The High Court of Australia has ruled 1 that James Hardie's general counsel and company secretary owed the company a duty of care under the Australian Corporations Act (the James Hardie decision). What are the implications of this decision for general counsel and company secretaries in New Zealand?

The James Hardie decision means that Australian general counsel and company secretaries may owe a duty of care to their company, and may be sued by ASIC, the shareholders, or a liquidator, for a breach of that duty.

Although many New Zealand companies also have general counsel and company secretaries with similar responsibilities, there are key differences between Australian and New Zealand companies law which, in our opinion, make it unlikely that a New Zealand court would find that a company secretary or general counsel owes similar duties in New Zealand under our Companies Act.

However, general counsel and company secretaries should bear in mind that, although they may not owe duties under the Companies Act, they still owe their employer a duty of care. The law implies a duty into all employment contracts, requiring employees to act with reasonable care. To date, however, this duty has rarely been enforced by employers.

Although New Zealand general counsel and company secretaries may not owe the same company law duties that their Australian counterparts owe, the James Hardie decision should be seen as offering best practice guidance to New Zealand general counsel and company secretaries.

For a full summary of case and its practical application in New Zealand, click here.