Slow pace of litigation and incomprehensible laws

Former Federal Court judge Steven Rares is reported in the AFR[1] as having made several comments about the justice system in Australia, including about the slow pace of litigation and what he is reported as saying is “the “incomprehensible” laws that cover the corporate sector”.

Slow prosecutions

He refers to the Bankman-Fried trial in the US, on indictment before a jury 10–12 months after the collapse of FTX. 

“In Australia, the regulator would not even be looking at it for that period [of time]. Hardly anybody gets prosecuted for being a corporate criminal in Australia.”

The Senate Economics References Committee’s inquiry on the capacity and capability of ASIC to undertake investigation and enforcement action is examining this.  It has evidence from Professor Jason Harris, for example, that

“ASIC’s track record on enforcement matters arising from reports to ASIC of alleged misconduct by liquidators, administrators and receivers … has been manifestly inadequate for many years”.[2]

Nevertheless, Rares says that the Australian Law Reform Commission’s review of Chapter 7 of the Corporations Act, due by 30 November, will make a difference.  It is interesting to see that he thinks it will.

Corporate law drafting

As to “incomprehensible” corporate laws, he might have referred to a 2017 Full Court decision [3] that described the Corporations Act as being like a telephone book [in the days when such existed]

“The refrain in explanatory memoranda that legislation in the form of the over 2,500 page long Corporations Act, replete with massive and over complex verbiage, is “user friendly” is patent nonsense. Professionals and judges must navigate tortuous, mind-numbingly detailed, cascading provisions to ascertain the meaning that the Parliament, supposedly, had in mind when enacting these telephone books, at huge cost to the community. Principles-based drafting would enable the elucidation of legislative intention much more effectively and also be likely to be user friendly and to reduce cost”.

He claims that legislation generally has “become too prescriptive across the board” harking back to the advent of the Trade Practices Act in 1974 when

“section 52 was two lines long, and everybody knew you couldn’t engage in misleading or deceptive conduct. Now you have to work through 20 pages of definitions to see if it’s one or the other”. 

He added that “three different regulators – APRA, the ACCC and ASIC – have patches in that area.”

Bankruptcy Act drafting

He is also critical of the Bankruptcy Act which

“has a schedule it in that is hundreds of sections long that adds to what was in the rest of that Act”.

“Instead of having a standard like the 10 Commandments – though shalt not steal – you’ve got 40 pages of how you might be able to steal,”

no doubt referring to many of the voidable transaction provisions.

He might have added that, as well as the Bankruptcy Act, the Corporations Act also “has a schedule it in that is hundreds of sections long that adds to what was in the rest of that Act”. And, going further, that each area of law has rules, regulations, state and federal court rules, and court bankruptcy and corporations rules.  And while not three, insolvency has two different regulators, from different departments.  At least APRA, ACCC and ASIC all come within Treasury. 

Billing practices

As to time-based charging and the billing practices of large law and accounting firms

“with huge overheads – beautiful offices, they have their own baristas and chefs and everything else…”,

he comments that in days past counsel drafted pleadings and reviewed the evidence.

“Now it’s all done internally because they want to bring those costs in.”

As he said in Armstrong Scalisi Holdings[4],

 “one of the significant concerns in our society is the cost of access to justice. It is not surprising that individuals and small businesses would find it difficult to obtain access to justice where four lawyers at a solicitor’s firm were each charging different, but substantial, amounts for doing what must involve repetitive work of looking at one another’s drafts, documents or other communications, all of which, ultimately, would be, and were intended to be (and properly should have been), drafted and settled by counsel” at [23].  See The fees of insolvency lawyers – increased scrutiny under the new law – Murrays Legal

Search Results for “rares” – Murrays Legal

Steven Rares’ judgments and comments feature often in this website. 

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[1] Why an SBF trial wouldn’t happen in ‘lamentably slow’ Australia. 15.11.23 Steven Rares, departing Federal Court judge, laments Australia’s ‘lamentably slow’ pace of litigation (afr.com)

[2] See also (2023) 31 Insolv LJ 118.

[3] Oreb v Australian Securities and Investments Commission (No 2) [2017] FCAFC 49 (24 March 2017) (austlii.edu.au) at [54], Rares, Davies, Gleeson JJ.

[4] Armstrong Scalisi Holdings Pty Ltd v Piscopo (Trustee), in the matter of Collins [2017] FCA 423