Page 85 - Week 01 - Wednesday, 8 April 1992
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remains on the statute books in New South Wales, and equivalent provisions, I understand, exist in a number of other States. The explanatory statement to the amending legislation addresses the general questions of law reform in the theft/larceny area, but does not address the area specific to section 173, and related company officer sections. Nevertheless, it is to be assumed from the statement that the new section 99 was designed and was intended to cover these areas as well.
Apparently, Madam Speaker, the law was meant to be covered formally in two ways. First, the old section 173 was covered by the general theft provisions of the new Act - that is, section 99. But also, of course, the provisions of the Companies Act - formerly the Companies Act 1981, now the Corporations Law 1990 - particularly section 232 of the new Act, were designed to cover this area. So, there are meant to be two provisions dealing with this particular problem.
I believe, Madam Speaker, that those provisions are inadequate to deal with the problem of corporate fraud and some white collar crime in the ACT. Particularly, reference should be made to the case of R v. Roffel in the Victorian Supreme Court in 1985, where it was held that, where a director is substantially in sole control of the affairs of a company, an appropriation by him of the company's property is not to be regarded as theft, because he has, in effect, given himself authority to appropriate the property. This clearly is an unacceptable position as it permits controlling directors to use or misuse company property at their discretion, to the disadvantage perhaps of shareholders or creditors.
I also understand, Madam Speaker, that the courts have been quite unwilling to enforce the provisions of section 232 of the Corporations Law, except in the most obvious and blatant cases of wrongdoing by directors. In effect, the courts have followed the philosophy behind the decision in Roffel's case here as well.
I think, Madam Speaker, it is worth referring briefly to section 232 of the Corporations Law to see what deficiencies it does contain. Subsection (2) of that section says that an officer of a corporation shall at all times act honestly in the exercise of his or her powers and the discharge of the duties of his or her office. The courts, Madam Speaker, have read down the word "honestly" in this provision in conformity with Roffel's case. In effect, a director is held not to act dishonestly if, as the controlling director, he approves an appropriation of company property by himself.
Subsection (4) of that same section says that an officer of a corporation shall at all times exercise a reasonable degree of care and diligence in the exercise of his or her powers and the discharge of his or her duties. Unfortunately, that is also insufficient, I believe, to cover the problem of some white collar crime. The courts have not regarded appropriation of company property as relevant to care and diligence. This subsection has been held to be a restatement simply of the common law position of directors' duties.
Subsection (6) provides that an officer or an employee of a corporation must not, in relevant circumstances, make improper use of his or her position as such an officer or employee to gain directly or indirectly an advantage for himself or herself or for any other person, or to cause detriment to the corporation. The difficulty with that subsection is that the prosecution must prove beyond reasonable doubt that the appropriation was a misuse of position by the director charged, and it must be established that the director believed, by ordinary standards, that his actions were improper.
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