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The election of a Liberal-National Party government will lead to some interesting new "challenges" to law reform and the proliferation of laws that occurred during the last 13 years of Labor rule. In the area of corporations law there are a number of issues which are likely to be addressed by the new government. One of these is the related party transactions legislation. Even the Labor Party believed this legislation may have been a heavy overreaction to some of the concerns of the 1980s and may not have been achieving the aims intended. Invitations had already been issued to the community to provide comments on the way in which this legislation could be simplified. In particular, the government was looking for indications as to how these provisions created burdens on appropriate commercial behaviour.
One reason why the related party transactions legislation may be unnecessary, at least in its very extensive form, is the willingness of the courts to apply a more vigorous interpretation to the common law rules relating to directors' obligations to avoid a conflict of duty and interest. First we had the interpretation of the
Western Australian Full Supreme Court in Permanent Building Society (in liq) v Wheeler (1994) 14 ACSR 109; this decision was given support and emphasis by the High Court of Australia in R v Byrnes (1995) 130 ALR 529. Both cases built on a traditional statement of the law as in Aberdeen Railway Company v Blaikie Brothers [1854] 1 Macq 461 at 471. Now, that development has been given added impetus by a strong judgment in State Bank of South Australia v Marcus Clark (unreported, Supreme Court, SA, Perry J, 29 March 1996); 19 ACSR 606. This was one of a number of cases following the collapse of the State Bank of South Australia -- another of the casualties of the excesses of the 1980s. It was a civil action in which the State Bank sued...