Harris, J. & Hargovan, A.C. 2014, 'Strengthening creditor enforcement in insolvency: UK law reform proposals', Insolvency Law Bulletin, vol. 15, no. 3, pp. 45-47.
Harris, J. 2014, 'PPSA: Recent Developments', Australian Insolvency Journal, vol. 26, no. 2, pp. 30-33.
Harris, J. 2014, 'THE PROTECTION OF EMPLOYEE ENTITLEMENTS IN INSOLVENCY', Australian Insolvency Journal, vol. 26, no. 2, pp. 64-64.
Hargovan, A.C. & Harris, J. 2013, 'For Whom the Bell Tolls: Directors: Duties to Creditors after Bell', Sydney Law Review, vol. 35, no. 2, pp. 433-450.
It is now established, following High Court dicta in Walker v Wimborne and Spies, that directors owe a duty to consider creditors interests upon corporate insolvency, and that such a duty is one of imperfect obligation that is incapable of direct enforcement by the creditors. Notwithstanding such orthodox authority, the precise nature and scope of directors duties to creditors upon corporate insolvency remains a vexed issue that continues to plague the judiciary as a consequence of the absence of any detailed consideration of such issues by the High Court. The recent appellate court decision in the Bell Group case exemplifies the legal uncertainties on this topic, which arose upon the directors exploration of corporate rescue plans in the context of looming insolvency. In particular, it is now unclear whether directors must go beyond consideration of creditors interests and ensure that creditors are protected in conformity with the pari passu principle. The extent to which the judiciary can intervene to adjudicate on the directors beliefs and business judgments is also clouded by uncertainty. The High Court of Australia will consider such issues in an upcoming appeal. This note discusses the context of the decision and argues that the directors duties to consider creditor interests, while beneficial, should not be elevated to ensure pari passu treatment when directors make commercial decisions to save the company. To hold directors to be in breach of fiduciary duties in such circumstances, when they have acted in good faith, runs the risk of hindering corporate rescue opportunities, as well as undermining the business judgment of directors. Further, the goal of creditor protection can be achieved by existing legal rules and does not require the elevation of the duty from one of consideration to one of protection.
Harris, J. 2013, 'Re Maiden - landmark personal property security decision', Keeping Good Companies, vol. 65, no. 7, pp. 403-405.
Harris, J. & Mirzai, N. 2012, 'The Personal Property Securities Act and company secretaries', Keeping Good Companies, vol. March, no. 2, pp. 92-95.
Harris, J. 2012, 'Assessing the effect of the PPSA on the Corporations Act and corporate law teaching', Australian Journal of Corporate Law, vol. 27, pp. 72-90.
Harris, J. & Mirzai, N. 2012, 'Register on the PPSR in haste, repent at leisure', Keeping Good Companies, vol. 64, no. 9, pp. 534-535.
Hargovan, A.C. & Harris, J. 2011, 'Together alone: corporate group structures and their legal status revisited', Australian Business Law Review, vol. 39, no. 2, pp. 85-94.
Application of separate entity doctrine and corporate rule of limited liability to corporate group members practice of establishing subsidiary companies for dedicated purposes issues in recent BHP Billiton litigation intersection between tax law and company law limits of separate entity doctrine in the context of corporate groups.
Harris, J. & Webbey, S. 2011, 'Personal liability for corporate disclosure problems', Company and Securities Law Journal, vol. 29, no. 8, pp. 463-476.
Personal liability of company directors - need to harmonise state and federal laws - disclosure practices and requirements under s 1041H of the Corporations Act - distinguishing direct and indirect liability - due diligence defences - need for law reform to balance managerial control with organisational efficiency and innovation.
Harris, J. 2011, 'Adjusting creditor rights against third parties during debt restructuring', Insolvency Law Journal, vol. 19, no. 1, pp. 22-36.
Debt restructuring procedures aim to achieve a compromise between the needs of the debtor and its creditors. It is common for business to be conducted using group structures with related parties potentially exposing themselves to broad claims upon the debtor's insolvency, usually in a false hope of reparations. Enterprise groups may seek a global resolution to their disputes by proposing settlement arrangements that will address claims against the primary debtor as well as potential claims against related third parties. Recent decisions concerning the collapses of Lehman Brothers Australian and Opes Prime offer contrasting approaches to the question of whether a formal restructuring procedure (such as a scheme of arrangement or a deed of company arrangement) can include rights that creditors have against third parties. This article considers the potential scope and effect of these decisions and suggests that other mechanisms may also be available, particularly the long-standing but little used s 510 arrangement under voluntary liquidation
Harris, J. & Hargovan, A.C. 2011, 'Corporate groups: the intersection between corporate and tax law', Sydney Law Review, vol. 32, no. 4, pp. 719-732.
Commercial activities of corporate groups - tensions with traditional notions of corporate law and the concept of separate legal identity - issues in forthcoming High Court appeal - use of corporate treasury companies and limited recourse debt for the purposes of income tax legislation -- argument that the use of a member of a corporate group to provide in-house finance should not defeat the presumption of a company's independent and separate existence.
Harris, J. & Hargovan, A.C. 2011, 'Cutting the Gordian Knot of corporate law: Revisiting veil piercing in corporate groups', Australian Journal of Corporate Law, vol. 26, no. 1, pp. 39-54.
Veil piercing within corporate groups is an area of corporate law that continues to confound and confuse. Many consider it an area full of 'hard cases making bad law' to such an extent that it simply defies principled analysis. This article undertakes an investigation of the principled roots of veil piercing within corporate groups and challenges the perceived utility of an agency analysis. The authors argue that the purported agency principles used in veil piercing cases are in reality something different from legal principles of agency.
Harris, J. 2010, 'Relief from insolvent trading liability', Australian Insolvency Journal, vol. 22, no. 1, pp. 14-19.
Harris, J. 2010, 'Lehman Brothers applied in New Zealand', Insolvency Law Bulletin, vol. 11, no. 1, pp. 17-18.
Harris, J. 2010, 'Share sales during deeds of company arrangement', Insolvency Law Bulletin, vol. 11, no. 1, pp. 9-12.
Harris, J. 2010, 'Charting the Limits of Insolvency Reorganisations: Lehman Brothers Holdings Inc v City of Swan', Sydney Law Review, vol. 32, no. 1, pp. 141-158.
Australia's corporate insolvency regime strives to provide flexible measures that allow stakeholders of a financially distressed company to come to a mutually beneficial arrangement. As with all insolvency laws, it is possible to bind dissenting creditors to the will of the majority in resolving these disputes. How nexible should corporate insolvency law be in facilitating corporate reorganisations? To what extent can/should individual creditors be forced to limit their rights against other stakeholders in the insolvency, including rights against third parties, in the name of collective benefit? This important question has recently been the subject of conflicting statements in several Federal Court decisions. After an expedited hearing the High Court dismissed an appeal from one of these Federal Court decisions in the Lehman Brothers case on 30 March 2010 and will release its reasons on 14 April 20 I O. This note considers the legal and policy issues involved in this matter.
Harris, J. 2009, 'The role of future liabilities in insolvency law', Insolvency Law Bulletin, vol. 9, no. 8, pp. 129-132.
Harris, J. 2009, 'Lessons from abroad: its time to reform insolvent trading laws', Insolvency Law Bulletin, vol. 10, no. 1, pp. 2-5.
Evers, M. & Harris, J. 2009, 'The duties of in-house counsel: The bold, the bright and the blurred?', Australian Business Law Review, vol. 37, pp. 267-285.
Recent cases involving in-house and external lawyers have attracted much media attention, from the C7litigation to the AWB Inquiry. Some of the media commentary and judicial remarks were directed at the role of the internal legal advisers in the conduct of the parties, both before and during litigation. The cases acknowledge the challenges faced by in-house counsel where the duty to client is blended with loyalty to the employer. The requirement for independence is a fundamental principle of the legal profession. The increasing use of in-house counsel challenges this principle. The conflict faced by in-house counsel is predominant in claims for privilege. This article examines the scope for privilege to be claimed in respect of communications involving in-house counsel.
Harris, J. & Webbey, S. 2009, 'The risks of personal liability for defective corporate disclosure', Keeping Good Companies, vol. 61, no. 6, pp. 346-349.
Harris, J. 2009, 'Director liability for insolvent trading: Is the cure worse than the disease?', Australian Journal of Corporate Law, vol. 23, no. 3, pp. 266-286.
The Global Financial Crisis has shone a bright light on the efficacy and scope of Australias corporate and financial regulatory system. The past year has seen several significant changes introduced, many of which have given more power and responsibility to Australia's corporate regulator ASIC. In some cases, greater regulatory attention and tougher legislative provisions have been needed and will hopefully provide for better outcomes for the Australian community. There is at least one area where the regulatory failings have been highlighted by the GFC and yet government attention has been conspicuously absent: insolvent trading. The economic challenges produced by the GFC have highlighted the need for effective restructuring and corporate rescue laws that encourage directors and managers to act to save businesses that are capable of saving but are suffering financial distress, in many cases because of broader market changes and depressed asset prices. This article discusses the disincentive for corporate restructuring posed by the insolvent trading prohibition by undertaking a comparative analysis of insolvent trading provisions in five industrialised countries. The author argues that Australias insolvent trading prohibition does not sufficiently promote corporate restructuring and therefore requires amendment. Particular law reform measures are suggested for consideration.
Harris, J. & Legg, M. 2009, 'What price investor protection? Class actions vs Corporate rescue', Insolvency Law Journal, vol. 17, no. 4, pp. 185-205.
The financial turmoil and share market losses generated by the global financial crisis have provided ideal conditions for increased numbers of investor class actions. The numbers of firms involved in litigation funding and law firms involved in class actions are also increasing. Australian securities law seems to be at the beginning of a wave of investor class actions based on allegations of inadequate corporate disclosure. The fallout from the global financial crisis (GFC) has also focused attention on the efficiency of Australia's corporate rescue laws as companies struggle under onerous debt levels and attempt to rebuild balance sheets and restructure operations in much tighter credit conditions than in previous years. This article considers the tension between laws that seek to compensate investors through the use of class actions and laws that aim to promote corporate rescue attempts. It suggests that reform may be needed to ensure that these two important policy goals work more harmoniously together.
Harris, J. 2009, 'Corporate lawyers as accessories to breaches of directors' duties', Keeping Good Companies, vol. 61, no. 9, pp. 564-566.
Legg, M. & Harris, J. 2009, 'How the American dream became a global nightmare: An analysis of the causes of the Global Financial Crisis', The University of New South Wales Law Journal, vol. 32, no. 2, pp. 350-389.
Harris, J. 2008, 'Implications of margin lender insolvency', Australian Insolvency Journal, vol. 20, no. 3, pp. 4-6.
Harris, J. 2008, 'Stewart's Guide to Employment Law (1st ed), by Andrew Stewart', Australian Law Librarian, vol. 16, no. 2, pp. 149-149.
Zandstra, A., Harris, J. & Hargovan, A.C. 2008, 'Widening the new: Accessorial liability for continuous disclosure contraventions', Australian Journal of Corporate Law, vol. 22, no. 1, pp. 51-81.
Australias continuous disclosure laws impose a regulatory burden on disclosing entities to ensure that all relevant information is accurately disclosed to the market in a timely manner. This regulatory burden is an important mechanism to encourage investor confidence in the quality and value of our capital markets. It is also important however that the system of continuous disclosure creates appropriate economic incentives for listed entities to voluntarily comply with the law. These incentives should fall not merely on the corporate entity but also on those involved in the regulatory contravention.This article examines the scope of accessorial liability for breaches of continuous disclosure laws. It advocates greater use of this legislative tool to ensure that the burden of continuous disclosure breaches falls on the persons responsible for the failure and not merely on the companys shareholders who may already have been penalised. A range of options are canvassed, in particular the establishment of an expert peer review panel, to facilitate this aim.
Harris, J. 2008, 'Initial impressions of the new statutory pooling provisions', Insolvency Law Bulletin, vol. 8, no. 9, pp. 134-136.
Harris, J. & Siow, W.N. 2008, 'Uncertainty regarding civil penalties and privilege against penalties', Keeping Good Companies, vol. 60, no. 2, pp. 68-71.
Harris, J. & Hargovan, A.C. 2008, 'The scope of the pari passu rule', Australian Insolvency Journal, vol. 20, no. 1, pp. 16-21.
Harris, J., Hargovan, A.C. & Austin, J. 2008, 'Shareholder Primacy Revisited: Does the Public Interest Have Any Role in Statutory Duties?', Company and Securities Law Journal, vol. 26, no. 6, pp. 355-376.
The conventional view of corporate regulation is that corporations are to be managed for the benefit of their shareholders. The general law and statutory duties of directors and officers reflect this "shareholder primacy norm", with duties formulated to prevent directors acting otherwise than in the interests of shareholders. However, the general law and statutory duties are not identical. The remedies and enforcement mechanisms differ considerably, which raises the question as to whether the public enforcement of statutory duties carries with it a public interest mandate that general law duties do not. This article considers what role the public interest should have in enforcing statutory duties and whether such a role represents a challenge to the dominant shareholder primacy norm of corporate law. This issue is highly topical as recent decisions have suggested that the statutory duties of directors and officers are limited in their scope to protecting the interests of shareholders, even to the detriment of the public interest. The authors contest that viewpoint and argue that, at least in relation to statutory duties, directors and officers have obligations that extend beyond the narrow conception of the protection of shareholder wealth.
Hargovan, A.C. & Harris, J. 2008, 'Shareholders as creditors: a response to the CAMAC discussion paper on law reform', Australian Journal of Corporate Law, vol. 22, no. 2, pp. 135-160.
he CAMAC discussion paper regarding shareholder claims against insolvent companies has considered the issue of how best to address the implications of the High Courts decision in Sons of Gwalia. That decision recognised that shareholders may stand as creditors in a corporate insolvency by making a claim for damages based on statutory rights to compensation for defective disclosure.The decision has been highly controversial and has generated calls for law reform. The CAMAC discussion paper considers several options for reform, with various public submissions providing alternative options to address the tension between investor protection laws and corporate insolvency priorities. This article examines the range of suggested reforms and advocates a position of limited subordination, as well as other law reform measures, to address the practical, legal and policy issues raised by shareholder class actions against companies in financial difficulty.
Harris, J. 2008, 'Relief from liability for company directors', University of Western Sydney Law Review, vol. 12, pp. 152-175.
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Harris, J. & Hargovan, A.C. 2008, 'The intersection between shareholders' and creditors' rights in insolvency: an Australian perspective', Annual Review of Insolvency Law, vol. 2007, pp. 699-734.
Harris, J. & Hargovan, A.C. 2007, 'Sons of Gwalia: Navigating the line between membership and creditor rights in corporate insolvencies', Company and Securities Law Journal, vol. 25, no. 1, pp. 7-29.
Purchasing shares in a company is an inherently risky proposition, which leaves the investor at the mercy of the vagaries of the market. However, one of the founding principles of modern capitalism is the ability of members to limit their liability to the unpaid value of their shares. The benefits of limited liability are well understood by market participants, but limited liability also has significant consequences for shareholders. It could be said that the quid pro quo for the statutory protection of limited liability conferred on shareholders is the deferral of their rights to claim a proportion of the company's assets in liquidation, which, in the case of an insolvent company, results in shareholders receiving no return on their investment. The boundaries of the rule that membership interests are deferred until after the creditors are paid in full (known as the rule in Houldsworth's case) have recently been tested by the Federal Court where shareholders have sought declarations that they were misled by the company into purchasing their shares on the market and therefore they are contingent creditors with an unliquidated damages claim. This paper examines whether it is appropriate for members to be classed as creditors where the claim arises out of the circumstances that led to the purchase of their shares. The significant practical implications of such a classification for the efficient regulation of insolvency administration will also be discussed.
Hargovan, A.C. & Harris, J. 2007, 'Sons of Gwalia and statutory debt subordination: An appraisal of the North American experience', Australian Journal of Corporate Law, vol. 20, no. 3, pp. 265-300.
Harris, J. 2007, 'Corporate group insolvencies: Charting the past, present and future of pooling arrangements', Insolvency Law Journal, vol. 15, no. 2, pp. 78-99.
This article examines the problems associated with the collapse of corporate groups; in particular, the tension that arises during insolvency between the application of the separate legal entity principle and the common commercial practice of managing corporate groups as a single economic entity. Specific attention is given to the difficulties faced by insolvency administrators dealing with extensive (and often inadequately documented) intermingling of assets between corporate group members and creditor confusion concerning the precise identity of the debtor corporation. One solution to these problems has been the use of pooling arrangements, with a range of statutory powers currently being used by different courts to facilitate the consolidation, for liability purposes, of the assets of the pooled group companies. However, each of the current methods of pooling has at least some measure of judicial uncertainty, which has prompted the introduction of a statutory pooling regime. This article will discuss how the proposed new pooling powers will overcome the problems that have arisen under the current methods for implementing pooling arrangements and attempt to provide some guidance as to how these new powers may be interpreted by the judiciary.
Hargovan, A.C. & Harris, J. 2007, 'Sons of Gwalia and the High Court: Implications for shareholders, creditors and the insolvency regime', Insolvency Law Bulletin, vol. 7, no. 7, pp. 80-85.
Hargovan, A.C. & Harris, J. 2007, 'Piercing the corporate veil in Canada: A comparative analysis', The Company Lawyer, vol. 28, no. 2, pp. 58-62.
Harris, J. 2007, 'Pooling: Part 2', Australian Insolvency Journal, vol. 19, no. 1, pp. 16-21.
Harris, J. 2007, 'Collapse Inc: the case of the sleeping watchdog?', Insolvency Law Bulletin, vol. 8, no. 2, pp. 21-23.
Opinion piece on public criticism of ASIC
Harris, J. 2007, 'The revised statutory pooling provisions', Australian Insolvency Journal, vol. 19, no. 3, pp. 28-30.
comment on recent legislative changes to corporate insolvency law
Harris, J. 2007, 'Engaging examination of trust law principles', Australian Law Librarian, vol. 14, no. 4, pp. 80-81.
Harris, J. 2007, 'Sir Ronald Wilson: a Matter of Conscience, by Antonio Buti', Australian Law Librarian, vol. 15, no. 4, pp. 69-70.
Harris, J. & Nehme, M. 2007, 'An analysis of the Vines appeal', Company and Securities Law Journal, vol. 25, no. 8, pp. 554-558.
Hargovan, A.C. & Harris, J. 2007, 'Sons of Gwalia Ltd v Margaretic: the shifting balance of shareholders' interests in insolvency-evolution or revolution?', Melbourne University Law Review, vol. 31, no. 2, pp. 591-621.
A critical analysis of the policy implications of the Sons of Gwalia decision.
Harris, J. 2006, 'The constitutional basis of s 447A: Is it a power without limit?', Insolvency Law Journal, vol. 14, no. 3, pp. 135-149.
Section 447A of the Corporations Act 2001 (Cth) provides the court with a unique power that allows it to mould the voluntary administration process to suit the needs of individual companies. The enactment of a federal corporations statute in 2001 has brought into question whether this power fits within the constitutional limitations that are imposed on federal law-making power. The suggestion has been raised recently that the power is so broad that it is constitutionally invalid. This article argues that the power is constitutionally valid principally on the basis that, despite its potential for broad application, the power has defined limits which retain its status as a judicial power.
Harris, J. 2006, 'Federal collective bargaining after Electrolux', Federal Law Review, vol. 34, no. 1, pp. 45-73.
Hargovan, A.C. & Harris, J. 2006, 'Sons of Gwalia: policy issues raised by the subordination of shareholder claims', Insolvency Law Bulletin, vol. 7, no. 1, pp. 1-8.
Hargovan, A.C. & Harris, J. 2006, 'Taking continuous disclosure seriously: a landmark decision in Jubilee Mines,', Keeping Good Companies, vol. 58, no. 11, pp. 648-651.
Harris, J. 2005, 'Lifting the corporate veil on the basis of an implied agency: A re-evaluation of Smith, Stone and Knight.', Company and Securities Law Journal, vol. 22, no. 1, pp. 7-27.
Harris, J. & Gordon, B. 2005, 'Lost in Transition: Section 447A and the question of members' rights when a company transitions from voluntary administration to a creditors' voluntary liquidation', Insolvency Law Journal, vol. 13, no. 2, pp. 96-110.
One of the benefits of voluntary administration under Pt 5.3A of the Corporations Act 2001 (Cth) is that it allows for a smooth transition from administration to a creditors' voluntary liquidation, particularly when the company cannot be returned to profitability by either the period of voluntary administration or under a subsequent deed of company arrangement. However, recent cases have posed the question as to the nature of the creditors' voluntary winding up into which insolvent companies transfer. This article examines these cases and argues that the transitional provisions in Pt 5.3A do not alter the substance of the subsequent creditors' voluntary liquidation, but rather merely provide an efficient gateway into a separate form of external administration. The scope and effect of the transitional arrangements between voluntary administration and creditors' voluntary liquidation is important because it frames the court's power to grant orders under s 447A. The authors argue that whilst s 447A orders may properly be made to give effect to the purposes of Pt 5.3A, they should not be made where the order dispenses with membership rights ordinarily accruing under voluntary liquidation.
Harris, J. 2005, 'Pooling options for insolvent corporate groups', The Company Lawyer, vol. 26, no. 4, pp. 125-128.