An important argument in the trial in Australian Securities and Investments Commission v Macdonald (No 11)[2009] NSWSC 287 (see summary here) was the evidentiary value of the minutes of a key board meeting.

The minutes of the meeting of the board of James Hardie at the 15 February 2001 Meeting which referred to approval of the ASX announcement at the centre of the case were signed as a correct record by the chairman at the next meeting of the board on 4 April 2001.

ASIC argued that the minutes had the benefit of a statutory presumption in s 251A(6) of the Corporations Law that the minutes were proof of their contents unless the defendants proved to the contrary.

However there was a failure to comply with Section 251A(1) in that the minutes were not recorded in a minute book within a month of the meeting.

Gzell J decided that “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… 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. “

However he observed that “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. “

Nevertheless, Gzell J decided that the Draft ASX Announcement was approved at the 15 February 2001 Meeting of the JHIL board of directors.

But the issue is a lesson of the importance of keeping accurate Board minutes and having them signed in a timely manner.