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Richardson, Tessa --- "Illegal Phoenix Activity: Will A Phoenix Prohibition Solve The Problem" [2019] WAStuLawRw 3; (2019) 3 Western Australian Student Law Review 28


ILLEGAL PHOENIX ACTIVITY: WILL A PHOENIX PROHIBITION SOLVE THE PROBLEM?

TESSA RICHARDSON[*]

Phoenix Activity—Phoenix Prohibition—Companies—Taxation—Financial Regulation—Bankruptcy

Illegal phoenix activity is becoming increasingly prominent in Australia. This activity causes significant harm to various parties—such as creditors, employees and revenue authorities––meaning Australia needs an appropriate deterrent. This article considers Australia’s existing attempts at deterring illegal phoenix activity and concludes that the current approach is insufficient to prevent illegal phoenix activity. Introducing a phoenix prohibition has been suggested as a mechanism to deter harmful activity; however, this article argues that this approach does not present a viable solution. Instead, the focus should be on enforcing existing penalties under existing legislation and ensuring that relevant authorities pursue maximum penalties for relevant offences as required.

I INTRODUCTION

Fraudulent phoenix activity is a current matter of concern in Australia. Recent estimates indicate that the cost of illegal phoenix activity to the economy is significant, despite the difficulty associated with quantification due to a lack of data.[1] The Fair Work Ombudsman estimates the total cost to the Australian economy to be between approximately $1.8 billion and $3.2 billion per year.[2] While it is clear that fraudulent phoenix activity needs to be stopped, what is unclear is the best approach to do so. In 2017, the Treasury introduced a report for consultation titled ‘Combatting Phoenix Activity’ which proposed a number of solutions in relation to reforming the law applicable to phoenix activity.[3] In Part II, this article considers the threshold issues associated with defining illegal phoenix activity. Part III analyses the existing legislation and penalties that may be applied to illegal phoenix activity. Part IV considers whether a phoenix prohibition––that is, a specific phoenix activity offence––provides a viable solution for illegal phoenix activity, or whether a focus on reforming existing laws and enforcement is a more suitable approach. This article ultimately argues that the introduction of a phoenix prohibition will not significantly alter provisions that already exist. Instead, the best way to target illegal phoenix activity is to place greater emphasis on deterrence and the enforcement of existing provisions.

II WHAT IS PHOENIX ACTIVITY?

Phoenix activity is notoriously difficult to define.[4] Broadly, phoenix activity occurs when individuals in control of a failed company transfer the failed company’s (‘OldCo’) assets to a new company (‘NewCo’), so that NewCo is seen to ‘arise from the ashes’.[5] Any of OldCo’s debts remain its responsibility, but it no longer has any assets available to satisfy these debts.[6] Another way phoenix activity may occur is within a corporate group.[7] A subsidiary with a few assets may be liquidated without paying its debts, and an existing or newly created subsidiary will take over the activity of the failed subsidiary company.[8] Employees may keep their jobs in this instance by being transferred to a related entity, but they may lose their entitlements, such as accrued sick leave.[9]

There are a number of creditors that may be impacted by phoenix activity. These include unsecured trade creditors; employees who may lose their entitlements and wages; and revenue authorities who may lose payroll tax revenue, pay as you go (‘PAYG’) instalments and superannuation guarantee charges.[10]

Phoenix activity can be classified as either illegal or legal.[11] Legal phoenix activity occurs where the company’s controllers, usually the directors, intend on rescuing the business in a legitimate way, with NewCo paying a fair price for the transfer of the assets of OldCo.[12] Illegal phoenix activity is similar to legal phoenix activity; however, the activity becomes illegal where there is an element of intention present in relation to the directors using the corporate form to detriment unsecured creditors.[13] There are a number of reports that have attempted to define illegal phoenix activity in Australia from as early as 1994.[14] Such reports have indicated that any definition of illegal phoenix activity must include the element of ‘intent’ in order to distinguish it from legal phoenix activity, which involves a legitimate business rescue.[15]

A significant step forward in addressing the definition of illegal phoenix activity was the introduction of the Corporations Amendment (Similar Names) Act 2012 (Cth). This legislative instrument has the effect of making directors of a failed company jointly and severally liable for the debts of a company that has a similar name to the name of the previous failed company, where the directors of both OldCo and NewCo are the same.[16] However, where NewCo is created using a different name, it falls outside these amendments. The various attempts to clearly define illegal phoenix activity over the last 20 years indicate the extreme difficulty in providing a clear definition of illegal phoenix activity. Given this difficulty, the suggestion that a specific phoenix offence be created is problematic, and consideration should be given to whether a specific phoenix prohibition is the best approach, or whether existing laws can sufficiently address the problem.

III LEGAL FRAMEWORK

The Australian Securities and Investment Commission (‘ASIC’) has classified illegal phoenix activity as ‘illegal’,[17] and the Australian Tax Office (‘ATO’) has labelled it as ‘fraudulent’.[18] However, both of these labels are used as a way of capturing the breach of laws that occur generally in relation to phoenix activity, but not a breach of law in relation to the conduct itself.[19] Instead, there are a number of existing provisions that can be used to punish illegal phoenix activity.[20]

A Existing Provisions

Under the Corporations Act 2001 (Cth) (‘Corporations Act’), directors have a duty of care and diligence;[21] a duty to act in good faith in the best interests of the corporation and for a proper purpose;[22] a duty not to use their position or information to improperly gain an advantage or detriment the company;[23] and a duty to prevent insolvent trading by the company.[24] Although it was not the intent of those provisions, each of the statutory duties can be used to hold a director liable for phoenix activity. Section 182 of the Corporations Act is one of the more relevant provisions in preventing illegal activity, as it addresses the intentional aspect of the conduct.[25] That is, where a director intentionally misuses their position to benefit NewCo or detriment OldCo by transferring the assets of OldCo to NewCo, they will be in breach of their duty not to improperly use their position under s 182. As a result, the use of this provision to target illegal phoenix activity is useful, because it does not interfere with legitimate business rescues.[26] Further, where a director fails to act in the best interests of a company, such as through the intentional undervaluing of assets transferred between OldCo and NewCo,[27] they will be in breach of their duty to act in good faith under s 181(1).[28]

Since 2000, uncommercial transactions have fallen under insolvent trading provisions.[29] The Explanatory Memorandum for the Corporations Law Amendment (Employee Entitlements) Act 2000 (Cth) provides that, by including phoenix activity as an uncommercial transaction in s 588G(1A) of the Corporations Act, there is an avenue for prosecution of directors involved in phoenix activity.[30] Also passed in 2000 is s 596AB of the Corporations Act which provides that ‘a person must not enter into a relevant agreement or transaction with the intention of ... preventing the recovery of the entitlements of employees of a company; or significantly reducing the amount of the entitlements of employees’. By engaging in illegal phoenix activity, directors are intentionally preventing employees from accessing their entitlements.

Tax laws are also relevant in this sphere:[31] s 5 of the Crimes (Taxation Offences) Act 1980 (Cth) (‘Taxation Offences Act’) makes it an offence to enter ‘into an arrangement with the intention of securing ... that a company ... will be unable ... to pay income tax payable by the company’. There are a number of provisions available that are relevant to phoenix activity, so why is phoenix activity still such a problem? This may be a matter of increasing the enforcement of provisions, or it may be that the provisions cannot be effectively enforced as they stand.

B Enforcement of Provisions

Each of the existing provisions described above have associated penalties that can be applied to illegal phoenix activity. These include the penalty provisions for directors contained in the Taxation Administration Act 1953 (Cth) and the provisions in the Corporations Act that allow for the disqualification of a director involved in two or more failed companies.[32] There are also a number of laws that target the improper conduct of directors involved in phoenix activity as outlined in Part Error! Reference source not found..

Directors’ duties are enforced through either civil or criminal sanctions, except for breaches of directors’ duty of care and diligence which only attracts civil liability.[33] ASIC may bring a proceeding for breaches of directors’ duties for a civil penalty of up to $200,000 per contravention, in addition to making disqualification orders and compensation orders.[34] Civil penalties seek to facilitate enforcement and overcome the associated difficulties with traditional criminal regimes, such as evidentiary burdens.[35] Criminal sanctions for breaches of directors’ duties requires the presence of an additional mens rea element to determine a breach of the duty, including dishonesty, recklessness or intention.[36] Criminal penalties may include imprisonment for up to five years and fines of up to $360,000 per offence.[37] Since 1993—when the civil penalties for directors’ duties were introduced—only one application has been brought by ASIC for a breach of directors’ duties in relation to phoenix activity.[38] In this instance, pecuniary penalties were not sought and the directors were merely disqualified.[39] Provisions under the Taxation Offences Act carry a potential term of imprisonment of ten years and a $180,000 fine.[40] This should be the preferred approach in addressing fraudulent phoenix activity due to the significant penalties.[41] Fraudulent phoenix activity should be addressed using this provision given the significant penalties associated.[42] The harsh pecuniary penalty and potential imprisonment sentence would act as a deterrent to those looking to engage in illegal phoenix activity, and should be enforced where the penalties under the Corporations Act cannot act as a significant enough deterrent.

Section 596AB of the Corporations Act can only be enforced as a criminal provision by ASIC.[43] Commentators have argued that s 596AB would be so difficult to prove that nobody could be effectively prosecuted,[44] and that it would inevitably limit the scope and effectiveness of the provision as a protective mechanism for employees.[45] This poses a problem in attempting to enforce phoenix activity as it is difficult to prove intention or recklessness as the actions of directors are likely to be similar whether the conduct is a legitimate business rescue or an illegitimate avoidance of liability.[46]

ASIC frequently conducts summary prosecutions where companies fail to provide information to liquidators or fail to assist liquidators as required by ss 475 and 530A of the Corporations Act.[47] Although these strict liability summary offences are easier to prove and would be well suited to the prosecution of illegal phoenix activity, the maximum penalty is only $9,000. As such, where a company has resorted to the point of engaging in illegal activity to start again, debt free, it is unlikely that a $9,000 fine would be significant enough to deter such activity.

While there are a significant number of existing provisions that can be used to target illegal phoenix activity, it appears the existing regime has been underutilised.[48] A key consideration, therefore, is whether the creation of a new specific phoenix offence is the solution, or whether the problem can be addressed by fine-tuning the existing laws and focussing on increased enforcement.

IV POTENTIAL SOLUTIONS

A Specific Phoenix Prohibition

The key benefit of establishing an illegal phoenix prohibition is that it would send a clear message to company directors that illegal phoenix activity will not be tolerated.[49] However, the difficulty with establishing a targeted phoenix prohibition provision ties into the difficulties with defining phoenix activity discussed above. The difference between a legitimate business rescue and illegal phoenix activity is often unclear. The literature concerning phoenix activity argues that it would be extremely difficult to draft legislative provisions that are more specific than the existing directors’ duties, given that those duties already cover a number of manifestations of phoenix activity.[50]

Despite these uncertainties, Treasury has suggested that the best way to target illegal phoenix activity is by introducing a specific phoenix offence.[51] The offence would specifically prohibit the transfer of property from one company to another if the main purpose of the transfer is to ‘prevent, hinder or delay the process of that property becoming available for division among the first company’s creditors’.[52] The proposed offence focusses only on the transfer of property between companies. However, there are various other ways that illegal phoenix activity can occur—for example, the two company approach, where one company holds no assets and all the liability.[53] There are also issues with this proposed offence as it appears to import a criminal standard in relation to intention.[54] This will make the offence even more difficult to prove. Section 596AB also imposes a criminal standard, which is likely why it has never been used in relation to phoenix activity.[55] There does not appear to be a substantial difference between the proposed phoenix offence and the provisions that already exist––as discussed above––and therefore it appears that the introduction of this phoenix offence would not be beneficial to preventing illegal phoenix activity.[56]

B Hallmark Approach

Given the inherent difficulties with defining illegal phoenix activity, there is a risk that establishing a blanket phoenix prohibition would interfere with instances of legitimate business rescues. As an alternative, a ‘hallmarks’ approach may be preferable to circumvent this concern. Hallmarks act as tools to identify the features of illegal phoenix activity. This approach would mean that directors can be liable for phoenix activity if their conduct falls within one or more of the hallmarks.

Based on the definitions established by various reports, illegal phoenix activity hallmarks would likely need to include conduct where:

(1) the company fails and is unable to pay its debts; and

(2) directors intentionally deny unsecured creditors access to the company’s assets to meet unpaid debts; and

(3) within 12 months of the initial company failing, a new company commences using some or all of the initial company’s assets; and

(4) there is a transfer of undervalued assets; and

(5) the new company is controlled by either the same or related parties to the management or directors of the previous entity.

Multiple government agencies––including ASIC and the ATO—form part of a dedicated ‘Phoenix Taskforce’ whose role is to identify, manage and monitor suspected illegal phoenix activity.[57] This work already takes a similar approach to the hallmarks approach by identifying key behaviours that indicate illegal phoenix activity with the activities then managed and monitored. As such, incorporating these hallmarks into legislation would complement ASIC’s current enforcement approach. While the ‘hallmarks’ approach would be more suitable than the phoenix offence suggested by Treasury, given that ASIC already attempts to approach and deter illegal phoenix activity in a similar manner; it is unlikely that legislating the same will make a significant difference. As such, rather than focussing on introducing a new provision, it appears the best solution is twofold: prevent the occurrence of illegal phoenix activity in the first place; and focus on the enforcement of existing provisions.

C Increased Penalties

Given that the conduct associated with phoenix activity means that directors will always be in breach of one of their duties, it has been suggested that the solution is instead to increase the penalties associated with existing laws.[58] The basis for this argument is that increasing sanctions for a breach of directors’ duties will deter non-compliance and demonstrate the seriousness of the misconduct.

Under the civil penalty regime, the maximum penalty is $200,000 per contravention.[59] The median penalty imposed between 2005 and 2014 for directors’ duties breaches was $50,000.[60] Only four fines were imposed in this period for criminal breaches of directors’ duties, ranging between $4,000 to $75,000,[61] with the maximum fine under the Corporations Act being 2000 penalty units.[62] As a result of these low figures, commentators suggest increasing the penalties for directors’ duties breaches to $500,000 for the maximum civil penalty and 4,500 penalty units for the maximum criminal fine.[63]

This article does not agree with increasing the penalties for a breach of directors’ duties. While increasing the penalties may be useful in deterring illegal phoenix activity, increasing a penalty for an offence that has such a broad application risks these increased penalties being inappropriately applied in other situations. While it is ultimately at the discretion of the court as to what penalty is imposed, higher penalties could still be sought for other conduct. The penalties system for directors’ duties is designed to fit the current breaches that the existing provisions target. Rather than increasing the penalties available, the focus should be on seeking the imposition of higher penalties for illegal phoenix activity within the existing maximums. Given the maximum penalties that currently exist are not being enforced, they are not effective in deterring illegal phoenix activity. As such, the enforcement of these maximum penalties should be a priority, rather than increasing the penalty for an offence that already isn’t being utilised to its full extent.

D Other Measures

1 Detection

In order to better track those responsible for illegal phoenix activity, it has been suggested by some commentators that all directors should be required to have a director identification number (‘DIN’).[64] The Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2018––currently undergoing consultation––proposes to introduce this DIN to assist in tracing directors’ relationships between companies. This would prevent directors going undetected by creating fictitious characters, misspelling their name, or including a false date of birth.[65] The DIN would allow various agencies to track ‘repeat offenders’ and monitor individuals whom enforcement action should be taken against,[66] assisting in preventing the activity.

2 Enforcement

General deterrence is likely to result if widespread enforcement actions become known to the public.[67] Given there are existing penalties that can be applied to illegal phoenix activity that have significant penalties, the focus in deterring illegal phoenix activity should be on increased enforcement of these provisions. There has only been one civil penalty application brought by ASIC for a breach of directors’ duties in the context of phoenix activity, despite there being an estimated 424 criminal breaches and 1,125 civil breaches of the s 182 directors’ duty in 2015-16 alone.[68] These results suggest that ASIC needs to prioritise taking enforcement actions against persons who engage in conduct that breaches existing provisions in the course of phoenix activity.[69] Enforcement actions would likely be more prevalent if pursued in relation to those provisions that have civil penalties, due to the lower standard of proof. As such, ASIC should prioritise the enforcement of provisions that have civil penalties.

3 Compensation

Courts can order a person that is in contravention of a civil penalty provision to compensate the aggrieved company for damage as a result of the contravention under s 1317H(1) of the Corporations Act. This is effectively an account of profits mechanism.[70] There is no requirement on the part of the corporation that has suffered damage, to prove any pecuniary loss.[71] In relation to phoenix activity, a court could order a director in breach of their duty to compensate OldCo for profits made by NewCo that are a result of the undervalued transfer of assets.[72] A potential reform could be introduced to amend this section so that orders can be made against NewCo, rather than only its director. This amendment would further facilitate enforcement and signal to directors that those who engage in illegal phoenix activity and obtain a benefit from a breach of duty will be stripped of that benefit.[73]

V CONCLUSION

There are numerous existing laws that can be applied to illegal phoenix activity, with s 182 of the Corporations Act providing clear guidelines as to the improper conduct of directors that inevitably occurs with illegal phoenix activity. The key issue associated with phoenix activity is the inherent difficulty in defining illegal phoenix activity so as to distinguish it from a legitimate business rescue. A broad definition will likely capture these legitimate business rescues, but a narrow proscription likely has the ability to be circumvented through loopholes and will therefore have limited applicability. As a result, it is the author’s opinion that a strict phoenix prohibition is not an effective way to prevent this activity. However, illegal phoenix activity has significant detrimental effects on the Australian economy; so while a phoenix prohibition is not the solution, more needs to be done to combat the issue. Accordingly, greater focus should be placed on enforcing existing provisions to best deter this harmful activity. Additionally, those responsible for enforcing these provisions should prioritise the imposition of penalties as close to the existing maximum as possible in order to demonstrate a zero-tolerance attitude towards illegal phoenix activity.

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[*] LLB (Hons). Tessa is a recent Curtin Law School graduate.

[1] Helen Anderson et al, ‘Illegal Phoenix Activity: Quantifying its Incidence and Cost’ (2016) 24 Insolvency Law Journal 95.

[2] PricewaterhouseCoopers and Fair Work Ombudsman, Phoenix Activity—Sizing the Problem and Matching Solutions (June 2012), (2012 PWC FWO Phoenix Activity Report) [1.2].

[3] Australian Government Treasury, Combatting Illegal Phoenix Activity Consultation Paper (September 2017).

[4] Helen Anderson, ‘The Proposed Deterrence of Phoenix Activity: An Opportunity Lost?’ [2012] SydLawRw 20; (2012) 34 Sydney Law Review 411, 412.

[5] Anderson et al, ’Quantifying Incidence and Cost’ above n 1, 96.

[6] Ibid

[7] Anderson, ‘The Proposed Deterrence of Phoenix Activity’ above n 4, 412.

[8] Ibid.

[9] Helen Anderson et al, ‘Illegal Phoenix Activity: Is a “Phoenix Prohibition” the Solution?’ (2017) 35 Company and Securities Law Journal 184, 186.

[10] Anderson, ‘The Proposed Deterrence of Phoenix Activity’, above n 4, 412.

[11] Helen Anderson et al, Defining and Profiling Phoenix Activity (December 2014) <http://law.unimelb.edu.au/__data/assets/pdf_file/0007/1709503/15- Definingandprofilingphoenixactivity-reportfinal2.pdf> .

[12] Anderson et al, ‘Quantifying Incidence and Cost’, above n 1, 96.

[13] Anderson et al, ‘Phoenix Prohibition’, above n 9, 185.

[14] Parliament of Victoria Law Reform Committee, Curbing the Phoenix Company - First Report on the Law Relating to Directors and Managers of Insolvent Corporations, Report No 83 (1994).

[15] Australian Securities Commission, “Project One: Phoenix Activity and Insolvent Trading Public Version” (ASC Research Paper 95/01, May 1996) 35–40.

[16] Corporations Amendment (Similar Names) Act 2012 (Cth) s 596AJ(1).


[17] Australian Securities and Investments Commission (ASIC), Small Business—Illegal Phoenix Activity (2 February 2015) <http://asic.gov.au/for-business/your-business/small-business/compliance-for-small-business/small- business-illegal-phoenix-activity> .

[18] Australian Taxation Office (ATO), Fraudulent Phoenix Activities <https://www.ato.gov.au/General/The-fight-against-tax-crime/Our-focus/Fraudulent-phoenix-activities>.

[19] Anderson et al, ‘Quantifying Incidence and Cost’ above n 1, 97.

[20] Anderson et al, ‘Phoenix Prohibition’ above n 9, 193.

[21] Corporations Act 2001 (Cth) s 180.

[22] Ibid s 181.

[23] Ibid ss 1823.

[24] Ibid s 588G(2).

[25] Anderson et al, ‘Phoenix Prohibition’ above n 9, 194.

[26] Ibid.

[27] Helen Anderson, ‘Comment and Opinion: Phoenix Activity—A Context Not a Crime’ (2015) Australian Insolvency Journal 35.

[28] Corporations Act 2001 (Cth) s 181(1).

[29] Corporations Law Amendment (Employee Entitlements) Act 2000 (Cth) inserted s 588G(1A) into the Corporations Act 2001 (Cth).

[30] Explanatory Memorandum, Corporations Law Amendment (Employee Entitlements) Bill 2000 (Cth) [10].

[31] Criminal Code Act 1995 (Cth); Dishonestly obtaining Commonwealth property (s 134.1(1)); Obtaining financial advantage by deception (s 134.2(1)); Dishonestly causing a loss to the Commonwealth (s 135.4(3)); Taxation Administration Act: Failure to comply with requirements under taxation law (s 8C); Failure to answer questions when attending before the Commissioner or another person pursuant to a taxation law (s 8D); Making false or misleading statements to a taxation officer (s 8K) or recklessly making false or misleading statements (s 8N); Incorrectly keeping records (s 8L) or recklessly incorrectly keeping records (s 8Q); Incorrectly keeping records with intention of deceiving or misleading (s 8T); Falsifying or concealing identity with intention of deceiving or misleading (s 8U); Directors and officers are liable for taxation offences committed by the company (s 8Y).

[32] Taxation Administration Act 1953 (Cth) sch 1, div 269; Corporations Act 2001 (Cth) ss 206D, 206F.

[33] Corporations Act 2001 (Cth) ss 1804.

[34] Ibid ss 1317G, 206C, 1317H, 1317J(1).

[35] Anderson et al, ‘Phoenix Prohibition’ above n 9, 194.

[36] Corporations Act 2001 (Cth) ss 184, 588G(3).



[37] Ibid sch 3.

[38] Australian Securities and Investments Commission v Somerville (No 2) [2009] NSWSC 998.

[39] Ibid.

[40] Crimes (Taxation Offences) Act 1980 (Cth) ss 5, 6; Crimes Act 1914 (Cth) s 4AA.

[41] Pitcher Partners, Submission to Treasury, Action against Fraudulent Phoenix Activity (8 January 2010) <http://archive.treasury.gov.au/documents/1892/PDF/Pitcher_Partners.PDF> 5.

[42] Pitcher Partners, Submission to Treasury, Action against Fraudulent Phoenix Activity (8 January 2010) <http://archive.treasury.gov.au/documents/1892/PDF/Pitcher_Partners.PDF> 5.

[43] Note that liquidators can seek to recover the employee entitlements from the directors in the absence of a criminal conviction: Corporations Act 2001 (Cth) s 596AC(2).

[44] The Shop, Distributive and Allied Employees’ Association, Submission to Parliamentary Joint Statutory Committee on Corporations and Securities, Report on the Corporations Law Amendment (Employee Entitlements) Bill 2000 [3.25].

[45] Jennifer Hill, ‘Corporate Governance and the Role of the Employee’ in Paul Gollan and Glenn Patmore (eds), Partnership at Work: The Challenge of Employee Democracy: Labor Essays (Pluto Press, 2003) 110, 119.

[46] Anderson et al, ‘Phoenix Prohibition’ above n 9, 194.

[47] Corporations Act 2001 (Cth) ss 475 and 530A.

[48] Anderson et al, ‘Phoenix Prohibition’ above n 9, 197.

[49] Ibid.

[50] Ibid.

[51] Australian Government Treasury, Combatting Illegal Phoenix Activity Consultation Paper (September 2017) 8–9.

[52] Ibid.

[53] Helen Anderson et al, Submission to Treasury, Combatting Illegal Phoenix Activity, 9 October 2017, 4.

[54] Ibid.

[55] Ibid.

[56] Chartered Accountants Australia and New Zealand, Submission to Treasury, Combatting Illegal Phoenix Activity, 27 October 2017, 3.

[57] Australian Taxation Office, Phoenix Taskforce (3 September 2018) <https://www.ato.gov.au/General/The-fight-against-tax-crime/Our-focus/Illegal-phoenix-activity/Phoenix-Taskforce/>.

[58] Anderson et al, ‘Phoenix Prohibition’, above n 9, 185.

[59] Corporations Act 2001 (Cth) s 1317G.

[60] Jasper Hedges et al, ‘An Empirical Analysis of Public Enforcement of Directors’ Duties in Australia: Preliminary Findings’ (Working Paper No 105, Centre for International Finance and Regulation, March 2016) 2, 26, 29, 33 <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2766132> .

[61] Ibid 27.

[62] Corporations Act 2001 (Cth) sch 3 item 30 imposes a maximum fine of 2000 penalty units which equates to $360,000. A penalty unit is defined in Crimes Act 1914 (Cth) s 4AA.

[63] Anderson et al, ‘Phoenix Prohibition’ above n 9, 203.

[64] Helen Anderson et al, Phoenix Activity: Recommendations on Detection, Disruption and Enforcement (February 2017) Melbourne Law School [1.1.1]. <https://law.unimelb.edu.au/__data/assets/pdf_file/0020/2274131/Phoenix- Activity-Recommendations-on-Detection-Disruption-and-Enforcement.pdf>.

[65] Ibid.

[66] Ibid.

[67] Ibid [3.2].

[68] Ibid.

[69] Ibid.

[70] An account of profits is an equitable remedy that can be granted in cases where the defendant has profited from an equitable wrong.

[71] See Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6; (2012) 200 FCR 296, [620]–[631]; V Flow Pty Ltd v Holyoake Industries (Vic) Pty Ltd [2013] FCAFC 16; (2013) 296 ALR 418, [54].

[72] Anderson et al, ‘Phoenix Prohibition’ above n 9, 199.

[73] Ibid.


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