Forrest v Australian Securities and Investments Commission & Anor; Fortescue Metals Group Inc v Australian Securities and Investments Commission & Anor

The High Court of Australia considered appeals from decisions of the Full Federal Court concerning alleged contraventions of the *Corporations Act 2001* (Cth) by Andrew Forrest and Fortescue Metals Group Ltd (FMG). The Australian Securities and Investments Commission (ASIC) alleged that Mr Forrest, as a director of FMG, had contravened s 180(1) of the *Corporations Act* by failing to exercise his powers and discharge his duties with the degree of care and diligence required. ASIC also alleged that FMG had contravened s 1041H of the *Corporations Act* by engaging in conduct that was misleading or deceptive or likely to mislead or deceive in relation to financial products.

The central legal issues before the High Court were whether Mr Forrest had breached his director's duties of care and diligence, and whether FMG had engaged in misleading or deceptive conduct. Specifically, the Court had to determine whether Mr Forrest had acted with the requisite care and diligence in relation to certain communications and disclosures made by FMG concerning its financial position and its ability to meet contractual obligations, and whether these communications were misleading or deceptive.

The High Court, by majority, found that Mr Forrest had not contravened s 180(1) of the *Corporations Act*. The Court reasoned that the evidence did not establish that Mr Forrest had failed to exercise reasonable care and diligence, noting that the standard of care and diligence required of a director is that of a reasonable person in the position of a director, taking into account the specific responsibilities and circumstances of the company. The Court also found that FMG had not contravened s 1041H of the *Corporations Act*, concluding that the communications in question were not misleading or deceptive in the context in which they were made. The Court emphasised that the assessment of whether conduct is misleading or deceptive requires an objective analysis of the likely effect of the conduct on the relevant audience.