); ASIC v Sydney Investment House Equities Pty Ltd (2008) 69 ACSR 1 (‘SIHE’); ASIC v MacDonald [No 11] (2009) 256 ALR 199 (‘MacDonald’), affd ASIC v Hellicar (2012) 247 CLR 345; Drake (2016) 340 ALR 75.

21. Maxwell (2006) 59 ACSR 373, 400 [106] (Brereton J).

22. ASIC v Mariner Corporation Ltd (2015) 241 FCR 502, 582 [444] (emphasis added) (Beach J) (‘Mariner’). See also Warrenmang (2007) 63 ACSR 623, 628 [22] (Gordon J); SIHE (2008) 69 ACSR 1, 15 [49] (Hamilton J); Cassimatis (2016) 336 ALR 209, 311 [529] (Edelman J).

23. Maxwell (2006) 59 ACSR 373, 399 [104].

24. Black, above n 12, 518.

25. Cassimatis (2016) 336 ALR 209, 218 [4]–[6]; Drake (2016) 340 ALR 75, 137–8 [318].

26. Maxwell (2006) 59 ACSR 373, 402 [111] (Brereton J); Warrenmang (2007) 63 ACSR 623, 630 [27] (Gordon J); ASIC v Citrofresh International Ltd [No 2] (2010) 77 ACSR 69, 78 [44] (Goldberg J) (‘Citrofresh’); Mariner (2015) 241 FCR 502, 584 [451], 586–8 [462]–[474] (Beach J); Sino (2016) 115 ACSR 437, 454 [86] (Davies J); Cassimatis (2016) 336 ALR 209, 338 [675], 357–9 [772]–[776] (Edelman J); Drake (2016) 340 ALR 75, 168–9 [448]–[449] (Edelman J); Avestra (2017) 348 ALR 525, 567 [217] (Beach J).

27. See generally CA s 180(1); Maxwell (2006) 59 ACSR 373, 397 [100] (Brereton J); Mariner (2015) 241 FCR 502, 582 [440]–[441] (Beach J); Cassimatis (2016) 336 ALR 209, 338 [676] (Edelman J).

28. Preston [2005] FCA 1805 (13 December 2005) [10]–[11].

29. See, eg, Maxwell (2006) 59 ACSR 373; SIHE (2008) 69 ACSR 1; Ostrava [2016] FCA 1064 (1 September 2016).

30. Herzberg and Anderson, above n 5, 198. See also Vivienne Brand, ‘Foreign Bribery Regulation in Australia and “Stepping Stones” Director Liability’ (2017) 45 Australian Business Law Review 199, 206–12.

31. Herzberg and Anderson, above n 5, 184.

32. SIHE (2008) 69 ACSR 1, 36 [170]–[172].

33. Ostrava [2016] FCA 1064 (1 September 2016) [41].

34. Drake (2016) 340 ALR 75, 84 [26].

35. Ibid 137 [314], 148 [366].

36. Ibid 160 [421], 177 [489].

37. This is equally so in respect of the specific regimes of officers’ liability prescribed under the CA, which are examined in the third part of this article. In this regard, the distinction between corporate contraventions of the CA and laws other than the CA is one without a difference.

38. Cassimatis (2016) 336 ALR 209, 302 [485].

39. POEO Act s 169A(2).

40. Ibid.

41. Ibid s 169A(1).

42. See also Dimity Kingsford Smith, ‘From Entity to Individual: Director’s Duties, Stepping Stones Liability and Enforcement Strategy’ (Paper presented at Centre for Law, Markets and Regulation Legal Practitioners’ Forum, Sydney, 10 March 2017) 18.

43. Cassimatis (2016) 336 ALR 209, 218 [4]–[6].

44. Drake (2016) 340 ALR 75, 137–8 [318].

45. (2012) 247 CLR 486 (‘Fortescue Appeal’).

46. Fortescue (2011) 190 FCR 364, 370 [10].

47. Ibid.

48. Fortescue Appeal (2012) 247 CLR 486, 512–13 [60]–[61] (French CJ, Gummow, Hayne and Kiefel JJ), 528 [108], 529 [113] (Heydon J).

49. Ibid 514 [67].

50. Ibid 529 [115].

51. Mariner (2015) 241 FCR 502, 584 [455] (emphasis in original).

52. Ibid.

53. Ibid 584 [454], 592 [501].

54. Cassimatis (2016) 336 ALR 209, 218 [5].

55. Ibid 339 [679] (emphasis in original).

56. Ibid.

57. Ibid 218 [4].

58. Ibid 218 [6].

59. Ibid 218 [4].

60. Drake (2016) 340 ALR 75, 137–8 [318].

61. Ibid 84 [26].

62. Cassimatis (2016) 336 ALR 209, 218 [5].

63. Vines v ASIC (2007) 63 ACSR 505, 537 [158] (Santow JA).

64. Cassimatis (2016) 336 ALR 209, 339 [679].

65. Vrisakis v Australian Securities Commission (1993) 9 WAR 395, 449–50 (Ipp J) (‘Vrisakis’).

66. Ibid.

67. Mariner (2015) 241 FCR 502, 584 [452] (emphasis in original) (Beach J). See also Explanatory Memorandum, Corporate Law Economic Reform Program Bill 1998 (Cth) 4 [2.1].

68. Senate Standing Committee on Legal and Constitutional Affairs, Parliament of Australia, Company Directors’ Duties (1989) 17 [2.39].

69. Australian Institute of Company Directors, ‘The Honest and Reasonable Director Defence’ (Proposal for Reform, Australian Institute of Company Directors, August 2014) 9.

70. Ibid 9–10.

71. Cassimatis (2016) 336 ALR 209, 218 [5].

72. Vrisakis (1993) 9 WAR 395, 449 (Ipp J).

73. Australian Institute of Company Directors, ‘Director Sentiment Index: Research Findings Second Half 2015’ (Research Findings, Australian Institute of Company Directors, October 2015) 52. See also Anna Huggins, Roger Simnett and Anil Hargovan, ‘Integrated Reporting and Directors’ Concerns about Personal Liability Exposure: Law Reform Options’ (2015) 33 Company and Securities Law Journal 176.

74. Mariner (2015) 241 FCR 502, 584–5 [456].

75. Domini Stuart, ‘Freedom to Choose the Right Path’ (2014) 30(8) Company Director 44, 45.

76. Australian Institute of Company Directors, ‘Director Sentiment Index’, above n 73, 50–1, 58.

77. Philip Crutchfield and Catherine Button, ‘Men Over Board: The Burden of Directors’ Duties in the Wake of the Centro Case’ (2012) 30 Company and Securities Law Journal 83, 99.

78. Elm (1) (2005) 55 ACSR 411, 412–13 [5]–[6] (Barrett J); Elm (2) [2005] NSWSC 1033 (13 October 2005) [4] (Barrett J); Elm (3) (2005) 55 ACSR 544, 545–6 [3]–[4] (Barrett J).

79. Maxwell (2006) 59 ACSR 373, 402 [111] (Brereton J).

80. Warrenmang (2007) 63 ACSR 623, 629 [25] (Gordon J).

81. Preston [2005] FCA 1805 (13 December 2005) [12] (Finkelstein J); SIHE (2008) 69 ACSR 1, 92 [517] (Hamilton J); Sino (2016) 115 ACSR 437, 454 [85] (Davies J); Padbury (2016) 116 ACSR 208, 216 [48] (Siopis J); Cassimatis (2016) 336 ALR 209, 370 [833] (Edelman J).

82. Tim Bednall and Pamela Hanrahan, ‘Officers’ Liability for Mandatory Corporate Disclosure: Two Paths, Two Destinations?’ (2013) 31 Company and Securities Law Journal 474, 493.

83. Drake (2016) 340 ALR 75, 158–9 [410].

84. Warrenmang (2007) 63 ACSR 623, 629 [25].

85. See, eg, Citrofresh (2010) 77 ACSR 69.

86. See, eg, Sino (2016) 115 ACSR 437; Padbury (2016) 116 ACSR 208; Ostrava [2016] FCA 1064 (1 September 2016).

87. Citrofresh (2010) 77 ACSR 69, 80 [52] (Goldberg J); Padbury (2016) 116 ACSR 208, 210 [6] (Siopis J).

88. SIHE (2008) 69 ACSR 1, 65 [358]–[359] (Hamilton J).

89. MacDonald (2009) 256 ALR 199, 244 [225] (Gzell J); Mariner (2015) 241 FCR 502, 588 [475] (Beach J); Drake (2016) 340 ALR 75, 158 [407]–[408] (Edelman J).

90. Cassimatis (2016) 336 ALR 209, 341–2 [695].

91. Ibid 370 [833]; Avestra (2017) 348 ALR 525, 567 [216] (Beach J).

92. Sino (2016) 115 ACSR 437, 454–5 [86]–[87] (Davies J); Cassimatis (2016) 336 ALR 209, 342 [697], 360 [779] (Edelman J); Avestra (2017) 348 ALR 525, 565 [210] (Beach J).

93. SIHE (2008) 69 ACSR 1, 28 [127] (Hamilton J); MacDonald (2009) 256 ALR 199, 263–5 [354]–[364] (Gzell J); Sino (2016) 115 ACSR 437, 455 [87] (Davies J).

94. Sino (2016) 115 ACSR 437, 455 [87] (Davies J).

95. See, eg, Yorke v Lucas (1985) 158 CLR 661, 670 (Mason ACJ, Wilson, Deane and Dawson JJ); Maxwell (2006) 59 ACSR 373, 395 [92] (Brereton J).

96. Elm (1) (2005) 55 ACSR 411, 413 [7] (Barrett J); Preston [2005] FCA 1805 (13 December 2005) [1]–[2] (Finkelstein J); Warrenmang (2007) 63 ACSR 623, 629 [25] (Gordon J); SIHE (2008) 69 ACSR 1, 28 [124] (Hamilton J); MacDonald (2009) 256 ALR 199, 250–1 [259]–[262] (Gzell J); Citrofresh (2010) 77 ACSR 69, 78 [44] (Goldberg J); Sino (2016) 115 ACSR 437, 455 [87] (Davies J); Padbury (2016) 116 ACSR 208, 217–18 [55]–[57] (Siopis J); Cassimatis (2016) 336 ALR 209, 237 [113], 340 [684] (Edelman J); Ostrava [2016] FCA 1064 (1 September 2016) [45]–[46] (Davies J); Avestra (2017) 348 ALR 525, 539–40 [95]–[97] (Beach J).

97. Belinda Gibson and Diane Brown, ‘ASIC’s Expectations of Directors’ (2012) 35 University of New South Wales Law Journal 254, 258.

98. Maxwell (2006) 59 ACSR 373, 402–3 [113].

99. Ibid 420 [196]–[197].

100. Ibid 415 [166]–[168], 418 [180].

101. Ibid 402–3 [112]–[113].

102. Vrisakis (1993) 9 WAR 395, 449–50. The general test in Vrisakis was applied in another novel context in Noel Hutley and Sebastian Hartford-Davis, ‘Climate Change and Directors’ Duties’ (Memorandum of Opinion, Centre for Policy Development and Future Business Council, 7 October 2016).

103. Tim Connor, ‘Should the Statutory Business Judgment Rule Apply to Directors’ Compliance Decisions?’ (2016) 34 Company and Securities Law Journal 403, 405.

104. Michael Pearce, ‘Company Directors as “Super-Fiduciaries”’ (2013) 87 Australian Law Journal 464, 481; Sulette Lombard and Jessica Viven, ‘Continuous Disclosure and Good Faith’ (2014) 32 Company and Securities Law Journal 419, 426.

105. Maxwell (2006) 59 ACSR 373, 402 [110].

106. Mariner (2015) 241 FCR 502, 583–4 [448]. See also Warrenmang (2007) 63 ACSR 623, 630 [27] (Gordon J).

107. Cassimatis (2016) 336 ALR 209, 313 [537].

108. Ibid.

109. Connor, above n 103, 405.

110. Mariner (2015) 241 FCR 502, 586–7 [468].

111. Citrofresh (2010) 77 ACSR 69, 79 [50] (Goldberg J).

112. Mariner (2015) 241 FCR 502, 585 [458]–[461] (Beach J); Drake (2016) 340 ALR 75, 160–3 [420]–[424] (Edelman J).

113. MacDonald (2009) 256 ALR 199, 269 [395] (Gzell J); Mariner (2015) 241 FCR 502, 587 [469] (Beach J); Padbury (2016) 116 ACSR 208, 217 [55] (Siopis J); Cassimatis (2016) 336 ALR 209, 301–2 [481]–[483] (Edelman J).

114. Sino (2016) 115 ACSR 437, 454–5 [85]–[86].

115. Warrenmang (2007) 63 ACSR 623, 630 [27] (Gordon J).

116. See, eg, Avestra (2017) 348 ALR 525, 567 [217] (Beach J).

117. Sino (2016) 115 ACSR 437, 454 [86].

118. Ibid.

119. Cassimatis (2016) 336 ALR 209, 358 [774].

120. Ibid 358–9 [775].

121. Michelle Welsh et al, ‘The End of the “End of History for Corporate Law”?’ (2014) 29 Australian Journal of Corporate Law 147, 167; Michelle Welsh, ‘Realising the Public Potential of Corporate Law: Twenty Years of Civil Penalty Enforcement in Australia’ (2014) 42 Federal Law Review 217, 235–6; Jason Harris and Anil Hargovan, ‘Still a Sleepy Hollow? Directors’ Liability and the Business Judgment Rule’ (2016) 31 Australian Journal of Corporate Law 319, 326.

122. CA s 180(3).

123. ASIC v Rich (2009) 236 FLR 1, 151 [7277] (Austin J).

124. Australian Institute of Company Directors, ‘The Honest and Reasonable Director Defence’, above n 69, 9–10; Jean J du Plessis and Jim A Mathiopoulos, ‘Defences and Relief from Liability for Company Directors: Widening Protection to Stimulate Innovation’ (2016) 31 Australian Journal of Corporate Law 287, 298.

125. Fortescue (2011) 190 FCR 364, 427 [197].

126. Connor, above n 103, 406.

127. Fortescue (2011) 190 FCR 364, 427 [198].

128. Explanatory Memorandum, Corporate Law Economic Reform Program Bill 1998 (Cth) 18 [6.8].

129. See also Kingsford Smith, above n 42, 15–16.

130. Mariner (2015) 241 FCR 502, 590 [486].

131. Ibid.

132. Ibid.

133. Fortescue (2011) 190 FCR 364, 427 [198].

134. Connor, above n 103, 407.

135. Mariner (2015) 241 FCR 502, 588–9 [475]–[482].

136. Ibid 591 [495].

137. Drake (2016) 340 ALR 75, 186 [540].

138. Mariner (2015) 241 FCR 502, 582 [444].

139. Black, above n 12, 520.

140. Ibid.

141. Ibid.

142. See, eg, Oreb v ASIC [No 2] (2017) 247 FCR 323, 337 [54] (Rares, Davies and Gleeson JJ).

143. Sir Anthony Mason, ‘Corporate Law: The Challenge of Complexity’ (1992) 2 Australian Journal of Corporate Law 1, 1.

144. Geoffrey Gibson, Law for Directors (Federation Press, 2003) ix.

145. Cally Jordan, ‘Unlovely and Unloved: Corporate Law Reform’s Progeny’ (2009) 33 Melbourne University Law Review 626, 627.

146. Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390, 397 (Dixon CJ); Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, 381–2 [69]–[70] (McHugh, Gummow, Kirby and Hayne JJ) (‘Project Blue Sky’).

147. Commonwealth v Baume (1905) 2 CLR 405, 414 (Griffith CJ); Project Blue Sky (1998) 194 CLR 355, 382 [71] (McHugh, Gummow, Kirby and Hayne JJ).

148. Maxwell (2006) 59 ACSR 373, 402 [110].

149. See, eg, Citrofresh (2010) 77 ACSR 69, 78 [46] (Goldberg J); Mariner (2015) 241 FCR 502, 582–3 [444] (Beach J); Cassimatis (2016) 336 ALR 209, 314 [543] (Edelman J); Avestra (2017) 348 ALR 525, 566 [214] (Beach J).

150. Maxwell (2006) 59 ACSR 373, 387 [57] (Brereton J).

151. Pearce, above n 104, 481; Bednall and Hanrahan, above n 82, 494, 501; Rosemary Teele Langford, ‘Corporate Culpability, Stepping Stones and Mariner: Contention Surrounding Directors’ Duties where the Company Breaches the Law’ (2016) 34 Company and Securities Law Journal 75, 76–7; Rosemary Teele Langford, ‘Managed Investment Schemes: Liability of Directors of Responsible Entities where the Responsible Entity Breaches the Law’ (2016) 34 Company and Securities Law Journal 599, 611–12.

152. Maxwell (2006) 59 ACSR 373, 387–8 [57].

153. Ibid.

154. But see Bednall and Hanrahan, above n 82, 505.

155. See, eg, Warrenmang (2007) 63 ACSR 623.

156. CA s 1317E(1).

157. Ibid s 1317G(1).

158. Ibid s 206C(1)(a)(i).

159. See, eg, ibid s 1041I.

160. Welsh, above n 121, 239. See, eg, ASIC v Cassimatis [No 9] [2018] FCA 385 (22 March 2018) [4] (‘Cassimatis Penalty Judgment’).

161. Herzberg and Anderson, above n 5, 197.

162. Warrenmang (2007) 63 ACSR 623, 630 [31] (Gordon J).

163. Citrofresh (2010) 77 ACSR 69, 78 [46].

164. Ibid 78 [47].

165. Australian Institute of Company Directors, ‘The Honest and Reasonable Director Defence’, above n 69, 10; Tim Bednall and Victoria Ngomba, ‘The High Court and the C-Suite: Implications of Shafron for Company Executives Below Board Level’ (2013) 31 Company and Securities Law Journal 6, 19; Bednall and Hanrahan, above n 82, 498, 500–5. See, eg, MacDonald (2009) 256 ALR 199; Citrofresh (2010) 77 ACSR 69.

166. Citrofresh (2010) 77 ACSR 69, 78 [47].

167. CA s 344(1). See also s 344(3).

168. Ibid s 601FD(1)(f)(i). See also ss 601FD(1)(f)(ii)–(iv).

169. Ibid s 601UAA(1)(e)(i). See also s 601UAA(1)(e)(ii).

170. See, eg, ASIC v Healey (2011) 196 FCR 291 (‘Healey’); Agricultural Land Management Ltd v Jackson [No 2] (2014) 48 WAR 1 (‘Jackson’); ASIC v Planet Platinum Ltd [2015] VSC 682 (1 December 2015); Trilogy Funds Management Ltd v Sullivan [No 2] (2015) 331 ALR 185 (‘Trilogy’); ASIC v Managed Investments Ltd [No 9] (2016) 308 FLR 216; Avestra (2017) 348 ALR 525.

171. This issue of interpretation was left open in respect of an analogous provision of the CA in ASIC v NSG Services Pty Ltd (2017) 122 ACSR 47, 56 [36]–[39] (Moshinsky J).

172. See, eg, CA ss 601FD(1)(b), 601UAA(1)(b), which impose duties of care.

173. Healey (2011) 196 FCR 291, 347–8 [236] (Middleton J); Jackson (2014) 48 WAR 1, 49 [251] (Edelman J); Trilogy (2015) 331 ALR 185, 233 [219] (Wigney J).

174. Healey (2011) 196 FCR 291, 336 [188].

175. Explanatory Memorandum, Managed Investments Bill 1997 (Cth) 17 [8.19].

176. Healey (2011) 196 FCR 291, 336 [187].

177. CA ss 601FD(2), 601UAA(3).

178. Trilogy (2015) 331 ALR 185, 232 [212] (Wigney J).

179. (2012) 247 CLR 465, 478–9 [23]–[26] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ).

180. Bednall and Ngomba, above n 165, 20; Bednall and Hanrahan, above n 82, 502–3.

181. Pearce, above n 104, 481.

182. Maxwell (2006) 59 ACSR 373, 397 [102] (Brereton J); Cassimatis (2016) 336 ALR 209, 299 [469] (Edelman J).

183. Trilogy (2015) 331 ALR 185, 232 [214] (Wigney J).

184. Ibid 233 [220].

185. CA s 206C(1)(a)(i).

186. Ibid s 206E(1)(a)(i).

187. Elm (1) (2005) 55 ACSR 411, 418 (Barrett J); Elm (2) [2005] NSWSC 1033 (13 October 2005) [23] (Barrett J); Elm (3) (2005) 55 ACSR 544, 551 (Barrett J); Maxwell (2006) 59 ACSR 373, 404 [121] (Brereton J); Ostrava [2016] FCA 1064 (1 September 2016) [58] (Davies J); ASIC v Sino Australia Oil and Gas Ltd (in liq) (2016) 118 ACSR 43, 52 [24] (Davies J) (‘Sino Penalty Judgment’); Cassimatis Penalty Judgment [2018] FCA 385 (22 March 2018) [62], [99] (Dowsett J).

188. Cassimatis (2016) 336 ALR 209, 370 [831].

189. CA s 206E(1)(a)(iii).

190. See, eg, Elm (1) (2005) 55 ACSR 411; Elm (2) [2005] NSWSC 1033 (13 October 2005); Elm (3) (2005) 55 ACSR 544; Maxwell (2006) 59 ACSR 373; Ostrava [2016] FCA 1064 (1 September 2016); Sino Penalty Judgment (2016) 118 ACSR 43; Cassimatis Penalty Judgment [2018] FCA 385 (22 March 2018).

191. Companies and Securities Legislation (Miscellaneous Amendments) Act 1983 (Cth) s 70.

192. Explanatory Memorandum, Corporate Law Economic Reform Program Bill 1998 (Cth) 12 [4.3].

193. Explanatory Memorandum, Companies and Securities Legislation (Miscellaneous Amendments) Bill 1983 (Cth) 133 [349].

194. Transport Accident Commission v Treloar [1992] 1 VR 447, 462 (Brooking J); Tabcorp Holdings Ltd v Treasurer (Vic) [2013] VSC 324 (24 June 2013) [25] (Hargrave J).

195. ASIC v Astra Resources Ltd [No 2] (2016) 113 ACSR 162, 176 [72] (White J) (‘Astra’).

196. Pearce, above n 104, 481.

197. This irregularity was likely borne out of uncertainty on the part of ASIC as to the scope and legitimacy of the stepping stone approach. ASIC’s conduct in Cassimatis is further evidence of this. Almost immediately before trial, ASIC applied to amend its originating application and statement of claim to allege, in the alternative, that Storm’s directors should be disqualified under the s 206E disqualification route: Cassimatis (2016) 336 ALR 209, 369 [825]. Dowsett J stated that this was ‘apparently because of a concern…that it might not satisfy the requirements of s 206C’: Cassimatis Penalty Judgment [2018] FCA 385 (22 March 2018) [62].

198. Astra (2016) 113 ACSR 162, 175 [70], 177 [77]–[78].

199. Ibid 190–1 [145]–[146].

200. Herzberg and Anderson, above n 5, 196.

201. Ibid.

202. Healey (2011) 196 FCR 291, 335 [186].

203. Citrofresh (2010) 77 ACSR 69, 78 [47] (Goldberg J).

204. Black, above n 12, 511.

205. See, eg, Daniels v Anderson (1995) 37 NSWLR 438; ASIC v Chemeq Ltd (2006) 234 ALR 511. See also Chief Justice David Malcolm, ‘Directors’ Duties: The Governing Principles’ in Ian M Ramsay (ed), Corporate Governance and the Duties of Company Directors (Centre for Corporate Law and Securities Regulation, 1997) 60, 78; Joanna Bird and Jennifer Hill, ‘Regulatory Rooms in Australian Corporate Law’ (1999) 25 Brooklyn Journal of International Law 555, 561–72; Greg Golding, ‘Tightening the Screws on Directors: Care, Delegation and Reliance’ (2012) 35 University of New South Wales Law Journal 266, 268–72.

206. See, eg, John H C Colvin and James Argent, ‘Corporate and Personal Liability for “Culture” in Corporations?’ (2016) 34 Company and Securities Law Journal 30.

207. See, eg, John Price, ‘The Current State of Corporate Culture’ (Speech delivered at the Governance Institute of Australia 33rd National Conference, Sydney, 28 November 2016); Greg Medcraft, ‘The Importance of Corporate Culture’ (Speech delivered at the AHRI Senior HR Directors Forum Luncheon, Sydney, 5 April 2017).

208. Golding, above n 205, 268.

209. Healey (2011) 196 FCR 291, 298 [16], 330 [166].

210. See, eg, Tony Featherstone, ‘Lessons from Centro’ (2011) 27(9) Company Director 20, 21–3; Jennifer G Hill, ‘Centro and the Monitoring Board — Legal Duties Versus Aspirational Ideals in Corporate Governance’ (2012) 35 University of New South Wales Law Journal 341, 353.

211. Sir Douglas Menzies, ‘Company Directors’ (1959) 33 Australian Law Journal 156, 164.

212. Bednall and Hanrahan, above n 82, 510.