AUSTRALIA Law and Practice Contributed by: Joachim Delaney and Ranjani Sundar, HFW
3. Corporate Entities, Ultimate Beneficial Owners and Shareholders 3.1 Imposing Liability for Fraud on a Where the directing mind and will of the company commits an offence, the company, as a legal person, can be liable for the commission of the offence by virtue of the criminal directing mind and liability will be attributed to the company itself ( Tesco Supermar- kets v Nattrass [1972] AC 153; Mousell Brothers Ltd v London and North-Western Railway Co [1917] 2 KB 836) applied in Perpetual Trustee Company Ltd v Pascoe Partners Custodian Services Pty Ltd [2025] WASC 82 at [24], [39]–[40]. For instance, directors and managers, who are concerned with the company’s management, can be regarded as the directing mind and will of the company to the extent that they control the company’s operations. Consequently, the states of mind of these directors are regarded as that of the company itself ( H L Bolton (Engineering) Co Ltd v T J Graham & Sons Ltd [1957] 1 QB 159). Corporate Entity Criminal Liability Sections 12.2 and 12.3 of the Criminal Code Act 1995 (Cth) have been enacted to impose liability on a company for both the physical elements and fault elements giving rise to the commission of crimes by a company’s organ(s). Civil Liability Corporations are separate legal entities, such that the extent to which the owner or shareholders can be held liable for the deeds of a company is limited ( Salo- mon v A Salomon & Co Ltd [1897] AC 22). However, the courts have been willing to pierce the corporate veil and impose liability on shareholders, directors and managers of a company, where the corporate structure has been used as a vehicle to commit fraud ( Re Darby, ex parte Brougham [1911] 1 KB 95). Such liability can be fixed on directors, particularly in the context of sole director companies where the director is also the majority and/or controlling shareholder of the company ( Australian Securities and Investments Commission v Caddick (2021) 395 ALR 481). Professional advisers to a company may also be liable where their advice amounts to aiding, abetting, coun -
There are various victim compensation schemes in Australia which may provide both corporations and individuals with a means of obtaining restitution in cases where the unknown identity of the fraudster(s) would otherwise leave them without redress (see R v David Michael Wills, Application by Woolworths Ltd for a direction for compensation pursuant to Section 77B of the Victims Support and Rehabilitation Act 1996 (NSW) [2013] NSWDC 1); Victims Rights and Support Act 2013 (NSW); Victims of Crime (Financial Assis - tance) Act 2016 (ACT); Criminal Injuries Compensation Act 2003 (WA); Victims of Crime Financial Assistance Act 2009 (Qld); Victims of Crime Assistance Act 2006 (NT); Victims of Crime Compensation Act 1994 (Tas); Victims of Crime Assistance Act 1996 (Vic); Victims of Crime Act 2001 (SA)). For example, under Section 97 of the Victims Rights and Support Act 2013 (NSW), an “aggrieved person” – ie, someone who has sustained loss through or by reason of the relevant offence, can apply for a direc - tion that compensation be paid out of the property of a person, which includes corporations, convicted of that offence. The court’s power to make the order is discretionary. Such power can be exercised suo moto, that is, on the court’s initiative, or upon an application by or on behalf of an aggrieved person. Any amount granted by the court cannot exceed the maximum amount that, in its civil jurisdiction, the court is empowered to award in proceedings for debt recovery. An aggrieved person can also commence civil pro - ceedings against the offender and obtain damages, even if a direction for compensation is obtained; how - ever, double recovery is not permitted (Civil Liability Act 2002 (NSW) Section 37 (2); Civil Liability Act 2003 (Qld) Section 32B; Civil Liability Act 2002 (Tas) Sec - tion 43E(2); Civil Liability Act 2002 (WA) Section 5AM; Proportionate Liability Act 2005 (NT) Section 16 (2); Civil Law (Wrongs) Act 2002 (ACT) Section 107I(2); Wrongs Act 1958 (Vic) Section 24AK(2); Law Reform (Contributory Negligence and Apportionment of Liabil - ity) Act 2001 (SA) Section 12).
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