Case: Rich v Australian Securities and Investments [2004] HCA 42 ; (2004) 220 CLR 129
Outcome: followed
Those factors were summarised by McHugh J in Rich v Australian Securities and Investments Commission (2004) 220 CLR 107 at 152-154 [49] as follows: 'The 15 propositions formulated by Santow J are as follows ( Adler (2002) 42 ACSR 80 at 97-99): 1. Disqualification orders are designed to protect the public from the harmful use of the corporate structure or from use that is contrary to proper commercial standards. 2. The banning order is designed to protect the public by seeking to safeguard the public interest in the transparency and accountability of companies and in the suitability of directors to hold office. 3. Protection of the public also envisages protection of individuals who deal with companies, including consumers, creditors, shareholders and investors. 4. The banning order is protective against present and future misuse of the corporate structure. 5. The order has a motive of personal deterrence, though it is not punitive. 6. General deterrence is an object of the legislation. 7. In assessing the fitness of an individual to manage a company, it is necessary that the individual have an understanding of the proper role of the company director and the duty of due diligence that is owed to the company. 8. Longer periods of disqualification are reserved for cases where contraventions have been of a serious nature such as those involving dishonesty. 9. In assessing an appropriate length of prohibition, consideration is given to the degree of seriousness of the contraventions, the propensity of the defendant to engage in similar conduct in the future and the likely harm that may be caused to the public. 10. It is necessary to balance the personal hardship to the defendant against the public interest and the need for protection of the public from any repeat of the defendant's conduct. 11. A mitigating factor in considering a period of disqualification is the likelihood of the defendant reforming. 12. The eight criteria to govern the exercise of the court's powers of disqualification set out in Commissioner for Corporate Affairs (WA) v Ekamper ((1987) 12 ACLR 519) have been influential. It was held that in making such an order it is necessary to assess: (a) the character of the defendant; (b) the nature of the breaches; (c) the structure of the company or companies and the nature of its or their business; (d) the interests of shareholders, creditors and employees; (e) the risks to others from the continuation of the defendant as a director; (f) the honesty and competence of the defendant; (g) hardship to the defendant and to his or her personal and commercial interests; and (h) the defendant's appreciation that future breaches could result in future proceedings. 13. Factors that have led to the imposition of the longest periods of disqualification (that is, disqualifications of 25 years or more) include: (a) large financial losses; (b) high propensity that the defendant may engage in similar activities or conduct; (c) activities undertaken in fields in which there was potential to do great financial damage such as in management and financial consultancy; (d) the defendant's lack of contrition or remorse; (e) disregard for the law and compliance with corporate regulations; (f) dishonesty and intent to defraud; and (g) previous convictions and contraventions for similar activities. 14. In cases in which the period of disqualification ranged from 7 years to 12 years, the factors that led to the conclusion that these cases were serious though not the "worst cases", included: (a) serious incompetence and irresponsibility; (b) substantial loss; (c) the fact that the defendant had engaged in deliberate courses of conduct to enrich himself or herself at others' expense, but with lesser degrees of dishonesty; (d) continued, knowing and wilful contraventions of the law and disregard for legal obligations; and (e) lack of contrition or acceptance of responsibility, although that must be weighed against the prospect that the defendant may reform. 15. The factors leading to the shortest disqualifications (that is, disqualifications for up to 3 years) were: (a) although the defendant had personally gained from the conduct, he or she had endeavoured to repay or partially repay the amounts misappropriated; (b) the defendant had no immediate or discernible future intention to hold a position as manager of a company; and (c) the defendant had expressed remorse and contrition, acted on advice of professionals and had not contested the proceedings against him or her.'