Early Warner Getting our litigation processes right Law Reporter

  • Date:01 Aug 2005
  • Type:CompanyDirectorMagazine
There is nothing politicians hate more than to find themselves "embarrassed" by the fact that the system of regulation that they have put in place is not able to deliver what the community expects to be the proper results in high profile matters where the answer to the particular issues that are before the public seem to be clear cut.

Getting our litigation processes right

There is nothing politicians hate more than to find themselves "embarrassed" by the fact that the system of regulation that they have put in place is not able to deliver what the community expects to be the proper results in high profile matters where the answer to the particular issues that are before the public seem to be clear cut.

In that context there is no clearer example of the difficulties and frustrations that must face politician regulator alike than issues concerning the satisfactory nature of the current Vizard litigation brought by the Australian Securities & Investments Commission against a high profile individual.

As noted in some detail in one of the stories in this month's Law Reporter - criminal versus civil prosecutions - a critical matter for the future of Australian law.

ASIC in considering the issues arising in the Vizard matter, felt it was appropriate (and indeed proper) for the question to be referred to the Director of Public Prosecution which has jurisdiction in matters where criminal sanctions are being sought against company officers in appropriate circumstances.

ASIC has had a string of major successes in the past 12-18 months in both civil and criminal cases, and in the area of insider trading (which seems to be an issue in contention in the Vizard matter), these successes have also been both in the civil and criminal jurisdictions.

The fact that the criminal proceedings were not brought in the context of the Vizard allegations was not a fault on the part of ASIC, in my view.

ASIC had to refer the matter, because of the operation of a Memorandum of Understanding (MoU) imposed by the Government on the DPP. Some details of the MoU are discussed in our note referred to earlier.

This issue concerning the appropriate course of litigation in this matter and the whole question of enforcement by regulators in this "space" and related "spaces" has become a critical issue for the Australian legal system.

The Australian media finds as one of its favourite areas of "intervention" and comment, the fact that our litigation system does not operate as efficiently and as effectively as it should.

Criticisms are often leveled at our courts (federal and state) for being too slow, too cumbersome and perhaps too costly. In that context, another story in this month's Law Reporter dealing with litigation funding is of some importance.

That particular area of interest (i.e. litigation funding) remains very high on the agenda of our Courts - only this week another decision has been delivered, by this time, the New South Wales Court of Appeal in the case of Project 28 Pty Ltd etc v Barr [2005] NSW CA 240 (the details of which do not need to concern us).

The clear message, however, is that issues concerning the administration of justice and the speed of which our courts are able to handle matters are important matters for federal, state and territory governments in going forward.

The proposed introduction of the new rules to make directors "socially responsible" (in a positive sense rather than a permissive sense), a matter that is being considered at the moment by the Corporations and Markets Advisory Committee, is a matter of great concern to both practitioners and business people.

In my view our law works pretty well in regulating the behaviour of company directors and officers. Occasional company crashes (sometimes of great magnitude), if caused by the misbehaviour of company directors and officers, can be dealt with effectively by our existing laws. To punish the whole community by imposing a set of obligations on directors and officers in addition to the very onerous regulatory regime currently in place is neither warranted nor sensible in the context of an economy that needs to compete effectively with many countries in the region.

Now that the Liberal and National parties control both Houses of Parliament it is hoped that we will have a stable period of consolidation, removal of unnecessary regulatory regimes, and attempts to improve the efficiency of the current regulatory regimes and the operation of the litigation system, rather than continuing with the proliferation of ad hoc legislative change - often too hasty and not properly balanced - initiated by reactions to events.

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