Things To Think About

What’s the best way to stop the use of unethically-produced materials in the goods we consume?  In this fortnight’s news: cobalt mined by underpaid, sometimes underage, people in unsafe conditions in the laptops and phones you and I use (see SOMO’s report here); sale of Ivory in Australia; and palm oil in the foods you and I eat threatening orangutans and other rainforest species.   Should the use of these products in manufacture be criminal?  Should that liability end with the company buying the cobalt (for example), or extend to end-manufacturers? If the latter, what standard of vigilance ought we mandate?  Should the same standard apply to importers and retailers?  None of these three items is subject to meaningful regulation in Australia.

What does meaningful cooperation with investigating authorities look like?  In the US, Principal Deputy Associate Attorney General Bill Baer paints the picture, reflecting on his work in post-GFC enforcement through the Residential Mortgage Backed Securities Working Group as part of the Financial Fraud Enforcement Task Force.

A retired WorkSafe Victoria prosecutor has asked the Federal OHS regulator, Comcare, to prosecute the regional processing centres on Nauru and Manus Islands, and the operators of onshore detention centres.  It’s an issue he wrote about in 2015; and more recently here.  He may need to appeal to the CDPP to file a direct indictment.

More problems with off-label drug sales in the US; this time, it’s fentanyl.

Law & Policy Updates

The Australian government has released advice received from the Council of Financial Regulators, regarding appropriate responses to the BBSW scandal.  According to the Treasurer, “The Government has accepted the CFR’s recommendations and will work to implement these critical reforms over the next 18 months.” They include the criminalisation (with civil counterparts) of manipulation of financial benchmarks.

Another reminder about the “unfair contract terms” legislation commencing mid-November: the ACCC has identified common clauses in franchisee contracts that are likely to be deemed unfair, and to therefore be invalid under the new law.

“ASIC has remade ten legislative instruments and repealed three that are due to expire (‘sunset’) in 2016 and 2017, following public consultation.”

Notable Litigation & Other Actions

First: the High Court has provided a little (but only a little: see Gageler and Gordon JJ’s comments at [131]) much-needed clarity around vicarious liability.  The case in question, Prince Alfred College Incorporated v ADC [2016] HCA 37, concerns a claim by the plaintiff (respondent) who, as a child, was the victim of sexual offences committed by an employee (a teacher) of the defendant (applicant) school.  The employee had been convicted of the offences; the victim subsequently brought a damages claim against the school; one of the bases of the claim was that the school was vicariously liable for the offending and therefore liable to pay damages to the victim.

The plurality’s comments on vicarious liability start at [39].  Their conclusions start at [80].  They provide a rather unconvincing argument that the existing common law distinction between criminal offences committed “in the course of employment” and “outside the scope of employment” has some satisfactory principled basis.  They attempt to create a touchstone for liability, by cobbling together various indicators that have guided past decisions.  The case is undoubtedly helpful, as it gathers and reviews the important cases to date, and makes the best sense of them possible.  But not even the careful attention of the High Court can make the principle of vicarious liability for intentional wrongdoing gainly.  Ultimately, the question as to whether the school is vicariously liable, set out at [84], is not answered in the judgment (and never will be).

Second, the NSWSC has considered the meaning of s69 Law Enforcement (Powers and Responsibilities) Act 2002 (NSW):

A person executing a warrant other than a covert search warrant must produce the warrant for inspection by an occupier of the premises if requested to do so by that occupier.

The question arose: if an occupier asks the person executing the warrant to see the warrant, do they have to produce it immediately, except in ‘extenuating circumstances’, or do they merely have to produce it ‘as soon as practicable’?  The parties argued that there is a division of authority in Australia along these lines; the presiding judge preferred the first view: see DPP (NSW) v Roberts [2016] NSWSC 1224.  I am inclined to think the judgments are describing the same test in different words.  The small matter of differing legislative provisions across (and even within) the states and territories makes the execution of warrants a tricky issue requiring very close attention from lawyers and investigators.

Third: ‘Regulatory’ offences are often married with ‘secondary liability’ sections in legislation, to enable the easy (or simplified) attribution of criminal liability to, for example, a director when a corporation has committed an offence.  These provisions relieve some of the difficulties of proving whom is responsible for what within a business enterprise; they also operate to burden a director, manager, licensee or whomever, with special responsibility for ensuring the compliance with the law by others.  In Dietman v Feast [2016] SASCFC 108 (there’s a case name you’ll remember – especially when you realise it concerns illegal lobster ‘scrubbing’ by Feast), these attribution provisions were misunderstood by the SASC, which quashed Magistrates’ Court convictions and substituted acquittals.  The prosecutor successfully appealed, and the case may provide some useful guidance on the interpretation of these types of offence provisions, particularly where there is a defence available, or where latent duplicity in the charge sheet has been alleged.

Finally: the Standing Committee on Economics conducted four public hearings for its review of Australia’s four major banks; transcript here.  Commonwealth Bank’s Ian Narev appeared on day one (4 Oct), ANZ’s Shayne Elliott on day two (5 Oct), and NAB’s Andrew Thorburn and Westpac’s Brian Hartzer appeared on day three (6 Oct).

When asked if they would support a banking tribunal, two responses were  reasonably positive:

Narev (CBA): In terms of the establishment of the tribunal, we are very open to the discussions that are being had at the moment….”

Elliott (ANZ): “I think it is a good idea. We have no issue with a banking tribunal and no issue with supporting it. I think the challenge is making sure that whatever process is put in place is simple and efficient for customers.”

Hartzer (Westpac):

NAB and Westpac were more reserved:

Hartzer (Westpac): “…  hopefully we can handle most of those things [complaints] ourselves, but there may be, as you say, occasions when people say, ‘Well, I’m still not happy,’ and all we would say is that it is entirely appropriate to have a look at that appeal framework.  I do not have a strong view on whether the right answer is a tribunal per se or something else. I certainly support the idea that we should take a look at the architecture of appeal. … by all means, let’s simplify it and make it clearer so that customers know where to go.

Thorburn (NAB): “I think when customers experience hardship or difficulty or there are complaints that they want to raise, those need to be dealt with really well. That is our role to do that. … But we have said, as part of the ABA initiative, and separately, that we would be absolutely prepared to work with government to make sure that high standards are in place so that it is easy to customers when they have issues and grievances to be dealt with. So, absolutely, we would.”

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