Company Law Conference
Brisbane Marriott Hotel
Monday, 31 March 2008

Is There A Need For A Separate Corporations Court?
The Hon Justice Andrew Greenwood
The Federal Court of Australia

1.	I have been asked to express some remarks this afternoon on the question of whether there is a need in Australia for a separate Corporations Court.  

2.	Whether a person lives in the Derwent Valley or Sale, the Margaret River region or Alice Springs, Townsville, Dubbo or any of the capital cities, each of us (since Federation and especially in 2008) are first and foremost Australians, conditioned, of course, by place, the way we engage in our particular communities and (although not properly understood in the day to day life of Australians), the distribution of power between the Commonwealth and the States effected by the Commonwealth Constitution as interpreted by the High Court (the most recent significant examples of which are, as to the interpretation of the scope of Commonwealth power, Australian Workers’ Union & Anor v The Commonwealth (the Work Choices case) (2006) 229 CLR 1; and Betfair Pty Limited & Anor v State of Western Australia [2008] HCA 11, 27 March 2008, as to the principles governing s 92 of the Constitution).  

3.	Regional rivalry played out on the WACA, Gabba, MCG, the Adelaide Oval or the Sydney Stadium focuses spirit and identity and plainly enough, is often exciting (especially when as two nights ago the Lions defeated Collingwood by 2 points).  Regional rivalry however in the exercise of legislative power (and regulatory oversight and governance) concerning matters of national interest serve no long term public interest.  

4.	The resolution last week by the Council of Australian Governments (COAG) of many years of inter‑jurisdictional rivalry in the framework for determining water entitlements, water allocations and the management of the Murray Darling Basin Catchment, is the most recent example.  

5.	Inter‑jurisdictional State rivalry in the development of corporate laws in the United States has been said to reflect ‘a race to the bottom’ among States to see which State could offer a corpus of permissive corporate laws most favourable to management at the expense of shareholders (Professor William L Carey, Federalism and Corporate Law, Reflections upon Delaware, 83 Yale Law Journal 663 (1974), 701), thus necessitating, it is said, a uniform nationwide regime of federal government regulation of corporate internal affairs.  Professor Carey’s thesis is said by a number of United States commentators to now be largely ‘discredited’.  

6.	As Mr Rolin Bissell points out, securities law violations and criminal conduct by officers and directors of Enron, WorldCom, Adelphia and Tyco, gave new life to a move for federal pre-emption in that country (‘The Race to the Top’ in State Corporate Law:  The Delaware Model: Securities Litigation and Regulation Reporter (2004) V10, Issue 17).  The corporate collapses just mentioned led in part to the federal Sarbanes‑Oxley Act 2002 (PLN107‑204; 116 Stat 745; 15 USC) which addressed traditional areas of State corporate law legislative jurisdiction such as the composition of the corporation’s Audit Committee.  

7.	However, Mr Bissell argues that competitive federalism both in terms of the exercise of State legislative power and, importantly, the adjudication and disposition of commercial disputes by State courts or State business courts (or in the case of the State of Delaware, the Court of Chancery) has, in fact, provoked a ‘race to the top’ in terms of the introduction of relevant and useful corporate laws; the development of the skill and expertise, responsiveness and efficiency in the management of commercial disputes on the part of the judiciary; and ready adaptation to changing circumstances by both the State legislatures and the courts.  Mr Bissell notes the observation of Chief Justice Myron T Steele (in August 2004) of the Delaware Supreme Court, at the annual ABA meeting (reported V19, No. 32 (p 250) Corporate Council Weekly), in these terms:  ‘I worry about the chilling effect that federal encroachment will have on our flexible market approach … the bottom line in my view is that competitive federalism is under attack’.  It is interesting to note that this very day, the United States Federal Government announced a proposal for new broad‑ranging federal regulation of the entire financial sector although the press releases emphasise that this response is not a legacy of the recent sub‑prime lending difficulties or immediate stock market volatility.  It is intended to be, apparently, a deep and thorough intervention to serve the long term public interest.  

8.	The experience of inter‑jurisdictional rivalry in the disposition of commercial disputes (and particularly corporate law disputes (which are not the same thing)) and the features of the Delaware Court of Chancery that have established the international reputation for that court will be mentioned shortly.  However, the United States’ experience both as to the legislative environment and the disposition of commercial disputes must be judged carefully as there are significant differences between the institutional arrangements and practices in Australia and the United States.  

9.	The debate in Australia about the exercise of federal jurisdiction in corporate law and governance is essentially over.  The model is, however, consensual.  Although the decision of the High Court in New South Wales v Commonwealth (1990) 169 CLR 482 makes it clear that Commonwealth power is limited in a number of important respects, the referral of power by the States in conjunction with heads of Commonwealth power provide the existing and future foundation for Commonwealth legislative power as the source of statutory authority in this area.

10.	With approximately 20 million people occupying one of the five continents of the world, engaged in a range of primary, secondary and tertiary industries all affected by the portability of international capital, currency fluctuations, movements in internal commodity prices and the full wind of globalisation (in recent experience, sub‑prime risk exposure, stock exchange volatility and margin lending calls etc) Commonwealth and State governments recognise that one nationally consistent body of statutory instruments is required with national oversight and governance by a national regulator to deal with such matters as managed investment schemes, takeovers, fund raising, the securities industry, the futures industry and the range of subject matter reflected in the Corporations Agreement 2002 between the Commonwealth, States and the Northern Territory.

11.	The history however of these changes has an influence on the source of judicial power in the resolution of matters arising under the Corporations Act 2001 (Cth).  In considering whether a new corporations court might be established, it is important to understand the forums in which those disputes are presently resolved, the approaches adopted by courts under the present arrangements and whether an independent and new corporations court might serve the public interest by providing a solution to problems perceived to exist in the efficient disposition of existing disputes and the quelling of controversies.  

12.	As to the structural arrangements, the initial model involved the enactment by the Commonwealth of the Corporations Act 1989 independently of the States and the Northern Territory.  The Commonwealth lacked the necessary scope of power to support that approach (New South Wales v Commonwealth (supra)).

13.	The second model involved the enactment of model legislation by the Commonwealth (based on the Corporations Act 1989 – Corporations Legislation Amendment Act 1990 (Cth)) adopted by State Application of Laws Acts in each participating jurisdiction supplemented by amending legislation based upon the Corporations Agreement of 23 September 1997 between the Commonwealth, the States and the Northern Territory.  Constitutional difficulties with aspects of the scheme led to a reference of power by participating States in accordance with s 51(xxxvii) of the Constitution to the Commonwealth to support other heads of Commonwealth power leading to the enactment of the Corporations Act 2001 (Cth) (the ‘Corporations Act’), the Australian and Securities Investments Commission Act 2001 (Cth) (the ‘ASIC Act’) and four Acts providing for fees and levies to be charged.  

14.	The pre‑existing application of laws regime provided for cross‑vesting arrangements designed to facilitate an efficient system of adjudication of disputes by conferring on federal courts, the exercise of State jurisdiction and conferring upon State courts, the exercise of federal jurisdiction.  Courts established under Chapter III of the Constitution (such as the Federal Court of Australia) can not be invested with State jurisdiction (Re Wakim; Ex parte McNally (1999) 198 CLR 511) (although the Federal Court properly exercises an accrued jurisdiction in relevant circumstances: as to the jurisdiction of the Federal Court generally, see, Federal Jurisdiction and the Jurisdiction of the Federal Court of Australia in 2002, Allsop J, (2002) 23 Australian Bar Review 29).  Moreover, Commonwealth officers can not undertake functions (such as conferred regulatory functions) arising under a State law unless that function is itself the performance of a duty, function or obligation sufficiently connected with an exercise of Commonwealth legislative power (R v Hughes (2000) 202 CLR 535).  

15.	In terms of the statutory instruments (subject to an area of concurrent jurisdiction and provisions dealing with inconsistency (see Part 1.1A of the Corporations Act; ss 5D to 5I; particularly 5E, 5F and 5G; and as to the interpretation of these provisions see HIH Casualty Insurance v Building Insurers’ Corp (2004) ACLC 345 per Barrett J), there is one ‘Corporations Act’ dealing with incorporation, powers and duties of directors, members’ rights and remedies, meetings, shares and transactions affecting share capital, charges and debentures, financial reporting, external administration and insolvency, managed investment schemes, takeovers and compulsory acquisitions, continuous disclosure, fundraising, financial services and markets, and consequential matters; one federal regulator, ASIC, supported by the Companies and Markets Advisory Committee (CAMAC), the Takeovers Panel, the Companies Auditors and Liquidators Disciplinary Board (CALDB); the Financial Reporting Council (FRC); and the Australian Accounting Standards Board (AASB); and, subject to the Corporations Act, a body of Commonwealth administrative law that applies to particular decisions.  

16.	For present purposes, a number of things should be remembered about these institutional arrangements.  First, the legislation is Commonwealth legislation.  Secondly, the legislation (Part 9.6A) confers jurisdiction in civil matters (and I will not discuss the arrangements for the conduct of criminal matters) arising under the Corporations Act, the ASIC Act (and related instruments) on the Federal Court (s 1337B(1)), State and Territory Supreme Courts (s 1337B(2)) and the Family Court of Australia (s 1337C(1)).  Appeals are, in part, regulated by s 1337F.  Thirdly, the exercise of invested jurisdiction is the exercise of the judicial power of the Commonwealth.  Fourthly, the State Supreme Courts and Chapter III Courts are part of a ‘unified structure’ for ‘one Australian judicial system’ effecting an ‘integrated system’ in which State Supreme Courts are ‘transmuted’ as Supreme Courts ‘subject to the Constitution’ (Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51, p 141 per Gummow J).  Fifthly, the statutory provisions of the Corporations Act deal with subject matter that either intersects with or is the expression, in part, of general principles concerning legal and equitable interests, principles of agency, limited liability, contract law, the law of trusts and the law of fiduciary obligations (particularly in relation to directors, officers and financial advisers).  Seventhly, the ASIC Act, establishes the Takeovers Panel (the ‘Panel’) as one non‑curial forum for the resolution of takeover disputes on a final basis within the period of a bid.  

17.	As to the Panel, the Explanatory Memorandum circulated by the Commonwealth Treasurer in support of the Corporate Law Economic Reform Program Bill addressing a change in the areas of fundraising, directors’ duties, corporate governance, accounting standards and takeovers, sets out the thinking of policy‑makers about the utility of resolving disputes concerning takeovers in the non‑curial forum of a market focused panel (within the bid period).  The Explanatory Memorandum contains these paragraphs:

	‘Takeovers
	Problems/options
	2.16	The Law regulates the market for corporate control through prescriptive procedures to be followed in the launch and acceptance of a takeover bid.  The Law imposes obligations on bidders and target companies for the purpose of ensuring that acquisitions of substantial parcels of shares are conducted in a transparent and equitable manner.  As well as the black letter law, the Eggleston principles -– rules to ensure sufficient information and fairness in takeovers – give jurisdiction to the Corporations and Securities Panel (the Panel) to declare conduct as unacceptable even if it does not involve a breach of the Law.

	2.17	The current regulatory regime overly constrains takeover conduct.  Too often litigation is used as a defensive tactic and bidders are inhibited by having to enter into an option for corporate control.  The CLERP proposals assess whether the code should be replaced or liberalised to facilitate changes in control.  They also considered whether responsibility for adjudicating on takeover disputes should be taken away from the courts and given to a Panel which could reduce costs, speed up resolution of disputes and bring to bear greater market expertise in the adjudicative process.  

	Conclusion

	2.22	The Panel will be given an enhanced role replacing the courts as the venue for dispute resolution during the period of the bid.  Parties’ rights to seek injunctive relief from the courts for contraventions of the black‑letter takeover law will be removed.  This will have the benefit of enabling takeover disputes to be resolved on a final basis within the period of the bid.  As well, disputes will be reduced through the Panel being able to initiate changes to takeover documents and negotiate with parties to minimise areas of dispute.’

									[emphasis added]

18.	In discussing the provisions of the Bill, the Treasurer in the Explanatory Memorandum explains further aspects of the policy thinking informing a decision to displace the courts in the resolution of takeover disputes within the bid period and establish a jurisdiction in the Panel.  The Treasurer said this:

	‘Dispute Resolution
	7.15	Target companies often resort to litigation in hostile takeover bids, sometimes for tactical reasons.  This can result in bids being delayed and, where a final hearing cannot be held within the bid period, the courts having to decide between disrupting the bid by granting an injunction without the benefit of full evidence and allowing the bid to proceed even though it may later be found to be defective.

	7.16	To meet these concerns, a reconstituted panel will take the place of the courts as the principal forum for resolving takeover disputes under the Corporations Law, with the exception of civil claims after a takeover has occurred and criminal prosecution.  This will allow takeover disputes to be resolved as quickly and efficiently as possible by a specialist body largely comprised of takeover experts, so that the outcome of the bid can be resolved by the target shareholders on the basis of its commercial merits.  Other benefits of an effective panel for dispute resolution include the minimisation of tactical litigation and the freeing up of court resources to attend to other priorities.’

									[emphasis added]

19.	The expansion of the role of the Takeovers Panel may be seen as a criticism by policy‑makers of the capacity of the courts generally to respond to urgent commercial circumstances or, at least, to respond to challenges to compliance with the law during the course of a takeover bid.  The Panel is established as the main forum for resolving disputes until the bid period has ended (s 659AA) and the field of considerations the Panel takes into account (and the discretions it exercises in addressing the public interest) in either making or not making (on the application by a party with standing) a declaration of ‘unacceptable circumstances’ are wide‑ranging.  Additionally, such a declaration might be made ‘whether or not the circumstances constitute a contravention of a provision of this Act’ (s 657A(1)).  

20.	We now know that the Takeovers Panel in discharging this role does not exercise the judicial power of the Commonwealth because the Panel is required to take account of ‘considerations and interests to which the judicial process is ill‑adapted’ and a decision of the Panel creates ‘new rights and obligations, and provision is made for their enforcement by a court in the independent exercise of judicial power’ (Attorney-General of the Commonwealth of Australia v Alinta Limited [2008] HCA 2 per Gleeson CJ at [2]; per Hayne J [70], [71] [88], [89], [90] and [91]; per Crennan and Kiefel JJ [167], [168], [169], [171], [173] and [175].  

21.	Had the statutory scheme conferred the exercise of a judicial power on the Panel, a question might well have arisen as to whether in response to the decision, policy‑makers would have been encouraged by the corporate community to consider establishing a Corporations Court and if so, whether features of the Panel’s current arrangements might have been capable of retention consistent with the exercise of judicial power.  Alternatively, policy‑makers might have looked to the existing federal and State courts to assume that role although concerns about access, speed of resolution and the fundamental concern of the use of litigation as part of the strategic approach to advancing or resisting a takeover, might have remained.  

22.	What then is the existing approach to dealing with the adjudication of matters arising under the Corporations Act and the ASIC Act and have courts in Australia adapted in a broader sense to the challenges of dealing with commercial disputes?  

23.	It is certainly true, historically, that almost every takeover (that I can recall) became subject to challenge either in terms of aspects of the offer documents, the target’s response or the adequacy of disclosure.  And it is also true that litigation was used as a strategic weapon in the battle for winning or resisting a takeover.  Equally clearly, a number of these disputes although expedited could not be resolved within the time frames for making and resolving the takeover offer.

24.	However, since I am addressing an audience in Queensland, I will first make some references to the historical practices of the Supreme Court of Queensland.  

25.	As you know, the Supreme Court of Queensland under Justice Connolly in the early 1980s re‑invigorated the ‘Commercial List’.  Serious commercial disputes (apart from traditional commercial money claims) were put on the list and given expedited treatment including what we would now call vigorous interventionist case management.  I can recall acting for a syndicate of banks that had appointed receivers and managers to a group of companies which resulted in a challenge by the company to the appointment.  The proceedings were commenced and resolved by final judgment after expedited pleadings, affidavits and a hearing, within 10 days.  

26.	Justice BH McPherson assumed the management of the Commercial List after Justice Connolly.  Similarly, vigorous management of the list occurred.  I was involved as a lawyer for the offeror in the BTQ7 Limited (Channel 7), Pan Australian Mining Limited, , North Australia Cement Limited/Adsteam, Bond Corporation/Castlemaine Perkins Limited takeovers and a lawyer for the target in the Pine Vale Investments Ltd/McDonnell & East Limited takeover, all of which were resolved on the Commercial List (all, as I recall, by Justice McPherson).  I also acted for Coles Myer Ltd in the proceedings taken by Davids Holdings Ltd against Coles Myer concerning a strategic parcel of shares in QIW Retailers Ltd.  That proceeding was litigated in the Federal Court with expedited treatment.

27.	The attractive features of the Commercial List were access to experienced commercial Judges dedicated to the management of the list, case management, expedited orders for the progression of the matter, ready hearing dates, a body of experienced commercial lawyers and advisers and pronouncement of judgment within the limits of the commercial environment evident in the particular transaction.  Justice de Jersey adopted a similar approach on assuming the management of the Commercial List.  Similarly, Justices Muir, Chesterman and now McMurdo adopt a similar approach.  

28.	In the Supreme Court of New South Wales, Justice Rogers provided vigorous case management of commercial litigation in that court on his Honour’s list.  Commercial matters were given priority, vigorous case management and, by and large, early resolution.  It is fair to say that on some occasions the management of cases in terms of the narrowing of issues resulted in concessions being made which some parties found difficult to resile from upon a more detailed understanding of the facts.  Nevertheless, the profession’s judgment has been that the system worked well.  It provided ready access to experienced commercial Judges supported by an experienced commercial profession against the background of expedition, case management and early pronouncement of judgment.  A similar approach has been seen, by and large, in the resolution of matters in the important Equity Division of that court.  In relation to corporations matters, Justices Austin, Barrett and Santow (until his recent retirement as a Judge of Appeal) have provided vigorous case management and speedy resolution of corporate disputes.  

29.	I cannot speak directly of the Victorian Supreme Court Commercial List.  However, I understand that similar protocols applied in that court.  

30.	In the Federal Court, consistent with the Court’s position nationally, Corporations Panel Judges have been appointed dedicated to the supervision, case management and speedy resolution of matters arising under the Corporations Act and the ASIC Act.  Justices Dowsett and Greenwood are the Queensland Panel Corporations Judges.  Approaches to the District Registrar or Deputy District Registrar will result in matters being brought to the attention of the Corporations Judges immediately upon notification.  Those matters are assessed as to an appropriate listing response by the Court either for directions, immediate review or the determination of urgent orders.  Once allocated to either Dowsett J or Greenwood J, all approaches throughout the conduct of the matter can be made to the Associate to the particular Judge.  The particular cases are managed in the spirit of case management arrangements of the kind mentioned earlier.  There is a ready recognition in the Federal Court that the resolution of matters arising under the Corporations Act and the ASIC Act are likely, in most cases, to require expedition and appropriate case management direction to achieve that purpose together with prompt delivery of judgment should a matter be reserved for consideration rather than ex tempore judgment.  

31.	In the Federal Court, the Corporations Panel Judges in Sydney are Justices Lindgren, Tamberlin, Sackville, Emmett, Gyles, Stone, Jacobson, Graham and Rares.  The Co‑ordinating Judge in Sydney is Justice Lindgren.  Three members of the Panel are Corporations Duty Judges.  They are Justices Lindgren, Emmett and Jacobson.  On a roster basis, these Judges deal with any urgent matters such as schemes of arrangement, extensions of time applications and any other urgent matters.  

32.	In Melbourne, the Corporations Panel Judges are Justices Ryan, Heerey, Sundberg, North, Finkelstein, Weinberg, Kenny, Middleton and Gordon.  The Co‑ordinating Judge in Melbourne is Justice Finkelstein.  Many in the profession would be familiar with the expedited case management protocol for corporations matters, sometimes described as the ‘Rocket Docket’ in Victoria.  Elements of that protocol are applied in Sydney and Brisbane by Panel Judges.

33.	An active case management philosophy operates within the Federal Court.  Protocols for active management of cases have been adopted in the corporations work, the management and disposition of patent cases and in the management of tax cases.  Members of the profession would be familiar with the elements of the proposed Tax Practice Note announced to the profession recently by Justice Edmonds as the co‑ordinator of the tax cases in Sydney.  The Federal Court gives effect to active case management through the mechanism of Practice Notes approved by the Judges and issued by the Chief Justice.  The Judges of the Court are presently considering whether amendments ought to be recommended to the Commonwealth Attorney‑General, to the Federal Court of Australia Act 1976 (Cth) to set out conceptions of the overriding objectives to be achieved in dealing with cases justly, the application of those objectives, the duties of parties and the Court’s conception of a statutory expression of the elements of case management.  Aspects of these matters are reflected in Part 6, Divisions 1 and 2 of the Civil Procedure Act 2005 (NSW) and the Civil Procedure Rules (CPR) of the United Kingdom (in particular rules 1.1 to 1.4, 3.1, 3.3 and 3.4).  As I say, aspects of these matters are presently dealt with by the Federal Court by Practice Notes issued by the Chief Justice.  See also, Hamilton J, Supreme Court of New South Wales, Civil Procedure Reform: Gradualism or Revolution, Judicial Officers’ Bulletin, Volume 17, No. 7, August 2005; Judicial Commission of New South Wales; and, Mr Geoff Lindsay SC, Dynamics of the Civil Procedure Regime in New South Wales, New South Wales CLE Program, 3 March 2005.  

34.	The Council of Chief Justices Harmonized Corporations Rules Monitoring Committee developed recommendations for the adoption of procedural rules for the uniform and harmonised treatment of applications made and proceedings taken under the Corporations Act.   The rules, in the case of the Federal Court, are described as the Federal Court (Corporations) Rules 2000.  There are presently proposals before the Judges for the adoption of the Federal Court (Corporations) Amendment Rules 2008 (No. 1) consequent upon changes to the Corporations Act made by the Corporations Amendment (Insolvency) Act 2007.  

35.	Having regard to all of these considerations, it seems to me that contemporary experience demonstrates, in the Federal Court, a co‑ordinated national perspective in the management and resolution of corporate disputes arising under what is now invested federal jurisdiction.  The ‘Commercial Lists’ of the State Supreme Courts provide a continuing mechanism for the expedited resolution of corporate disputes also in the exercise of invested federal jurisdiction.  To the extent that proponents of an independent Corporations Court argue the case for such a court based upon the notion that commercial and corporate litigants can not secure ready access to the courts, the Judges determining such matters are not sufficiently experienced or that the cases are not progressed and resolved within a commercial time frame that enables each of the parties to be given a proper, fair and balanced hearing, it seems to me that experience does not bear that out.  Plainly enough, there are cases which might have been dealt with more quickly.  However, the systemic approach to the resolution of these matters is sound and of real utility to corporate and commercial litigants.  Particular approaches might be adopted to facilitating early resolution of cases and in that regard I would commend to you the article of the Hon Geoffrey Davies AO, Civil Justice Reform:  Some Common Problems, Some Possible Solutions (2006) 16 JJA 5.  

36.	It follows, it seems to me, that a separate Corporations Court would involve a misallocation of resources.  

37.	Further, the Commonwealth Government proposes to examine a statutory model for greater national regulation of non‑bank mortgage lending and aspects of margin lending in connection with securities.  These areas of further legislative activity represent further expression of the national or federal governance of corporations and the financial sector.  Speaking as a Federal Court Judge, it seems to me inevitable in the modern environment that as the National Government continues to assume the field, in substance, in the regulation of corporations and the market environment within which they operate (especially having regard to the integration of Australia’s corporate and financial sector with the international economy), the nation’s national court, the Federal Court of Australia, is the natural forum within which nationally consistent treatment (through the co‑ordination of national corporations panels) of the management and disposition of controversies involving matters arising under the Corporations Act, the ASIC Act and related statutory instruments, will occur.  

38.	Moreover, the Federal Court is the natural forum for liaison between the superior courts of other nation States which deal with corporations matters.  For example, the Federal Court is presently engaged in national exchanges between the Federal Court, Courts of the People’s Republic of China, Canadian courts and United States Judges.  Judges of the Federal Court will conduct meetings in the PRC in May 2008 representing reciprocal meetings with Judges from that country recently conducted in Australia.  

39.	There are, however, other fundamental reasons why a separate Corporations Court is undesirable.  

40.	First, the substantive questions which arise for determination in matters arising under the Corporations Act or the ASIC Act (or related statutory instruments) necessarily involve a close inter‑relationship with broader commercial doctrines and principles of commercial law within the legal discipline.  It is artificial, in the extreme, to isolate a proper understanding of the construction of the statutory provisions from their contextual evolution and an understanding of the intersection between the statutory instruments and foundation doctrines.  This is particularly true in relation to aspects of the conduct of directors for the purposes of ss 180‑184 of the Corporations Act and considerations, for example, (as an illustration) of the nature of the obligations owed by directors and advisers in the context of potential conflicts of interest that might arise in connection with private equity bids or the nature of the interest (a security interest or a transferee?) held by margin lenders in relation to securities.  I recommend to you two Papers by N. J. Young QC, Has directors’ liability gone too far or not far enough?:  A review of the standard of conduct required of directors under ss 180-184 of the Corporations Act, 18 February 2008, ASIC Summer School; Conflicts of Interest in the Context of Private Equity Transactions, Law Council of Australia Workshop, Glenelg, 21 July 2007, which discuss all the major authorities touching these questions.  

41.	Although, of course, the statutory instruments must be construed according to their terms reflecting the orthodoxy prescribed by the High Court for that purpose, an understanding of the fundamental principles upon which the provisions rest, is central to providing consistent decisions to the commercial community and a consistent application of the law (modified by statutory intervention).  Similarly, a proper understanding of the circumstances which give rise to fiduciary obligations and which might render a party ‘a fiduciary’ in the relevant circumstances is a central part of discourse in this area.  As to those matters, I invite you to note the observations of the Hon Justice Hayne AC, (2002) 23 Australian Bar Review 24.

42.	At [15] of this paper, I mentioned some subject matter which intersect with the determination of matters arising under the Corporations Act and the ASIC Act and I will not further illustrate the point by other references.  The point, of course, is that within the Federal Court and those in charge of the resolution of such matters within the State Supreme Courts, there is a considerable body of expertise.  Many of the Judges have been involved for most of their professional lives in the analysis and resolution of commercial controversies central to corporate and commercial life in Australia.  Those courts will continue to deal with and resolve commercial controversies within the traditional scope of their commercial role even if a separate court is established to deal with matters specifically arising under either the Corporations Act or the ASIC Act.

43.	Secondly, it is not in the public interest to create a proliferation of subject specific courts which have the potential to become narrowly focused and introspective, serve particular sectoral interests and fail to serve the public interest in ensuring that proper analysis, weight and emphasis is given to issues within the controversy which fall outside the particular focus of those working within the professional silo.  There is a tendency for every matter or controversy to be viewed solely in terms of the particular specialisation.  

44.	This debate has taken place most recently in the context of agitation (to a greater or lesser degree in particular quarters) to establish an independent Taxation Court in Australia.  Although the income tax legislation of the Commonwealth has its own particular Brechtian dialogue and elements of the Verfremdungseffekt, the truth of the matter is that what is central to a proper construction and application of the tax laws of the Commonwealth is an understanding of the way in which legal and equitable interests arise and might be transmitted, the nature of beneficial interests, trusts law and aspects of commercial law.  Whilst experience in and a proper understanding of approaches to the interpretation of the tax laws is important particularly having regard to the many discretions conferred upon the Commissioner, an understanding of these underlying principles is a critical matter.  I commend to you the observations of the Hon Justice Michael Kirby AC CMG with which, as to this topic, with great respect, I agree (Challis Taxation Discussion Group:  Hubris Contained:  Why a Separate Australian Tax Court should be Rejected, Sydney, 3 August 2007).  A similar question has arisen in relation to a Patents Court based on the English Patents Court.  Again, it seems to me that the public interest is best served by experienced Panel Judges who sit regularly in the patent and non‑patent intellectual property panels in the Federal Court rather than seeking to establish a new and separate Patents Court which in a major international financial capital such as London, has utility.  

45.	Thirdly, although separate Corporate Courts or separate Business Courts have been established in a number of States in the United States largely reflecting the pressure to provide competitive legislative regimes and competitive adjudication processes to answer the leading position seen in the legislative arrangements for corporate affairs in the State of Delaware and the commanding position the Court of Chancery (and the Supreme Court of Delaware), holds nationally in corporate disputes, the arguments for such separate courts in those States essentially turn on what is seen to be an important combination of flexibility in the legislative approach; access to Judges experienced in and dedicated to commercial matters; and, Judges who apply case management techniques for the early resolution and disposition of the cases.  The Court of Chancery in the State of Delaware performs its role against the background of, it is said, a highly responsive legislature.  The Court is characterised by very experienced Judges, vigorous case management, speedy resolution of cases and the determination of commercial and corporate matters by Judges who are not ‘distracted’ by other case loads from the criminal, matrimonial or other parts of a superior court’s jurisdiction.  The consolidation upon experience in the Court of Chancery supported by a vigorous and co‑operative profession versed in the subject matter of the law and litigation practice has enabled that court to establish a major international reputation.  As to competition between jurisdictions see Thomas A Muccifori, Odd Man Out; New Jersey is Surrounded by States that have Seen the Benefits of Business Courts, New Jersey Law Journal, 2 August 2004; William O Pitts, Courting Business, , The Journal Record, 23 February 1998; Milo Geyelin, Pennsylvania Law Makers to Consider Specialised Court for Business Matters, The Wall Street Journal, 11 September 1990; Timothy de Sieno and Rupal Shah Palanki, The United States’ Specialised Bankruptcy Courts, Forum for Asian Insolvency Reform, Bali, 7‑8 February 2001.

46.	When these features are examined in Australia it can be seen that as to the legislative arrangements, they are settled, reasonably flexible and subject to constant review and oversight.  There are (and I will not list them) many discussion papers presently issued by the agencies on important contemporary topics inviting commentary from the profession.  Secondly, the resolution of corporate and commercial disputes is undertaken in Australia by Judges who are experienced and committed to the work of the Corporations Panels (in the Federal Court) and committed to such work in the Commercial Lists of the State Supreme Courts and in the Equity Division undistracted by case loads from other parts of a superior court’s jurisdiction.  Further, vigorous case management techniques are applied to the resolution of these cases, in particular.  Moreover, the cohort of commercial lawyers within the profession that focus particularly on this area of law are very experienced and, by and large, co‑operate in assisting courts in the disposition of these controversies.  Plainly enough, commercial battles can sometimes spill over into rivalrous behaviour between practitioners but sober reflection and maturity almost always prevail.  

47.	For all these reasons, I am unpersuaded of the need to establish a sectoral court within the Australian hierarchy of courts, as a specialist Corporations Court.  

48.	Thank you for your attention.  

The Hon Justice Andrew Greenwood
FEDERAL COURT OF AUSTRALIA
31 March 2008