In this case, the High Court held that in determining whether a statement is misleading or deceptive, the key question is how the relevant audience would interpret the statement. With the target audience in this case not being lawyers, but rather the business and commercial community who invested in shares of Australian companies (or advised and reported on them), a legalistic view of Fortescue’s statements was not appropriate. In preparing public statements, listed companies and their boards must clearly identify, and carefully consider the viewpoint of, its target audience.

This High Court decision marks the final chapter in over 6 years of litigation between Fortescue Metals Group Ltd (Fortescue) and ASIC.

The High Court unanimously held that public statements that Fortescue had entered into “binding agreements” with several Chinese entities to build, finance and transfer railway, port and mine infrastructure in the Pilbara region were not misleading and deceptive, and that Fortescue and its CEO Andrew Forrest had not contravened the Corporations Act 2001 (Cth) in connection with the making of those statements.

For more a more detailed summary and further analysis, see the recent G+T Article.

See the case.