In Australian Securities and Investments Commission v Macdonald (No 11) [2009] NSWSC 287 the New South Wales Supreme Court has decided in favour of ASIC's civil claim that a number of statements in the Draft ASX Announcement by James Hardie 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 were false or misleading and that the directors were in breach of Section 180(1) of the Corporations Act.

Gzell J also decided that:

• the CEO Mr Macdonald and Company Secretary and General Counsel Mr Shafron failed to advise the board of JHIL that the Draft ASX Announcement was expressed in too emphatic terms concerning the adequacy of funding to meet all legitimate present and future Asbestos Claims and in that respect they were in breach of Section 180(1).
• 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).
• 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.
• by issuing the Final ASX Announcement 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 Act.

A number of ASIC allegations of false and misleading conduct were not successful.

UPDATE 24 April: ASIC has released a table analysing proved contraventions and dismissed allegations against each defendant.

ASIC notes that a future hearing will consider penalties and submissions by the defendants relating to penalties.

Update: Company minutes as evidence