Upcoming Australian Decisions on Securities Law Issues Related to Mass Torts
Two significant, upcoming securities law cases in Australia are relevant to corporations and their officers and directors coping with mass tort liabilities and risks, and issues related to corrections/changes to prior disclosures. Both are cases that ASIC – Australia’s SEC – will soon argue to the Supreme Court in Australia.
Case number one involves James Hardie, a significant asbestos defendant in Australia. The issues arise from allegedly deficient disclosures made a decade ago when Hardie created a fund to resolve its asbestos "liabilities." The fund turned out to be under-funded by some large amount – some say by $ 1 billion. More specifics are provided below through an article in The Australian.
The second case involves a different company that allegedly made misleading statements about the strength of legal agreements. Again, more specifics are provided through an article in The Australian. Article excerpts are after the jump.
Set out below are key quotes from the two articles by John Durie writing in The Australian:
"ASIC took 10 James Hardie directors and executives to court in NSW, arguing they had approved a draft announcement to the ASX in February 2001 in relation to establishing a foundation to cover asbestos claims.The foundation was to be "fully funded", but it was underfunded by about $1 billion.
ASIC won the case in 2009, but the NSW Supreme Court of Appeal ruled last year in favour of seven former James Hardie non-executive directors (Meredith Hellicar, Michael Brown, Michael Gillfillan, Martin Koffel, Dan O’Brien, Greg Terry and Peter Willcox) and cleared them of breaching the Corporations Act.
Former chief executive Peter Macdonald was the only James Hardie defendant not to appeal, agreeing to a $350,000 fine and a banning order of 15 years.
ASIC has spent more than $18 million on the Hardie case and if unsuccessful in the High Court, it will also have to pay the legal bills of the Hardie directors and former executives.
Lawyers for the eight James Hardie respondents will respond to ASIC’s arguments later this month."
#2 — The Australian
by: John Durie From: The Australian September 29, 2011 12:49PM
"THE High Court will set the agenda on stockmarket integrity rules after this morning agreeing to hear Andrew Forrest’s appeal against ASIC and ahead of next month’s hearing into the James Hardie case.
Both cases cover key aspects of market integrity, starting with the rules of continuous disclosure and director duties, and the High Court’s involvement in both means it will lay down the rules for corporate governance for the foreseeable future.
It is rare for corporate governance cases to attract High Court interest in such a short space of time, reflecting — in part — the aftermath of the bull market.
It also comes at a time when, led by Justice Bob French, the personnel on the court just happen to be uniquely well qualified to hear such cases.
ASIC took aim at Forrest for allegedly making misleading claims about the strength of contractual agreements with possible Chinese customers.
ASIC lost in first instance when the Federal Court, in Forrest’s home town of Perth, ruled a director has the discretion to decide how material public comments may be. This was overruled by the full Federal Court and the High Court will review that decision."