Tue August 21, 2012 12:33am
The corporate ban on former James Hardie chairman Meredith Hellicar and fellow non-executive director Michael Brown was a 'manifest error' , the New South Wales Court of Appeal has been told.
The five-year corporate ban imposed on former James Hardie Industries chairman, Meredith Hellicar, and fellow non-executive director Michael Brown was a ''manifest error'', which should be reduced to no more than two years disqualification, the NSW Court of Appeal has heard.
The appeal court proceedings are the final chapter to events dating back to 2001, when the board approved a misleading draft press release to the ASX that there were sufficient funds for asbestos sufferers in a company restructure. The matter went all the way to the High Court, which this year held the directors had breached their duty to act with care and diligence in approving the draft release.
The seven non-executive board members are appealing against declarations and penalties imposed by the original trial judge. All were disqualified for five years, and fined $30,000 each.
Justin Gleeson SC, for Ms Hellicar and Mr Brown, said his clients ''accepted it was a significant contravention'', and they accepted court findings that ''it is not an excuse that the executives let down the non-executive directors''. That was the reason, he said, that they were no longer asking the court to exercise its discretion to exonerate them. However they did ask the appeal court judges to find that they had acted honestly.
He compared their circumstances with that of former chief executive Peter Macdonald, who has not appealed. Mr Macdonald was found guilty of 11 contraventions, was found to have acted dishonestly, and was disqualified for 15 years and fined $350,000.
James Hardie general counsel and company secretary Peter Shafron, who is appealing, was disqualified for seven years, and fined $75,000.
Mr Gleeson presented character references which traversed Ms Hellicar's business career, which described her as diligent, skilled and fit for company office.
''The disqualification order displays manifest error. General deterrence and retribution do not and cannot justify preventing a person working as a director or manager when their fitness has been so proven, honesty so proven, probity so proven and one is left with one contravention of negligence,'' he said.
''They not only remained, they dealt with the particular backlash and were party to dealing the ultimate settlement which has achieved sufficiency of funds.
''In the light of that, we would submit the loss of Ms Hellicar and Mr Brown to the corporate community is a loss of personality and skills.''
He said the disqualification period should be no more than two years.
Mr Gleeson said the highest the case came against them was they ''ought to have known'' that the draft release was misleading, and he rejected a written submission by the Australian Securities and Investment Commission which asserted that they had ''known'' it was.
The hearing continues.
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