Australian Securities and Investments Commission v Macdonald (No 11) - [2009] NSWSC 287

No judgment structure available for this case.

Reported Decision:
[2009] ALMD 5385
27 ACLC 522
71 ACSR 368
256 ALR 199
230 FLR 1
256 ALR 199
230 FLR 1

New South Wales

Supreme Court

CITATION: Australian Securities and Investments Commission v Macdonald (No 11) [2009] NSWSC 287

HEARING DATE(S): 29, 30 September 2008; 1, 2, 3, 7, 8, 13, 14, 15, 20, 21, 22, 23, 24, 28 October 2008; 3, 4, 6, 10, 11, 12, 13, 14 Nov 2008; 4, 5, 8, 9, 10, 11, 12 15, 16, 17, 18, 19 December 2008; 2, 3, 4, 5, 9, 10, 11, 12 February 2009; 2 March 2009

JUDGMENT DATE :
23 April 2009

JUDGMENT OF: Gzell J

DECISION: See summary at [1269] and following.

CATCHWORDS: CORPORATIONS - Supervision, Regulation and Correction - Civil penalty proceedings - Whether announcement to the ASX approved at directors' meeting - Whether minute to that effect subject to statutory presumption under s 251A or s 1305 of the Corporations Law - Whether false or misleading - Whether directors and senior executives acted in breach of s 180(1) of the Corporations Law - Whether in failing to disclose information with respect to a deed of covenant and indemnity (DOCI) there was a breach of Listing Rule 3.1 and s 1001A(2) of the Corporations Law - Whether the directors who executed the DOCI were in breach of s 180(1) - Whether the chief executive officer approved the release of the ASX Announcement and breached s 180(1) - Whether the company breached s 995(2) of the Corporations Law - Whether the company breached s 999 of the Corporations Law - Whether the CEO was in breach of s 180(1) for statements made at a press conference - Whether he was he breach of s 181 of the Corporations Law - Whether the company was in breach of s 995(2) and s 999 - Whether there were breaches of s 180(1), s 181, s995(2) and s 999 for statements made in two subsequent ASX Announcements - Whether the directors were in breach of s 180(1) of the Corporations Act in approving a draft information memorandum to be used in a members' scheme of arrangement - Whether the CEO and secretary and general counsel were in breach of s 180(1) in approving the draft IM and authorising a letter to be sent to the Court - Whether the company was in breach of s 995(2) and s 999 of the Corporations Act - Whether the CEO was in breach of s 180(1) and s 181 of the Corporations Act for statements made in United Kingdom and slides lodged with the ASX - Whether the company was in breach of s 1041E and s 1041H of the Corporations Act - Whether the company was in breach of Listing Rule 3.1 and s 674(2) of the Corporations Act for failing to disclose a restructure of the James Hardie group

LEGISLATION CITED: Corporations Law (Cth)
Corporations Act 2001 (Cth)
Trade Practices Act 1974 (Cth)
Companies Code
Evidence Act 1995

CASES CITED: Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355
Australian Securities and Investments Commission v Rich [2005] NSWSC 417; (2005) 34 ACSR 752
Claremont Petroleum NL v Cummings (1992) 110 ALR 239
Galladin Pty Ltd v Aimnorth Pty Ltd (1993) 11 ACSR 23
Gosford Christian School Ltd v Totonjian [2006] NSWSC 725; (2006) 201 FLR 424
Silver v Dome Resources NL [2007] NSWSC 455; (2007) 62 ACSR 539
Dome Resources NL v Silver [2008] NSWCA 322; (2008) 68 ACSR 458
Repatriation Commission v Gordon (1990) 26 FCR 569
Hughes v R (1983) 49 ALR 110
Foster v R (1982) 38 ALR 599
Hodgson v Hart District Council [1986] 1 All ER 400
Re Wayne Myer & Son Family Butchery Pty Ltd [1998] QSC 2
Damaso v The Queen [2002] NTCCA 2; (2002) 168 FLR 103
Singh v The Queen WACCA, unreported, 18 September 1985
Abbott v Western Australia (2005) 152 A Crim R 186
R v Phillips [1991] 3 NZLR 175
Hanson v R [2005] NZCA 220
R v Hanson [2007] NZSC 7; [2007] NZLR 1
Sheldrake v Director of Public Prosecutions [2005] 1 ALL ER 237
McLean Bros & Rigg Pty Ltd v Grice (1906) 4 CLR 835
Briginshaw v Briginshaw (1938) 60 CLR 336
Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449
Adler v Australian Securities and Investments Commission [2003] NSWCA 131; (2003) 179 FLR 1
CEPU v Australian Competition and Consumer Commission [2007] FCAFC 132, (2007) 162 FCR 466
Trade Practices Commission v Allied Mills Industries Pty Ltd (No 4) (1981) 37 ALR 225
Cook’s Construction Pty Ltd v Brown [2004] NSWCA 105; (2004) 49 ACSR 62
Whitlam v Australian Securities and Investments Commission [2003] NSWCA 183; (2003) 57 NSWLR 559
Australian Securities and Investments Commission v Maxwell [2006] NSWSC 1052; (2006) 59 ACSR 373
Australian Securities and Investments Commission v Sydney Investment House Equities Pty Ltd [2008] NSWSC 1224; (2008) 69 ACSR 1
Vines v Australian Securities and Investments Commission [2007] NSWCA 75; (2007) 62 ACSR 1
Australian Securities and Investments Commission v Adler [2002] NSWSC 171; (2002) 168 FLR 253
Australian Securities and Investments Commission v Rich [2003] NSWSC 85; (2003) 174 FLR 128
Australian Securities and Investments Commission v Vines [2005] NSWSC 738; (2005) 55 ACSR 617
AWA Ltd v Daniels (1992) 7 ACSR 759
Daniels v Anderson (1995) 37 NSWLR 438
Overend & Gurney Co v Gibb (1872) LR 5 HL 480
Statewide Tobacco Services Ltd v Morley (1990) 2 ACSR 405
Group Four Industries Pty Ltd v Brosnan (1992) 59 SASR 22
Vrisakis v Australian Securities Commission (1993) 9 WAR 395
Permanent Building Society v Wheeler (1994) 11 WAR 187
National Exchange Pty Ltd v Australian Securities and Investments Commission [2004] FCAFC 90; (2004) 49 ACSR 369
Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [2008] NSWCA 206; (2008) 252 ALR 659
Milwell v Olympic Amusements Pty Ltd [1999] FCA 63; (1999) 85 FCR 436
Commissioner for Corporate Affairs v Bracht [1989] VR 821
Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Ltd (No 4) [2007] FCA 963; (2007) 160 FCR 35
Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2008] NSWSC 657
James Hardie & Co Pty Ltd v Hall (1998) 43 NSWLR 554
CSR Ltd v Wren (1997) 44 NSWLR 463
The Trustee for the Estate of the Late AW Furse No 5 Will Trust v Federal Commissioner of Taxation 91 ATC 4007
Granby Pty Ltd v Federal Commissioner of Taxation 95 ATC 4240
Lezam Pty Ltd v Seabridge Australia Pty Ltd (1992) 35 FCR 535
Australian Securities and Investments Commission v Narain [2008] FCAFC 120; (2008) 169 FCR 211
Australian Securities Commission v McLeod [2000] WASCA 101; (2000) 34 ACSR 135
Macleod v Australian Securities and Investments Commission [2002] HCA 37; (2002) 211 CLR 287
Marchesi v Barnes [1970] VR 434
Australian Growth Resources Corporation Pty Ltd v Van Reesema (1988) 13 ACLR 261
Forge v Australian Securities and Investments Commission [2004] NSWCA 448; (2004) 213 ALR 574
Chew v R (1991) 4 WAR 21
Chew v R (1991-1992) 173 CLR 626
Lloyd v R (1995) 15 WAR 117
ICAL Ltd v County Natwest Securities Australia Ltd (1988) 39 NSWLR 214
Cackett v Keswick [1902] 2 Ch 456
Australian Consolidated Investments Limited v Rossington Holdings Pty Limited (1992) 35 FCR 226
Re HIH Casualty and General Insurance Ltd [2006] NSWSC 485, (2006) 57 ACSR 791
Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146
Stirling Resources NL v Capital Energy NL (1996) 14 ACLC 1,005
Watson v Foxman (1995) 49 NSWLR 315
Australian Woollen Mills Ltd v FS Walton & Co Ltd (1937) 58 CLR 641
Boughey v R (1986) 161 CLR 10
Henville v Walker [2001] HCA 52; (2001) 206 CLR 459
Sellars v Adelaide Petroleum NL (1992-1994) 179 CLR 332
Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees’ Union (1979) 42 FLR 331
R v Firns [2001] NSWCCA 191; (2001) 51 NSWLR 548
Australian Securities and Investments Commission v Southcorp Ltd [2003] FCA 1369; (2003) 130 FCR 406
Exicom Pty Ltd v Futuris Corporation Ltd (1995) 123 FLR 394
Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 220 CLR 129
Re Chameq Ltd; Australian Securities and Investments Commission v Chemeq Ltd [2006] FCA 936; (2006) 234 ALR 511
Jones v Dunkel (1959) 101 CLR 298
Manly Council v Byrne and Anor [2004] NSWCA 123
Ghazal v Government Insurance Office of New South Wales (1992) 29 NSWLR 336
Payne v Parker (1976) 1 NSWLR 191
Harmony Shipping Co SA v Saudi Europe Line Ltd [1979] 1 WLR 1380
Australian Securities and Investments Commission v Macdonald (No 5) [2008] NSWSC 1169
Australian Securities and Investments Commission v Macdonald (No 6) [2008] NSWSC 1175
Australian Securities and Investments Commission v Macdonald (No 10) [2009] NSWSC 53
Browne v Dunn (1894) 6 R 67
James Hardie Industries NV v Australian Securities and Investments Commission [2009] NSWCA 18

TEXTS CITED: Phipson on Evidence, 16th ed (2005) Sweet & Maxwell, London
Ford’s Principles of Corporation Law, 13th ed (2007) LexisNexis Butterworths, Australia
Cross on Evidence, Australian ed, Butterworths

PARTIES: Australian Securities and Investments Commission (Plaintiff)
Peter Donald Macdonald (First Defendant)
Peter James Shafron (Second Defendant)
Phillip Graham Morley (Third Defendant)
Michael Robert Brown (Fourth Defendant)
Michael John Gillfillan (Fifth Defendant)
Meredith Hellicar (Sixth Defendant)
Martin Koffel (Seventh Defendant)
Geoffrey Frederick O'Brien (Eighth Defendant)
Gregory James Terry (Ninth Defendant)
Peter John Willcox (Tenth Defendant)
ABN 60 Pty Ltd (Eleventh Defendant)
James Hardie Industries NV (Twelfth Defendant)

FILE NUMBER(S): SC 1490/07

COUNSEL: Mr A Bannon SC/ Mr R Beech-Jones SC/ Ms D Hogan-Doran/ Ms S Pritchard / Ms J Single/ Mr A Kuklik (Plaintiff)
Mr S Finch SC/ Mr D Studdy SC/ Mr D Mackay (First Defendant)
Mr B Walker SC/ Mr M Holmes QC/ Mr R Lancaster/ Mr N Owens (Second Defendant)
Mr B Oslington QC/ Mr R Dick/ Mr N Bender (Third Defendant)
Mr T Bathurst QC/ Mr R Whitington QC/ Mr R Hollo/ Mr R Hardcastle/ Mr I Colquhoun (Fourth to Seventh Defendants)
Mr P Wood/ Mr M Henry (Eighth Defendant)
Mr R McHugh SC/ Mr S Nixon (Ninth Defendant)
Mr T Jucovic QC/ Mr R Scruby (Tenth Defendant)
Mr I Pike (Eleventh Defendant)
Mr A Meagher SC/ Ms K Morgan (Twelfth Defendant)

SOLICITORS: Clayton Utz (Plaintiff)
Minter Ellison (First Defendant)
Middletons (Second Defendant)
Henry Davis York (Third Defendant)
Atanaskovic Hartnell (Fourth to Seventh Defendants)
Arnold Bloch Leibler (Eighth Defendant)
Blake Dawson (Ninth Defendant)
Kemp Strang (Tenth Defendant)
Baker & McKenzie (Eleventh Defendant)
Mallesons Stephen Jaques (Twelfth Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

GZELL J

23 APRIL 2009

1490/07 AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v MACDONALD (NO 11)

JUDGMENT

1 Introduction

1 Companies in the James Hardie group manufactured and sold asbestos products. They became subject to damages claims for asbestos related diseases sustained from exposure to asbestos (Asbestos Claims).

2 James Hardie Industries Limited (JHIL), the eleventh defendant, was the holding company of the James Hardie group. Under its former name it manufactured and sold asbestos products until 1937. From 1937 to 1987, James Hardie & Coy Pty Limited (Coy), a wholly owned subsidiary of JHIL, manufactured and sold asbestos products and became subject to Asbestos Claims. From 1978 to 1987, another wholly owned subsidiary of JHIL, Jsekarb Pty Ltd (Jsekarb), manufactured and sold asbestos products under former names and became subject to Asbestos Claims. Coy and Jsekarb were the main recipients of Asbestos Claims within the James Hardie group.

3 Consequent upon decisions made at a meeting of the board of directors of JHIL on 15 February 2001 (15 February 2001 Meeting), Medical Research and Compensation Foundation Ltd was constituted trustee of the Medical Research and Compensation Foundation (Foundation) and JHIL, in effect, made a gift of its shares in Coy and Jsekarb to the Foundation. In addition to the assets of Coy and Jsekarb, the Foundation received $3m for medical research. The Foundation was to manage and pay out Asbestos Claims against members of the James Hardie group.

4 On the pleadings, the following issues arise.

1.1 Draft ASX Announcement

5 The plaintiff, the Australian Securities and Investments Commission (ASIC), alleges that a draft announcement to the Australian Stock Exchange (ASX) of the formation of the Foundation (Draft ASX Announcement) was considered and approved by the JHIL board at the 15 February 2001 Meeting. The Draft ASX Announcement that ASIC contends was before the meeting stated that the Foundation would commence operations with assets of $284m and contained a number of statements to the effect that the Foundation would have sufficient funds to meet all legitimate Asbestos Claims, that it was fully funded and provided certainty for people with legitimate Asbestos Claims. ASIC alleges that those statements were false or misleading and in breach of provisions of the Corporations Law (Cth).

6 Michael Robert Brown, the fourth defendant; Michael John Gillfillan, the fifth defendant; Meredith Hellicar, the sixth defendant; Martin Koffel, the seventh defendant; Geoffrey Frederick O’Brien, the eighth defendant; Gregory James Terry, the ninth defendant; and Peter John Willcox, the tenth defendant, were non-executive directors of JHIL. ASIC alleges that they approved the Draft ASX Announcement at the 15 February 2001 Meeting and in doing so they contravened s 180(1) of the Corporations Law as carried over into the Corporations Act 2001 (Cth) (Section 180(1)) in that, on the material provided to them, they could not have been satisfied that JHIL had a proper basis for making the assertions of sufficient funding.

7 Section 180(1) was in the following terms in February 2001:

8 Peter Donald Macdonald, the first defendant, was chief executive officer and a director of JHIL. ASIC alleges he voted in favour of the Draft ASX Announcement at the 15 February 2001 Meeting and in doing so he contravened Section 180(1) in that he failed to enquire of the other directors whether they had formed the opinion that it was certain that the Foundation was sufficiently funded; he failed to advise the board that the Draft ASX Announcement was expressed in too emphatic terms; and he failed to advise the board that the Draft ASX Announcement was false or misleading in these respects.

9 The board had before it at the 15 February 2001 Meeting a cashflow exercise (Cashflow Model). It had been the subject of limited review by PricewaterhouseCoopers (PwC) and Access Economics Pty Ltd (Access Economics). ASIC alleges that Mr Macdonald was in breach of Section 180(1) in failing to advise the board of the limited nature of these reviews.

10 JHIL had retained the services of Trowbridge Deloitte Limited (Trowbridge), a firm of actuaries. They had provided a number of reports over the years including a schedule forwarded on 9 February 2001 containing updated estimates over 50 years (Trowbridge 50 Year Estimate) and a report of 13 February 2001 with an updated estimate over 20 years (February 2001 Trowbridge Report). ASIC alleges that Mr Macdonald failed to advise the board at the 15 February 2001 Meeting that the best estimate contained in the February 2001 Trowbridge Report and in the Trowbridge 50 Year Estimate was too uncertain to be used as a basis to assess the adequacy of funding of the Foundation; had not taken into account superimposed inflation as a prudent estimate would; and had only a 50% probability of being achieved. ASIC alleges that these failures constituted breaches of Section 180(1).

11 Peter James Shafron, the second defendant, was secretary and general counsel of JHIL. In terms similar to those pleaded against Mr Macdonald, ASIC alleges that Mr Shafron contravened Section 180(1) at the 15 February 2001 Meeting in failing to enquire of the directors whether they had formed an opinion that it was certain that the amount of funds made available to the Foundation would be sufficient; in failing to advise the board that the Draft ASX Announcement was expressed in too emphatic terms; and in failing to advise the board that the Draft ASX Announcement was false or misleading in these respects. Similarly, it is alleged against Mr Shafron that he failed to advise the limited nature of the review of the Cashflow Model by PwC and Access Economics; he failed to advise that the best estimate contained in the February 2001 Trowbridge Report and in the Trowbridge 50 Year Estimate was too uncertain to be used as a basis to assess the adequacy of funding of the Foundation; it had not taken into account superimposed inflation as a prudent estimate would; and it had only a 50% probability of being achieved.

12 Phillip Graham Morley was the chief financial officer of JHIL. ASIC alleges, in similar terms to the allegations raised against Mr Macdonald and Mr Shafron, that Mr Morley contravened Section 180(1) in failing to advise the board of the limited nature of the review of the Cashflow Model by PwC and Access Economics; and in failing to advise that the best estimate contained in the February 2001 Trowbridge Report and in the Trowbridge 50 Year Estimate was too uncertain to be used as a basis to assess the adequacy of funding of the Foundation; it had not taken into account superimposed inflation as a prudent estimate would; and it had only a 50% probability of being achieved.

1.2 DOCI disclosure

13 At the 15 February 2001 Meeting if was resolved to execute a deed of covenant and indemnity (DOCI). ASIC alleges that there was an obligation to disclose information in relation to the DOCI (DOCI Information) to the ASX as at 15 February 2001. It is alleged that in failing to disclose the DOCI Information to the ASX, JHIL was in breach of ASX Listing Rule 3.1 (Listing Rule 3.1) and s 1001A(2) of the Corporations Law as carried over into the Corporations Act (Section 1001A(2)). In February 2001, s 1001A(1) and Section 1001A(2) were in the following terms:

14 In February 2001, s 111AE(1) of the Corporations Law as carried over into the Corporations Act provided that securities in a class of securities of a body were ED securities if securities in that class were quoted on a stock market of a securities exchange. The shares of JHIL were ED securities.

15 In February 2001, Listing Rule 3.1 provided:

16 It is alleged against Mr Macdonald that he knew or ought to have known when he attended the 15 February 2001 Meeting that if the board authorised the execution of the DOCI without disclosing the DOCI Information to the ASX it would be harmful, or potentially harmful, to JHIL in that JHIL risked contravening Section 1001A(2). It is alleged that in failing to advise the chairman of the board as to whether or not the DOCI Information was required to be disclosed to the ASX; in failing to seek and consider advice as to whether the DOCI Information was required to be disclosed; in failing to resolve or determine that JHIL would disclose the DOCI Information, or in failing to raise with the chairman that they needed to consider and determine whether or not to disclose the DOCI Information; Mr Macdonald failed to discharge his duties to JHIL and thereby breached Section 180(1).

17 Similar allegations are made against Mr Shafron. It is alleged that in failing to advise the chief executive officer or the board that it needed to consider whether JHIL was required to disclose the DOCI Information to the ASX; in failing to obtain advice for the chief executive officer or the board, or in failing to provide his own advice as to whether there was a requirement to disclose the DOCI Information; and in failing to advise the chief executive officer or the board to resolve or determine that JHIL would disclose the DOCI Information; Mr Shafron failed to discharge his duties to JHIL and thereby breached Section 180(1).

1.3 DOCI execution

18 The DOCI was executed by Mr Morley in the early morning of 16 February 2001. In brief, Coy and Jsekarb covenanted that they would not make any claim against JHIL arising from, or incidental to, the manufacture and sale of asbestos products, they would indemnify JHIL against all claims or losses suffered or incurred arising from, or incidental to, the manufacture and sale of asbestos products, and Coy gave a covenant to the sole registered shareholder of JHIL to acquire all of the shares of JHIL (Put Option). In consideration, JHIL undertook to make annual payments to Coy and Jsekarb until 2042.

19 Donald Ewen Cameron was James Hardie group treasurer and joint company secretary of JHIL with Mr Shafron. He and Mr Morley were the two directors of Coy and Jsekarb and they executed the DOCI on their behalf. Blake Dawson Waldron (BDW) were retained to advise Mr Morley and Mr Donald Cameron of their duties in considering whether Coy and Jsekarb should enter into the DOCI. ASIC alleges that they advised Mr Morley and Mr Donald Cameron to seek from Trowbridge advice on the quantification of the liabilities that were to be assumed under the DOCI.

20 It is alleged against Mr Morley that he failed to obtain the information and advice recommended by BDW; he failed to negotiate to obtain additional funds for Coy and Jsekarb; and he failed to inquire or obtain advice as to the Put Option and when it might be exercised. It is alleged that in failing to discharge his duty to Coy and Jsekarb when he executed the DOCI on their behalf, Mr Morley contravened Section 180(1).

1.4 Final ASX Announcement

21 With some variations from the Draft ASX Announcement, and in particular the introduction of the word “anticipated” in relation to Asbestos Claims, an announcement was forwarded to the ASX on 16 February 2001 (Final ASX Announcement). ASIC alleges that Mr Macdonald approved its release. ASIC alleges that it contained false or misleading statements as to the sufficiency of funding of the Foundation. It is alleged that Mr Macdonald failed to advise that the Final ASX Announcement should not be released or that it should be amended to remove the matters that were false or misleading and those failures constituted a breach of Section 180(1).

1.5 Press Conference Statements

22 ASIC alleges that similar false or misleading statements as to the sufficiency of funding of the Foundation to meet all legitimate future Asbestos Claims were made at a press conference convened by Mr Macdonald on 16 February 2001 (Press Conference Statements). It is alleged against Mr Macdonald that the Press Conference Statements included assertions that it was certain that the funds would be sufficient; that Mr Macdonald believed it was certain the funding would be sufficient; and that PwC and Access Economics had provided advice that supported the assertion that it was certain that the funding would be sufficient. It is alleged that those assertions were false or misleading and in breach of Section 180(1).

23 In addition, ASIC alleges that the Press Conference Statements conveyed, or were capable of conveying, that JHIL did not have any potential claims on the assets of Coy and Jsekarb and that was false or misleading and in breach of Section 180(1).

1.6 23 February 2001 ASX Announcement

24 ASIC alleges that Mr Macdonald approved for release to the ASX an announcement of 23 February 2001 (23 February 2001 ASX Announcement). It is alleged against Mr Macdonald that it conveyed, or was capable of conveying, that it was certain the funding would be sufficient to meet all legitimate present and future Asbestos Claims, Mr Macdonald believed this and that the material available to JHIL provided a reasonable basis for that assertion. It is alleged that those representations were false or misleading and in breach of Section 180(1).

1.7 21 March 2001 ASX Announcement

25 ASIC alleges that Mr Macdonald approved for release to the ASX a further announcement of 21 March 2001 (21 March 2001 ASX Announcement). In similar terms to the allegations with respect to the 23 February ASX Announcement, it is alleged that Mr Macdonald was in breach of Section 180(1) in that the 21 March 2001 ASX Announcement conveyed, or was capable of conveying, that 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, and that was false or misleading.

26 ASIC also alleges against Mr Macdonald that in making the Press Conference Statements, the 23 February 2001 ASX Announcement and the 21 March 2001 ASX Announcement, Mr Macdonald contravened s 181(1) of the Corporations Law as carried over into the Corporations Act (Section 181(1)). In February and March 2001 that provision was as follows:

27 It is alleged that Mr Macdonald knew, or was reckless as to the truth, that if he made the above statements on behalf of JHIL that were false or misleading, that was 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 and s 52 (Section 52) of the Trade Practices Act 1974 (Cth). In February and March 2001, Section 995(2) was in the following terms:

engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”

28 ASIC alleges that the Final ASX Announcement, the Press Conference Statements, the 23 February 2001 ASX Announcement and the 21 March 2001 Announcement were misleading or deceptive in the respects indicated above and by reason of their publication, JHIL contravened Section 995(2). ASIC contends that each of the Final ASX Announcement, the 23 February 2001 ASX Announcement and the 21 March 2001 ASX Announcement were notices published in relation to securities, namely JHIL shares, and that the Press Conference Statements were made in, or in connection with, dealings with securities, namely, JHIL shares.

29 ASIC also contends that the Final ASX Announcement, the Press Conference Statements, the 23 February 2001 ASX Announcement and the 21 March 2001 Announcement were false in a material particular or were materially misleading in the respects indicated above and by their publication, JHIL contravened Section 999. It is alleged that each constituted a statement or information that was likely to induce other persons to sell or purchase securities, namely the shares of JHIL, or likely to have the effect of increasing, reducing, maintaining or stabilizing the market price of securities, namely shares of JHIL.

1.8 Scheme of Arrangement

30 A restructure of the James Hardie group was effected by means of a members’ scheme of arrangement (Scheme) under s 411 of the Corporations Act (Section 411). It involved the creation of a new holding company of the group, James Hardie Industries NV (JHINV), a company incorporated in the Netherlands. Part of the arrangement involved JHIL issuing to JHINV 100,000 partly paid shares at a cost $50 each with an uncalled amount on each share of $19,603.62 giving a total uncalled capital of $1.96 billion.

31 At the board meeting of JHIL on 23 July 2001 (23 July 2001 Meeting) it is alleged that Mr Brown, Mr Gillfillan, Ms Hellicar, Mr Koffel and Mr Willcox approved a draft of an information memorandum to be sent to members of JHIL as part of the Scheme (Draft IM).

32 The Draft IM contained statements to the effect that the partly paid shares would enable JHIL to call upon JHINV to pay if it was required to meet any liabilities of JHIL. ASIC alleges that that was false or misleading because JHIL could cancel the partly paid shares at any time in the future and management had proposed to the board that after the completion of the restructure the Put Option should be exercised; the partly paid shares should be cancelled; the shares should be transferred to another trust; or JHIL should be liquidated. It is alleged that the members of the board had either endorsed the proposals and intended that the steps be taken, or had assumed they would occur. ASIC alleges that the steps necessarily involved, or most likely required, the cancellation of the partly paid shares, or the putting of them to Coy under the Put Option. It is alleged that in approving the Draft IM, Mr Brown, Mr Gillfillan, Ms Hellicar, Mr ellicarHKoffel and Mr Willcox failed to discharge their duties to JHIL and thereby contravened s 180(1) of the Corporations Act which was then in identical terms to Section 180(1).

33 In August 2001, JHIL commenced proceedings in this Court seeking approval of the Scheme. The proceedings were listed before the late Justice Santow who was provided with a later version of the Draft IM. Allens Arthur Robinson (Allens) drafted a letter to be sent to Santow J’s Associate (Draft Court Letter). It advised that JHIL proposed to impose a condition on its ability to call the partly paid shares: a call could only be made if the directors formed the view that it was necessary to ensure that JHIL was able to pay its debts as and when they fell due and in such amount as the directors believed was necessary to ensure that JHIL remained solvent. The Draft Court Letter contained a statement to the effect that JHIL would have, through existing reserves and access to funding in the form of the partly paid shares, the means to meet liabilities that it might incur in the future whether in relation to Asbestos Claims or otherwise.

34 The letter was settled and sent to his Honour’s Associate (Final Court Letter). It contained a statement with respect to the partly paid shares to similar effect. On 23 August 2001, Santow J ordered the dispatch of an approved, amended and finalised information memorandum (Final IM) to the shareholders of JHIL and the convening of a meeting of members. JHIL caused copies of the Final IM to be sent to its members and lodged a copy with ASIC. The Final IM contained the same statements with respect to the partly paid shares. The Scheme was approved by Santow J on 11 October 2001. ASIC alleges that the statements with respect to the partly paid shares in the Final IM, in the Draft Court Letter and in the Final Court Letter were for the above reasons false, misleading or deceptive.

35 ASIC alleges against JHIL that by issuing the Final IM to its members, JHIL engaged in conduct that was misleading or deceptive, or likely to mislead or deceive in contravention of s 995(2) of the Corporations Act. It was then in terms similar to Section 995(2). It was as follows:

36 ASIC also alleges that in issuing the Final IM, JHIL contravened s 999 of the Corporations Act that was then in identical terms to Section 999.

37 For the same reasons, ASIC alleges against Mr Macdonald that he failed to discharge his duties to JHIL and thereby breached s 180(1) of the Corporations Act in approving the Draft IM; in failing to advise the other directors of its false or misleading aspects; in instructing Allens to send the Final Court Letter, or in failing to correct the Draft Court Letter.

38 Against Mr Shafron, ASIC alleges that in failing to ensure that the board was advised that the Draft IM was false or misleading and in instructing Allens to issue the Final Court Letter, or in failing to correct the contents of the Draft Court Letter, Mr Shafron failed to discharge his duties to JHIL and thereby breached s 180(1) of the Corporations Act.

1.9 Roadshow Presentations

39 In June 2002, Mr Macdonald made representations (Edinburgh Representations) with respect to JHINV at a function in Edinburgh attended by Alistair James Thompson who was employed by Edinburgh First Managers as head of Asia Pacific, excluding Japan, and as portfolio manger for a range of funds and a leading investment trust (Edinburgh Roadshow).

40 That was followed by representations (London Representations) with respect to JHINV made in London to Paul Joseph Simons who was employed by Pyford International plc as a senior research analyst responsible for stock selection recommendations in Australia (London Roadshow).

41 The slides for these presentations (UK Slides) were lodged with the ASX (ASX Representations). ASIC alleges that in the Edinburgh Representations and in the London Representations, Mr Macdonald said that the Foundation was fully funded and this was stated in the ASX Representations. ASIC alleges that the statements were false in a material particular or were materially misleading and in making them JHINV contravened s 1041E of the Corporations Act (Section 1041E). In June 2002 Section 1041E(1) was in the following terms:

42 ASIC also alleges that in making the ASX Representations, JHINV engaged in conduct in this jurisdiction in relation to financial products, namely shares of JHINV, which was misleading or deceptive, or was likely to mislead or deceive, contrary to s 1041H of the Corporations Act (Section 1041H). In June 2002, Section 1041H(1) was in the following terms:

“A person must not, in this jurisdiction, engage in conduct, in relation to a financial product or a financial service, that is misleading or deceptive or is likely to mislead or deceive.”

43 ASIC alleges against Mr Macdonald that in making the assertions as to full funding in the Edinburgh Representations and in the London Representations and in approving the provision of the UK Slides to the ASX, or in failing to advise that the ASX Representations should not be made, or should be amended to remove matters that were false or misleading, Mr Macdonald failed to discharge his duties to JHINV and thereby contravened s 180(1) of the Corporations Act.

44 It is further alleged against Mr Macdonald that in making the assertions as to full funding in the Edinburgh Representations, the London Representations and in the ASX Representations, Mr Macdonald knew, or was reckless as to whether, they were false or misleading. It is alleged that in making such public statements on behalf of JHINV, or in failing to take steps to prevent such statements being made, Mr Macdonald knew or was reckless as to whether it would be harmful, or potentially harmful, to JHINV in that JHINV would contravene, or risk contravening, Section 1041E and Section 1041H and Section 52. ASIC alleges that in consequence Mr Macdonald contravened s 181(1) of the Corporations Act. In June 2002 it was in identical terms to Section 181(1).

1.10 Cancellation of the partly paid shares

45 JHINV was in March 2003 a listed disclosing entity for the purposes of s 674(2) of the Corporations Act (Section 674(2)). Section 674(1) and Section 674(2) were then in the following terms:

“(1) Subsection (2) applies to a listed disclosing entity if provisions of the listing rules of a listing market in relation to that entity require the entity to notify the market operator of information about specified events or matters as they arise for the purpose of the operator making that information available to participants in the market.

the entity must notify the market operator of that information in accordance with those provisions.”

46 In March 2003, Listing Rule 3.1 provided:

“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.”

47 Negotiations took place between JHINV and the Foundation during March 2003 with a view to the exercise of the Put Option in relation to the one JHIL share that JHINV held. JHINV was advised that Coy would not accept the transfer of the JHIL share and would oppose any attempted exercise of the Put Option.

48 JHIL had changed its name to ABN 60 000 009 263 Pty Ltd (ABN 60) by March 2003.

49 At the meeting of the board of directors of JHINV on 25 March 2003 (25 March 2003 Meeting), it was resolved that JHINV execute a trust deed and settle a sum upon the trustee to create a new trust (ABN 60 Foundation); that it approve a $1.5m capital reduction by JHIL by payment to it of $1.5m; that it request JHIL to issue 1,000 shares to the ABN 60 Foundation; and that the cancellation by JHIL for no consideration of the one fully paid ordinary share held by JHINV was in its best interests. It was further resolved to enter into a deed of covenant, indemnity and access (DOCIA) with JHIL. Under the DOCIA JHIL agreed to make regular payments to Coy and Jsekarb in accordance with the DOCI; subject to exceptions, JHIL covenanted not to claim against JHINV; subject to conditions, JHIL provided an indemnity not to make a claim against JHINV in relation to acts occurring before JHIL’s transfer to the ABN 60 Foundation; and subject to conditions, JHINV provided an indemnity to JHIL in relation to acts occurring before JHIL’s transfer to the ABN 60 Foundation.

50 On 31 March 2003, JHIL reduced capital by $1.5m by transferring that amount to JHINV; JHINV executed the ABN 60 Foundation trust deed and the DOCIA; and JHIL issued 1,000 shares to the ABN 60 Foundation and resolved to cancel the one fully paid ordinary share owned by JHINV for no consideration. On 14 April 2003 that share was cancelled.

51 ASIC alleges that the resolutions passed at the 25 March 2003 Meeting required it to disclose the proposed events, as they were then sufficiently certain to take place. ASIC alleges that in failing to notify the ASX of this information, JHINV contravened Section 674(2).

2 Draft ASX Announcement issue

52 The first question that arises under this issue is whether a document incorporating a draft announcement to be made to the ASX about the formation of the Foundation was before the board of JHIL at the 15 February 2001 Meeting.

2.1 Minutes of 15 February 2001 Meeting

53 The minutes of the meeting of the board of JHIL at the 15 February 2001 Meeting were signed as a correct record by the chairman, the late Alan Gordon McGregor, at the next meeting of the board on 4 April 2001. They contained the following entry:

ASX Announcement

Resolved

54 ASIC submits that the minutes have the benefit of a statutory presumption in s 251A of the Corporations Law as carried over into the Corporations Act (Section 251A). The section was as follows:

55 ASIC submits that the defendants must prove the contrary of the stated fact that an announcement to the ASX was approved by the board of JHIL at the 15 February 2001 Meeting and it says they have not done so.

56 There appears to have been a failure to comply with Section 251A(1) in the sense that the minutes were not recorded in a minute book within a month of the meeting. There is in evidence an email from the late Alan Thornton Kneeshaw, a former manager secretarial services of the James Hardie group of 5 April 2001 noting that the last minutes in the JHIL directors’ minute book were those of the 15 November 2000 meeting. This drew a response from Mr Shafron on 7 April 2001 enclosing the minutes of the January and February 2001 board meetings. The earliest date upon which it appears to have been possible for the minutes of the 15 February 2001 Meeting to be recorded in a minute book was 7 April 2001, well outside the one month period.

57 ASIC points to the definition of “books” in s 9 of the Corporations Law as carried over into the Corporations Act as including a document and submits that all that is required under Section 251A(1) is that within a month a company keep a draft minute document recording the proceedings and resolutions of directors’ meetings. But Section 251A(1) draws a distinction between a record of the proceedings and resolutions and a book in which the record is kept.

58 ASIC refers to s 1306(1) of the Corporations Law as preserved in the Corporations Act (Section 1306(1)) which was in the following terms:

59 ASIC submits that a draft minute document kept by a company electronically or in paper satisfies the statutory requirement in Section 251A(1). But a document that satisfies Section 251A(1) must also be capable of being signed in order to satisfy Section 251A(2) and, so far as a paper version is concerned, the submission suffers the same problem that Section 1306(1)(a) draws a distinction between the record and the book in which it is stored. In any event, JHIL chose to maintain bound books in which it recorded the minutes of meetings of its directors.

60 ASIC points to s 1305 of the Corporations Law as preserved in the Corporations Act (Section 1305). Section 1305(1) and Section 1305(2) were in the following terms:

61 ASIC submits that a draft minute document recording the proceedings and resolutions of directors’ meetings electronically or in paper is prima facie evidence of the matters stated or recorded therein. But Section 1305(1) only applies if a book is required to be kept under the Act and the relevant requirement is Section 251A(1). The general provision in Section 1305(2) must give way to the specific provision in Section 251A(1). In that way the provisions operate harmoniously (Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at [69]-[70]).

62 ASIC relied upon Australian Securities and Investments Commission v Rich [2005] NSWSC 417; (2005) 34 ACSR 752 at [281] where Austin J said of Section 1305(2):

“The presumption created by subs (2) can be rebutted by proof to the contrary. If it appears, having regard to the nature of any particular document, that there is no requirement of the Corporations legislation for such a document to be kept by a body corporate, the presumption is rebutted.”

63 In my view, his Honour was stating one way in which the presumption in Section 1305(2) could be rebutted. He was not concerned with the interaction of that provision and Section 251A(1).

64 Section 253 of the Companies Code (Section 253) was a forerunner of Section 251A. It was in the following terms:

65 This provision was considered by Wilcox J in Claremont Petroleum NL v Cummings (1992) 110 ALR 239. A minute initialled by the chairman of the board was not entered in a minute book within one month. At 258 his Honour said that if the minute had been entered within a month the section would apply creating a presumption that the recorded proceedings took place, a presumption rebuttable by proof to the contrary. His Honour went on to say:

“The condition that a minute be entered within one month, if it is to be regarded as prima facie evidence of the proceedings at a meeting, should be strictly applied. A minute prepared and signed soon after a meeting is likely to be more reliable than one prepared long afterwards when memories have dimmed and, perhaps, other interests intruded.”

66 There was a distinction in Section 253 between a minute as prima facie evidence of the proceedings at a meeting and a minute as deemed proof of the proceedings unless the contrary was proved. The latter reversed the onus of proof: the former did not. That dichotomy does not appear in Section 251A. But since it was to the former that Wilcox J addressed his remark of strict compliance, it has relevance to the interpretation of Section 251A(6) which, although in different terms, is not on its face a deeming provision of the type in Section 253(3).

67 At a time when s 258 of the Corporations Law was in identical terms to Section 253, Perry J in Galladin Pty Ltd v Aimnorth Pty Ltd (1993) 11 ACSR 23 at 44 endorsed the remark of Wilcox J in Claremont.

68 In Gosford Christian School Ltd v Totonjian [2006] NSWSC 725; (2006) 201 FLR 424 at [19], Barrett J extended the effect of a failure to comply with Section 251A(1) to a non-entitlement to the benefit of Section 1305. His Honour held that a copy of a minute that did not form part of a minute book in accordance with Section 251A(1) did not derive evidentiary value from Section 1305(2). To construe Section 1305(2) as ASIC submits would circumvent the purpose of Section 251A(1) and its forerunner Section 253.

69 I see no reason why the observation of Wilcox J should not apply to Section 251A(6). One thing that has emerged clearly in this case is that recollection is fallible. If a minute is to be given evidentiary value, it ought to be a contemporaneous document, for then it is more likely to be an accurate reflection of the proceedings of the meeting rather than a reconstruction of them.

70 When the legislature created the requirement of one month in Section 251A(1) it did so with the object of restricting the benefit of the section to reasonably contemporaneous documents. Hence the need for strict compliance.

71 As a matter of construction, only documents recorded in a minute book within one month of a meeting are accorded the evidentiary value specified in Section 251A(6). This is apparent from the use of the words “so recorded and signed” in the sub-section. They refer back to the earlier provisions of the section. A minute is “so signed” if it is signed in accordance with Section 251A(2), Section 251A(3) or Section 251A(4) as they are the only provisions within the section that require a signature. Likewise, a minute is “so recorded” if it is recorded in a minute book within a month of the meeting as provided in Section 251A(1) for that is the only provision within the section that requires recording.

72 Since the minutes of the 15 February 2001 Meeting were not recorded in a minute book within one month, it follows that Section 251A(6) was not engaged and the minutes have no special evidentiary value.

73 In light of that finding, the question whether Section 251A(6) gives rise to a reversal of the onus of proof need not be decided. But in view of the submissions of most parties on the issue, I set out my view of the matter.

74 ASIC contends that Section 251A(6) contains the sort of deeming that Section 253(3) had. But Section 251A(6) does not say that the minute is conclusive evidence of happenings at a meeting unless the contrary is proved. It does not state, as Section 253(3) stated, that the events recorded in the minute are deemed to have happened. It says the minute is evidence of the events unless the contrary is proved. And whether the contrary is proved must be judged on the whole of the evidence. If the evidence establishes that an event recorded in a minute did not occur, the fact of its recording in the minute has no effect.

75 Hamilton J adopted this approach of judging whether the contrary had been proved by surveying the whole of the evidence in Silver v Dome Resources NL [2007] NSWSC 455; (2007) 62 ACSR 539 at [61]-[63] where, having referred to a minute to which Section 251A(6) applied, his Honour considered the evidence as a whole and concluded that the evidence against the holding of the meeting should be rejected. In so doing his Honour attributed no special weight to the minute. The Court of Appeal affirmed the decision but did not address Section 251A(6) in Dome Resources NL v Silver [2008] NSWCA 322; (2008) 68 ACSR 458.

76 ASIC relies on a number of cases that discuss the phrase “unless the contrary is proved” and like phrases. Such phrases will vary in meaning depending upon their context. In the cases relied upon by ASIC, the context is one that specifies that a certain state of affairs is deemed, or presumed, or taken to exist. That is the context of Section 253(3). It is not the context of Section 251A.

77 Thus in Repatriation Commission v Gordon (1990) 26 FCR 569 Spender J considered s 29 of the Acts Interpretation Act 1901 (Cth) in which service is deemed to be effected by properly addressing, prepaying and posting a document, and, unless the contrary is proved, is deemed to have been effected at the time at which the letter would be delivered in the ordinary course of post (see also Hughes v R (1983) 49 ALR 110, Foster v R (1982) 38 ALR 599, Hodgson v Hart District Council [1986] 1 All ER 400, Re Wayne Myer & Son Family Butchery Pty Ltd [1998] QSC 2, Damaso v The Queen [2002] NTCCA 2; (2002) 168 FLR 103, Singh v The Queen WACCA, unreported, 18 September 1985, Abbott v Western Australia (2005) 152 A Crim R 186, R vPhillips [1991] 3 NZLR 175, Hanson v R [2005] NZCA 220, R v Hanson [2007] NZSC 7; [2007] NZLR 1, Sheldrake v Director of Public Prosecutions [2005] 1 ALL ER 237 and McLeanBros & Rigg Pty Ltd v Grice (1906) 4 CLR 835).

78 These cases do not bear on the interpretation of Section 215A(6) in my view. It requires a weighing up of the evidence for and against the happening of the events recorded in a minute entered in a minute book within one month. If that weighing favours the recorded events, the contrary is not proved. If it favours evidence against the happening of the event, the contrary is proved. There is no shift in the onus of proof to the party asserting that the event did not happen.

79 In my view, therefore, the minutes of the 15 February 2001 Meeting do not fall within Section 251A(6) and, in any event, that provision does not create any statutory presumption in favour of the events recorded in the minute.

2.2 Some matters leading up to the 15 February 2001 Meeting

80 JHIL had given a deal of consideration to the restructure of the James Hardie group prior to the 15 February 2001 Meeting. One object was to separate from the James Hardie group in whole or in part those companies with a risk of receiving Asbestos Claims (Separation Proposals). Another object was to achieve a better worldwide income tax position. In July 1998 it issued an announcement to the ASX of its intention to form a wholly owned company in the Netherlands, James Hardie NV (JHNV), which would acquire all the operating companies in the group. JHIL planned to sell down about 15% of JHNV by an initial public offering (IPO) in the United States of America (US) and to list the shares on the New York Stock Exchange (NYSE). This was expected to occur in October 1998. The plan was referred to internally as Project Chelsea. Because of unfavourable equity market conditions in the US, the IPO was abandoned.

81 As a result of this restructure, Coy and Jsekarb and other non-operating entities remained subsidiaries of JHIL but the operating entities within the James Hardie group were owned by JHNV which was wholly owned by JHIL.

82 In December 1999, Mr Morley circulated a paper entitled “Potential Separation Structure Outline”. A working party was established to consider this proposal further. The proposal became known internally as Project Green.

83 Board packs containing board papers were distributed to the directors of JHIL prior to each meeting of the board. Throughout the balance of 2000 and into 2001 the board packs contained board papers discussing Project Green.

84 On 13 December 2000 Mr Macdonald sent a project Green update memorandum to members of the board of JHIL foreshadowing that management would seek board approval in January 2001 to establish a trust over the shares in Coy thereby deconsolidating it from the James Hardie group.

85 The memorandum discussed Australian and US generally accepted accounting principles (GAAP) and noted that a proposed Australian accounting exposure draft – ED 88 (ED 88) might amend the accounting standards under which JHIL accounted for long tail liabilities including Asbestos Claims. The memorandum contained a recommendation for the transfer of the shares in Coy to a corporate trustee, a new subsidiary of JHIL. The memorandum stated that the value of the total assets available for creditors and potential claimants including asbestos costs was $217m.

86 The board papers for the 17 January 2001 board meeting included a paper entitled “Proposed Trust Structure Update”. It considered the establishment of a stand-alone trust company to manage the asbestos liabilities in the James Hardie group. This Separation Proposal involved the incorporation of a company limited by guarantee to act as trustee of a trust, the object of which was to fund medical and scientific research into asbestos related and other lung diseases. JHIL would make a gift to the trust of its shares in Coy and Jsekarb and a cash gift of $2m for research. Under the proposal the assets of Coy and Jsekarb could not be used for research nor could any profits be distributed to the trustee by way of dividends. Instead they would be dedicated to meeting existing and future Asbestos Claims. The paper stated:

“The Trust concept would ensure that approximately $214m in cash, receivables and assets, plus earnings from those assets, are earmarked solely for creditors of JH & Coy and Jsekarb, including the funding of future asbestos related claims. Ultimately any surplus funds would be available for the charitable purposes of the Trust, being asbestos and lung disease research. In addition to the shares in JH & Coy and Jsekarb, JHIL also could also provide a grant of approximately $2 million directly to the Trust to enable it to support current and ongoing research into asbestos related and other lung disease from the time of its establishment.”

87 Mr Macdonald’s memorandum of 13 December 2000 stated that press releases would explain the creation of the trust as providing certainty for creditors and potential claimants that the assets of Coy were irrevocably secured for their benefit. A draft announcement to the ASX was contained in the board papers for the January 2001 meeting. The board papers also contained a series of recommendations on communications strategy.

88 The Separation Proposal contained in the board papers was discussed at the JHIL board meeting on 17 January 2001. A feature of this Separation Proposal was that only the net assets of Coy and Jsekarb would be made available to meet present and future Asbestos Claims (Net Assets Model). The board papers stated:

“Under current Australian law, the maximum quantum of funds available to Australian asbestos claimants is the existing net assets of JH & Coy and Jsekarb, the two legal entities which have been found legally liable to compensate asbestos victims. Apart from minimal exposure in JHIL to pre 1937 manufacturing of asbestos containing products and some minor NZ exposure described above, there are no other James Hardie companies with asbestos exposure. There is no sound rationale for increasing the net assets of JH & Coy and Jsekarb and thereby expanding this quantum of funds available to claimants….”

89 The board rejected the Net Assets Model on 17 January 2001 and management was sent away to do more work on the Separation Proposal to ensure sufficient funds were available to meet all present and future Asbestos Claims.

90 By 15 February 2001 the Separation Proposal had been refined. The board papers for the 15 February 2001 Meeting contained a paper entitled “Project Green Board Paper” produced by Mr Macdonald. The management suggestion was that additional annual payments should be made to the Foundation by JHIL in consideration for the benefits that came to be included in the DOCI. Under a heading “Separation from legacy issues” it was stated:

“James Hardie Industries Limited (JHIL) does not have legal liability for the obligations of its former asbestos producing subsidiaries. In particular, James Hardie and Coy Pty Ltd and Jsekarb Pty Ltd, two subsidiaries which formerly produced asbestos bearing products and are currently subject to plaintiffs actions on account of injuries caused by asbestos, have current and potential liabilities that have the potential to exceed their net worth. This does not create an obligation for JHIL to meet any shortfall. It is recommended that the shares of these two companies be vested to a Foundation to manage the companies’ assets in the interests of current and future creditors. It is also proposed that an additional sum be paid over time (NPV $70M) to JH & Coy in return for an indemnity and covenant not to sue JHIL and an agreement to take JHIL if it is put to it in the future with no subsidiary companies. Upon the vesting of the shares and additional sums, the vesting of an additional $3M to support the Foundation in ongoing research into asbestos related diseases, and other establishment costs, JHIL will recognise an extraordinary write off of around $256M. We are also recommending that JHIL make a direct $1M once off commitment to support a proposed Asbestos Diseases Research Institute. The gross assets in the companies amount to around $284M before asbestos related liabilities. The creation of a Foundation as recommended will largely remove asbestos related issues from JHIL and the ongoing James Hardie Group. A separate paper detailing the separation process is included as Attachment A. Communications strategies have been well developed and a paper on communications is included as Attachment B.”

91 Unlike the board papers for the January 2001 meeting, the board papers for the 15 February 2001 Meeting did not contain a draft press release. Nor was there any reference to a draft press release in the agenda for that meeting. In Attachment B, dealing with communications strategy, there was no discussion of the specific terms of an announcement to the ASX. The first page of the communications strategy contained the following statement:

“Our central communications conundrum is that we will not be able to provide key external stakeholders with any certainty that the funds set aside to compensate victims of asbestos diseases will be sufficient to meet all future claims.”

92 The board papers contained a statement that work was being done on announcements as further work on the sufficiency of funding was being undertaken. The board was also informed that the proposed meeting date was 15 February 2001 with the announcement of separation, if approved, scheduled for 16 February 2001. The board papers also recommended that the board agree to the creation of the Foundation at its 15 February 2001 Meeting for announcement together with JHIL third quarter (Q3) results on Friday 16 February 2001.

93 The February 2001 board papers did not contain draft minutes of the detailed resolutions that were to be put to the meeting. Attachment A on the separation process under the heading “JHIL Board Resolutions” stated:

94 Gavin Anderson & Company (Gavin Anderson) provided public affairs and financial relations advice to corporate clients. They were retained by JHIL. Gregory John Baxter was the senior vice-president of corporate affairs of JHIL. His chief point of contact was with Jane Alison Sarah Rotsey who was employed part time by Gavin Anderson as chief operating officer. Stephen Gregory Ashe was vice-president public affairs of JHIL. He reported to Mr Baxter.

95 On 7 February 2007, Mr Baxter and Mr Ashe met with Ms Rotsey and Bryan Tyson, the head of Gavin Anderson’s Sydney office. One of the tasks to be addressed by Gavin Anderson and Tony Park, a consultant to Gavin Anderson, was to revise and finalise a James Hardie media release, a Foundation media release, key messages and question and answer (Q&A) documents.

96 On 9 February 2001, Mr Macdonald, Mr Shafron and Mr Ashe met with Mr Steven Loosley of PwC’s strategic advice and public policy group. He advised them to attempt to get independent verification of the funding outcomes they had modelled.

97 On 10 February 2001, Mr Macdonald sent an email to Mr Baxter with copies to Mr Shafron and Mr Morley amongst others. Under a heading “4. Funding- will it be enough? and independent verification” it was stated:

“Stephen felt the new numbers put us in a very powerful position. We should attempt to get independent verification of the funding outcomes we had modeled (Access Economics, Grant Samuel, PwC were suggestions) so that funding outcomes were not solely on our say so. For example….”)

98 Melissa Maree Wheeler was project coordinator in corporate affairs of JHIL and an executive assistant to Mr Baxter. On 13 February 2001 she sent an email to Ms Rotsey, Mr Tyson, Mr Baxter and Mr Ashe calling an “all hands on deck” meeting for the afternoon of Wednesday 14 February 2001. Action points from that meeting prepared by Ms Wheeler indicated that the tasks of revising for comment the media release of JHIL, the media release of the Foundation, the key messages and the Q&A had not been completed. A deadline for their completion that day was set.

99 On 14 February 2001, Mr Shafron sent an email to Mr Macdonald, Mr Baxter and Mr Ashe with a copy to Mr Morley amongst others in which he said:

“I think you know that we really should get express permission from our experts before mentioning them publicly. As for Trowbridge, they have yet to give that permission. If we do intend to refer to them in public documents or discourse then please let me know what we intend to say and I will try to clear it with David Minty. Same will apply to Access and PwC.”

100 David Julian Minty was an actuarial consultant at Trowbridge and a partner of Deloitte Touche Tohmatsu.

101 Mr Baxter responded to Mr Shafron’s email as follows:

sic

102 As well as the all hands on deck meeting with Gavin Anderson staff, there was a Project Green board meeting run through session on the afternoon of 14 February 2001. Prior to that meeting, Andrew Cowper of UBS distributed slide presentations to, amongst others, Mr Macdonald, Mr Baxter, Mr Shafron and Mr Morley and indicated that slides prepared by Mr Baxter were being formatted and would be brought to the meeting.

2.3 7.28 pm Draft Announcement

103 At 7.28 pm on 14 February 2001, Ms Rotsey sent an email to Mr Baxter and others attaching the work of Mr Park, Mr Tyson and Ms Rotsey being the JHIL release, the Foundation release, the JHIL Q&A, the Foundation Q&A and key messages.

104 In the documents forwarded by Ms Rotsey, were statements to the effect that the Foundation would have sufficient funds to meet all future Asbestos Claims and the words “fully funded” appeared. In the Foundation release there was the following:

“A new, fully-funded organisation, the Medical Research and Compensation Foundation (MRCF) has been established to handle asbestos-related claims against former James Hardie companies, and to fund medical research.”

105 In the JHIL Q&A material there was a statement:

“We have established a fully–funded Medical Research and Compensation Foundation which provides much greater security than ever before for people with legitimate asbestos-related claims against James Hardie, and for James Hardie shareholders.”

106 The key messages document contained the following:

“As a fully-funded Foundation, the MRCF provides certainty for claimants injured by asbestos that there will be sufficient funds to meet all legitimate compensation claims.”

107 The JHIL release (7.28 pm Draft Announcement) also contained such statements. It was as follows:

Legally privileged and confidential – for legal advice only

Draft news release 14 February 2001

James Hardie resolves its Asbestos Liability
Favourably for Claimants and Shareholders

James Hardie Industries Limited (JHIL) announced today that it had established a foundation to compensate sufferers of asbestos-related diseases with claims against the company and fund medical research aimed at finding cures for these diseases.

The Foundation’s purpose is to manage all future litigation arising from the past manufacturing of asbestos-containing products by two former subsidiaries of JHIL and fund legitimate compensation claims.

JHIL CEO, Mr Peter MacDonald said that the establishment of a fully-funded Foundation provided the best resolution for all stakeholders

“The establishment of the Medical Research and Compensation Foundation provides certainty for people with a legitimate claim against the former James Hardie companies which manufactured asbestos products,” Mr MacDonald said.

“It also resolves James Hardie’s asbestos liability and allows it to pursue its very exciting growth prospects for the benefit of shareholders.”

A separate fund of $3 million has also been set aside scientific and medical research aimed at finding treatments and cures for asbestos diseases.

The $284 million vested into the Foundation includes portfolios of commonly traded shares, a substantial cash reserve, properties which earn rent and insurance policies which cover workers compensation claims.

Fund manager, Towers Perrin has been appointed to manage the Foundation’s investments, which will generate investment income and capital growth.

In establishing the Foundation, James Hardie sought information from a range of specialist advisors. It also has many years of experience in managing this issue and has formed a very well rounded view of the funding required to meet current and future claims

“The directors of James Hardie are satisfied that the Foundation will have sufficient funds to meet all 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, the Foundation will convert any remaining assets to cash and these surplus funds will be donated to a reputable medical and or scientific research organisation involved in work on lung diseases.

Mr MacDonald said, Sir Llewellyn Edwards, who had 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. He is a director of a number of organizations including Westpac Banking Corporation and is also Chancellor of the University of Queensland.

The other Foundation directors include Mr Michael Gill, Mr Peter Jollie and Mr Dennis Cooper.

-ends-

For further information:

108 Stephen Edward Harman was financial controller of JHIL. He reported to Mr Morley. At 12.33 am on 15 February 2001 Mr Harman sent by email to Mr Koffel and Mr Gillfillan with copies to Mr Macdonald, Mr Shafron and Mr Morley amongst others, board meeting material including the slide presentation “Project Green Board Presentation” and a number of documents constituting the Cashflow Model. The documents did not include the draft of any announcement to the ASX.

2.4 7.24 am Draft Announcement

109 At 6.57 am on 15 February 2001 (the email states the time wrongly at 7.57 am) Mr Baxter sent an email to Ms Rotsey returning the documents she had sent the previous evening with his amendments. The email stated:

110 Mr Baxter sent a further email to Ms Rotsey at 7.24 am attaching his revised changes to the draft announcement to the ASX (7.24 am Draft Announcement). He said:

“here are my comments on the news release – no doubt we can refine further later today – this is the version I will take to the Bd meeting.”

111 The attached revised draft announcement was in the same terms as the Draft ASX Announcement except that it contained boxes explaining Mr Baxter’s deletions. Without the boxes, the 7.24 am Draft Announcement was as follows:

Legally privileged and confidential – for legal advice only

Draft news release 14 February 2001

James Hardie resolves its Asbestos Liability
Favourably for Claimants and Shareholders

James Hardie Industries Limited (JHIL) announced today that it had established a foundation to compensate sufferers of asbestos-related diseases with claims against the company and fund medical research aimed at finding cures for these diseases.

The Foundation will have sufficient funds to meet all legitimate compensation claims from people injured by asbestos products manufactured in the past by two former subsidiaries of JHIL.

JHIL CEO, Mr Peter Macdonald said that the establishment of a fully-funded Foundation provided the best resolution for all stakeholders

“The establishment of the Medical Research and Compensation Foundation provides certainty for people with a legitimate claim against the former James Hardie companies which manufactured asbestos products,” Mr Macdonald said.

“The Foundation will concentrate solely on asbestos for the benefit of claimants allowing James Hardie to pursue its very exciting growth prospects for the benefit of shareholders.”

A separate fund of $3 million has also been set aside for scientific and medical research aimed at finding treatments and cures for asbestos diseases.

The $284 million vested into the Foundation includes portfolios of commonly traded shares, a substantial cash reserve, properties which earn rent and insurance policies which cover workers compensation claims.

1205 The simple answer is that I have found that the ASX announcement resolution accurately recorded what happened at the meeting. That there may have been inaccuracies with respect to other matters recorded in the minutes does not detract from this finding.

1206 Since some emphasis was placed on the inaccuracies, however, I set them out.

1207 First, the minutes reported a resolution in relation to the DOCI that identified an NPV of $65m whereas the figure in the slide presentation with respect to the Cashflow Model for the 15 February 2001 Meeting was an NPV of $72m.

1208 Mr Morley said when he returned to work on 16 February 2001, Mr Harman told him that he had made a change to the figures as the extraordinary loss to be entered in JHIL’s books was required to be determined at a risk free discount rate which led to the $8m difference between $285m and $293m.

1209 It was submitted that this explained a like change in the $65m to $72m. I do not accept that submission. First, that difference is $7m. More importantly, the NPV of $72m had been displayed in the slide presentation at the 15 February 2001 Meeting and predated any discussion with Mr Harman after the conclusion of the meeting.

1210 Secondly, the minutes recorded Mr McGregor tabling a power of attorney that appointed Mr Macdonald, Mr Shafron, Guy Jarvi and Joanne Marchione as attorneys for the company. But Mr Jarvi was not appointed in the tabled power of attorney. The matter was rectified at the April 2001 board meeting.

1211 Thirdly, the figure of $65m instead of $72m was repeated on the third page of the minutes.

1212 Fourthly, the minutes recorded a substantial shareholder notice for Merrill Lynch dated 28 February 2001 whereas the notice was dated 29 December 2000.

1213 Fifthly, the minutes recorded a chronological sequence of events in accordance with the agenda whereas Mr Morley gave unchallenged evidence that items 6, 7 and 10 were deferred until after the discussion of Project Green, item 11 on the agenda. Material documents, item 5 on the agenda, were recorded in the minutes as happening after Sir Llewellyn Edwards retired from the meeting whereas that item was dealt with before he retired.

1214 Sixthly, item 8 on the agenda was the chief executive officer’s report. The minutes recorded it being considered prior to Mr Baxter, Mr Harman, Mr Wilson, Mr Sweetman, Mr Cameron and Mr Robb joining the meeting. Mr Morley’s unchallenged evidence was that item 8 was considered after they joined the meeting.

1215 Seventhly, in incorrect sequence was item 10 on the agenda, “Australia/Asia Restructure”. It was deferred until after discussion on Project Green.

1216 Eighthly, Mr Morley said that item 7 on the agenda, “Finance”, was deferred until after the discussion on Project Green. The minutes recorded it as being considered before Project Green.

1217 Ninthly, it was submitted that the minute recording approval of the Draft ASX Announcement was incorrect, as Mr Morley had said that his best recollection was that no Draft ASX Announcement was tabled at the meeting. That is not an inaccuracy. I have found that the minutes are accurate in this respect.

1218 Tenthly, the minutes recorded a decision to explore strategic options for the gypsum business whereas the board had decided to adopt a strategy to commence a process for the sale of the business.

1219 Eleventhly, the minutes did not record a consensus of the board for the continuation of preparation for restructuring.

1220 The rescheduling errors are to be expected when, as here, the minutes were drafted before the meeting. Some of the errors such as the date of the substantial shareholder notice are relatively immaterial. But, in any event, it does not follow that because there were inaccuracies with respect to some events, the minutes could not be regarded as accurately recording other events and, in particular, the resolution approving the Draft ASX Announcement.

1221 In September 2004 the supervisory board of JHINV received advice from its Dutch lawyers that the directors were required to disclose conflicts of interest in relation to matters the subject of investigation by the Special Commission. A draft of a declaration to be made by Mr Brown, Mr Gillfillan and Ms Hellicar was prepared by JHINV’s solicitors. It was attached to an email Ms Hellicar sent to Mr Brown and Mr Gillfillan amongst others. It said:

1222 The attached draft declaration stated that in her capacity as a supervisory director JHINV and as a director of JHIL she participated in certain decisions and acts of those companies, certain of which had been, or might become, subject to criticism, including during the Special Commission.

1223 Paragraph 6 of the draft declaration was in the following terms:

“By way of example of the decisions described in paragraph 4, but without limiting the declaration made under paragraph 5, in my capacity as a director of JHIL, I participated in the deliberations leading to the decision taken by the Board of Directors of JHIL on 15 February 2001, and in the decision itself, to approve the terms of the press release made by JHIL to the Australian Stock Exchange Limited on that day announcing the establishment of the Foundation.”

1224 Mr Brown signed the declaration after having read it carefully and believing it to be true at the time, he said. Mr Gillfillan said he did not recall signing the declaration but most likely he did. Ms Hellicar said, to the best of her recollection, she did not sign the declaration although its contents were disclosed at the meeting of the supervisory board of JHINV on 28 September 2004 as is recorded in the minutes.

1225 In accordance with my findings, the declarations stated the matter accurately.

1226 I had limited the use that ASIC could make of these documents to its case against Mr Brown, Mr Gillfillan and Ms Hellicar. ASIC submitted that Mr Brown’s oral evidence in relation to his declaration was admissible against all defendants as a prior inconsistent statement to what was to come in relation to revised declarations in 2005, or as an admission.

1227 I reject those submissions. If the declaration was a prior inconsistent statement, it could only go to Mr Brown’s credit. It could have no relevance to the cases ASIC mounted against the other defendants. If it was an admission its use was, like the document itself, confined to ASIC’s case against him.

1228 Early in 2005, Ms Hellicar said that she was informed by Mr Butterfield, the recently appointed James Hardie group’s general counsel, that the directors of JHINV were required under Dutch law to lodge further standing disclosure notices. There is mention of some discussion whether or not this was required in the minutes of the meeting of the JHINV supervisory board on 10 May 2005.

1229 Ms Hellicar said she then considered the possibility that she may have provided an earlier disclosure notice that was incorrect to the extent that it acknowledged that she had participated in a decision at the 15 February 2001 Meeting to approve the terms of a press release to be made by JHIL. She said she recalled that her state of mind at the time was that she had no recollection of participating in a resolution or agreement of directors at that meeting to approve the terms of a press release.

1230 Ms Hellicar approached Mr Brown and Mr Gillfillan about a potential inaccuracy in the minutes of the 15 February 2001 Meeting. Each considered a revised declaration a draft of which was circulated at the meeting of 16 May 2005. Solicitors settled the final form of the declarations and an accompanying letter. Each declaration contained a paragraph 7 the opening portion of which was as follows:

“By way of example of the decisions described in paragraph 4, but without limiting the declaration made under paragraph 5:

· in my capacity as a director of JHIL, I participated in the deliberations leading to the decisions taken by the Board of Directors of JHIL on 15 February 2001, and in those decisions themselves. However, in certain respects I and other directors present at that meeting have raised an issue concerning a potential inaccuracy of the minutes of that meeting as previously adopted by the Supervisory Board. We have raised our concerns in that regard with the company secretary by way of a separate letter to the Supervisory Board ….”

1231 The letter to be signed by Mr Brown, Mr Gillfillan and Ms Hellicar contained the following:

“In this respect, each of the undersigned directors has discussed an issue of potential inaccuracy of the minutes of the JHIL board meeting of 15 February 2001 as previously adopted by the JHIL board. That discussion occurred for the limited purpose of testing whether our memories were accurate, since while each of us recalls being in attendance at that meeting and having given the matter significant thought over the extended period of time since the occasion of our September 2004 Declarations, none of us could possibly recall, when we signed the September 2004 Declarations and we cannot now recall, our involvement as being as extensive as that described in the September 2004 Declarations. On reflection we currently have no positive recollection of the following matter recorded in the 15 February 2001 board minutes as having actually occurred….”

1232 While suggestions were made as to the reasons for these documents being brought into existence, no ulterior motive for them was established by ASIC.

1233 ASIC sought to rely upon evidence of subsequent conduct to prove anterior intentions of individual members of the board of directors of JHIL. Reference was made to Cross on Evidence, Australian ed, Butterworths at [1170] in the discussion of retrospectant evidence:

“The argument for the reception of this kind of evidence is the converse of that which demonstrates the relevance of prospectant evidence: the subsequent occurrence of an act, state of mind or state of affairs justifies an inference that the act was done, or that the state of mind or affairs previously existed. Thus, a driver’s excessive speed may be proved to support the conclusion that he was going too fast a short distance further back.”

1234 Thus, for example, ASIC sought to use evidence that Mr Macdonald instigated steps to put JHIL to the Foundation as soon as gypsum proceeds had been secured and were shortly to be received as evidence against Ms Hellicar and her assertion that the proposed exercise of the Put Option was prompted by new circumstances that first arose in September 2002.

1235 That use of evidence does not fall within the principle. It allows a subsequent act of a person to establish the anterior intention of that person. Here ASIC seeks to prove the anterior intention of Ms Hellicar by subsequent acts of Mr Macdonald.

1236 In any event any doubt as to Ms Hellicar’s assertion of events in September 2002 does not establish that she had an intention on 23 July 2001 that JHIL be put to Coy under the Put Option.

1237 Furthermore, it is the intention of the directors of JHIL collectively that is in point and not the individual view of one director.

1238 In cross-examination of Ms Hellicar with respect to the board papers for the January 2001 meeting, Ms Hellicar denied knowledge of certain portions of the papers stating: “I have an absolute recollection of what I didn’t read in this paper”. Categorical statements like this made in the course of Ms Hellicar’s testimony I find hard to accept. An absolute recollection of one particular document some eight years after the event is not readily believable.

1239 Ms Hellicar said that she believed the earliest she saw the Final ASX Announcement was in the report of the Special Commission. I find it difficult to accept this evidence. The announcement of the formation of the Foundation was a highly significant event in the life of the James Hardie group. ASX announcements were automatically sent to directors. There were the Press Conference Statements, the 23 February 2001 ASX Announcement and the 21 March 2001 ASX Announcement that ought to have alerted Ms Hellicar to the need to look at the Final ASX Announcement, if she had not already done so.

1240 Ms Hellicar said she was shocked when shown in the course of her cross-examination the allegations made in the Special Commission in relation to Mr Macdonald’s involvement in the Final ASX Announcement. It was contained in a submission of counsel assisting the Special Commission that she had not seen before.

1241 Ms Hellicar met with Mr Macdonald prior to the meeting of the board of JHINV on 24 May 2004. He told her what he was going to say at that board meeting. She received a copy of a memorandum he was to give to the directors. Item 6 was as follows:

“That executives of JHIL misled investors, government and the broader community by falsely promoting the ability of the MRCF to meet future claimants’ costs.”

1242 Ms Hellicar was one recipient of an email of 11 August 2004. The first paragraph was in the following terms:

“The 52nd day of the Commission commenced with Mr Meagher SC, senior counsel for JHI NV and ABN 60, making submissions on the Commissioner’s power to make findings in relation to alleged defences and any limitations on the evidence to which the Commission may have regard in considering alleged contraventions. Mr Meagher also made submissions in defence of Mr Macdonald in relation to the press release of 16 February 2001.”

1243 At an information meeting on 15 September 2004, Ms Hellicar responded to the following question:

“Given that the submissions by counsel assisting at the Jackson Inquiry raised issues of fraud, deceit, misleading and deceptive conduct, possible breaches of the Corporations Law, between both our – by both CEO, Peter Macdonald, and the Chief Financial Officer, Peter Shafron, why hasn’t the board demanded that both those individuals at least stand down pending outcome of this inquiry?”

1244 Ms Hellicar knew well before her cross-examination, of the gravity of the allegations raised against Mr Macdonald in the Special Commission. I find that her shock with respect to the document put to her in cross-examination was feigned.

1245 Ms Hellicar said she was unaware of problems in raising finance due to the perception that JHIL’s membership of the James Hardie group connected it to the possibility of Asbestos Claims until September 2002. But the material, including analysts’ reports, set out earlier in these reasons makes it clear that the board was well aware of this problem well before September 2002.

1246 At the annual general meeting of JHINV in September 2004 Ms Hellicar said that at the time of the application for the restructure of the James Hardie group in this Court: “It was known we might review the need for the partly paids”. Her explanation was that she had been briefed prior to making the presentation about the nature of the partly paid shares and the company’s position on them.

1247 When pressed in cross-examination, Ms Hellicar maintained that between April 2001 and July 2001 she was not aware that the partly paid shares could be reviewed. Notwithstanding submissions to the contrary this evidence does not affect Ms Hellicar’s credit. It is consistent with my findings.

1248 In one incident in particular I found Ms Hellicar’s demeanour to be most unsatisfactory. She had been cross-examined and maintained her statement that she did not sign the September 2004 declaration. Shortly thereafter she said there was a newspaper article that suggested that she was seeking an indemnity from government. She said:

“… and I was so incensed with that allegation, that I actually wrote to ASIC and Costello, the Minister, to say: “(a) I’m not party to this, I don’t know what’s going on and I don’t want such protections if they are being sought. “

1249 This exchange then took place:

1250 There was laughter in Court and Ms Hellicar smiled broadly. The cross-examination continued:

A. No.”

1251 I have set out at some length some of the incidents in the testimony of Ms Hellicar because I have grave doubts about her evidence and that may have some relevance to the exoneration provisions that are invoked on her behalf. There was a dogmatism in her testimony that I do not accept. She was proved to be inaccurate on a number occasions. I found Ms Hellicar to be a most unsatisfactory witness.

1252 Attacks were made on the credit of other witnesses. For example, Mr Koffel said he did not attend the board meeting on 12 July 2001 because he was in Houston at a meeting of his company that occurred over two days and required his attendance. He was deeply involved in preparation as well.

1253 But a sound recording of the chairman’s address to the annual general meeting on that day confirmed that Mr Koffel attended on the telephone for at least half an hour from the commencement of the address until he confirmed his attendance.

1254 Mr Koffel said he did not recall his attendance by telephone and he maintained that he would not have attended the directors’ meeting that followed the annual general meeting.

1255 There were not nearly so many attacks on the credit of the other non-executive directors who gave evidence as there were in relation to Ms Hellicar. I do not catalogue them because, as I have said, I did not rely upon issues of credit in arriving at my conclusions on the matters in issue.

14 Curiosity

1256 In Australian Securities and Investments Commission v Macdonald (No 10) [2009] NSWSC 53, I disallowed the tender of some 87 financial market analysts’ reports other than those relevant to JHINV’s sale of its gypsum business on the basis that those reports ought to have been put to Mr Humphris in cross-examination in accordance with the principle in Browne v Dunn (1894) 6 R 67.

1257 JHINV successfully appealed. In James Hardie Industries NV v Australian Securities and Investments Commission [2009] NSWCA 18 the Court of Appeal held that the rule in Browne did not apply. Mr Humphris gave his opinions upon assumptions that included the analysts’ reports provided to him and JHINV was entitled to seek to displace the market perception on which Mr Humphris had acted by tendering other analysts’ reports.

1258 Following that decision I enquired whether objection to the balance of the analysts’ reports sought to be tendered by JHINV was maintained in light of the decision of the Court of Appeal. It was not, and I admitted the balance of the analysts’ reports.

1259 The curiosity is that so far as I can tell, JHINV did not refer to any of the additional reports in its submissions.

15 Observation

1260 The minutia of information tendered by ASIC was, no doubt, influenced by the statement in its press release of 15 February 2007 that its investigation involved about 348 billion documents.

1261 I rejected the notion that ASIC should tender all its documents subject to objection and required documents to be proved in the ordinary course.

1262 That no doubt reduced considerably the documents ASIC would otherwise have sought to tender. But the result was still a large volume of documentary material having little, other than an historical bearing, on the matters in issue.

1263 Reference was not made to all the documents in the 3,237 pages of final submissions with which I was confronted.

1264 I found it unnecessary to refer to the vast bulk of the documents in reaching my conclusions on the issues in question.

1265 The detail with which ASIC presented this case caused the defendants, in answering it, to descend to a like level of detail. Ultimately the community bears the enormous cost of this venture.

1266 It ought to be possible for ASIC to present cases such as this without descending to the level of detail that it did in this matter.

16 Exoneration provisions

1267 While s 1317S and s 1318 of the Corporations Act have been addressed in written submissions, I stand over consideration of those provisions to enable the submissions to be raised in the context of these reasons.

17 James Hardie (Civil Penalty Compensation Release) Act 2005

1268 I also stand over argument on the effect of the James Hardie (Civil Penalty Compensation Release) Act 2005.

18 Summary

1269 ASIC alleged that the Draft ASX Announcement was approved at the 15 February 2001 Meeting of the JHIL board of directors and that it contained a number of statements to the effect that the Foundation would have sufficient funds to meet all legitimate Asbestos Claims, that it was fully funded and provided certainty for people with legitimate Asbestos Claims. ASIC alleged that those statements were false or misleading and that the directors were in breach of Section 180(1) of the Corporations Law as carried over into the Corporations Act.

1270 I have found that ASIC has made out this case against Mr Brown, Mr Gillfillan, Ms Hellicar, Mr Koffel, Mr O’Brien, Mr Terry, Mr Willcox and Mr Macdonald.

1271 I have found that Mr Macdonald and Mr Shafron failed to advise the board of JHIL that the Draft ASX Announcement was expressed in too emphatic terms concerning the adequacy of Coy and Jsekarb’s funding to meet all legitimate present and future Asbestos Claims and in that respect they were in breach of Section 180(1).

1272 I have found that by failing to advise the board of JHIL that the reviews of the Cashflow Model by PwC and Access Economics were limited to reporting on the logical soundness and technical correctness of it and they had not verified, and had been specifically instructed not to consider, the key assumptions adopted by the Cashflow Model, being fixed investment earnings rates, litigation and management costs and future claim costs, Mr Macdonald, Mr Shafron and Mr Morley breached Section 180(1).

1273 I have found that ASIC failed to make out its case that in failing to advise the JHIL board that the best estimate contained in the February 2001 Trowbridge Report and in the Trowbridge 50 year Estimate was too uncertain to be used as a basis to assess the adequacy of Coy and Jsekarb’s funding; it had not taken into account superimposed inflation as a prudent estimate would; and it only had a 50% probability of being achieved; Mr Macdonald, Mr Shafron and Mr Morley were in breach of Section 180(1).

1274 ASIC alleged that upon the passing of the resolution of the JHIL board on 15 February 2001 to execute the deed of covenant and indemnity (DOCI), JHIL was bound by continuous disclosure obligations to disclose the information it had to the ASX under Listing Rule 3.1.

1275 I have found that ASIC has made out its case that on or about 15 February 2001 JHIL negligently failed to disclose the DOCI Information in contravention of Listing Rule 3.1 and Section 1001A(2) of the Corporations Law as carried over into the Corporations Act in that it did not obtain any legal advice as to whether it should disclose the DOCI Information and in that neither the board nor management of JHIL considered disclosure of the DOCI Information.

1276 I have found that ASIC has made out its claim that by failing to advise the chairman of the board of JHIL as to whether or not the DOCI Information was required to be disclosed to the ASX; by failing to seek and consider advice and satisfy himself in relation to whether JHIL was required to disclose the DOCI Information to the ASX; by failing to resolve or determine that JHIL would disclose the DOCI Information to the ASX; or by failing to raise with or propose to the chairman of the board of JHIL that they needed to consider and determine whether or not to disclose the DOCI Information to the ASX; Mr Macdonald was in breach of Section 180(1).

1277 I have found that ASIC has made out its claim 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 was in breach of Section 180(1).

1278 ASIC alleged that Mr Morley failed to obtain information and advice recommended by solicitors retained to advise him and his co-director of Coy and Jsekarb in relation to their execution of the DOCI and that he failed to obtain advice as to the Put Option and when it might be exercised.

1279 I have found that ASIC has failed to establish that in failing to seek or obtain legal or other professional advice concerning the Put Option and in failing to make any inquiries, or sufficient inquiries, as to the circumstances in which the Put Option would, or might, be exercised, Mr Morley contravened Section 180(1).

1280 ASIC alleged that Mr Macdonald approved the release of the Final ASX Announcement.

1281 I have found that Mr Macdonald breached Section 180(1) in approving for release the Final ASX Announcement, or in failing to advise that the Final ASX Announcement not be released, or that it be amended before being released to remove the matters that were false or misleading.

1282 I have found that since the Final ASX Announcement was false or misleading, ASIC has made out its allegation that by issuing it to the ASX on 16 February 2001, JHIL engaged in conduct that was misleading or deceptive, or was likely to mislead or deceive, contrary to Section 995(2) of the Corporations Law as carried over into the Corporations Act.

1283 Since the Final ASX Announcement was false in a material particular or was materially misleading, I have found that in making and disseminating it, JHIL contravened Section 999 of the Corporations Law as carried over into the Corporations Act.

1284 ASIC alleged that false or misleading statements as to the sufficiency of funding of the Foundation to meet all legitimate future Asbestos Claims were made at a press conference convened by Mr Macdonald on 16 February 2001.

1285 I have found that the Press Conference Statements included statements that were false or misleading and potentially harmful to JHIL and Mr Macdonald was thereby in breach of Section 180(1).

1286 I have found that ASIC has failed to make out a case that in making the Press Conference Statements, Mr Macdonald was in breach of Section 181(1) of the Corporations Law as carried over into the Corporations Act.

1287 I have found that in making the Press Conference Statements on 16 February 2001, JHIL engaged in conduct that was misleading or deceptive, or was likely to mislead or deceive, contrary to Section 995(2).

1288 I have found that the natural effect of the Press Conference Statements was likely to induce persons to purchase JHIL shares and was likely to increase the market price of JHIL shares; that Mr Macdonald knew, or ought to have known, that the statements were false in a material particular or were materially misleading and JHIL thereby contravened Section 999.

1289 ASIC alleged that Mr Macdonald approved for release to the ASX an announcement of 23 February 2001. It was alleged that it conveyed, or was capable of conveying, that it was certain the funding would be sufficient to meet all legitimate present and future Asbestos Claims; Mr Macdonald believed this; and that the material available to JHIL provided a reasonable basis for that assertion.

1290 I have found that by approving the 23 February 2001 ASX Announcement, or in failing to advise that it not be released, or that it be amended before release to remove matters that were false or misleading, Mr Macdonald contravened Section 180(1).

1291 I have found that ASIC failed to make out its allegation that Mr Macdonald was in breach of Section 181(1) in approving the release of the 23 February 2001 ASX Announcement.

1292 I have found that by issuing the 23 February 2001 ASX Announcement, JHIL engaged in conduct that was misleading or deceptive, or was likely to mislead or deceive, and was in contravention of Section 995(2).

1293 I have found that the natural and probable result of the publication of the 23 February 2001 ASX Announcement was to induce the reader to hold JHIL’s shares thereby maintaining or stabilising their market price and that in disseminating the 23 February 2001 ASX Announcement, JHIL contravened Section 999.

1294 ASIC alleged that Mr Macdonald approved for release to the ASX a further announcement of 21 March 2001. In similar terms to the allegations with respect to the 23 February 2001 ASX Announcement, it was alleged that the announcement conveyed, or was capable of conveying, that 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, and that was false or misleading.

1295 I have found that by approving the 21 March 2001 ASX Announcement, or in failing to advise that it not be released, or that it be amended before being released to remove matters that were false or misleading, Mr Macdonald contravened Section 180(1).

1296 I have found that ASIC has failed to make out a case against Mr Macdonald under Section 181(1) with respect to the 21 March 2001 ASX Announcement.

1297 I have found that by issuing the 21 March 2001 ASX Announcement, JHIL engaged in conduct that was misleading or deceptive, or was likely to mislead to deceive, contrary to Section 995(2).

1298 I have found that ASIC has failed to establish that in making and disseminating the 21 March 2001 ASX Announcement, JHIL contravened Section 999.

1299 ASIC alleged that at a board meeting of JHIL on 23 July 2001, Mr Brown, Mr Gillfillan, Ms Hellicar, Mr Koffel and Mr Willcox approved a draft of an information memorandum to be sent to members of JHIL as part of a members’ scheme of arrangement. The Draft IM contained statements to the effect that the partly paid shares would enable JHIL to call upon JHINV to pay if it was required to meet any liabilities of JHIL. ASIC alleged that that was false or misleading.

1300 I have found that ASIC has failed to establish its case that, with respect to the Draft IM, Mr Brown, Mr Gillfillan, Ms Hellicar, Mr Koffel and Mr Willcox were in breach of Section 180(1) of the Corporations Act.

1301 ASIC alleged that a draft of a letter to be sent to the late Justice Santow’s Associate contained a statement to the effect that JHIL would have, through existing reserves and access to funding in the form of the partly paid shares, the means to meet liabilities that it might incur in the future whether in relation to Asbestos Claims or otherwise. The letter was settled and sent to his Honour’s Associate. It contained a statement with respect to the partly paid shares to similar effect.

1302 I have found that ASIC has failed to establish that Mr Macdonald’s conduct with respect to the Draft IM, the Draft Court Letter and the Final Court Letter was in breach of Section 180(1).

1303 I have found that ASIC has failed to establish that Mr Shafron’s conduct with respect to the Draft IM, the Draft Court Letter and the Final Court Letter was in breach of Section 180(1).

1304 I have found that ASIC has failed to establish that, in dispatching the Final IM to its shareholders, JHIL was in breach of Section 995(2) of the Corporations Act.

1305 I have found that ASIC has failed to establish its allegation that, in issuing the Final IM to its shareholders, JHIL was in breach of Section 999 of the Corporations Act.

1306 ASIC alleged that in June 2002, Mr Macdonald made representations with respect to JHINV in Edinburgh and in London and the slides for these UK presentations were lodged with the ASX. ASIC alleged that in the Edinburgh Representations, the London Representations and the UK Slides, the statements as to the Foundation being fully funded were false in a material particular or materially misleading.

1307 I have found that ASIC has made out its case that, with respect to these Roadshow Presentations, Mr Macdonald was in breach of Section 180(1).

1308 I have found that ASIC has failed to establish that Mr Macdonald was in breach of Section 181(1) with respect to the Roadshow Presentations.

1309 I have found with respect to the ASX Representations in the UK Slides that JHINV was in breach of Section 1041E of the Corporations Act.

1310 I have found that ASIC has failed to make out a breach by JHINV of Section 1041E of the Corporations Act with respect to the Edinburgh Representations and the London Representations.

1311 I have found that, in forwarding the UK Slides to the ASX, JHINV was in breach of Section 1041H of the Corporations Act.

1312 ASIC alleged that at a meeting of the board of directors of JHINV on 25 March 2003, it was resolved that JHINV execute a trust deed establishing the ABN 60 Foundation; that it approve a $1.5m capital reduction by JHIL by payment to it of $1.5m; that it request JHIL to issue 1,000 shares to the ABN 60 Foundation; that the cancellation by JHIL for no consideration of the one fully paid ordinary share held by JHINV was in its best interests; and that it enter into a deed of covenant indemnity and access (DOCIA). ASIC alleged that JHINV was obliged to disclose this information to the ASX under its continuous disclosure obligations.

1313 I have found that between 25 March 2003 and 30 June 2003 JHINV failed to notify the ASX of the ABN 60 Information in accordance with Listing Rule 3.1 and that it thereby contravened Section 674(2) of the Corporations Act.

Citations

Australian Securities and Investments Commission v Macdonald (No 11) [2009] NSWSC 287

Most Recent Citation

Cases Citing This Decision

88

Australian Securities and Investments Commission v Hellicar [2012] HCA 17

Cases Cited

78

Statutory Material Cited

5

Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28

Amalgamated Society of Engineers v Adelaide Steamship Co Ltd [1920] HCA 54

Australian Securities and Investments Commission v Rich [2005] NSWSC 417

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CITATION:	Australian Securities and Investments Commission v Macdonald (No 11) [2009] NSWSC 287
HEARING DATE(S):	29, 30 September 2008; 1, 2, 3, 7, 8, 13, 14, 15, 20, 21, 22, 23, 24, 28 October 2008; 3, 4, 6, 10, 11, 12, 13, 14 Nov 2008; 4, 5, 8, 9, 10, 11, 12 15, 16, 17, 18, 19 December 2008; 2, 3, 4, 5, 9, 10, 11, 12 February 2009; 2 March 2009
JUDGMENT DATE :	23 April 2009
JUDGMENT OF:	Gzell J
DECISION:	See summary at [1269] and following.
CATCHWORDS:	CORPORATIONS - Supervision, Regulation and Correction - Civil penalty proceedings - Whether announcement to the ASX approved at directors' meeting - Whether minute to that effect subject to statutory presumption under s 251A or s 1305 of the Corporations Law - Whether false or misleading - Whether directors and senior executives acted in breach of s 180(1) of the Corporations Law - Whether in failing to disclose information with respect to a deed of covenant and indemnity (DOCI) there was a breach of Listing Rule 3.1 and s 1001A(2) of the Corporations Law - Whether the directors who executed the DOCI were in breach of s 180(1) - Whether the chief executive officer approved the release of the ASX Announcement and breached s 180(1) - Whether the company breached s 995(2) of the Corporations Law - Whether the company breached s 999 of the Corporations Law - Whether the CEO was in breach of s 180(1) for statements made at a press conference - Whether he was he breach of s 181 of the Corporations Law - Whether the company was in breach of s 995(2) and s 999 - Whether there were breaches of s 180(1), s 181, s995(2) and s 999 for statements made in two subsequent ASX Announcements - Whether the directors were in breach of s 180(1) of the Corporations Act in approving a draft information memorandum to be used in a members' scheme of arrangement - Whether the CEO and secretary and general counsel were in breach of s 180(1) in approving the draft IM and authorising a letter to be sent to the Court - Whether the company was in breach of s 995(2) and s 999 of the Corporations Act - Whether the CEO was in breach of s 180(1) and s 181 of the Corporations Act for statements made in United Kingdom and slides lodged with the ASX - Whether the company was in breach of s 1041E and s 1041H of the Corporations Act - Whether the company was in breach of Listing Rule 3.1 and s 674(2) of the Corporations Act for failing to disclose a restructure of the James Hardie group
LEGISLATION CITED:	Corporations Law (Cth) Corporations Act 2001 (Cth) Trade Practices Act 1974 (Cth) Companies Code Evidence Act 1995
CASES CITED:	Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 Australian Securities and Investments Commission v Rich [2005] NSWSC 417; (2005) 34 ACSR 752 Claremont Petroleum NL v Cummings (1992) 110 ALR 239 Galladin Pty Ltd v Aimnorth Pty Ltd (1993) 11 ACSR 23 Gosford Christian School Ltd v Totonjian [2006] NSWSC 725; (2006) 201 FLR 424 Silver v Dome Resources NL [2007] NSWSC 455; (2007) 62 ACSR 539 Dome Resources NL v Silver [2008] NSWCA 322; (2008) 68 ACSR 458 Repatriation Commission v Gordon (1990) 26 FCR 569 Hughes v R (1983) 49 ALR 110 Foster v R (1982) 38 ALR 599 Hodgson v Hart District Council [1986] 1 All ER 400 Re Wayne Myer & Son Family Butchery Pty Ltd [1998] QSC 2 Damaso v The Queen [2002] NTCCA 2; (2002) 168 FLR 103 Singh v The Queen WACCA, unreported, 18 September 1985 Abbott v Western Australia (2005) 152 A Crim R 186 R v Phillips [1991] 3 NZLR 175 Hanson v R [2005] NZCA 220 R v Hanson [2007] NZSC 7; [2007] NZLR 1 Sheldrake v Director of Public Prosecutions [2005] 1 ALL ER 237 McLean Bros & Rigg Pty Ltd v Grice (1906) 4 CLR 835 Briginshaw v Briginshaw (1938) 60 CLR 336 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 Adler v Australian Securities and Investments Commission [2003] NSWCA 131; (2003) 179 FLR 1 CEPU v Australian Competition and Consumer Commission [2007] FCAFC 132, (2007) 162 FCR 466 Trade Practices Commission v Allied Mills Industries Pty Ltd (No 4) (1981) 37 ALR 225 Cook’s Construction Pty Ltd v Brown [2004] NSWCA 105; (2004) 49 ACSR 62 Whitlam v Australian Securities and Investments Commission [2003] NSWCA 183; (2003) 57 NSWLR 559 Australian Securities and Investments Commission v Maxwell [2006] NSWSC 1052; (2006) 59 ACSR 373 Australian Securities and Investments Commission v Sydney Investment House Equities Pty Ltd [2008] NSWSC 1224; (2008) 69 ACSR 1 Vines v Australian Securities and Investments Commission [2007] NSWCA 75; (2007) 62 ACSR 1 Australian Securities and Investments Commission v Adler [2002] NSWSC 171; (2002) 168 FLR 253 Australian Securities and Investments Commission v Rich [2003] NSWSC 85; (2003) 174 FLR 128 Australian Securities and Investments Commission v Vines [2005] NSWSC 738; (2005) 55 ACSR 617 AWA Ltd v Daniels (1992) 7 ACSR 759 Daniels v Anderson (1995) 37 NSWLR 438 Overend & Gurney Co v Gibb (1872) LR 5 HL 480 Statewide Tobacco Services Ltd v Morley (1990) 2 ACSR 405 Group Four Industries Pty Ltd v Brosnan (1992) 59 SASR 22 Vrisakis v Australian Securities Commission (1993) 9 WAR 395 Permanent Building Society v Wheeler (1994) 11 WAR 187 National Exchange Pty Ltd v Australian Securities and Investments Commission [2004] FCAFC 90; (2004) 49 ACSR 369 Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [2008] NSWCA 206; (2008) 252 ALR 659 Milwell v Olympic Amusements Pty Ltd [1999] FCA 63; (1999) 85 FCR 436 Commissioner for Corporate Affairs v Bracht [1989] VR 821 Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Ltd (No 4) [2007] FCA 963; (2007) 160 FCR 35 Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2008] NSWSC 657 James Hardie & Co Pty Ltd v Hall (1998) 43 NSWLR 554 CSR Ltd v Wren (1997) 44 NSWLR 463 The Trustee for the Estate of the Late AW Furse No 5 Will Trust v Federal Commissioner of Taxation 91 ATC 4007 Granby Pty Ltd v Federal Commissioner of Taxation 95 ATC 4240 Lezam Pty Ltd v Seabridge Australia Pty Ltd (1992) 35 FCR 535 Australian Securities and Investments Commission v Narain [2008] FCAFC 120; (2008) 169 FCR 211 Australian Securities Commission v McLeod [2000] WASCA 101; (2000) 34 ACSR 135 Macleod v Australian Securities and Investments Commission [2002] HCA 37; (2002) 211 CLR 287 Marchesi v Barnes [1970] VR 434 Australian Growth Resources Corporation Pty Ltd v Van Reesema (1988) 13 ACLR 261 Forge v Australian Securities and Investments Commission [2004] NSWCA 448; (2004) 213 ALR 574 Chew v R (1991) 4 WAR 21 Chew v R (1991-1992) 173 CLR 626 Lloyd v R (1995) 15 WAR 117 ICAL Ltd v County Natwest Securities Australia Ltd (1988) 39 NSWLR 214 Cackett v Keswick [1902] 2 Ch 456 Australian Consolidated Investments Limited v Rossington Holdings Pty Limited (1992) 35 FCR 226 Re HIH Casualty and General Insurance Ltd [2006] NSWSC 485, (2006) 57 ACSR 791 Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146 Stirling Resources NL v Capital Energy NL (1996) 14 ACLC 1,005 Watson v Foxman (1995) 49 NSWLR 315 Australian Woollen Mills Ltd v FS Walton & Co Ltd (1937) 58 CLR 641 Boughey v R (1986) 161 CLR 10 Henville v Walker [2001] HCA 52; (2001) 206 CLR 459 Sellars v Adelaide Petroleum NL (1992-1994) 179 CLR 332 Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees’ Union (1979) 42 FLR 331 R v Firns [2001] NSWCCA 191; (2001) 51 NSWLR 548 Australian Securities and Investments Commission v Southcorp Ltd [2003] FCA 1369; (2003) 130 FCR 406 Exicom Pty Ltd v Futuris Corporation Ltd (1995) 123 FLR 394 Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 220 CLR 129 Re Chameq Ltd; Australian Securities and Investments Commission v Chemeq Ltd [2006] FCA 936; (2006) 234 ALR 511 Jones v Dunkel (1959) 101 CLR 298 Manly Council v Byrne and Anor [2004] NSWCA 123 Ghazal v Government Insurance Office of New South Wales (1992) 29 NSWLR 336 Payne v Parker (1976) 1 NSWLR 191 Harmony Shipping Co SA v Saudi Europe Line Ltd [1979] 1 WLR 1380 Australian Securities and Investments Commission v Macdonald (No 5) [2008] NSWSC 1169 Australian Securities and Investments Commission v Macdonald (No 6) [2008] NSWSC 1175 Australian Securities and Investments Commission v Macdonald (No 10) [2009] NSWSC 53 Browne v Dunn (1894) 6 R 67 James Hardie Industries NV v Australian Securities and Investments Commission [2009] NSWCA 18
TEXTS CITED:	Phipson on Evidence, 16th ed (2005) Sweet & Maxwell, London Ford’s Principles of Corporation Law, 13th ed (2007) LexisNexis Butterworths, Australia Cross on Evidence, Australian ed, Butterworths
PARTIES:	Australian Securities and Investments Commission (Plaintiff) Peter Donald Macdonald (First Defendant) Peter James Shafron (Second Defendant) Phillip Graham Morley (Third Defendant) Michael Robert Brown (Fourth Defendant) Michael John Gillfillan (Fifth Defendant) Meredith Hellicar (Sixth Defendant) Martin Koffel (Seventh Defendant) Geoffrey Frederick O'Brien (Eighth Defendant) Gregory James Terry (Ninth Defendant) Peter John Willcox (Tenth Defendant) ABN 60 Pty Ltd (Eleventh Defendant) James Hardie Industries NV (Twelfth Defendant)
FILE NUMBER(S):	SC 1490/07
COUNSEL:	Mr A Bannon SC/ Mr R Beech-Jones SC/ Ms D Hogan-Doran/ Ms S Pritchard / Ms J Single/ Mr A Kuklik (Plaintiff) Mr S Finch SC/ Mr D Studdy SC/ Mr D Mackay (First Defendant) Mr B Walker SC/ Mr M Holmes QC/ Mr R Lancaster/ Mr N Owens (Second Defendant) Mr B Oslington QC/ Mr R Dick/ Mr N Bender (Third Defendant) Mr T Bathurst QC/ Mr R Whitington QC/ Mr R Hollo/ Mr R Hardcastle/ Mr I Colquhoun (Fourth to Seventh Defendants) Mr P Wood/ Mr M Henry (Eighth Defendant) Mr R McHugh SC/ Mr S Nixon (Ninth Defendant) Mr T Jucovic QC/ Mr R Scruby (Tenth Defendant) Mr I Pike (Eleventh Defendant) Mr A Meagher SC/ Ms K Morgan (Twelfth Defendant)
SOLICITORS:	Clayton Utz (Plaintiff) Minter Ellison (First Defendant) Middletons (Second Defendant) Henry Davis York (Third Defendant) Atanaskovic Hartnell (Fourth to Seventh Defendants) Arnold Bloch Leibler (Eighth Defendant) Blake Dawson (Ninth Defendant) Kemp Strang (Tenth Defendant) Baker & McKenzie (Eleventh Defendant) Mallesons Stephen Jaques (Twelfth Defendant)