Corporate Act 2001

1663 Words4 Pages

Issues:

I. Which common law and statute law makes a company criminally liable?

II. Discuss whether the actions of a low level employee result in criminal liability for a company for a regulatory offence not involving strict liability?

Rules:

I. Lennard’s Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705

II. H L Bolton Co Ltd v T J Graham & Sons Ltd [1975] 1 QB 159

III. Tesco Supermarket Ltd v Nattrass [1972] AC 153

IV. Meridian Global Funds Management Asia Ltd v Securities Commission (1995) 13 ACLC 3245

V. ABC Development Learning Centres Pty Ltd v Wallace [2006] VSC 171

VI. The Criminal Code Act 1995 (Cth)

VII. The Corporation Act 2001

VIII. The Trade Practice Act 1974 (Cth)

IX. Crimes (Industrial Manslaughter) Act 1900

Apply Laws to Fact

Section 124 of the Corporations Act 2001 establishes a company as a separate legal entity which has the same characteristics as a natural legal person. Although a corporation lacks of physical existence, it does not prevent the company comply with common law and statute law being liable in relation to tort, crime and contract. It may enter into contract in its own name and can sue or be sued for failing to carry out its contractual obligation and therefore found liable for breaching that contract. As a result, the actions under criminal and civil law is found to be responsible to a corporation.

Before determining a company criminal liability, it is important to distinguish clearly two forms of liability:

• primary (or direct); and

• secondary (or vicarious) liability.

The primary liability incurs when the corporation is deemed to have committed wrongdoing itself. A corporation itself, however, has no capacity for physical action or the possession of intention or knowledge which differ from human beings. Denning LJ in H L Bolton stated that directors and managers were simply like human brain in a corporation which controlled its body (the corporation) by their directing mind and will. The state of mind of these decision makers represented the state of mind of the company and was treated by the law. As in criminal law, the directors or managers were found to be guilty mind would render the company itself guilty.

The secondary liability incurs when the corporation is found liable for the acts or omissions of a natural person. For instance, a person suffers serious injuries due to the lack of duty of care by a lower-level employee within the scope of employment. The lack of duty of care of that employee is to count as the lack of duty of care of the corporation.

Open Document