News: High Court Rules on James Hardie Directors
Author: Jonathan Casson, Partner
3 May 2012
In a decision that will have important implications for directors, the High Court has overturned a NSW Court of Appeal decision by finding that former James Hardie directors have each breached their duties as directors by approving the release of a misleading statement to the Australian Stock Exchange.
The seven directors were found to have approved a draft ASX announcement, in February 2001, which claimed that a trust fund for asbestos victims was fully funded, but was, in fact, underfunded by $1.3 billion. Much turned on the accuracy of the minutes of the meeting at which the announcement was approved, and the manner in which evidence on this was called. The directors claimed that minutes were inaccurate and they had not actually approved the announcement. They must now wait for the NSW Court of Appeal to consider penalties and disqualifications.
As a side issue, the High Court also found that company secretary, Peter Shafron, had breached his duties, disallowing his argument that he was acting as a General Counsel and was, therefore, not an officer of the company.
The case will have important implications for corporate and civil prosecutions brought against directors and a board’s ability to correctly classify liabilities.
Please do not hesitate to contact Jonathan Casson if you have any questions about this High Court decision.
Jonathan Casson
Partner
T: +61 2 9390 8316
E: jonathan.casson@holmanwebb.com.au