In this paper, we will look at the case between Australia Securities and Investments Commission (ASIC) and Peter James Shafron. The case comes by from the employment of Mr. Shafron in 1998 as general counsel and company secretary of James Hardie Industries Ltd (JHIL). A year later, Mr. Donald Cameron was then appointed joint secretary with Mr. Shafron.
The court of appeal found that Mr. Shafron had contravened s 180(1) of the Corporations Act 2001 (Cth) in two respects that are put in issue in the appeal. Both the contraventions were those of omission: failing to give advice, in the case to the chief executive officer (Mr. Macdonald) or the board of JHIL. The court of appeal found that Mr. Shafron did not put his powers into action and discharged his duties with degree of diligence that a person was an officer of a corporation in JHIL’s circumstances and had responsibilities within the corporation like Mr. Shafron.
The court of appeal found advice which should have been given to either JHIL board or Mr. Macdonald was advice to the effect certain information which was to be given by Hardie & Coy Pty Ltd and Jsekarb Pty Ltd to JHIL should be disclosed to the Australian Stock Exchange (ASX). This information would be convenient if termed as DOCI information. The other breach found was his failing to advise the JHIL board that material (in regards to February 2001 Trowbridge Report) provided by actuarial consultants by Mr. Shefron on behalf of JHIL-Trowbridge Deloitte Ltd- did not take into account superimposed inflation and that a sensible approximation would have done so.
- In what respect or respects did the legal meaning of “officer” is valid to him?
- Having regard to the answer given to the first question:
- Did he fail to apply the significant standards of care through failure of advising either the chief executive officer or the board that the DOCI details should be revealed to the ASX?
- Did he not succeed in exercising the relevant standards of care through failure of advising the board that the Trowbridge material did not take report of superimposed inflation but should have done so?
The following are the laws that were relied upon by the judges in hearing the case. The first one is the s 9 of the Corporations Act which defines the term “officer” of a corporation. The most important definition of this word as found in this act is that an officer is a person who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the corporation. The second law relied upon is s 180(1) which provides that a director or other officer of a corporation must exercise their powers and discharge their duties with degree of care and diligence that a reasonable person would exercise it they were officer of corporation.
With reference to the above laws, the judges came to a conclusion with valued arguments in regards to the charges brought forward that the appeal must be dismissed with cost.
