Introduction

On 16 October 2013 the Directors’ Liability Reform Amendment Act 2012 was passed in the Queensland Parliament with most provisions to commence on 1 November 2013.1 The Act reduces the number of provisions imposing responsibility on executive officers for corporate fault. It also recasts the standard of executive liability with respect to a broad range of offence provisions.

The Act responds to the Council of Australian Governments (‘COAG’) agreement to Principles and Guidelines2 to promote consistency across all Australian jurisdictions in the imposition of personal liability on directors. Prior to the introduction of the Bill into Parliament, the Queensland Government undertook a legislative audit which identified over 3,800 executive officer liability offence provisions in over 80 Acts.

Removal of provisions imposing executive liability

The effect of the Act in terms of removing provisions that impose executive liability is very modest. The Act removes particular executive liability offences from the Higher Education (General Provisions) Act 2008, the Invasion of Privacy Act 1971 and the Vocational Education, Training and Employment Act 2000.

Recasting the standard of executive liability

The real significance of the Act lies in its recasting of the standard of executive liability. Where directors’ liability is justified, the Act provides for calibrated standards of liability which accord with the COAG Guidelines.

In broad terms, the Act provides for four types of executive liability:

  • Type 1 executive liability (standard) provision: each executive officer will be liable where the corporation commits an offence and the officer did not take reasonable steps to ensure the corporation did not engage in the conduct constituting the offence. Type 1 liability will apply to a range of offences including under the Casino Control Act 1982, Electricity Act 1994, Fisheries Act 1994, Industrial Relations Act 1999 and Mineral Resources Act 1989.
  • Type 2 executive liability (evidentiary burden) provision: each executive officer will be taken to have committed an offence committed by a corporation unless the officer proves they did not know, and could not reasonably have been expected to have known, of the corporation’s conduct constituting its offence; or the officer took all reasonable steps to ensure the corporation did not engage in the conduct constituting the offence. The officer having satisfied the evidentiary burden, it remains open for the prosecutors to prove the contrary beyond a reasonable doubt. Type 2 liability will apply to a range of offences including those contained in the Building Act 1975, the Queensland Building Services Authority Act 1991 and the Water Act 2000.
  • Type 3 executive liability (persuasive burden) provision: each executive officer will be taken to have committed an offence committed by the corporation. It will be a defence if the executive officer can prove they did not know, and could not reasonably have been expected to have known, of the corporation’s conduct constituting its offence; or the officer took all reasonable steps to ensure the corporation did not engage in the conduct constituting the offence (having regard to whether the officer was in a position to influence the corporation’s conduct). Type 3 liability will apply to a range of offences including those contained in the Geothermal Energy Act 2010, the Greenhouse Gas Storage Act 2009, the Mineral Resources Act 1989 and the Petroleum and Gas (Production and Safety) Act 2004.
  • Executive (deemed) liability provision: each executive officer will be taken to have committed an offence committed by a corporation against executive (deemed) liability provisions where the officer authorised or permitted the corporation’s conduct constituting the offence; or the officer was directly or indirectly, knowingly concerned in the corporation’s conduct. Deemed liability will apply to a large number of offences including those contained in the Building Act 1975, the Clean Energy Act 2008, the Land Act 1994, the Tourism Services Act 2003 and the Transport Operations (Marine Pollution) Act 1995.

Although the intention of the Act is to reduce red tape and the regulatory burden placed upon Queensland businesses, it is difficult to argue that the new approach simplifies the regulatory environment for a director. Its recasting of executive offences should encourage company directors and officers to review their obligations across the expansive range of provisions that have been amended.