A Step Too Far? Rethinking the Stepping Stone Approach to Officers’ Liability

Abstract

In recent years, the Australian Securities and Investments Commission has placed considerable emphasis on the stepping stone approach as a device to establish officers’ liability in respect of corporate contraventions of the law. The approach represents a novel interpretation of the general duties of officers under the Corporations Act 2001 (Cth) (‘ CA’). Despite the seriousness of the consequences for an officer that may follow from a finding of liability, the content and boundaries of the approach remain undefined. Critically, the courts’ heightened receptiveness to the approach and the judicial expansion of its scope departs from earlier judicial statements of caution sounded against using the general statutory duties as a mechanism to secure corporate compliance with the law. At a more fundamental level, it is doubtful whether the approach represents a legitimate interpretation of the general statutory duties, to the extent that it subverts several existing routes to officers’ liability and remedies under the CA. It is incumbent on the legislature to correct these inconsistencies by recalibrating the role envisaged for officers under the CA in line with contemporary expectations.