ASIC brought civil proceedings against JHIL, its parent company (James Hardie Industries NV), the seven surviving non-executive directors of JHIL, the former CEO, the former Company Secretary/General Counsel and the former CFO. ASIC was successful in the majority of its claims. The Court's principal findings were that:
- each director of JHIL breached their duty to act with the required degree of care and diligence by approving a draft ASX announcement containing false or misleading statements;
- the CEO breached his duty to act with the required degree of care and diligence by failing to advise the board about the false or misleading statements and repeating the false or misleading statements in investor roadshows and subsequent announcements. The CEO also breached that duty by failing to seek advice or adequately consider whether the Deed of Covenant and Indemnity (DOCI) signed by the Foundation to remove liability from JHIL, should be disclosed to the ASX;
- the CEO did not breach his duty to act in good faith in the best interests of the corporation and for a proper purpose by releasing the ASX announcements;
- the Company Secretary/General Counsel, as an officer of JHIL, breached his duty to act with the required degree of care and diligence by failing to advise the board about the false or misleading statements, and by failing to provide or obtain advice on whether the DOCI should be disclosed;
- each of the CFO, CEO and Company Secretary/General Counsel breached his duty to act with the required degree of care and diligence by failing to advise the board of the limited nature of the external reviews of the cashflow modelling which underpinned the statements regarding the Foundation's funding; and
- JHIL and James Hardie Industries NV engaged in misleading or deceptive conduct, provided false or misleading statements to the ASX and breached their continuous disclosure obligations by failing to disclose required information about the DOCI and subsequent separation of JHIL and James Hardie Industries NV.
No penalties have yet been determined as the Court deferred consideration of provisions that may relieve a person from a civil penalty liability where the Court is satisfied that the person acted honestly and, having regard to the circumstances of the case, ought to be excused from liability.