[UPDATE] Fines and disqualifications were handed down to former James Hardie directors in the NSW Supreme Court today, with Justice Ian Gzell declaring that former chairman Meredith Hellicar and former CEO Peter Macdonald be disqualified from directing companies for five and 15 years respectively.
Former General Counsel Peter Shafron was disqualified for a period of seven years, while the remaining seven directors involved were struck off for five years each.
Macdonald was also fined $350,000, while Hellicar was fined $30,000.
ASIC had asked that the former directors be fined somewhere between $120,000 and $1.81 million, and disqualified from acting in company management positions for up to 16 years.
The penalties come following a NSW Supreme Court decision earlier this year that found 10 former executives and directors of James Hardie had breached the Corporations Act, following misleading comments in a board-approved press release regarding its ability to meet asbestos compensation liabilities.
It was a decision that David Grace, partner at Cooper Grace Ward, recently told Lawyers Weekly highlights the increasing attention the courts are paying to how company directors carry out their duties, with breaches resulting in serious consequences.
"Director's duties haven't changed because the law hasn't changed in that regard," said Grace. "What [the Hardie decision] shows is [that], especially in difficult economic times, directors need to heighten their alertness to an understanding of what's happening to the company's business and to make sure they receive all relevant and adequate information and that they deal with it through proper decision-making."
Corporate law expert and head of the School of Law at the University of Westerm Sydney, Michael Adams, said he was surprised by the low ranging fines and disqualifications. "One has to ask, if the defendants have to pay their own legal costs - if they are not covered by Directors & Officers insurance - this could pose a much greater imposition than the court's penalties!," he said. "Also, the many victims of asbestos diseases from JHI products may not feel very much satisfaction from these penalties today."
Adams added that Macdonald's penalty reflected the fact that he was found to have breached ten provisions of the Corporations Act - with his 15 year disqualification period in a similar range to Ray Williams and Rodney Adler in the HIH Insurance case.
Check back with Lawyers Weekly for further developments on this story