In Australian Securities and Investments Commission v Hellicar [2012] HCA 17 and appeals relating to 6 other non-executive directors of James Hardie Industries Ltd (“JHIL”) the High Court allowed ASIC’s appeals and held that each director breached his or her duties as a director of the company by approving the company’s release of a misleading announcement to the Australian Stock Exchange (“ASX”).

The media release stated that the company had fully funded its asbestos diseases liabilities, when in fact there was a funding shortfall of more than $1 billion.

Allowing ASIC’s appeal, the High Court held that inaccuracies in the February board minutes did not counter their probative value as a contemporaneous and formally adopted record of what was done at the February meeting. The High Court decided that the Board did approve the announcement and that the announcement was misleading.

In respect of the issue that JHIL’s external lawyer was not called by ASIC to give evidence the High Court decided that there was no basis for inferring that Mr Robb may have given evidence favourable to the directors. ASIC not calling him caused no unfairness. If it had, it would be wrong to respond by discounting the cogency of other evidence led at the trial; the question would be whether there had been a miscarriage of justice requiring a new trial.

As to whether ASIC has a duty to act as a “model litigant” the Court stated: “For the purposes of deciding these matters, it is convenient to assume, without deciding, that ASIC is subject to some form of duty, even if a duty of imperfect obligation, that can be described as a duty to conduct litigation fairly.”

The matters were remitted to the Court of Appeal for further consideration of remaining issues in the appeals to that Court about claims to be excused from liability, penalty and disqualification.

UPDATE: Revised penalties

ASIC’s appeal with respect to the NSW Court of Appeal decision relating to Mr Shafron, the company secretary was also allowed.