Regulatory issues impacting on insolvency
A speech by David Knott, Deputy Chairman, ASIC, to the National Conference of the Insolvency Practitioners Association of Australia, Adelaide, 13 October 2000.
A firm Constitutional footing
It is curious to reflect on the impact that insolvency issues have had on the evolution of Australian corporations law over the past few decades. You will all recall the problems that arose from inconsistent court rulings in the insolvency jurisdiction, particularly relating to statutory notices of demand and deemed insolvency, which contributed to the push for a truly national corporations law during the 1980s.
It is therefore ironic that, more than a decade later, insolvency law has provided the impetus for the constitutional challenges that have afflicted our national scheme and dominated the Commission's agenda over the past twelve months. Often we find insolvency providing precedent setting law of profound interest. Rarely is it as interesting as the outcome in the four High Court cases collectively referred to as Re Wakim.
I don't need to revisit the outcome of that case for this audience. Suffice to say, that from the date of that decision we entered a period of great uncertainty. We took the view that we could not allow that uncertainty to prevent the regulatory and enforcement work of the Commission being pursued.
However, there were serious implications across a raft of matters on hand, including applications to transfer litigation from the Federal Court into State Supreme Courts and challenges to specific State remedial legislation - all of which added cost, delay and uncertainty to the outcome of enforcement proceedings. More than once we have found ourselves this year arguing constitutional issues in the High Court and we were obliged to stay several of our enforcement actions after the decision in the Hughes case. It is fair to say that in the months leading up to August this year the national Corporations Law and its administration was approaching crisis point.