Shafron v Australian Securities and Investments Commission

The High Court of Australia considered an appeal by Mr Shafron against a decision of the Australian Securities and Investments Commission (ASIC). The dispute concerned whether Mr Shafron, as company secretary and general counsel of James Hardie Industries Ltd (JHIL), had breached his duty of care and diligence under section 180(1) of the *Corporations Act 2001* (Cth). ASIC alleged that Mr Shafron failed to exercise the degree of care and diligence required of a reasonable person in his position and with his responsibilities.

The central legal issues before the High Court were whether Mr Shafron qualified as an "officer" of JHIL under paragraph (b)(i) of the definition in section 9 of the Act, which includes a person who "participates in making" decisions that substantially affect the business of the corporation. This involved determining the scope of "responsibilities within the corporation" for an officer and whether providing information and advice, even if making a "real contribution," constituted participation in decision-making. The court also considered whether section 180(1) applied to all tasks performed by an officer within the corporation and whether the responsibilities of a company secretary and general counsel were divisible for the purposes of this duty.

The High Court affirmed that the inquiry under paragraph (b)(i) of the definition of "officer" must focus on the role played by the person within the corporation, not solely on their actions concerning the specific issue of alleged breach. The court found that Mr Shafron's argument that "participation in making a decision" required a role in the actual making of the decision, distinct from providing information and advice, was too narrow. The court held that a person could participate in decision-making by making a "real contribution" to it, and that the scope of an officer's responsibilities within the corporation was not confined to their specific title but encompassed their actual role and the decisions they influenced. The court also noted that considering an officer's conduct on occasions other than the alleged breach was relevant to assessing how a reasonable person in their position would have discharged their duties.

The appeal was dismissed with costs.