Directors take judge to task
By Elisabeth Sexton | smh.com.au | 22 September
A contest over whether the James Hardie board approved a misleading media release about asbestos compensation in 2001 will be fought again in the NSW Court of Appeal next year.
Former directors will appeal Justice Ian Gzell's April ruling by attacking his conclusions about what happened at the February 2001 board meeting in the absence of direct evidence, their lawyers told the court yesterday.
They also raised the eleventh-hour decision by the Australian Securities and Investments Commission not to call three witnesses who attended the meeting as advisers and disputed Justice Gzell's findings about the seriousness of the breaches of duty by the directors.
These and other complaints of "manifest error" in the judgment were foreshadowed yesterday when former non-executive directors Dan O'Brien, Michael Gillfillan and Martin Koffel asked the court to stay orders disqualifying them from company directorship until the outcome of their appeals are known.
Lawyers for both sides estimated a result would take six to 12 months. Four other former non-executive directors and three former executives have until Thursday to lodge appeals.
The court was told that former director Meredith Hellicar will file an appeal but others had not yet decided. Justice Murray Tobias decided against the stay applications from Mr Gillfillan and Mr Koffel, who live in the United States.
Their barrister, Tom Bathurst, QC, said he would not present any "specific evidence of prejudice" his clients would suffer if they were banned from serving on the boards of Australian companies for the next year.
Justice Tobias reserved his decision about Mr O'Brien, who lives in Melbourne and earns $240,000 a year from his directorships of two companies listed on the Australian Securities Exchange: agricultural biotechnology company Hexima, which he chairs, and engineering services company Thomas & Coffey.
Mr O'Brien's barrister, Peter Wood, said there would be no remedy to the prejudice his client would suffer if the ban imposed by Justice Gzell came into effect on Thursday and his appeal later succeeded.
Hexima and Thomas & Coffey would appoint permanent replacement directors, Mr Wood said. ASIC's barrister, Tony Bannon, SC, said Mr Wood's attack on the way Justice Gzell reached his conclusion that the directors approved the release was "absolutely and utterly hopeless".
The judge had also correctly assessed the seriousness of the board's approval of a misleading media release announcing "a significant decision which affected potentially so many people," Mr Bannon said.
First published by Smh.com.au on September 22 2009
Visit smh.com.au for the latest news updated throughout the day
