James Hardie Directors win an appeal

Seven former directors of James Hardie are now able to return to sit on Australian company boards, after they were successful appealing against their bans from company directorships and fines given to former chairman Meredith Hellicar, Michael Brown, Michael Gillfillan, Martin Koffel, Dan O’Brien, Greg Terry and Peter Willcox have been overturned.

The decision relates to a judgement in 2009, in which Justice Ian Gzell found that ten former executives and directors of James Hardie breached their duty of care after approving a media release relating to claims for asbestos victims.

The release claimed that an asbestos compensation fund provided certainty for both claimants and shareholders. But the fund was later found to be short by more than $1 billion.

The former directors were subsequently disqualified and fined.

Nine of the ten of the defendants appealed against the 2009 judgement, while the tenth, former chief executive Peter Macdonald, accepted the 2009 ruling and has been banned from managing a company for 15 years.

Chief Justice Jim Spigelman and Appeal Judges Margaret Beazley and Roger Giles also found that ASIC had “a duty of fairness to call a witness whose role was such that there was a significant probability that he had relevant knowledge” of what happened at a board meeting.

They found that by not calling the witness ASIC undermined its case.

James Hardie’s former general counsel, Peter Shafron, and former chief financial officer, Phillip Morley, lost their appeals, although part of Mr Shafron’s appeal was allowed. Their cases will return to court in 2011.

However, just to remind you that even if successful you can incur legal costs, James Hardie, lost its appeal on a separate issue and has been ordered to pay 90 per cent of ASIC’s legal costs. Thank god for that Side B Cover