Atanaskovic Hartnell were the big winners in a NSW Court of Appeal decision that has allowed seven former non-executive directors of James Hardie to once again sit on company boards.
In a unanimous decision handed down today (17 December), a previous decision that banned the former directors, including Meredith Hellicar, the chairman of James Hardie between 2004 to 2007, from sitting on boards for five years and separate fines of $30,000 to each director was overturned. Atanaskovic Hartnell acted for four of the seven victorious directors. In addition to Hellicar, managing partner John Atanskovic also represented Michael Brown, Mike Gillfillan and Martin Koffel.
The other directors who were successful in their appeal were Dan O'Brien, with Arnold Bloch Leibler acting, Peter Willcox, who were represented by Kemp Strang and Greg Terry, for whom Blake Dawson acted.
ASIC was represented by Clayton Utz, with Brigitte Markovic, the head of the firm's blue-ribbon litigation team acting.
In the judgment, Chief Justice Spigelman specifically referred to the failure of the regulator to call David Robb, a former partner of Allens Arthur Robinson who provided legal advice to James Hardie, as "undermining the cogency of ASIC's case that the resolution was passed".
John Atanaskovic, who also acted for the four directors in the trial judgment that went against his client, was scathing in his assessment of the role of the regulator and their lawyers throughout this process.
"ASIC (and derivatively its lawyers) has a duty to conduct litigation such as this consistently with ASIC's duty of fairness," he said. "This case was notable for ASIC's egregious failure to observe this duty, and the court's decision today was in significant part based on ASIC's failure to act fairly in particular in presenting necessary witnesses to court."
The action by ASIC against the non-executive directors relates to the establishment of a fund to pay compensation to asbestos victims.
ASIC claimed that despite James Hardie making announcements to the Australian Securites Exchange that the fund would be fully funded, it later emerged the fund was underfunded by over $1 billion.
Despite overturning the ban on the former James Hardie directors from sitting on boards, Chief Justice Spigelman rejected the company's appeal from an earlier ruling that it made misleading statements to the Australian Securities Exchange about its ability to meet asbestos claims.
James Hardie was ordered to pay 90 per cent of ASIC's costs in this matter.
Under an agreement with the NSW government, James Hardie committed to pays 35 per cent of its annual cash flow to compensate sufferers of asbestos-related diseases.
Asbestos victims support groups have criticised the decision of the Court of Appeal to overturn the penalties against the non-executive directors.