"Sexually transmitted debts":the scope of defences to directors' liability for insolvent trading

The recent demise of prominent Australian corporations, such as GIO Australia Holdings Ltd, One.Tel Ltd, HIH Insurance Ltd and Ansett Australia Ltd, have highlighted the relevance of, inter alia, the Australian insolvent trading provisions embodied in the Corporations Act 2001 (Cth) (formerly Corporations Law). What may not be appreciated, however, is that insolvent trading is not only concerned with large public companies. Many of the insolvent trading cases that come before the courts involve small proprietary companies. Moreover, in many cases these are small “family” companies where there may only be one active director. This gives rise to a difficult issue as to the appropriateness of imposing liability for insolvent trading on a spouse who is, factually, merely a dormant director. This article explores the issue of spousal liability for insolvent trading, particularly focusing on the scope of the current defences to insolvent
trading under s 588H.

Charges over book debts in the United Kingdom and Australia : the way forward

Is it possible to create a fixed charge over book debts? This question was recently decided by the House of Lords in National Westminster Bank plc v. Spectrum Plus Limited & Ors [2005] UKHL 41 where the full House was against the idea of a fixed charge on book debts and insisted that only a
floating charge had been created. The law in this area is still vague and uncertain in Australia. This article argues that the financiers and the companies should be given the freedom to decide how they wish to structure their charge documents. The article sets out to argue that it is possible to create a sustained workable fixed charge or even a multiple combination of fixed and floating charge over book debts and argues that this would be the only way for both the financiers and the companies to do business together, in respect to the use of book debts as security for a loan. The author explains how this could be possible and how the proposed model would not deny the statutory priority rights of the preferential creditors.

Directors' personal liability-is the proposed amendment to Section 197 acceptable when compared with Hanel v O'Neill?

On 2 June 2005, the Australian Government announced a proposal to amend s. 197 of the Corporations Act. This is to overturn the decision in Hanel v. O'Neill ("Hanel") where the South Australian Supreme Court has expanded the circumstances in which directors of trustee companies can be held personally liable for the debts under the current section 197(1) of the Corporations Act 2001 (Cth). The multiple interpretations presented in Hanel highlighted the uncertainty of s. 197 and this uncertainty is heightened in at least two subsequent cases. The article provides a detailed analysis of how the decision in Hanel is affecting the directors' freedom of management and suggests some precautionary measures that the directors could take as protection against creditor's actions under s. 197. The author welcomes the proposed amendment because the new section will create certainty for directors as to. the scope of their potential personal liability, but contends that the substance of the proposed s. 197 is not acceptable as there is potential for abuse by directors of certain trustee companies.

Recent amendment to section 197- is it acceptable?

The majority decided in Hanel v O’Neill that directors of trustee companies
could be held personally liable to discharge the debts incurred by a
company pursuant to s 197(1) of the Corporations Act 2001 (Cth). On
18 November 2005, legislation was passed to amend s 197(1); this was to
overturn the decision. This article evaluates other relevant cases and
argues that the recent amendment to s 197 is unsatisfactory as it leaves
potential for abuse by directors of certain trustee companies. The article
suggests further reform to the section and to this end, suggests ways for
s 197 to reconcile with other parts of corporate law, such as insolvent
trading and directors’ duties.

Not the same : a comparison of female and male clients seeking treatment from problem gambling counselling services

Previous studies of problem gamblers portray this group as being almost exclusively male. However, this study demonstrates that females comprised 46% of the population (n = 1,520) of persons who sought assistance due to concerns about their gambling from the publicly-funded BreakEven counselling services in the state of Victoria, Australia, in one 12-month period. This suggests that the model of service delivery which is community based counselling on a non-residential basis may be better able to attract female clients than treatment centres where males predominate such as veterans centres. A comparative analysis of the social and demographic characteristics of female and male gamblers within the study population was undertaken. As with previous studies, we have found significant differences between males and females who have sought help for problems associated with their gambling. Gender differences revealed in this study include females being far more likely to use electronic gaming machines (91.1% vs. 61.4%), older (39.6 years vs. 36.1 years), more likely to be born in Australia (79.4% vs. 74.7%), to be married (42.8% vs. 30.2%), living with family (78.9% vs. 61.5%) and to have dependent children (48.4% vs. 35.7%), than males who present at these services. Female gamblers (A$7,342) reported average gambling debts of less than half of that owed by males (A$19,091). These gender differences have implications for the development and conduct of problem gambling counselling services as it cannot be assumed that models of service which have demonstrated effectiveness with males will be similarly effective with females.

Fixed and floating charges : the latest conflicting law and how to address the gaps

Can book debts be subject to a fixed charge? This question was considered by the House of Lords in National Westminster Bank v. Spectrum Plus Limited [2005] UKHL 41 where the full House was against the idea of a fixed charge on book debts and insisted that only a floating charge had been created. The law in this area is still vague and uncertain in Australia. This paper argues that the financiers and the companies should be given the freedom to decide how they wish to structure their charge documents. The paper sets out to argue that, in respect to the use of book debts as security for a loan, the only way for both the financiers and the companies to do business is to create a sustained workable fixed charge or even multiple fixed and floating charge on book debts. The author explains how this could be possible and how the proposed model would not deny the statutory priority rights of the preferential creditors.

Limited Liability Act of 1855

Examines the Limited Liability Act 1855 and highlights its significance in the formation of the modern company's legal framework. Looks at the background to the Act, which was repealed after a few months and incorporated in the Joint Stock Companies Act 1856 in an amended form. Considers the Act's legacy in extending the general principle of limited liability for corporate debts to shareholders of registered companies, including its implications in allowing a greater diversification of shareholders.

An examination of taxpayers' attitutes towards the Australian Tax System : findings from a survey of tax scheme investors

In recent years, the number of taxpayers involved in aggressive tax planning has more than doubled, posing a serious threat to the integrity of Australia's tax system. To deal with the problem, the Australian Taxation Office (ATO) implemented a number of initiatives aimed at combating aggressive tax planning. Part of the ATO's crackdown involved issuing amended assessments to the 42,000 Australians who invested in mass marketed tax schemes. The majority of investors, however, resisted the ATO's attempts to recover scheme related tax debts. This paper discusses the findings of an empirical study that shows that the resistance was due partly to the manner in which the ATO dealt with the schemes issue. Using survey data collected from 2301 tax scheme investors, and 2040 taxpayers from the general population, it will be shown that those who invested in tax schemes are more disillusioned with the tax system, are more hostile and resistant toward the ATO, and are more likely to resent paying tax as a result.

Firms as adaptive organizations : the case of Australian trading banks

The conventional accounting notion of ‘going concern’ — that a firm will continue its business operations in the same manner indefinitely — has underpinned accounting practice for over one hundred years. This idea has provided a rationale for spreading costs over accounting periods and for deferring costs as assets in balance sheets. An alternative idea that is widely regarded as reliable in the literatures of economics and deliberate action is that firms continually adapt to changes in market and economic conditions. That is economic behaviour. The implications of that view of a firm for accounting have been systematically explored by Chambers (1966). While not examining those particular implications, many other accounting theorists have been critical of the conventional accounting idea of 'going concern' and of its impact on accounting practice. The two notions of ‘going concern’ - as static or adaptive enterprises - are examined by referring to the business operations of the four major Australian trading banks over the period 1983-1991. Banks were selected because they are commonly thought to be particularly ‘conservative’ organizations. The period 1983—1991 was chosen because it covers the era of deregulation of the Australian financial system. The evidence adduced by this study indicates that the Australian trading banks have continually adapted their organizational structures and business operations in the light of changes in technology, markets for financial services, government policies and domestic and global economic conditions. Illustrations of adaptive behaviour by banks ate drawn from their normal operating procedures such as the provision of products and services, loan services, acquisitions, sale of property, non-core banking operations and international banking. It is argued on analytical grounds that the cost basis of accounting does not yield financial statements that provide factual and up-to-date information about the financial capacity of firms to pay their debts and to continue trading generally; that is, to be going concerns. At any time, those financial capacities are determined by the amount of money commanded by a firm, including the money's worth of its assets, and by its level of debt. It is concluded on empirical grounds that the Australian trading banks, at least, are adaptive entities.

Definition and quantification of assets

The word ‘asset’ was originally taken into the English language, from the Latin ‘ad satis’ and French ‘asez’, as a term used at law meaning sufficient estate or effects to discharge debts. It later came to be used in the sense of property available for the payment of debts. Assets were understood to be property (objects owned and rights of ownership) that could be exchanged for cash. The importance of factual knowledge of the money equivalents of property and debts, in managing mercantile affairs, was emphasised in accounting manuals during the eighteenth and nineteenth centuries. The rights of investors and creditors to factual up-to-date information about the financial state of affairs of companies, given the advent of limited liability, underscored the early company legislation that required the preparation and auditing of statements of property and debts. During the latter part of the nineteenth century the emphasis in accounting moved away from assets as exchangeable property to assets as deferred costs. Expectations took the place of observables. The abstract (expectational) notion of assets as ‘future economic benefits’ was embraced by accountants in the absence of rigorous definitions of the elements and functions of dated statements of financial position and performance. Assets are quantified financially by a heterogeneous mass of potentially inconsistent rules that, by and large, have no regard for the empirical nature of measurement. Consequently, accountants have failed to provide the community with up-to-date factual information about the financial state of affairs and performance of business entities - and, hence, with an informative basis for financial action.

Not for personal gratification, or for contention, or to look down on others, or for convenience, reputation, or power : Cultura Animi in Bacon’s 1605 Apology for the proficiency and advancement of learning

This paper examines the apology for the life of the mind Francis Bacon gives in Book I of his 1605 text The Advancement of Learning. Like recent work on Bacon led by the ground-breaking studies of Corneanu, Harrison and Gaukroger, I argue that Bacon’s conception and defence of intellectual inquiry in this extraordinary text is framed by reference to the classical model, which had conceived and justified philosophising as a way of life or means to the care of the inquirer’s soul or psyche. In particular, Bacon’s proximities and debts to the Platonic Apology and Cicero’s defence of intellectual pursuits in Rome are stressed, alongside the acuity and eloquence of Bacon’s descriptions of the intellectual virtues and their advertised contributions to the theologically and civically virtuous life.