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nsw_caselaw:549ff7443004262463c68ec8:69 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | “The Foundation will concentrate on managing its substantial assets for the benefit of claimants. Its establishment has effectively resolved James Hardie’s asbestos liability and this will allow management to focus entirely on growing the company for the benefit of all shareholders.”
A separate fund of $3 million has also been granted to the Foundation for scientific and medical research aimed at finding treatments and cures for asbestos diseases.
The $293 million assets of the Foundation include a portfolio of long term securities, a substantial cash reserve, properties which earn rent and insurance policies which cover various types of claims, including all workers compensation claims.
Towers Perrin has been appointed to advise the Foundation on its investments, which will generate investment income and capital growth. | 69 |
nsw_caselaw:549ff7443004262463c68ec8:70 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | In establishing the Foundation, James Hardie sought expert advice from a number of firms, including PricewaterhouseCoopers, Access Economics and the actuarial firm, Trowbridge. With this advice, supplementing the company’s long experience in the area of asbestos, the directors of JHIL determined the level of funding required by the Foundation.
“James Hardie is satisfied that the Foundation has sufficient funds to meet anticipated future claims,” Mr Macdonald said.
The initial $3 million for medical research will enable the Foundation to continue work on existing programs established by James Hardie as well as launch new programs.
When all future claims have been concluded, surplus funds will be used to support further scientific and medical research on lung diseases. | 70 |
nsw_caselaw:549ff7443004262463c68ec8:71 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | Mr Macdonald said Sir Llewellyn Edwards, who has resigned as a director of James Hardie Industries Limited to take up his new appointment as chairman of the Foundation, has enjoyed a long and distinguished career in medicine, politics and business.
His experience with James Hardie will assist the Foundation to rapidly acquire the knowledge it needs to perform effectively. Sir Llew is a director of a number of organisations including Westpac Banking Corporation and is also Chancellor of the University of Queensland.
The other Foundation directors are Mr Michael Gill, Mr Peter Jollie and Mr Dennis Cooper.
Ends.
For further details contact:
Greg Baxter, Senior Vice President Corporate Affairs
Tel:
Mob:
This document is available from the Investor Relations Section
of the James Hardie website – www.jameshardie.com | 71 |
nsw_caselaw:549ff7443004262463c68ec8:72 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | This document contains forward-looking statements. Forward-looking statements are subject to risks and uncertainties and, as a result readers should not place undue reliance on such statements. The inclusion of these forward-looking statements should not be regarded as a representation that the objectives or plans described will be realised.”
93 I have excluded the telephone number and mobile number set out in the announcement.
94 It was submitted that the Draft ASX Announcement was not released to the public. The Final ASX Announcement was. But it was based upon the Draft ASX Announcement.
95 While none of the non-executive directors offered evidence of contrition, this was not a case of a defendant guilty of obvious and palpable wrongdoing maintaining innocence against the overwhelming weight of evidence (Australian Securities and Investments Commission v Vines [2006] NSWSC 760; (2006) 58 ACSR 298 at 331-332 [103]). | 72 |
nsw_caselaw:549ff7443004262463c68ec8:73 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 96 Furthermore, there is a tension when a matter is the subject of an appeal or likely to be the subject of an appeal and there is perceived to be some significance in a resolute continuance of a denial of events found by the primary judge (Australian Securities and Investments Commission v Whitlam (No 2) [2002] NSWSC 718; (2002) 42 ACSR 515 at 520 [16]).
97 I do not place a great deal of weight on the lack of evidence of contrition.
98 The first element of seriousness identified by Austin J was the importance of the provision contravened in terms of public policy.
99 Section 180(1) imposes a statutory duty much like the duty at common law. Its public policy value is to ensure that boards of directors of companies are composed of individuals with suitable skills to monitor the actions of management and to perform any special tasks for which they are appointed. In Deputy Commission of Taxation v Clark [2003] NSWCA 91; (2003) 57 NSWLR 113 at 140 [108]-[109] Spigelman CJ said: | 73 |
nsw_caselaw:549ff7443004262463c68ec8:74 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | “What constitutes breach of the standards of care and of diligence, in a particular case, will depend on a wide variety of circumstances including the precise nature of the business conducted by the company and the composition of its board. However, the case law indicates that there is a core irreducible requirement of involvement in the management of the company. | 74 |
nsw_caselaw:549ff7443004262463c68ec8:75 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | Although the standard of skill may vary in accordance with the particular skills of the director, the core, irreducible requirement of skill involves an objective test, such as “ordinary competence” ( Kemish , above at 373 per Foster J) or “reasonable ability” ( Rema Industries and Services Pty Ltd v Coad (1992) 107 ALR 374 at 382; 7 ACSR 251 at 259 per Lockhart J). An equivalent objective test applies to the core irreducible requirement of diligence, such as “reasonable steps to place themselves in a position to guide and monitor the management of the company” per Rogers CJ CommD in AWA Ltd v Daniels , above at 864, adopted by Clarke and Sheller JA on appeal in Daniels v Anderson at 501.” | 75 |
nsw_caselaw:549ff7443004262463c68ec8:76 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 100 As Austin J points out in Australian Securities and Investments Commission v Vines [2003] NSWSC 1116; (2003) 182 FLR 405 at 415 [38] there is encompassed by the statutory formulation of care and diligence an objective standard measured by reference to what a reasonable man of ordinary prudence would do enhanced where the directorial appointment is based on special skill by an objective standard of skill referable to the circumstances, notwithstanding the absence of the word “skill” from the statutory formulation.
101 The circumstances in which Section 180(1) is breached will vary from the trivial where a bias towards exoneration under Section 1317S(2) will be likely, to the serious in which that bias will be unlikely, or less likely. | 76 |
nsw_caselaw:549ff7443004262463c68ec8:77 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 102 It was submitted that since the release of the Final ASX Announcement was but part of a series of communication strategies for informing the public of the separation of Coy and Jsekarb from the James Hardie group, the contravention of Section 180(1) was at the lower end of the spectrum of seriousness and misleading aspects of the Draft ASX Announcement were errors of emphasis in what the board was told was a single aspect of a much wider strategy in the approval and implementation of which the non-executive directors were not involved. | 77 |
nsw_caselaw:549ff7443004262463c68ec8:78 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 103 I do not accept that submission. This event, while isolated, was highly significant. The board had decided to form the Foundation, to settle Coy and Jsekarb upon it and to provide a level of funding to meet future asbestos claims. The non-executive directors knew from the board papers they had received at this and earlier meetings that JHIL had to convince the public that there were sufficient funds to meet all legitimate asbestos claims. They had rejected an earlier proposal that did not provide sufficient funding. They were aware of the significance of what was to be said in the Draft ASX Announcement about the level of funding. The information at their disposal did not support the emphatic terms of the Draft ASX Announcement. | 78 |
nsw_caselaw:549ff7443004262463c68ec8:79 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 104 This was a serious breach of duty and a flagrant one. The non-executive directors were endorsing JHIL’s announcement to the market in emphatic terms that the Foundation had sufficient funds to pay all legitimate present and future asbestos claims, when they had no sufficient support for that statement and they knew, or ought to have known, that the announcement would influence the market.
105 Here the negligently made misleading statement was serious as it was a deliberate attempt to influence the market to an acceptance of the separation of Coy and Jsekarb, with their attendant asbestos claims, from the James Hardie group. | 79 |
nsw_caselaw:549ff7443004262463c68ec8:80 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 106 Included in the material made available to them at the 15 February 2001 Meeting was a sensitivity analysis forming part of the Cashflow Model. It demonstrated that a drop of 1% in the investment rate adopted in the Cashflow Model halved the fund. In other words, on a 51 year analysis, the fund would be exhausted somewhere between year 20 and year 25. The shortcomings of the Cashflow Model must have been obvious to the non-executive directors, or at least they ought to have been, and they should have realized that they were prevented from approving the unequivocal and unqualified statements as to the certainty of sufficient funding in the Draft ASX Announcement. | 80 |
nsw_caselaw:549ff7443004262463c68ec8:81 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 107 The meeting was not informed that PwC and Access Economics had been instructed not to analyse the assumptions underlying the Cashflow Model. All the non-executive directors were told was that PwC and Access Economics had found the Cashflow Model to be logically sound and technically correct. But that did not justify the emphatic statements made in the Draft ASX Announcement. That statement simply drew attention back to the Cashflow Model and its sensitivity analysis denied the accuracy of the statements as to sufficiency of funding in the Draft ASX Announcement. | 81 |
nsw_caselaw:549ff7443004262463c68ec8:82 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 108 There were a number of occasions subsequent to the meeting at which the Draft ASX Announcement was approved when the non-executive directors should have complained about the statements in the Draft ASX Announcement and other statements to like effect. None of them did. The evidence of those non-executive directors who gave evidence was that they did not read, or had no recollection of reading, such statements. I did not accept the chorus of denial of recollection to be genuine.
109 Like Austin J in Vines 65 NSWLR at 293 [51], I do not feel myself constrained to ignore conduct after the event.
110 It was submitted that my findings of unsatisfactory conduct on the part of Ms Hellicar should not be used in determining the presence or absence of honesty under Section 1317S(2) and Section 1318(1) as that matter had to be decided at the time of contravention. | 82 |
nsw_caselaw:549ff7443004262463c68ec8:83 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 111 As it has turned out my decision that Ms Hellicar has not satisfied me that she acted honestly in approving the Draft ASX Announcement was not based on findings as to credit. I arrived at that view for the same reasons as I found that Mr Brown and Mr Willcox had not satisfied me that they acted honestly in approving the Draft ASX Announcement.
112 It is true that the question of honesty must be determined at the time the duty is breached. But it cannot be correct to say that subsequent conduct cannot be taken into account. Findings as to credit subsequent to an event may be highly significant in determining whether an earlier breach of duty was nonetheless committed honestly.
113 Had it been necessary I would have relied upon my rejection of the chorus of denials and my findings of unsatisfactory conduct on the part of Ms Hellicar to conclude that the non-executive directors had not established that they acted honestly at the antecedent time they breached their duty of care and diligence. | 83 |
nsw_caselaw:549ff7443004262463c68ec8:84 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 114 It was submitted that there was no evidence of damage or harm emanating from the publication of the Final ASX Announcement other than the legal liability on the part of JHIL established in these proceedings.
115 The Final ASX Announcement would not have been understood to convey representations of certainty to sophisticated readers. They would have assumed, however, that such emphatic statements as the Final ASX Announcement contained could only be made if very conservative assumptions had been adopted by JHIL in determining the funding level for the Foundation. A risk free investment earnings rate was not adopted in the Cashflow Model. It adopted 11.7%.
116 There were a series of analysts’ reports and newspaper articles regarding the establishment of the Foundation published shortly after the publication of the Final ASX Announcement. None of them stated that it was certain that there would be sufficient funds for asbestos claimants or that JHIL had said that this was certain. | 84 |
nsw_caselaw:549ff7443004262463c68ec8:85 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 117 Apart from the current proceedings, in which no penalty or costs order is sought against JHIL, no other proceeding in respect of the Final ASX Announcement has been brought, nor could now be brought successfully given the limitation period.
118 As Austin J observed in Vines 65 NSWLR at 294 [55] of this third component of seriousness, it can give rise to awkward and difficult questions of causation. What his Honour suggested, and I endorse, at 294-295 [56] is that it is sufficient to deal with this issue in general terms: | 85 |
nsw_caselaw:549ff7443004262463c68ec8:86 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | “It was sufficient for Tadgell J in Commonwealth v Friedrich and for Mandie J in ASIC v Plymin (No 2) to advert to the effect of the defendants' contravening conduct in general terms, without making any specific findings about causation for the purpose of exercising the discretion. Consistently with that approach, it seems to me adequate, in the case of negligently misleading statements, to consider the degree of plausibility, in a general sense, of the contention that the contravening conduct caused or did not cause loss, having regard to the applicable principles of causation. The stronger the likelihood that loss has been caused, the more powerful this factor becomes as a factor against granting leave. Conversely, the weaker the likelihood is that the contravening conduct caused loss, the weaker is the "serious contravention" factor.” | 86 |
nsw_caselaw:549ff7443004262463c68ec8:87 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 119 The publication of the Final ASX Announcement had the effect of maintaining the market price of JHIL shares. Thus, the market operated on a false basis and by reason of the misleading announcement the price of JHIL shares was artificially maintained. That increased the potential harm to JHIL if the misleading statements were revealed.
120 It was submitted that this effect lasted for only 41 minutes before the Press Conference Statements were made. But those statements did not supplant the effect of those contained in the Final ASX Announcement. They enforced them.
121 With respect to the other matters identified by Austin J of whether advice was taken, whether a standard practice was followed and whether the transgressor was paid, none raises an issue of significance in the circumstances of this case.
122 Of the negative criteria accepted by Austin J, none was present in this case with the exception of flagrancy of the breach. | 87 |
nsw_caselaw:549ff7443004262463c68ec8:88 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 123 Mr Gillfillan and Mr Koffel were appointed to the JHIL board to provide strategic advice in relation to JHIL’s operations in the US. Those operations had become, and were expected to continue to be, the main source of profitability and revenue for the company.
124 It was submitted that the gravity of the contravention by them was of a lower scale than that of the other non-executive directors who were physically present at the 15 February 2001 Meeting and who approved the Draft ASX Announcement. Had any of the advisers and, in particular, Allens, been aware that the US directors were not entitled to rely on their fellow directors, management, or independent advisers, Allens would have insisted, it was submitted, that Mr Gillfillan and Mr Koffel be provided with copies of the Draft ASX Announcement. It was submitted that had Mr Gillfillan and Mr Koffel abstained from voting, the Draft ASX Announcement would still have been approved by the directors present at the meeting. | 88 |
nsw_caselaw:549ff7443004262463c68ec8:89 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 125 In the manner in which Mr McGregor conducted board meetings, the silence of Mr Gillfillan and Mr Koffel was, in effect, a vote approving the Draft ASX Announcement.
126 The fact that the Draft ASX Announcement would have been approved in any event does not excuse the conduct of the US directors. | 89 |
nsw_caselaw:549ff7443004262463c68ec8:90 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 127 Nor do I consider their breach of duty to be of a lower flagrancy to the conduct of those who attended the 15 February 2001 Meeting in person. There was discussion at the meeting of the Draft ASX Announcement. The statements as to the key message to be communicated to the market made at the meeting bore a correlation to the paragraphs of the Draft ASX Announcement. That in itself may have been sufficient for Mr Gillfillan and Mr Koffel to be taken to have approved the release of the Draft ASX Announcement. But there was clearly enough discussion to have alerted Mr Gillfillan and Mr Koffel to the fact that the board was considering a document that they did not have. Their failure to ask for a copy and their silence knowing that it would be taken as a vote in favour of approval was, in my view, just as flagrant as the approval of the Draft ASX Announcement by those who attended the meeting in person. | 90 |
nsw_caselaw:549ff7443004262463c68ec8:91 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 128 I dismiss the applications of Mr Brown, Mr Gillfillan, Ms Hellicar, Mr Koffel, Mr O’Brien, Mr Terry and Mr Willcox for relief under Section 1317S(2) and Section 1318(1). I must make declarations of contravention of Section 180(1) under Section 1317E(1). I will return later in these reasons to the form of the declarations. | 91 |
nsw_caselaw:549ff7443004262463c68ec8:92 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 1.4 Draft ASX Announcement and Mr Shafron
129 Mr Shafron was one of the company secretaries of JHIL. He is a qualified legal practitioner with Bachelor and Masters of Law degrees from the University of Sydney. He was admitted to practice in Australia and in California. He performed the role of general counsel.
130 In Macdonald (No 11) I found Mr Shafron in breach of Section 180(1) in failing to advise the board that the Draft ASX Announcement was expressed in too emphatic terms concerning the adequacy of the funding made available to meet all legitimate present and future asbestos claims brought against Coy and Jsekarb.
131 Mr Shafron did not give evidence. I have already rejected the submission of ASIC that unless a person gives evidence on the topic the Court cannot be satisfied that the person acted honestly for the purposes of Section 1317S(2) or Section 1318(1). | 92 |
nsw_caselaw:549ff7443004262463c68ec8:93 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 132 Mr Shafron did not read testimonial affidavits. But that does not mean that he is excluded from seeking relief under Section 1317S(2) or Section 1318(1). But the absence of evidence by him and other persons as to his character and directorial performance leaves him in a worse position than that of Mr O’Brien and Mr Terry. There is nothing in the evidence from which I am positively persuaded that Mr Shafron acted honestly in failing to advise the board of the too emphatic terms of the Draft ASX Announcement.
133 Mr Shafron was involved in the making of decisions that affected the whole or a substantial part of the business of JHIL. The separation proposal considered by the board at the meeting at which the Draft ASX Announcement was approved was such a decision. And Mr Shafron played a vital role in the board’s deliberations thereby participating in the making of that decision. | 93 |
nsw_caselaw:549ff7443004262463c68ec8:94 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 134 As general counsel protecting JHIL from infringement of statutory obligations, it must have been obvious to Mr Shafron, or at least it ought to have been, that if JHIL authorised the release of a public statement concerning separation that was false and misleading, that would be harmful, or potentially harmful, to JHIL in that it might contravene or risk contravening s 995(2) (Section 995(2)) and s 999 (Section 999) of the Corporations Law as carried over into the Corporations Act.
135 Section 995(2) was in the following terms:
“A person shall not, in or in connection with:
(a) any dealing in securities; or
(b) without limiting the generality of paragraph (a):
(i) the allotment or issue of securities;
(ii) a notice published in relation to securities; | 94 |
nsw_caselaw:549ff7443004262463c68ec8:95 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (iii) the making of, or the making of an evaluation of, or of a recommendation in relation to, offers under a takeover bid;
(iv) the carrying on of any negotiations, the making of any arrangements or the doing of any other act preparatory to or in any other way related to any matter referred to in sub paragraph (i), (ii) or (iii);
engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”
136 Section 999 was in the following terms:
“A person must not make a statement, or disseminate information, that is false in a material particular or materially misleading and:
(aa) is likely to induce other persons to subscribe for securities; or
(a) is likely to induce the sale or purchase of securities by other persons; or | 95 |
nsw_caselaw:549ff7443004262463c68ec8:96 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (b) is likely to have the effect of increasing, reducing, maintaining or stabilising the market price of securities;
if, when the person makes the statement or disseminates the information:
(c) the person does not care whether the statement or information is true or false; or
(d) the person knows or ought reasonably to have known that the statement or information is false in a material particular or materially misleading.”
137 Guarding against legal risks to JHIL was at the core of Mr Shafron’s responsibilities as general counsel.
138 Most of the submissions on behalf of Mr Shafron had been dealt with in considering the position of the non-executive directors.
139 It was submitted that it should be apparent to the Court from its own review of Mr Shafron’s communications that they bespeak the honest execution of his duties as general counsel. In a general sense, that may be so. | 96 |
nsw_caselaw:549ff7443004262463c68ec8:97 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 140 It was submitted that the contraventions found should be considered to be isolated, out of character and probably explained by the presence at the board meeting of more experienced and senior external lawyers from Allens and inattention arising from a profoundly busy and demanding period of work before and at the meeting.
141 I have already dealt with these contentions with respect to the non-executive directors. They apply a fortiori to Mr Shafron whose duty it was to protect JHIL from legal harm.
142 ASIC submitted that it was appropriate for the Court to take into account that there was no cooperation from the defendants. I place little store on that submission so far as Mr Shafron is concerned. He resides in the US. He returned to Australia to attend ASIC’s examination of him during its investigation and he instructed his solicitors in Australia to accept service when ASIC commenced these proceedings. | 97 |
nsw_caselaw:549ff7443004262463c68ec8:98 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 143 It was submitted that since the wording of the Draft ASX Announcement was not a matter for reliance upon management or outside experts, the directors should have known without being told by anyone that the Draft ASX Announcement was too emphatic and not supportable. It was submitted it was not a serious contravention to neglect to tell sophisticated, intelligent and experienced board members something they already knew or something that must have been obvious to them. It was submitted that it would have been against board etiquette for someone in Mr Shafron’s position to do so.
144 I do not accept that submission. If the directors were not concerned at the emphatic terms of the Draft ASX Announcement it was Mr Shafron’s duty as general counsel, in protecting JHIL, to warn them that the contents were too emphatic, etiquette or no etiquette. | 98 |
nsw_caselaw:549ff7443004262463c68ec8:99 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 145 Gregory John Baxter was the senior vice-president of corporate affairs of JHIL. His name appeared on the Draft ASX Announcement and on the Final ASX Announcement. Announcements to the ASX other than those of a financial nature were drafted by corporate affairs under his supervision.
146 It was submitted that Mr Baxter was the “real culprit”. But that does not excuse Mr Shafron’s breach of duty.
147 For similar reasons to those enunciated with respect to the non-executive directors, I dismiss Mr Shafron’s application for relief under Section 1317S(2) and Section 1318(1) with respect to his failure to warn the board of the too emphatic content of the Draft ASX Announcement. I will make a declaration of contravention of Section 180(1) under Section 1317E(1) the form of which will be discussed later in these reasons. | 99 |
nsw_caselaw:549ff7443004262463c68ec8:100 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 1.5 Cashflow Model and Mr Shafron
148 In Macdonald (No 11) I found that Mr Shafron had breached Section 180(1) in failing to advise the JHIL board at the 15 February 2001 Meeting that a review of the Cashflow Model by PwC and Access Economics was limited to reporting on the logical soundness and technical correctness of the model, that it had not been verified and PwC and Access Economics had been specifically instructed not to consider the key assumptions adopted in it, being fixed investment earnings rates, litigation and management costs and future claim costs.
149 Mr Morley told the meeting that the Cashflow Model had been reviewed by PwC and Access Economics and they had found it to be logically sound and technically correct. He did not say that the reviews were limited to this analysis. He did not say that key variables had not been considered. | 100 |
nsw_caselaw:549ff7443004262463c68ec8:101 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 150 Mr Shafron knew, or ought to have known, that the unqualified statements that PwC and Access Economics had advised JHIL and that advice supplemented the company’s long experience in the area of asbestos and formed the basis of determining the level of funding required to meet all future claims was false or misleading and potentially damaging to JHIL.
151 In the absence of explanation by Mr Morley, it was Mr Shafron’s duty, in protecting JHIL from legal risk, to have advised the board of the limitations.
152 It was submitted that Mr Shafron’s role in the discussions on this topic were secondary and, it was submitted, his level of default was not substantial. | 101 |
nsw_caselaw:549ff7443004262463c68ec8:102 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 153 Stephen Gregory Ashe was vice-president public affairs of JHIL. He reported to Mr Baxter. Mr Ashe sent an email to Mr Macdonald, Mr Shafron and Mr Morley. It suggested wording for the reports to be provided by PwC and Access Economics. The wording suggested included a finding that the Cashflow Model was logically sound and technically correct. It contained the statement that the Cashflow Model showed that a surplus of funds would exist after all claims had been paid. But the suggested wording concluded:
“Key variables in the model which we have not checked and on which we express no opinion are:
investment earnings rates
litigation and management costs
future claim costs.”
154 It was submitted that it was Mr Macdonald and not Mr Shafron who responded to this email indicating that Mr Shafron’s role was secondary. | 102 |
nsw_caselaw:549ff7443004262463c68ec8:103 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 155 The preparation of the Cashflow Model was the core responsibility of Mr Morley. It was Mr Morley who presented the Cashflow Model to the board meeting. Mr Shafron did not have carriage of the issue of the PwC and Access Economics reviews. It was submitted that responsibility fell much more to either Mr Morley or Mr Macdonald to address the board on this issue.
156 As with the breach of Section 180(1) by Mr Shafron with respect to the over emphatic statements in the Draft ASX Announcement, reference to the evidence, he having elected not to give evidence himself, does not provide a basis for it appearing to me that Mr Shafron acted honestly when he contravened a civil penalty provision and the first limb of Section 1317S(2) and that of Section 1318(1) has not been established and Mr Shafron is not entitled to relief under those provisions.
157 If I be wrong in that view I would have rejected the application for relief under those provisions under one or other of the two discretions in them. | 103 |
nsw_caselaw:549ff7443004262463c68ec8:104 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 158 No contrition is expressed in the submissions made on Mr Shafron’s behalf. But I have already indicated my view on that topic.
159 It was submitted that the most likely inferred explanation of Mr Shafron’s conduct was momentary inattention borne of a confidence that Mr Morley would address the board on the subject with his usual thoroughness and accuracy.
160 Mr Shafron was the second or third most senior executive of JHIL. He took part in the slide presentation at the 15 February 2001 Meeting in the unusual circumstance of the presentation to the board of a draft release and bearing in mind the flagrancy of the adoption of the over emphatic statements in it.
161 I do not accept that Mr Shafron’s conduct is explained as momentary inattention. He understood that the scope of the review by PwC and Access Economics was limited and that key variables had not been considered. The Draft ASX Announcement contained the statement: | 104 |
nsw_caselaw:549ff7443004262463c68ec8:105 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | “In establishing the Foundation, James Hardie sought expert advice from a number of firms, including actuaries Trowbridge, Access Economics and PricewaterhouseCoopersThis [sic] advice supplemented the company’s long experience in the area of asbestos and formed the basis of determining the level of funding required to meet all future claims”.
162 To allow that statement to pass when he knew that key assumptions in the Cashflow Model had not been checked by PwC and Access Economics was a flagrant breach on his part, albeit that primary responsibility lay with Mr Morley and, to a lesser extent, with Mr Macdonald.
163 I dismiss the application of Mr Shafron for relief under Section 1317S(2) and Section 1318(1) with respect to his failure to advise the board of JHIL of the limited nature of the reviews by PwC and Access Economics. The form of the declarations to be made under Section 1317E(1) will be dealt with later. | 105 |
nsw_caselaw:549ff7443004262463c68ec8:106 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 1.6 DOCI Information and Mr Shafron
164 At the 15 February 2001 Meeting the board resolved to execute a deed of covenant and indemnity (DOCI). Information in relation to the DOCI (DOCI Information) was not notified to the ASX shortly after the board meeting. As JHIL was a listed disclosing entity to which the provisions of the listing rules of the ASX rules applied and those rules, namely listing rule 3.1 (Listing Rule 3.1), required continuous disclosure, s 1001A(2) of the Corporations Law as carried over into Corporations Act (Section 1001A(2)) applied. It was in the following terms:
“(1) This section applies to a listed disclosing entity if provisions of the listing rules of a securities exchange:
(a) apply to the entity; and | 106 |
nsw_caselaw:549ff7443004262463c68ec8:107 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (b) require the entity to notify the securities exchange of information about specified events or matters as they arise for the purpose of the securities exchange making that information available to a stock market conducted by the securities exchange.
(2) The disclosing entity must not contravene those provisions by intentionally, recklessly or negligently failing to notify the securities exchange of information:
(a) that is not generally available; and
(b) that a reasonable person would expect, if it were generally available, to have a material effect on the price or value of ED securities of the entity.”
165 At that time Listing Rule 3.1 provided: | 107 |
nsw_caselaw:549ff7443004262463c68ec8:108 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | “Once an entity is or becomes aware of any information concerning it that a reasonable person would expect to have a material effect on the price or value of the entity’s securities, the entity must immediately tell ASX that information. “Information” includes information a reasonable person would expect an entity to give ASX to prevent a false market in the entity’s securities. This rule does not apply to particular information while each of the following applies:
3.1.1 A reasonable person would not expect the information to be disclosed
3.1.2 The information is confidential
3.1.3 One or more of the following applies.
(a) It would be a breach of law to disclose the information
(b) The information concerns an incomplete proposal or negotiation
(c) The information comprises matters of supposition or is insufficiently definite to warrant disclosure | 108 |
nsw_caselaw:549ff7443004262463c68ec8:109 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (d) The information is generated for the internal management purposes of the entity
(e) The information is a trade secret.” | 109 |
nsw_caselaw:549ff7443004262463c68ec8:110 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 166 The DOCI Information of which Mr Shafron became aware by the time of the 15 February 2001 Meeting was that, subject to certain terms and conditions, Coy and Jsekarb provided covenants that they would not make any claim against JHIL arising from or incidental to, the marketing, manufacture, processing, purchase, sale, distribution or importation, by Coy and Jsekarb, of asbestos or products containing asbestos, and in relation to past dividends, distributions and management fees (The Covenants). Secondly, that, subject to certain terms and conditions, Coy and Jsekarb would indemnify JHIL against claims which might be made against it, and all losses suffered or incurred by it, arising from or incidental to, the marketing, manufacture, processing, purchase, sale, distribution or importation, by Coy and Jsekarb, of asbestos or products containing asbestos (The Indemnities). Thirdly, that in consideration JHIL would make annual payments to Coy in each of the years 2001 to 2042 of $5,296,250, make annual | 110 |
nsw_caselaw:549ff7443004262463c68ec8:111 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | payments to Jsekarb in each of the years 2001 to 2042 of $278,250 and, under certain conditions, accelerate payments to either or both of Coy and Jsekarb. Fourthly, Coy provided an option by an additional covenant to the “JHIL Shareholder”, defined as the person who was the sole registered holder of all of the issued shares of JHIL, that on certain conditions, including the receipt of a notice from the JHIL Shareholder, it would acquire all of the shares of JHIL in whole and in one lot (The Put Option). | 111 |
nsw_caselaw:549ff7443004262463c68ec8:112 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 167 In Macdonald (No 11) I found that by failing to advise Mr Macdonald or the board of JHIL that it needed to consider whether JHIL was required to disclose the DOCI Information to the ASX; in failing to obtain advice for Mr Macdonald or the board or provide his own advice to the board as to whether they were required to disclose the DOCI Information to the ASX; or in failing to advise Mr Macdonald or the board to resolve or determine that JHIL would disclose the DOCI Information to the ASX; Mr Shafron failed to discharge his duties to JHIL with the degree of care and diligence that a reasonable person would exercise if an officer of a corporation in JHIL’s circumstances and occupying the office held by Mr Shafron with the same responsibilities as he had. | 112 |
nsw_caselaw:549ff7443004262463c68ec8:113 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 168 It was submitted that Mr Shafron was entitled to assume that any disclosure obligation that JHIL had would have been the subject of advice by Allens before or at the 15 February 2001 Meeting. It was submitted that default on his part is explicable and was not substantial being consistent with a subjective understanding by Mr Shafron that questions of disclosure would or should have been the subject of advice by the expert legal advisers.
169 But Mr Shafron was aware that there was nothing in the board papers for the 15 February 2001 Meeting that dealt with the subject of disclosure, a topic upon which he was fully familiar having advised Mr Macdonald in writing on the continuous disclosure implications of Trowbridge reports obtained by JHIL some time earlier. He should have been alerted by the lack of a paper on disclosure to his need to ensure that the topic was canvassed at the meeting. | 113 |
nsw_caselaw:549ff7443004262463c68ec8:114 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 170 There was evidence that the continuous disclosure obligation was part and parcel of the role and responsibility, not only of a chief executive officer, but also of the chief financial officer and the company’s secretary and general counsel.
171 It was submitted that Mr Macdonald and Mr Baxter were the two senior executives with actual and practical primary responsibility for questions of disclosure to the ASX. As the company’s general counsel I would add Mr Shafron to that list.
172 It was submitted that the Final ASX Announcement stated that the Foundation would commence operation with assets of $293m, a figure that included the amounts payable under the DOCI and amounted to a disclosure of a material part of the DOCI Information. I rejected that argument in Macdonald (No 11). This could not be a disclosure in compliance with Listing Rule 3.1. There was no mention of the DOCI, nor The Covenants, nor The Indemnities, nor The Put Option. | 114 |
nsw_caselaw:549ff7443004262463c68ec8:115 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 173 It was submitted that the evidence revealed that the failure to disclose the DOCI Information caused the absence in the market of information that would have had a material positive effect on the price of JHIL’s shares reinforcing the positive effect about the statements. But, again, this means that the market was operating on a false basis and the price for JHIL shares was artificially increased.
174 Furthermore, the continuous disclosure obligation is not limited to disclosure of information likely to have a material negative effect on share price. It applies equally to information likely to have a material positive effect on share price.
175 It was submitted that JHIL’s annual report released five months after the 15 February 2001 Meeting disclosed relevant financial information in relation to it, namely the amounts paid and payable under it. | 115 |
nsw_caselaw:549ff7443004262463c68ec8:116 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 176 Again this is a submission I rejected in Macdonald (No 11). The annual report contained a note to the accounts in explanation of a provision of $73.4m in relation to the Foundation. The disclosure made no mention of The Covenants, The Indemnities or The Put Option.
177 The DOCI Information was disclosed to the United States Securities and Exchange Commission eight months after the 15 February 2001 Meeting. But the DOCI Information was required to be disclosed at about the time the DOCI was executed.
178 As with the other breaches of Section 180(1), the evidence does not establish a basis upon which it appears to the Court that Mr Shafron acted honestly in failing to advise on disclosure of the DOCI Information at the 15 February 2001 Meeting and Mr Shafron has not satisfied the first limb of Section 1317S(2) and Section 1318(1) and is not entitled to relief under those provisions. | 116 |
nsw_caselaw:549ff7443004262463c68ec8:117 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 179 If it were appropriate to consider the second limb of those provisions, it has been said that the continuous disclosure provisions are intended, amongst other things, to prevent selective disclosure of market sensitive information (Australian Securities and Investments Commission v Southcorp Ltd (No 2) [2003] FCA 1369; (2003) 130 FCR 406 at 408 [2]). Protective legislation should be construed beneficially to the public (Exicom Pty Ltd v Futuris Corporation Ltd (1995) 123 FLR 394 at 397), even if a distinction between “punitive” and “protective” proceedings or orders is elusive (Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 220 CLR 129 at 145 [32]). The importance of Section 1001A(2) in terms of public policy is that it seeks to enforce immediate disclosure of information not generally available that might be expected to have a material effect on the price of listed shares. The significance that the legislature places upon continuous disclosure was discussed by French J | 117 |
nsw_caselaw:549ff7443004262463c68ec8:118 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | in Re Chemeq Ltd; Australian Securities and Investments Commission v Chemeq Ltd [2006] FCA 936; (2006) 234 ALR 511 at 522-523 [42]-[46]. | 118 |
nsw_caselaw:549ff7443004262463c68ec8:119 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 180 The failure of JHIL to disclose the DOCI Information was flagrant. So was Mr Shafron’s failure to bring the matter to the attention of Mr Macdonald or the board. The legislation requires disclosure of fresh information in a timely fashion. Accurate and timely information is an essential requisite of an informed share market.
181 I dismiss the application of Mr Shafron for relief under Section 1317S(2) and Section 1318(1) with respect to his failure to advise on the need to disclose the DOCI Information. I will make a declaration under Section 1317E(1) in a form to which I will return later in these reasons. | 119 |
nsw_caselaw:549ff7443004262463c68ec8:120 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 1.7 Cashflow Model and Mr Morley
182 In similar terms to my finding with respect to Mr Shafron on the limited nature of the reviews by PwC and Access Economics, I found in Macdonald (No 11) that Mr Morley also breached his duty under Section 180(1) in failing to advise the 15 February 2001 Meeting of the limited nature of the reviews by PwC and Access Economics.
183 Mr Morley was the chief financial officer of JHIL who oversaw the development of the Cashflow Model.
184 At the 15 February 2001 Meeting the slide presentation included a slide on fund life expectancy/sensitivity. It contained a reference to future funds availability that Mr Morley addressed, advising the directors that available future funds depended on three major assumptions: the Trowbridge cashflows, the assets of the fund and the earnings of the fund. | 120 |
nsw_caselaw:549ff7443004262463c68ec8:121 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 185 Mr Morley took the board through the Cashflow Model. Of the sensitivity table in it, Mr Morley told the meeting that using Trowbridge’s most likely scenario the table showed the assets available from year 10 through to year 51 at varying earnings rates on a pre-tax basis. The table also showed that if the earnings rate was reduced from 11.7% to 10.7% the fund would be exhausted somewhere between year 20 and year 25.
186 Mr Morley said Mr Macdonald then addressed a bullet point on the key assumptions slide and said that the model showed that a surplus was the most likely outcome. Mr Morley then addressed the final bullet point on the slide and said the Cashflow Model had been reviewed by PwC and Access Economics and they had found it to be logically sound and technically correct. | 121 |
nsw_caselaw:549ff7443004262463c68ec8:122 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 187 Mr Morley was aware that neither PwC nor Access Economics had addressed key assumptions in the Cashflow Model. He had received the email from Mr Ashe. He said nothing about these limitations at the 15 February 2001 Meeting.
188 ASIC submitted that while Mr Morley gave evidence, the Court could not be positively persuaded that he had acted honestly when contravening Section 180(1) because he gave no evidence that he had acted honestly in so doing. | 122 |
nsw_caselaw:549ff7443004262463c68ec8:123 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 189 A finding that a person acted honestly for the purposes of Section 1317S(2) and Section 1318(1) is not determined by a self-serving statement to that effect by the person seeking exoneration. The Court will determine the matter on the evidence. The evidence included the testimony of Mr Morley at trial, including lengthy cross-examination. It included his affidavit sworn for the purpose of this current hearing. Mr Morley was originally required for cross-examination by ASIC but that requirement was subsequently withdrawn. In addition Mr Morley relied upon impressive testimonial affidavits. | 123 |
nsw_caselaw:549ff7443004262463c68ec8:124 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 190 It was submitted that Mr Morley’s character witnesses reinforced a conclusion that the breach of duty by Mr Morley was out of character with the manner in which he customarily performed his duties and militated against the conclusion that in committing the breach he did not act honestly as opposed to carelessly failing to appreciate that what he said might mislead unless something was added. It was submitted that Mr Morley’s failure to advise the board of the limitations in the PwC and Access Economics reviews is probably characterised as an isolated error of judgment falling well short of a failure to act honestly. | 124 |
nsw_caselaw:549ff7443004262463c68ec8:125 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 191 I am not prepared to reach those conclusions. Mr Morley knew that PwC and Access Economics had not reviewed key variables in the Cashflow Model. One of those key variables was investment earning rates. Mr Morley explained to the meeting the sensitivity of the Cashflow Model to the adopted investment earnings rate of 11.7%. The Cashflow Model suggested that there would be a surplus in year 51. But Mr Morley pointed out that if the investment earnings rate was 10.7% the life of the fund would be halved. Mr Morley must have known that to make the statement he did conveyed the impression that PwC and Access Economics had given their imprimatur to the Cashflow Model.
192 In the absence of an explanation by Mr Morley of how he came not to mention the limitations in the PwC and Access Economics reviews I am not persuaded that I should make the positive finding that in failing to advise the board of the limitations in the reviews he acted honestly. | 125 |
nsw_caselaw:549ff7443004262463c68ec8:126 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 193 Mr Morley has failed to establish the first limb of Section 1317S(2) and Section 1318(1) and is not entitled to relief under those provisions.
194 If I be wrong in that view I would, as with other defendants, have rejected relief under one or other of the two discretions in them.
195 If Mr Shafron’s failure to advise the meeting of the limitations in the reviews conducted by PwC and Access Economics was a flagrant breach of duty under Section 180(1), a fortiori with respect to Mr Morley who was responsible for the Cashflow Model.
196 Mr Morley has apologised. In his affidavit read in this hearing he swore: | 126 |
nsw_caselaw:549ff7443004262463c68ec8:127 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | “Having carefully considered the judge’s reasoning and taking into account his conclusions that what I said was capable of giving a misleading impression, I regret that I did not elaborate further on the PwC and Access Economics reviews. I have always prided myself on my openness and thoroughness in ensuring that all relevant information is made available to those who require it in a professional context, whether that is to board members, investors, regulators and so on. Accordingly, I deeply regret that I conducted myself in a way that has been judged by a Justice of the New South Wales Supreme Court as falling short of the standards of care and diligence expected of a reasonable CFO in like position.”
197 That stands in Mr Morley’s favour. But for the reasons stated with respect to Mr Shafron and for the reasons stated above I do not accept the submission of aberration and those matters outweigh the fact of contrition. | 127 |
nsw_caselaw:549ff7443004262463c68ec8:128 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 198 I dismiss the application of Mr Morley for relief under Section 1317S(2) and Section 1318(1) with respect to his failure to advise the board of JHIL of the limited nature of the reviews by PwC and Access Economics. I will make a declaration under Section 1317E(1) in the form to be dealt with later in these reasons. | 128 |
nsw_caselaw:549ff7443004262463c68ec8:129 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 1.8 ABN 60 Information and JHINV
199 At a meeting of the board of directors of JHINV on 25 March 2003 (25 March 2003 Meeting) the transfer of JHIL out of the James Hardie group was approved.
200 As part of a members’ scheme of arrangement approved by this Court on 11 October 2001, JHIL issued to JHINV 100,000 partly paid shares at a cost of $50 with an uncalled amount of $19,603.62 giving a total uncalled capital of $1.96 billion. | 129 |
nsw_caselaw:549ff7443004262463c68ec8:130 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 201 The steps approved at the 25 March 2003 Meeting were the cancellation of the partly paid shares by JHIL; a consolidation of JHIL share capital into one fully paid share held by JHINV; the reduction of JHIL share capital by approximately $1.5m and payment of that amount to JHINV; the execution of a trust deed by JHINV settling $2,000 on a foundation (ABN 60 Foundation); the execution of a deed of covenant, indemnity and access (DOCIA) by JHINV and JHIL; the issue of 1,000 shares by JHIL to the ABN 60 Foundation; and the cancellation by JHIL of its one fully paid share owned by JHINV for no consideration (ABN 60 Information).
202 In Macdonald (No 11) I found that JHINV breached Section 674(2) by failing to provide the ABN 60 Information to the ASX on or about 25 March 2003. | 130 |
nsw_caselaw:549ff7443004262463c68ec8:131 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 203 Allens gave advice in January 2003 that the ABN 60 Information should be disclosed. A number of arguments against disclosure were put to Allens and in a second advice in March 2003 they said that if JHINV correctly held the view that announcing the transaction to the market would not affect the price of its shares nor affect any decision by persons who commonly invested whether or not to buy them, disclosure was unnecessary.
204 Allens had provided draft advice as to how to calculate JHIL’s potential asbestos liabilities for the purpose of determining whether there was any need for JHIL to retain the partly paid shares. Mr Morley considered that advice and calculated the potential liability at $11.762m. | 131 |
nsw_caselaw:549ff7443004262463c68ec8:132 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 205 Prior to the 25 March 2003 Meeting the JHINV disclosure committee met to consider whether the transfer of JHIL and the cancellation of the partly paid shares and related transactions should be disclosed. Mr Baxter’s advice to that committee was that it was unnecessary to disclose the transaction to the market. That view was based in part on JHINV’s stated position that it had no asbestos liability, did not expect to have a liability and did not provide for any such liability and the potential liability of JHIL, calculated by Mr Morley, was more than covered by JHIL’s net assets. | 132 |
nsw_caselaw:549ff7443004262463c68ec8:133 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 206 It was submitted that there was no dishonesty or impropriety on the part of JHINV. The question of disclosure was properly identified by JHINV and was the subject of legal advice and consideration by senior management and the directors. It was submitted that the decision not to disclose was made by a committee of the board in accordance with JHINV’s established policy and procedures in relation to continuous disclosure principles and obligations. It was submitted that JHINV made an error of judgment and that it acted honestly and in good faith believing that the question to be considered was the materiality of the quantum of JHIL’s potential liabilities and taking into account that matter, JHINV’s conclusion was an available one. | 133 |
nsw_caselaw:549ff7443004262463c68ec8:134 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 207 It had been put to Mr Humphris that if he assumed that the company had assessed the value of potential liability of JHIL at about $12m and it separated JHIL with net assets to provide for those liabilities the transaction would not be a material one. He agreed but said it depended on how good the calculation was.
208 I determined that the question was not what the management of JHINV believed to be a material transaction: the question was whether the investing public would regard the ABN 60 Information as having a material effect on the JHINV share price.
209 One of the beliefs of JHINV that Allens had said was necessary if the ABN 60 Information was not to be disclosed was that announcing the transaction to the market would not affect any decision by persons who commonly invested, whether or not to buy its shares. That question was not addressed in Mr Baxter’s email. | 134 |
nsw_caselaw:549ff7443004262463c68ec8:135 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 210 To look at the question of disclosure solely on the basis of the potential liability of JHIL for asbestos claims, ignores the fact that there was a negative perception in the market and amongst lenders, rational or irrational, as a result of a perceived connection of JHINV to asbestos through its shareholding in JHIL. Time and effort was expended by JHINV in removing JHIL from the James Hardie group and thereby abating the negative perception. In those circumstances the investing public was likely to regard the ABN 60 Information as having a material effect on the JHINV share price.
211 JHINV should have known that the question they were addressing with respect to disclosure was not the question required by the legislation. And in the absence of evidence as to why the question required by the legislation was not addressed, I am not prepared to infer that JHINV acted honestly in failing to disclose the ABN 60 Information. | 135 |
nsw_caselaw:549ff7443004262463c68ec8:136 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 212 JHINV has failed to establish the first limb of Section 1317S(2) and is not entitled to the relief it affords.
213 As with the other defendants, if I be wrong in that view, I would have exercised one or other of the discretions in Section 1317S(2) against granting relief.
214 There was no contrition in the submissions on behalf of JHINV but I place little store on that circumstance for the reasons expressed above.
215 I have already addressed the public policy issues with respect to continuous disclosure in considering Section 1001A(2). In this case the breach was flagrant. The requirement of continuous disclosure is important in achieving an informed market. The legislation clearly identified the question to be addressed: would a reasonable person have expected the ABN 60 Information to have had a material effect on the price or value of JHINV shares? | 136 |
nsw_caselaw:549ff7443004262463c68ec8:137 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 216 A reasonable person would have so concluded in light of the negative sentiment of financiers and the market. JHINV had experienced difficulty in renewing loans because of a perceived connection to JHIL and its potential asbestos liabilities. The severing of the connection between JHINV and JHIL was likely to reduce that negative sentiment. A reasonable person would have expected the ABN 60 Information, by which that severance was to take place, to have had a material effect on the price of JHINV shares.
217 The failure to disclose the ABN 60 Information meant that the market was acting on a false premise, with potential harm to some investors. Decisions to sell shares in JHINV were made on the false assumption that JHINV shares were linked to potential asbestos claims when that perception should have been abated. Shareholders in JHINV who sold shortly after 25 March 2003 may well have sold at a lower price than they would have demanded if the ABN 60 Information had been disclosed to the market. | 137 |
nsw_caselaw:549ff7443004262463c68ec8:138 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 218 Of the other matters identified by Austin J in Vines 65 NSWLR at 295 [57], while JHINV received legal advice, it failed to address one of the prerequisites to non-disclosure of the ABN 60 Information identified by Allens. It adopted its standard practice of consideration by its disclosure committee, but the committee addressed the wrong question.
219 JHINV did not exhibit the negative constraints identified by Austin J in Vines 65 NSWLR at 295 [60]-[61] of personal gain, impropriety, consciousness of another’s impropriety, or deceptiveness. It did exhibit flagrancy. And that feature and potential harm in my view outweigh the absence of other negative constraints.
220 JHINV has failed to satisfy me that it is entitled to relief under Section 1317S(2) and I dismiss its application. I must make a declaration of contravention of Section 674(2) under Section 1317E(1). | 138 |
nsw_caselaw:549ff7443004262463c68ec8:139 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 2 Declarations
221 A common theme in the submissions with respect to the terms of the declarations that I must make under Section 1317E(1) was the alleged duplication of declarations regarding the same conduct.
222 In Vines v Australian Securities and Investments Commission [2007] NSWCA 126; (2006) 63 ACSR 505 at 509 [14], Spigelman CJ noted that there was duplication in some of the declarations made in that case:
“In order to understand the reasons of Austin J it is relevant to note that his Honour made 11 declarations of contravention with respect to various aspects of Mr Vines’ conduct. Some of these declarations overlapped, in the sense that they were referable to the same action or inaction, involving ancillary conduct. In this sense his Honour’s analysis involved 11 contraventions. For reasons set out in this court’s earlier judgment, it was convenient to analyse the contraventions as seven in number.”
223 Ipp JA warned against duplication at 549 [214]-[215]: | 139 |
nsw_caselaw:549ff7443004262463c68ec8:140 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | “In making more than one declaration of contravention, care must be taken not to duplicate conduct declared to constitute a contravention as that may result in a person being penalised more than once for the same conduct. | 140 |
nsw_caselaw:549ff7443004262463c68ec8:141 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | It might well be arguable that, as regards the six declarations of contravention that remain alive and are the subject of this appeal, there is a degree of duplication….” | 141 |
nsw_caselaw:549ff7443004262463c68ec8:142 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | His Honour then cited the above passage in the reasons for judgment of Spigelman CJ.
2.1 Declarations in relation to Mr Macdonald
224 I found that Mr Macdonald, like the non-executive directors, was in breach of Section 180(1) in voting in favour of the Draft ASX Announcement. ASIC seeks a declaration that he knew that the Draft ASX Announcement conveyed, or was capable of conveying, the various matters pleaded and he knew or ought to have known that the Draft ASX Announcement was misleading in those respects.
225 It was submitted that the first part of the declaration should be that Mr Macdonald “knew or ought to have known” that the Draft ASX Announcement conveyed, or was capable of conveying, those matters.
226 I reject that submission. I equated Mr Macdonald’s position as director to that of the non-executive directors and of them I found that they must have been aware that the Draft ASX Announcement conveyed, or was capable of conveying, those matters. | 142 |
nsw_caselaw:549ff7443004262463c68ec8:143 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 227 I found that Mr Macdonald contravened Section 180(1) in approving the Final ASX Announcement for release, or in failing to advise that it not be released, or in failing to advise that it be amended before being released to remove the respects in which it was misleading.
228 A similar argument was raised with respect to ASIC’s proposed declaration that he knew that the Final ASX Announcement conveyed, or was capable of conveying, the various matters pleaded. It was submitted the declaration should read he “knew or ought to have known”. For the reasons set out above I reject that submission.
229 I found Mr Macdonald had breached Section 180(1) in either approving for release to the ASX an announcement dated 23 February 2001 (23 February 2001 ASX Announcement), or failing to advise that it not be released, or failing to advise that it be amended before being released to remove the respects in which it was misleading. | 143 |
nsw_caselaw:549ff7443004262463c68ec8:144 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 230 ASIC proposes a declaration that says Mr Macdonald knew that the announcement conveyed or was capable of conveying the various matters pleaded and that he knew, or ought to have known, that it was misleading in those respects.
231 Again, it was submitted on behalf of Mr Macdonald that the first part of the declaration should read he “knew or ought to have known”. That submission is rejected.
232 A similar rejection of submission applies to the contravention of Section 180(1) constituted by a further announcement of 21 March 2001 (21 March 2001 ASX Announcement).
233 ASIC seeks declarations with respect to my findings that Mr Macdonald was in breach of Section 180(1) by either approving for release to the ASX a set of slides (ASX Slides), or failing to advise that they not be released, in making a presentation in Edinburgh (Edinburgh Representations) and another presentation in London (London Representations) containing statements to the effect that the Foundation was fully funded. | 144 |
nsw_caselaw:549ff7443004262463c68ec8:145 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 234 Submissions that in each case the collocation should be that he “knew or ought to have known” that they conveyed or were capable of conveying the various matters pleaded are rejected. I found that Mr Macdonald was aware that the Edinburgh Representations, the London Representations and the ASX Slides were false or misleading and not in a minor way.
235 It was submitted that the contraventions in relation to the release of the ASX Slides, the Edinburgh Representations and the London Representations should be combined into one declaration to avoid duplication. I reject that submission. While each event was closely linked temporally, each constituted a separate representation. | 145 |
nsw_caselaw:549ff7443004262463c68ec8:146 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 236 In its draft declarations, ASIC treats Mr Macdonald’s failure to advise of the limitations in the PwC review as a breach of Section 180(1) separate from his failure to advise of the limitations in the Access Economics review. It was submitted that this constituted duplication. I agree. The impugned conduct was a single failure to advise the board of JHIL that both reviews were limited.
237 I will make declarations with respect to Mr Macdonald in the following terms. | 146 |
nsw_caselaw:549ff7443004262463c68ec8:147 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | The Court declares that: | 147 |
nsw_caselaw:549ff7443004262463c68ec8:148 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 1. The First Defendant contravened s 180(1) of the Corporations Law as carried over into the Corporations Act 2001 (Cth) ( Section 180(1) ) in relation to ABN 60 Pty Ltd (formerly known as James Hardie Industries Ltd) ( JHIL ) by his conduct, as a director and Chief Executive Officer of that corporation, in voting on 15 February 2001 in favour of a resolution of the directors to approve a draft ASX announcement ( Draft ASX Announcement ) and authorise its execution and sending to the Australian Stock Exchange ( ASX ) in circumstances where:
(a) he knew that the Draft ASX Announcement conveyed or was capable of conveying that: | 148 |
nsw_caselaw:549ff7443004262463c68ec8:149 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (i) the material available to JHIL provided a reasonable basis for the assertion in the announcement that it was certain that the amount of funds made available to the Medical Research and Compensation Foundation ( Foundation ) would be sufficient to meet all legitimate present and future asbestos claims brought against two of JHIL’s former subsidiaries, Amaca Pty Ltd ( Amaca ) and Amaba Pty Ltd ( Amaba );
(ii) he believed that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(iii) all of the directors or at least the majority of them believed that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba; | 149 |
nsw_caselaw:549ff7443004262463c68ec8:150 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (iv) JHIL had received expert advice from PricewaterhouseCoopers ( PwC ) and Access Economics that supported the statement that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(b) he knew or ought to have known that the Draft ASX Announcement was misleading in those respects. | 150 |
nsw_caselaw:549ff7443004262463c68ec8:151 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 2. The First Defendant contravened Section 180(1) in relation to JHIL by his conduct, as a director and Chief Executive Officer of that corporation on or about 15 February 2001 when its board of directors voted in favour of a resolution to approve the Draft ASX Announcement and authorise its execution and sending to the ASX, in failing to advise the board that:
(a) the Draft ASX Announcement was expressed in too emphatic terms concerning the adequacy of the funding made available to meet all legitimate present and future asbestos claims against Amaca and Amaba; and
(b) in that respect the Draft ASX Announcement was misleading. | 151 |
nsw_caselaw:549ff7443004262463c68ec8:152 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 3. The First Defendant contravened Section 180(1) in relation to JHIL by his conduct, as a director and Chief Executive Officer of that corporation, on or about 15 February 2001 in failing to advise its board of directors that the reviews of a cashflow model ( Cashflow Model ) of the funding being made available to meet asbestos claims brought against Amaca and Amaba had been undertaken by PwC and Access Economics:
(a) were limited to reporting on the logical soundness and technical correctness of the Cashflow Model;
(b) had not verified, and PwC and Access Economics had been specifically instructed not to consider, the key assumptions adopted by the Cashflow Model, being:
(i) fixed investment earnings rates;
(ii) litigation and management costs; and
(iii) future claim costs. | 152 |
nsw_caselaw:549ff7443004262463c68ec8:153 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 4. The First Defendant contravened Section 180(1) in relation to JHIL by his conduct, as a director and Chief Executive Officer of that corporation, in either approving for release to the ASX an announcement ( Final ASX Announcement ), failing to advise that it not be released, or failing to advise that it be amended before being released to remove the respects in which it was misleading in circumstances where:
(a) he knew that the Final ASX Announcement conveyed or was capable of conveying that:
(i) the material available to JHIL provided a reasonable basis for the assertion in the announcement that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba; | 153 |
nsw_caselaw:549ff7443004262463c68ec8:154 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (ii) Mr Macdonald believed that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(iii) all of the directors or at least a majority of them believed that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(iv) JHIL had received expert advice from PwC and Access Economics that supported the statement that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(b) he knew or ought to have known that the Final ASX Announcement was misleading in those respects. | 154 |
nsw_caselaw:549ff7443004262463c68ec8:155 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 5. The First Defendant contravened Section 180(1) in relation to JHIL by his conduct, as a director and Chief Executive Officer of that corporation, on or about 16 February 2001 at a press conference during which he made statements which conveyed that:
(a) it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(b) the material available to JHIL provided a reasonable basis for the assertion that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(c) he believed that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba; | 155 |
nsw_caselaw:549ff7443004262463c68ec8:156 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (d) JHIL had received expert advice from PwC and Access Economics that supported the statement that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba; and
(e) JHIL did not have any potential claims on the assets of Amaca and Amaba,
in circumstances where he knew or ought to have known that those statements were false and misleading in those respects. | 156 |
nsw_caselaw:549ff7443004262463c68ec8:157 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 6. The first defendant contravened Section 180(1) in relation to JHIL by his conduct, as a director and Chief Executive Officer of that corporation, on or about 23 February 2001 in either approving for release to the ASX an announcement bearing that date ( 23 February 2001 ASX Announcement ), or failing to advise that it not be released, or failing to advise that it be amended before being released to remove the respects in which it was misleading in circumstances where:
(a) he knew that the 23 February 2001 ASX Announcement conveyed or was capable of conveying that:
(i) it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present or future asbestos claims brought against Amaca and Amaba; | 157 |
nsw_caselaw:549ff7443004262463c68ec8:158 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (ii) the material available to JHIL provided a reasonable basis for the assertion in the announcement that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(iii) he believed that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(b) he knew or ought to have known that the 23 February 2001 ASX Announcement was misleading in those respects. | 158 |
nsw_caselaw:549ff7443004262463c68ec8:159 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 7. The First Defendant contravened Section 180(1) in relation to JHIL by his conduct, as a director and Chief Executive Officer of that corporation, on or about 21 March 2001 in either approving for release to the ASX an announcement bearing that date ( 21 March 2001 ASX Announcement ), or failing to advise that it not be released, or failing to advise that it be amended before being released to remove the respects in which it was misleading in circumstances where:
(a) he knew that the 21 March 2001 ASX Announcement conveyed or was capable of conveying that:
(i) it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba; | 159 |
nsw_caselaw:549ff7443004262463c68ec8:160 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (ii) the material available to JHIL provided a reasonable basis for the assertion in the announcement that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos brought against Amaca and Amaba;
(b) he knew or ought to have known that the 21 March 2001 ASX Announcement was misleading in those respects. | 160 |
nsw_caselaw:549ff7443004262463c68ec8:161 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 8. The First Defendant contravened Section 180(1) in relation to JHIL by his conduct, as a director and Chief Executive Officer of that corporation, on and from 15 February 2001 in failing to:
(a) advise the Chairman or the board of JHIL as to whether or not the following information ( DOCI Information ) was required to be disclosed to the ASX namely that JHIL had entered into a deed of covenant and indemnity with Amaca and Amaba pursuant to which:
(i) Amaca and Amaba provided certain covenants and indemnities to JHIL in respect of its potential asbestos liabilities;
(ii) JHIL agreed to pay certain amounts in exchange for those covenants and indemnities;
(iii) Amaca agreed that it would acquire all the shares in JHIL if it was put to it by a sole registered shareholder of the entirety of JHIL shares; | 161 |
nsw_caselaw:549ff7443004262463c68ec8:162 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (b) seek and consider advice and satisfy himself in relation to whether JHIL was required to disclose the DOCI Information to the ASX;
(c) resolve or determine that JHIL would disclose the DOCI Information to the ASX; and
(d) raise with or propose to the Chairman or the board of JHIL that they needed to consider and determine whether or not to disclose the DOCI Information to the ASX;
in circumstances where Mr Macdonald knew or ought to have known that:
(e) if JHIL failed to disclose the DOCI Information to the ASX it risked contravening s 1001A(2) of the Corporations Law ; and
(f) if the DOCI Information was not disclosed to the ASX and JHIL had an obligation under the ASX Listing Rules to do so and that failure was revealed, it would be harmful to JHIL’s interests and harm market perceptions of JHIL. | 162 |
nsw_caselaw:549ff7443004262463c68ec8:163 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 9. The First Defendant contravened Section 180(1) in relation to James Hardie Industries NV ( JHINV ) by his conduct, as a director and Chief Executive Officer of that corporation, on or about 10 June 2002 in either approving for release to the ASX a set of slides ( ASX Slides ), or failing to advise that they not be released in circumstances where:
(a) he knew that the ASX Slides conveyed or were capable of conveying that:
(i) it was certain or highly likely that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(ii) the material available to JHINV provided a reasonable basis for the assertion that it was certain or highly likely that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims against Amaca and Amaba; | 163 |
nsw_caselaw:549ff7443004262463c68ec8:164 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | (b) he knew that the ASX Slides were misleading in those respects. | 164 |
nsw_caselaw:549ff7443004262463c68ec8:165 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 10. The First Defendant contravened Section 180(1) in relation to JHINV by his conduct, as a director and Chief Executive Officer of that corporation, in making a presentation in Edinburgh on or about 10 June 2002 during which he made statements which conveyed that:
(a) it was certain or highly likely that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(b) the material available to JHINV provided a reasonable basis for the assertion that it was certain or highly likely that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
in circumstances where he knew that those statements were false or misleading in those respects. | 165 |
nsw_caselaw:549ff7443004262463c68ec8:166 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 11. The First Defendant contravened Section 180(1) in relation to JHINV by his conduct, as a director and Chief Executive Officer of that corporation, in making a presentation in London on or about 11 June 2002 during which he made statements which conveyed that:
(a) it was certain or highly likely that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(b) the material available to JHINV provided a reasonable basis for the assertion that it was certain or highly likely that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba;
(c) the James Hardie Group had received legal advice that it had no remaining asbestos liabilities;
in circumstances where he knew that those statements were false or misleading in those respects. | 166 |
nsw_caselaw:549ff7443004262463c68ec8:167 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 2.2 Declarations in relation to Mr Shafron
238 The draft declarations proposed by ASIC treats Mr Shafron’s failure to advise that PwC’s review was limited as a distinct contravention of Section 180(1) from his failure to advise the board that Access Economics review was limited. For the reasons set above I reject that approach.
239 ASIC has amended its draft declarations to rectify Mr Shafron’s other complaint that his conduct with respect to the DOCI Information was in the alternative.
240 ASIC seeks a declaration that the impugned conduct was before, at or after the 15 February 2001 Meeting. It was submitted on Mr Shafron’s behalf that my judgment dealt only with the period before and at the board meeting. I will confine the declaration to that period. I will make declarations in the following terms with respect to Mr Shafron.
The Court declares that: | 167 |
nsw_caselaw:549ff7443004262463c68ec8:168 | nsw_caselaw:549ff7443004262463c68ec8 | decision | new_south_wales | nsw_caselaw | text/html | 2009-08-20 00:00:00 | Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 | https://www.caselaw.nsw.gov.au/decision/549ff7443004262463c68ec8 | 2024-05-26T11:20:31.640652+10:00 | 1. The Second Defendant contravened s 180(1) of the Corporations Law as carried over into the Corporations Act 2001 (Cth) ( Section 180(1) ) in relation to ABN 60 Pty Ltd (formerly known as James Hardie Industries Ltd) ( JHIL ) by his conduct, as an officer of that corporation, on or about 15 February 2001 when its board of directors voted in favour of a resolution to approve a draft ASX announcement ( Draft ASX Announcement ) and authorise its execution and sending to the Australian Stock Exchange ( ASX ), in failing to advise the board that:
(a) the Draft ASX Announcement was expressed in too emphatic terms concerning the adequacy of the funding made available to meet all legitimate present and future asbestos claims brought against two of JHIL’s former subsidiaries Amaca Pty Ltd ( Amaca) and Amaba Pty Ltd ( Amaba ); and
(b) in that respect the Draft ASX Announcement was misleading. | 168 |