Directors will only have two types of liability under Queensland law: Type 1 standard liability and "deemed liability".
Directors' personal liability has now been redefined in Queensland under a significant review of executive officer liability for offences committed by their corporation.
From 1 November 2013, 1 the number of provisions imposing personal or criminal liability on executive officers under Queensland legislation has been reduced from 3,800 to fewer than 300.
For those remaining provisions, the thresholds for executive officer liability have been rewritten and standardised across over 80 Queensland statutes.
Significant changes from the original Bill
The final form of the Act passed by Parliament on 16 October 2013 contains some significant changes from the original Bill introduced into the Queensland Parliament on 28 November 2012.
The original Bill had proposed a four tier approach to executive officer liability for an offence of the corporation, consisting of:
Type 1 "standard" provisions requiring the prosecution to prove that the executive officer failed to take all reasonable steps to prevent the corporation from committing the offence;
- Type 2 "evidential burden" provisions with deemed liability, unless the executive officer produces evidence that he or she took all reasonable steps to prevent the offence – or did not know and could not reasonably have known of the offence – the prosecution must prove to the contrary beyond reasonable doubt;
- Type 3 "persuasive burden" provisions: deemed liability, unless the executive officer can prove that he or she took all reasonable steps to prevent the offence, or did not know and could not reasonably have known of the offence;
- "Deemed liability" provisions requiring the prosecution to prove that the executive officer authorised or permitted the offence or was, directly or indirectly, knowingly concerned in the corporation's conduct.
The revised Bill and Act simplify the approach by doing away with the concept of Type 2 and 3 liability provisions. The changes followed review and consultation by the Legal Affairs and Community Safety Committee.
Under the Act as passed, there are now only two types of liability: Type 1 and "deemed liability".
This is a significant change in approach that should be welcomed by company directors and other executive officers. Type 2 and 3 provisions both involved a reversal of the onus of proof from the prosecution to the executive officer.
Type 1 liability has been adopted for just over 100 offences in the areas of:
- public safety, such as public health, building safety, fire safety, water safety and reliability and explosives use;
- public and environmental safety in mining, gas, petroleum and nuclear activities;
- environmental and heritage protection (although the Environmental Protection Act and certain other environmental legislation was excluded from the review);
- food safety;
- child protection;
- animal welfare; and
- revenue protection.
Proof of executive officer liability
For Type 1 liability provisions, in determining whether it has been proved that an executive officer failed to take "all reasonable steps" to prevent the corporation from committing the offence, a court must have regard to:
- whether the officer knew, or ought reasonably to have known, of the corporation's relevant conduct;
- whether the officer was in a position to influence the corporation's relevant conduct; and
- any other relevant matter.
For "deemed liability" provisions, the executive officer must be involved to some extent in the corporation's conduct constituting the offence. The prosecution must prove that he or she authorised or permitted the conduct or was, directly or indirectly, knowingly concerned in the conduct.
Under either Type 1 or deemed liability provisions, an executive officer may be prosecuted whether or not the corporation is also prosecuted or convicted of the offence.
For future legislation, Government policy is that directors liability provisions should not be included in future state legislation, unless appropriately justified in a particular case.
The Government has stated that where a directors liability provision is included, there will be no reversal of the onus of proof.
Exclusions from the Queensland reforms – for now
The Queensland Government is looking at making similar changes to certain legislation previously excluded from the scope of the review project. For example:
- Agricultural Chemicals Distribution Control Act 1966 and Chemical Usage (Agricultural and Veterinary) Control Act 1998 – under consideration;
- Coal Mining Safety and Health Act 1999 and Mining and Quarrying Safety Act 1999 – current public consultation regulatory impact statement;
- Electrical Safety Act 2002 – repeal imminent pursuant to amendments in the Work Health and Safety Act 2011;
- Environmental Protection Act 1994, the Marine Parks Act 2004, the Nature Conservation Act 1992, the Recreation Areas Management Act 2006 and the Vegetation Management Act 1999 – excluded from the initial review as environmental protection was exempted from COAG's review. However, the Government has stated that it is currently considering its options for reforming directors liability under environmental regulation;
- Exotic Diseases in Animals Act 1981, the Plant Protection Act 1989, and the Stock Act 1915 – proposed for repeal;
- Fair Trading Act 1989 – part of a national review and proposed to be considered for directors liability reform as a matter of priority;
- Sustainable Planning Act 2009 – currently subject to substantial review and proposed to be amended to comply with the Government's policy for executive officer liability.
The Health Act 1937 and Property Agents and Motor Dealers Act 2000 currently contain general deemed liability provisions, rather than deemed liability for specific nominated offences only. The Government has stated that these are retained as a temporary measure pending replacement legislation.
The COAG guidelines
The Act is part of the Queensland Government's response to the Council of Australian Governments' (COAG) guidelines approved in July 2012 to deliver a nationally-consistent and principles-based approach to the personal criminal liability of directors and officers for corporate offences.
Queensland, New South Wales, Victoria, South Australia and the ACT have now passed legislation in response to the Guidelines. Tasmanian legislation has been proposed but not yet enacted.
1.The Act also contains certain unrelated amendments to the Crime and Misconduct Act commencing 9 November 2013.
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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.