find the latest legal job
Freelance Project Finance Lawyers
Category: Other | Location: All Australia
· Vario are looking for freelance lawyers with experience in project finance ideally within the renewable energy sector
View details
Vario Freelance Lawyers
Category: Construction Law | Location: All Australia
· We are looking for lawyers who appreciate the endless possibilities that a freelance career can offer.
View details
Freelance Construction Lawyers
Category: Construction Law | Location: All Melbourne VIC
· We are looking for construction lawyers who appreciate the endless possibilities that a freelance career can offer.
View details
Banking Associate - 1-6PQE - Allen & Overy
Category: Banking and Finance Law | Location: United Kingdom
· Banking Associate - 1-6 PQE - Allen & Overy
View details
Academic Dean and Head of School of the TC Beirne School of Law
Category: Other | Location: Brisbane QLD 4000
· An outstanding opportunity · Provide educational, research and organisational leadership
View details
Jury out on CLERP9, says Justice Owen

Jury out on CLERP9, says Justice Owen

AS THE dust settles from the introduction of CLERP9 into Australian law, a senior judge has questioned whether the increased penalties for breaches of the Corporations Act 2001 will be an…

AS THE dust settles from the introduction of CLERP9 into Australian law, a senior judge has questioned whether the increased penalties for breaches of the Corporations Act 2001 will be an effective deterrent.

Justice Neville Owen, who chaired the Royal Commission into the collapse of insurance giant HIH, said recently that although CLERP9 increases the penalties for some contraventions of the Act from five to 10 years, in reality this may not discourage breaches.

“Will that really make a difference?” he said. “I think, as they say, the jury is well and truly out on that. I remember during the [HIH] Royal Commission speaking with a well-credentialed and respected Australian company director and chairman, and I asked him whether or not he thought that increasing penalties would have an effect and he just looked at me and said ‘anyone who is concerned with penalties would never get a seat on my board’.”

However, Owen admitted that striking a balance between prescriptive approaches and self-regulation is no easy task. “Legal regulation provides law and standards to dictate what is acceptable and it puts limits on what is permissible,” he said.

“The problem with this is that almost inevitably it leads to ‘one size fits all’, which is demonstrably the opposite,” he said.

“Speaking generally, a self regulating system can be more flexible and more readily adaptable than a system that is centred on prescriptive dictates. But self regulation in turn depends on the expertise, diligence and integrity of the operators in that particular market sector. It is reliant upon the theory of deterrence.”

But, he said, there are strong criticisms of the theory of deterrence. “First, putting aside the paucity of reliable empirical data which supports the value of deterrence, it is argued that the prospect of detention, rather than the severity of punishment, sways potential offenders from engaging in prohibited conduct,” Owen said.

“The most notorious example of this is the lack of deterrent effect of the death penalty,” he said, (adding he was not suggesting that corporate governance laws should carry the death penalty).

“The second major criticism of the general deterrence system is the serious injustice and practical application of what’s called exemplary sentencing, or more colloquially, ‘scapegoating’,” Owen said.

He added that it is an open question as to whether more prescription will have a significant effect. “It doesn’t seem to have worked in the past,” he said. “But of course we can’t simply stand still and allow things that are wrong to go unpunished, or systems that are not working to be immune to change. What I think is extremely important is to obtain and maintain a flexible approach.”

According to Owen, the best path to regulatory compliance is for Australian companies to create a ‘compliance culture’. “It seems to be whatever system of regulation that we put in place by way of rules and regulations, it’s not going to work unless there is a culture of compliance,” he said.

“The aim of any system of corporate governance, whether it be imposed or self-adopted, should be to ensure that those on whom responsibility falls understand what is required of them by the law, and by the reasonable and legitimate expectations of the market,” he said.

“The carrying out of those obligations and responsibilities would in an ideal world be second nature for those concerned. And establishing a culture of compliance is a significant step on the road to achieving the ideal world. The black letter of a corporate governance model will not be effective unless there is this culture of compliance.”

He added that in an ideal world, lawyers and risk practitioners would be out of a job. “In the Royal Commission report I emphasised the importance of a culture that stresses substance over form and that is another key thing that we should bear in mind,” Owen said.

“Substance must always prevail over form. And we must also look to a system that encourages decision making that is not only correct legally, but which accords to models of principles. Put in the vernacular, that is decision making that passes the smell test,” he said.

“Decision makers won’t always know the law. If they did, lawyers, and I suspect many other risk practitioners, would be out of a job. Wouldn’t it be wonderful if I were to be made redundant, not because I’m stupid, but because none of us are doing anything wrong. I’m afraid those days are a long way away.”

Stuart Fagg is the Editor of Lawyers Weeklys sister publication Risk Management.

Like this story? Read more:

Book commemorates diamond milestone for WA law society

QLS condemns actions of disgraced lawyer as ‘stain on the profession’

NSW proposes big justice reforms to target risk of reoffending

Jury out on CLERP9, says Justice Owen
lawyersweekly logo
Promoted content
Recommended by Spike Native Network
more from lawyers weekly
Lawyers take to Twitter to share career stories
Jan 22 2018
Lawyers take to Twitter to share career stories
The #mypathtolaw hashtag has been embraced by legal eagles to swap stories with the Twitter communit...
Jan 22 2018
Legal body disappointed with DPP emails leaked to tabloid
The NSW Bar Association has expressed “profound disappointment” over leaked emails from the NSW ...
Gavel, legal book, criminal lawyers
Jan 19 2018
Three criminal lawyers named NSW magistrates
The NSW Attorney-General has announced the appointment of three new local court magistrates. ...
APPOINTMENTS
Allens managing partner Richard Spurio, image courtesy Allens' website
Jun 21 2017
Promo season at Allens
A group of lawyers at Allens have received promotions across its PNG and Australian offices. ...
May 11 2017
Partner exits for in-house role
A Victorian lawyer has left the partnership of a national firm to start a new gig with state governm...
Esteban Gomez
May 11 2017
National firm recruits ‘major asset’
A national law firm has announced it has appointed a new corporate partner who brings over 15 years'...
opinion
Nicole Rich
May 16 2017
Access to justice for young transgender Australians
Reform is looming for the process that young transgender Australians and their families must current...
Geoff Roberson
May 11 2017
The lighter side of the law: when law and comedy collide
On the face of it, there doesn’t seem to be much that is amusing about the law, writes Geoff Rober...
Help
May 10 2017
Advocate’s immunity – without fear or without favour but not both
On 29 March 2017, the High Court handed down its decision in David Kendirjian v Eugene Lepore & ...