In Australian Securities and Investments Commission v Macdonald (No 11) [2009] NSWSC 287 the New South Wales Supreme Court has decided in favour of ASIC's civil claim that a number of statements in the Draft ASX Announcement by James Hardie to the effect that the Foundation would have sufficient funds to meet all legitimate Asbestos Claims, that it was fully funded and provided certainty for people with legitimate Asbestos Claims were false or misleading and that the directors were in breach of Section 180(1) of the Corporations Act.

Gzell J also decided that:

• the CEO Mr Macdonald and Company Secretary and General Counsel Mr Shafron failed to advise the board of JHIL that the Draft ASX Announcement was expressed in too emphatic terms concerning the adequacy of funding to meet all legitimate present and future Asbestos Claims and in that respect they were in breach of Section 180(1).
• by failing to advise the board of JHIL that the reviews of the Cashflow Model by PwC and Access Economics were limited to reporting on the logical soundness and technical correctness of it and they had not verified, and had been specifically instructed not to consider, the key assumptions adopted by the Cashflow Model, being fixed investment earnings rates, litigation and management costs and future claim costs, Mr Macdonald, Mr Shafron and Mr Morley breached Section 180(1).
• Mr Macdonald breached Section 180(1) in approving for release the Final ASX Announcement, or in failing to advise that the Final ASX Announcement not be released, or that it be amended before being released to remove the matters that were false or misleading.
• by issuing the Final ASX Announcement to the ASX on 16 February 2001, JHIL engaged in conduct that was misleading or deceptive, or was likely to mislead or deceive, contrary to Section 995(2) of the Corporations Act.

A number of ASIC allegations of false and misleading conduct were not successful.

Update:

Former Hardie chief executive Peter Macdonald, who had faced a fine of up to $1.8 million, has been fined $350,000 and disqualified from managing a corporation for 15 years for issuing false and misleading statements about the company's ability to fund asbestos compensation.

The James Hardie company and its disgraced former directors were fined a total of $750,000 for breaching the Corporations Act.

Seven former directors, including former chairwoman Meredith Hellicar, have been disqualified from managing companies for five years and fined $30,000 each.

Another former executive, Peter Shaffron, has been banned from managing a corporation for seven years, and former chief financial officer Phillip Morley for five years.

In handing down his judgement, Justice Ian Gzell referred to deceptive and misleading statements the former company directors made about the amount of money in a trust to compensate asbestos victims.

The directors breached their duties because they "engaged in conduct in relation to a financial product, mainly shares in JHINV that was misleading or deceptive or was likely to mislead or deceive," he said.

The Australian Securities and Investments Commission had wanted the former board members disqualified from managing companies for periods ranging from five to 16 years and fined between $120,000 to $1.81 million.