We're still going with the James Hardie saga,
and the illfated board meeting of 15 February 2001 at which they
decided to shift their asbestos compensation fund to the
Netherlands and dud their asbestosis victims.
Now the High Court has weighed in and reinstated the right
outcome – the James Hardie directors breached their
duties when they approved an ASX release about the restructure
which was materially misleading to the market.
Unanimously, and quite grumpily, the Court overturned the NSW
Court of Appeal's finding that ASIC had not proved that the
directors did approve the ASX release at their board meeting
– notwithstanding that the minutes of the meeting
expressly said that they had done so, and that nobody who was at
the meeting was able to remember what happened. That is, the only
direct evidence was the minutes, and yet the Court of Appeal
decided they were wrong. The High Court said that's just
In terms of important legal points to come out of this,
that's pretty much it. The High Court has re-established
what we've all always understood, which is that a
contemporaneous written record of a meeting, particularly something
official like minutes, is evidence of the truth of what it says,
and will trump other evidence which is really just inference.
For companies, it's a simple truth that whoever drafts
the minutes is king, and directors would always be well advised to
actually read the draft minutes before they blithely approve them
at their next meeting. They will be forever stuck with whatever the
Meanwhile, the James Hardie directors now go back to the Court
of Appeal to find out what their punishment will be. Way back at
the first trial, the judge slotted them with big penalties and
disqualifications. That's probably what they're
still looking at.
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The court exercised its discretion when a financier's failure to register security interests properly was inadvertent.
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