Unravelling corporate fraud: re-purposing ancient doctrines for modern times
Started at UWA: 2020
Dissecting the anatomy of corporate culpability in law, for the benefit of humanity.
A broad array of traditional common law and equitable doctrines seek to prohibit and remedy commercial fraud. These conceptions of fraud are also utilised in Australia’s statutory regimes. Proving fraud gives rise to a larger suite of general law and statutory remedies and also carries greater social sanction and shame.
However, these concepts tend to demand high levels of proof of personal dishonesty or culpability on the part of defendants – a ‘fraudulent state of mind’. The problem is that corporations are artificial persons, so do not possess a ‘state of mind’. Rather, they act through human agents such as directors, managers and employees.
The rules about when it is possible to ‘attribute’ these individual agents’ intentions and knowledge to the artificial person, the corporation, are complex and restrictive. This make it difficult and sometimes impossible to prove fraud against large and complex corporations, greatly undermining the efficacy and deterrent power of the existing laws.
Given the primacy and power of corporations in modern commerce, our laws require re-purposing, or even radical overhaul.
- Develop new theoretical and doctrinal models (the ‘models’) that overcome the current ‘state of mind’ and ‘attribution’ hurdles to holding corporations liable for fraudulent conduct;
- Test the models against paradigm cases that currently frustrate effective regulation, drawing on the insights of an established network of stakeholders and eminent panel of experts;
- Contribute to law reform within the Australian regulatory system through the development of detailed proposals that will identify, explain and justify the interpretive adjustments and wholesale changes to existing general law and legislation necessary to realise the models; and
- Develop rigorous, practical litigation guides that will assist regulators and victims to allege and prove the models of fraud against corporate wrongdoers.