Reported Decision: 81 ACSR 285 New South Wales Court of Appeal CITATION: Morley & Ors v Australian Securities and Investments Commission [2010] NSWCA 331 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S): 19, 20, 21, 22, 23, 27, 28, 29, 30 April 2010 JUDGMENT DATE: 17 December 2010 JUDGMENT OF: Spigelman CJ; Beazley JA; Giles JA 1. In each of 2009/298425, 2009/298427, 2009/298428, 2009/298440, 2009/298441, 2009/298442 and 2009/298524: (a) Appeal allowed; (b) Set aside the declaration and orders made against the appellant on 27 August 2009; (c) Order that the proceedings against the appellant be dismissed with costs. (d) Cross-appeal dismissed. (e) Order that ASIC pay the appellant's costs of the appeal and cross-appeal. ... 2. In 2009/298408: (a) Appeal against the declaration made on 27 August 2009 dismissed; (b) Cross-appeal dismissed; (c) Stand over the appeal and cross-appeal to 9.30 am on 4 February 2011 before Giles JA for directions for their further conduct. DECISION: ... 3. In 2009/298416: (a) Appeal allowed in part; (b) Set aside declarations 1 and 2 made on 27 August 2009; (c) Appeal against declaration 3 made on 27 August 2009 dismissed; (d) Cross-appeal allowed in part; (e) Declare that the appellant contravened s 180(1) in relation to JHIL by his conduct, as an officer of that corporation, on or about 15 February 2001 in failing to advise its board of directors that the best estimate contained in a schedule attached to an e-mail dated 9 February 2001 and in a report dated 13 February 2001 being estimates by Trowbridge Deloitte Ltd of JHIL's liabilities for exposure to asbestos products for up to 50 years and for 20 years respectively had not taken into account superimposed inflation, and a prudent estimate would have; (f) Liberty to apply within 14 days in relation to the terms of the declaration in (e); (g) Cross-appeal otherwise dismissed; (h) Stand over the appeal and cross-appeal to 9.30 am on 4 February 2011 before Giles JA for directions for their further conduct. *** [The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] CATCHWORDS: CORPORATIONS – misleading announcement sent to ASX – whether pleaded version of draft announcement taken to board meeting – whether resolution to approve draft announcement and authorise for sending to ASX passed at board meeting – detailed consideration of factual circumstances before, during and after board meeting – consideration of constraints in appellate review – discussion of advantages of trial judges – discussion of advantages in appellate courts – consideration of s 140 of Evidence Act and Briginshaw v Briginshaw – failure to call witnesses who were at board meeting – whether ASIC under obligation akin to prosecutorial duty – whether appropriate to reason by analogy from criminal procedure to civil penalty proceedings – discussion of civil penalty regime – not appropriate to reason by analogy – no prosecutorial duty – whether ASIC's obligation to act fairly required witnesses to be called – discussion of obligation of fairness owed by government agencies – consideration of principles of fair trial – consideration of government agencies as model litigants – consideration of ASIC's role as regulator – consideration of ASIC's powers under ASIC Act and Corporations Act – failure to call witnesses may constitute breach of obligation of fairness – consideration of evidentiary principles enunciated in Blatch v Archer, Jones v Dunkel and Whitlam v ASIC – failure to call witnesses taken into account in deciding whether onus of proof satisfied – breach of obligation of fairness taken into account in deciding whether onus of proof satisfied – obligation of fairness breached – burden of proof not discharged – not proved that resolution passed. CORPORATIONS – directors' statutory duty of care and diligence under s 180 of Corporations Law – assuming resolution passed, whether non-executive directors contravened duty in voting for resolution – discussion of duty of care and diligence of non-executive directors – non-executive directors may rely on management and officers to a greater extent than executive directors – duty dependent on facts of each case – consideration of factual circumstances surrounding resolution – if resolution passed, contravention properly found. CORPORATIONS – definition of officer in s 9 of Corporations Law – consideration of company secretary as officer when also general counsel – whether participation in matters that affected the whole or a substantial part of the business – participation need not be as one of those in ultimate control – test is one of participation in making of decision – participation more than administrative arrangement – must be real contribution to making of decision – participation made out – whether statutory duty extends to any matter which falls within the scope of responsibilities as company secretary – duty extends to responsibilities actually carried out by company secretary – relevant acts and omissions were within responsibilities as company secretary. CORPORATIONS – statutory duty of care and diligence of company secretary – assuming resolution passed, whether duty of care breached in failing to advise draft announcement was misleading – would be breach – whether duty breached in failing to warn of limitations in cash flow models – no breach because knowledge of limitations not proved – whether duty breached in failing to advise or obtain advice for board or CEO concerning disclosure of Deed of Covenant and Indemnity – whether company secretary could rely on absence of warning by external advisers – reliance not available – breach properly found – whether breach of duty in failing to advise nature of "best estimate" – on facts, no breach – whether breach in failing to advise of failure to take into account superimposed inflation – breach properly found. CORPORATIONS – definition of officer in s 9 of Corporations Law – whether chief financial officer participated in decisions that affected the whole or substantial part of company's business – not confined to acts and omissions alleged to have been in breach of statutory duty as officer – first consider whether person is an officer – then consider whether breach of duty – participation made out – whether chief financial officer had capacity to affect company's financial standing – test focuses on the particular officer, not an abstract officer – capacity made out. CORPORATIONS – statutory duty of due care and diligence of chief financial officer – whether duty breached in failing to warn of limitations in cash flow analysis –breach properly found – whether duty breached in failing to advise nature of "best estimate" and failing to take into account superimposed inflation – on facts, no breach. EVIDENCE – admissibility – admissibility of prior inconsistent statement for non-hearsay purpose – consideration of R v Adam and Adam v The Queen – no inconsistency identified – admissibility as admissions of documents stating resolution had been passed – consideration of Lustre Hosiery Limited v York – whether circumstances were such as to make it unlikely that erroneous statements would be allowed to pass unchallenged – no error shown in ruling not admissible. CATEGORY: Principal judgment Adam v The Queen [2001] HCA 57; (2001) 207 CLR 96; Adler v Australian Securities and Investments Commission [2003] NSWCA 131; (2003) 46 ACSR 504; Adler v Director of Public Prosecutions (C'th) [2004] NSWCCA 352; (2004) 185 FLR 422; Australian Securities and Investments Commission v Adler [2002] NSWSC 171; (2002) 168 FLR 253; Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Ltd (No 4) [2007] FCA 963; Australian Securities and Investments Commission v Lindberg (No 2) [2010] VSCA 19; Australian Securities and Investments Commission v Macdonald (No 3) [2008] NSWSC 1099; Australian Securities and Investments Commission v Macdonald (No 5) [2008] NSWSC 1169; Australian Securities and Investments Commission v Macdonald (No 6) [2008] NSWSC 1175; Australian Securities and Investments Commission v Rich [2003] NSWSC 85; (2003) ACSR 341; Australian Securities and Investments Commission v Rich [2009] NSWSC 312; Australian Securities and Investments Commission v Rich [2009] NSWSC 1229; [2009] 236 FLR 1; (2009) 75 ACSR 1; Australian Securities and Investments Commission v Vines [2003] NSWSC 995; (2003) 48 ACSR 282; Barnett, Hoares & Co v South London Tramways Co (1887) 18 QBD 815; re Belhaven and Stenton Peerage (1875) 1 App Cas 278; Berkey v Third Avenue Railway Company 244 NY 84 (1926); Blatch v Archer (1774) 1 Cowp 63; 98 ER 969; Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424; Briginshaw v Briginshaw (1938) 60 CLR 336; Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; (2000) 202 CLR 45; Chamberlain v The Queen (No 2) (1984) 153 CLR 521; Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Ltd [2003] HCA 49; (2003) 216 CLR 161; Commissioner for Corporate Affairs v Bracht (1989) VR 821; Commissioner for Revenue (ACT) v Slaven (2009) FCA 744; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission [2007] FCAFC 132; (2007) 160 FCR 466; Cook's Construction Pty Ltd v Brown [2004] NSWCA 105; (2004) 49 ACSR 62; CSR Ltd v Della Maddalena [2006] HCA 1; (2006) 224 ALR 1; CSR Ltd v Wren (1997) 44 NSWLR 463; Daniels v Anderson (1995) 37 NSWLR 438; Deputy Commissioner of Taxation v Clark (2005) 45 ACSR 332; Dietrich v The Queen (1992) 177 CLR 292; Re Doherty (Secretary of State for Northern Ireland Intervening) [2008] UKHL 33; (2008) 1 WLR 1499; Dr Andrew Roberts-Szudzinski Pty Ltd v .au Domain Administration Ltd [2006] NSWSC 950; Dwyer v Lippiatt (2004) 50 ACSR 333; [2004] QSC 281; Fox v Percy [2003] HCA 22; (2003) 214 CLR 118; G v H (1994) 181 CLR 387; Gett v Tabet [2009] NSWCA 76; (2009) 254 ALR 504; Re HIH Insurance Ltd; Australian Securities and Investments Commission v Adler (2002) 41 ACSR 72; Ho v Powell [2001] NSWCA 168; (2001) 51 NSWLR 572; House v The King (1936) 55 CLR 499; Hughes Aircraft Systems International v Air Services Australia (1997) 76 FCR 151; Jago v District Court (NSW) (1989) 168 CLR 23; CASES CITED: James Hardie & Co Pty Ltd v Putt (1998) 43 NSWLR 554; James Hardie Industries NV v Australian Securities and Investments Commission [2010] NSWCA 332; Jones v Dunkel (1959) 101 CLR 298; Kenny v State of South Australia (1987) 46 SASR 268; Kuru v State of New South Wales [2008] HCA 26; (2008) 236 CLR 1; Lee v The Queen (1998) 195 CLR 594; Logue v Shoalhaven Shire Council (1979) 1 NSWLR 537; Lustre Hosiery Limited v York (1935) 55 CLR 134; Mahenthirarasa v State Rail Authority (NSW) (No 2) [2008] NSWCA 2001; (2008) 72 NSWLR 273; Manly Council v Byrne [2004] NSWCA 123; Melbourne Streamship Co Limited v Moorehead (1912) 15 CLR 333; Milwell Pty Ltd v Olympic Amusements Pty Ltd [1999] FCA 63; (1999) 85 FLR 436; Minlabs Pty Ltd v Assaycorp Pty Ltd [2001] WASC 88; (2001) ACSR 509; Morrison v Jenkins (1949) 80 CLR 626; National Exchange Pty Ltd v Australian Securities and Investments Commission [2004] FCAFC 90; (2004) 49 ASCR 369; Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449; (1992) 67 ALJR 170; Nicholas v The Queen (1998) 193 CLR 173; O'Brien v Australian Securities and Investments Commission [2009] NSWCA 312; P & C Cantarella v The Egg Marketing Board of New South Wales (1973) 2 NSWLR 366; Payne v Parker (1976) 1 NSWLR 191; Qantas Airways Ltd v Gama [2008] 1 FCAFC 69; The Queen v Apostolides (1984) 154 CLR 563; (2008) 167 FCR 537; R v Adam [1999] NSWCCA 197; (1999) 47 NSWLR 267; R v Jenkins; Ex parte Morrison (1949) VLR 277; Rejfek v McElroy (1965) 112 CLR 521; Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 220 CLR 129; Ridgeway v The Queen (1995) 184 CLR 19; SCI Operations v The Commonwealth (1996) 69 FCR 346; Scott v Handley [1999] FCA 404; (1999) 58 ALD 373; Seiwa Australia Pty Ltd v Beard [2009] NSWCA 240; Seltsam Pty Ltd v McGuiness [2000] NSWCA 29; (2000) 49 NSWLR 262; Shalhoub v Buchanan [2004] NSWSC 99; Shepherd v The Queen (1990) 170 CLR 575; Tim Barr Pty Ltd v Nauri Gold Coast Pty Ltd [2008] NSWSC 657; Transport Industries Insurance Co Ltd v Longmuir (1997) 1 VR 125; Trevitt v NSW TAFE Commission [2001] NSWCA 363; Vines v Australian Securities and Investments Commission [2007] NSWCA 75; (2007) 73 NSWLR 451; Visy Industries Holdings Pty Ltd v Australian Competition and Consumer Commission [2007] FCAFC 147; (2007) 161 FLR 122; Walton v Gardiner (1993) 177 CLR 378; Warren v Coombes (1979) 142 CLR 531; (1979) 23 ALR 405; West v Government Insurance Office of NSW (1981) 148 CLR 62; Whitehorn v The Queen (1983) 152 CLR 657; Whitlam v Australian Securities and Investments Commission [2003] NSWCA 183; (2003) 57 NSWLR 559; Williams v Spautz (1992) 174 CLR 509; Yarrabee Coal Company Ltd v Lujans [2009] NSWCA 85; (2009) 53 MVR 187. MATTER NO. 2009/00298408: Phillip Graham Morley - Appellant/Cross-respondent Australian Securities and Investments Commission - Respondent/Cross-appellant MATTER NO. 2009/00298416: Peter James Shafron - Appellant/Cross-respondent Australian Securities and Investments Commission - Respondent/Cross-appellant MATTER NO. 2009/00298425: Gregory James Terry - Appellant/Cross-respondent Australian Securities and Investments Commission - Respondent/Cross-appellant MATTER NO. 2009/00298427: Meredith Hellicar - Appellant/Cross-respondent Australian Securities and Investments Commission - Respondent/Cross-appellant MATTER NO. 2009/00298428: PARTIES: Michael Robert Brown - Appellant/Cross-respondent Australian Securities and Investments Commission - Respondent/Cross-appellant MATTER NO. 2009/00298440: Michael John Gillfillan - Appellant/Cross-respondent Australian Securities and Investments Commission - Respondent/Cross-appellant MATTER NO. 2009/00298441: Martin Koffel - Appellant/Cross-respondent Australian Securities and Investments Commission - Respondent/Cross-appellant MATTER NO. 2009/00298442: Geoffrey Frederick O'Brien - Appellant/Cross-respondent Australian Securities and Investments Commission - Respondent/Cross-appellant MATTER NO. 2009/00298524: Peter John Willcox - Appellant/Cross-respondent Australian Securities and Investments Commission - Respondent/Cross-appellant FILE NUMBER(S): CA 2009/00298408; 2009/00298416; 2009/00298425; 2009/00298427; 2009/00298428; 2009/00298440; 2009/00298441; 2009/00298442; 2009/00298524 B C Oslington QC, R A Dick SC & N M Bender - Morley B W Walker SC, R Lancaster SC, N J Owen - Shafron R G McHugh SC & S M Nixon - Terry COUNSEL: T F Bathurst QC, R S Hollo, R Hardcastle - Hellicar, Brown, Gillfillan, Koffel P M Wood & M S Henry - O'Brien T Jucovic QC & R Scruby - Willcox A J L Bannon SC, R T Beech-Jones SC, S E Pritchard, J Single - Australian Securities and Investments Commission Henry Davis York - Morley Middletons - Shafron Blake Dawson - Terry SOLICITORS: Atanaskovic Hartnell - Hellicar, Brown, Gillfillan, Koffel Arnold Bloch Leibler - O'Brien Kemp Strang - Willcox Clayton Utz - Australian Securities and Investments Commission LOWER COURT JURISDICTION: Supreme Court - Equity Division LOWER COURT FILE NUMBER(S): ED 1490/07 LOWER COURT JUDICIAL OFFICER: Gzell J LOWER COURT DATE OF DECISION: 23 April 2009 (Liability); 20 August 2009 (Penalty) LOWER COURT MEDIUM NEUTRAL CITATION: Australian Securities and Investments Commission v Macdonald (No 11) [2009] NSWSC 287 Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 2009/00298408 CA 2009/00298416 CA 2009/00298425 CA 2009/00298427 CA 2009/00298428 CA 2009/00298440 CA 2009/00298441 CA 2009/00298442 CA 2009/00298524 ED 1490/07 SPIGELMAN CJ BEAZLEY JA GILES JA Friday 17 December 2010 MORLEY v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION SHAFRON v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION TERRY v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION HELLICAR v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION BROWN v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION GILLFILLAN v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION KOFFEL v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION O'BRIEN v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION WILLCOX v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Judgment THE COURT: 1 These reasons are arranged as follows - Section Subject Paragraphs 1 OVERVIEW AND CONCLUSIONS 2 2 SOME STATUTORY PROVISIONS 27 2.1 Exercise of care and diligence by officers 28 2.2 Civil penalty proceedings 37 2.3 Relief from liability 45 3 LEADING UP TO THE FEBRUARY MEETING 49 3.1 Separation of asbestos liability 52 3.2 The net assets model 71 3.3 Rejection of the net assets model 91 3.4 The proposal for the February meeting 100 3.5 Trowbridge's estimates and JHIL's cash flow modelling 124 3.6 The slides 168 3.7 The versions of the draft news release 179 4 WAS THE DRAFT ASX ANNOUNCEMENT APPROVED? 219 4.1 General 219 4.2 ASIC's allegation 227 4.3 The judge's findings 232 4.3.1 The tabling finding 241 4.3.2 The approval finding 246 4.4 Appellate constraints 251 4.5 Review of submissions on the evidence 272 4.5.1 Introduction 272 4.5.2 Our approach to the review 280 4.5.3 A necessary part of establishing the Foundation 287 4.5.4 In accordance with JHIL's practice 302 4.5.5 Taking a draft news release to the meeting 359 4.5.6 Correlation 385 4.5.7 The purpose of consideration 425 4.5.8 Absence of protest 433 4.5.8(i) The Final ASX Announcement 436 4.5.8(ii) The 23 February 2001 ASX Announcement 446 4.5.8(iii) The 21 March 2001 ASX Announcement 455 4.5.9 The minutes of the February meeting 463 4.5.10 Later acceptance 498 4.5.10(i) The teleconference 501 4.5.10(i)(a) The 15 and 17 February 2001 e-mails 507 4.5.10(i)(b) The 10 February 2001 e-mail and responses 521 4.5.10(i)(c) The 20 February 2001 e-mail 529 4.5.10(ii) Submissions to the Jackson inquiry 532 4.5.10(iii) Declarations of interest in 2004 and 2005 542 4.5.10(iv) The JHINV explanatory memorandum 618 4.6 Calling witnesses 626 4.6.1 The circumstances of Messrs Robb, Wilson and Sweetman 645 4.6.2 Prosecutorial duty 678 4.6.3 Obligation to act fairly 701 4.7 Credit findings 778 4.8 Decision 789 5 CONTRAVENTION BY MR BROWN, MS HELLICAR, MR O'BRIEN, MR TERRY AND MR WILLCOX 797 5.1 The pleaded contraventions 797 5.2 The contraventions found 803 5.3 Consideration of contravention 804 5.4 The defensive cross-appeal 832 6 CONTRAVENTION BY MR GILLFILLAN AND MR KOFFEL 838 6.1 The pleaded contraventions 838 6.2 The contraventions found 839 6.3 Consideration of contravention 858 6.4 The defensive cross-appeals 869 7 CONTRAVENTION BY MR SHAFRON 871 7.1 The pleaded contraventions 871 7.2 The contraventions found 879 7.3 Mr Shafron as an officer 880 7.3.1 Participation in decisions 885 7.3.2 Company secretary 899 7.4 Consideration of contravention 930 7.4.1 The draft ASX announcement 931 7.4.2 The cash flow analysis 949 7.4.3 DOCI disclosure 971 7.5 The cross-appeal 1037 8 CONTRAVENTION BY MR MORLEY 1075 8.1 The pleaded contravention 1075 8.2 The contravention found 1078 8.3 Mr Morley as an officer 1079 8.3.1 Participation in decisions 1083 8.3.2 Capacity to affect JHIL's financial standing 1087 8.4 Consideration of contravention 1091 8.5 The cross-appeal 1123 9 WHERE TO FROM HERE? 1144 10 THE COSTS APPEAL AND CROSS-APPEAL 1150 10.1 Mr Morley's appeal 1153 10.2 ASIC's cross-appeal 1155 11 ORDERS 1156 1. OVERVIEW AND CONCLUSIONS 2 In 2001 the appellants Mr Michael Brown, Mr Michael Gillfillan, Ms Meredith Hellicar, Mr Martin Koffel, Mr Geoffrey O'Brien, Mr Gregory Terry and Mr Peter Willcox were non-executive directors of James Hardie Industries Ltd ("JHIL") (later named ABN 60 Pty Ltd). The appellant Mr Peter Shafron was a joint secretary and general counsel of JHIL. The appellant Mr Phillip Morley was its chief financial officer. The managing director and chief executive officer of JHIL was Mr Peter Macdonald. 3 The respondent Australian Securities and Investments Commission ("ASIC") is the corporate regulator established under the Australian Securities and Investments Commission Act 2001 (C'th) ("the ASIC Act"). 4 The functions and powers conferred on ASIC include the general administration of the Corporations Act 2001 (C'th) ("the Act"). Within the Act, it may apply for a declaration that a person has contravened a civil penalty provision of the Act (s 1317E) and an order for payment of a pecuniary penalty (ss 1317G, 1317J(1)), and for an order disqualifying a person from managing corporations for a period (ss 206C, 206E). 5 On 14 February 2007 ASIC brought proceedings against the appellants, Mr Macdonald, JHIL and JHIL's later holding company James Hardie Investments NV ("JHINV"). As against the appellants and Mr Macdonald, it alleged that as directors or officers of JHIL they had contravened s 180(1) of the Corporations Law ("the Law") as carried into the Act (s 1401) or s 180(1) of the Act. These were provisions concerning the exercise of care and diligence by a director or other officer of a corporation, and were civil penalty provisions under the Act. ASIC claimed declarations of contravention, pecuniary penalties and disqualification orders. 6 The proceedings were heard by Gzell J over the period September 2008-March 2009. On 23 April 2009 his Honour gave judgment on contravention: Australian Securities and Investments Commission v Macdonald (No 11) [2009] NSWSC 287; (2009) 256 ALR 199. After a further hearing on 20 August 2009, his Honour gave judgment on relief from liability for contravention and on pecuniary penalties and disqualification orders: Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714; (2009) 259 ALR 116. On appeal the judgments were called the liability judgment and the penalty judgment respectively. Their paragraphs were identified in the manner LJ [200] and PJ [200]. We will adopt these practices. 7 The proceedings went to trial on a Fourth Further Amended Statement of Claim dated 1 October 2008 ("the FFASC"). Many contraventions were alleged. 8 Not all contraventions were found. Contraventions were found against the appellants in relation to approval of a draft announcement to the Australian Stock Exchange ("the ASX") and entry into a Deed of Covenant and Indemnity ("the DOCI"), in both cases said to have been decided at a meeting of JHIL's board on 15 February 2001 ("the February meeting"). Other contraventions were alleged against some of the appellants in relation to approval of the draft announcement or entry into the DOCI, but were not found. 9 Subject to later more detailed explanation, we briefly describe the background and the contraventions found. 10 JHIL was the holding company in the James Hardie group. Until 1937 it had manufactured and sold asbestos products. Thereafter and until 1987 two of its wholly owned subsidiaries, James Hardie & Coy Limited ("Coy") and Jsekarb Pty Ltd ("Jsekarb"), later named Amaca Pty Ltd and Amaba Pty Ltd respectively, had manufactured and sold asbestos products. 11 As at February 2001 the three companies, but principally Coy and Jsekarb, had been and would in the future be subject to many claims for compensation arising from exposure to asbestos ("asbestos claims"), and to associated litigation costs. 12 Coy and Jsekarb were no longer operating entities. For some time JHIL had been looking to separate the liability to asbestos claims from the group's operating businesses. 13 At the February meeting it was decided to create a trust, the Medical Research and Compensation Foundation ("the Foundation"), and to vest in the Foundation JHIL's shares in Coy and Jsekarb and a capital sum of $3 million. It was decided also to enter into the DOCI. Under the DOCI JHIL covenanted to pay substantial annual sums to Coy and Jsekarb over a period, in return for covenants by Coy and Jsekarb not to sue JHIL in relation to their manufacture and sale of asbestos products, for an indemnity from claims against JHIL by asbestos claimants, and for a put option for Coy to acquire from a (future) sole shareholder in JHIL the shares in JHIL. The Foundation was to manage and pay out asbestos claims against Coy and Jsekarb, and to use the $3 million for research into asbestos-related diseases. 14 ASIC alleged, but the appellants disputed, that the non-executive director appellants voted at the February meeting in favour of a resolution to approve a draft announcement of the establishment of the Foundation. We will later set out the allegation in its terms, which were specific. This was a substantial factual issue at trial and on appeal, which our reasons address in some detail. It was not in dispute that it was decided to enter into the DOCI. 15 On 16 February 2001 an announcement of the establishment of the Foundation was sent to the ASX, although its terms differed to an extent from those of the draft announcement which ASIC alleged had been approved. The trust deed and the DOCI were executed. The shares and the $3 milliobn were vested in the Foundation. The DOCI was not disclosed to the ASX for some months. 16 ASIC alleged that the draft announcement approved at the February meeting misleadingly conveyed that the Foundation was fully funded to meet all present and future asbestos claims ("full funding"). It alleged that, under the continuous disclosure objections in s 1001A of the Law, the DOCI should immediately have been disclosed to the ASX. 17 The judge found that the appellants had contravened s 180(1) of the Law in that, in summary – as to each of Mr Brown, Ms Hellicar, Mr O'Brien, Mr Terry and Mr Willcox, they had voted in favour of a resolution approving the draft announcement for sending to the ASX knowing that it conveyed or was capable of conveying full funding, when they ought to have known that it was misleading in that respect; as to each of Mr Gillfillan and Mr Koffel, who participated in the February meeting by telephone from the United States, they had failed to take steps to request that they be provided with a copy of the draft announcement, to familiarise themselves with its terms, or to abstain from voting in favour of the approval resolution; as to Mr Shafron, he had failed to advise the board that the draft announcement was expressed in too emphatic terms as to the adequacy of the Foundation's funding; had failed to advise the board of the limited nature of the reviews of the cash flow analysis by Pricewaterhouse Coopers ("PwC") and Access Economics Pty Ltd ("Access Economics"); and had failed to advise Mr Macdonald or the board in relation to the need for disclosure of the DOCI to the ASX; and as to Mr Morley, he had failed to advise the board of the limited nature of reviews by PwC and Access Economics of a cash flow analysis which was part of the board's consideration of the adequacy of the Foundation's funding. 18 We set out the precise contraventions found later in these reasons. The contraventions were concerned with disclosure to the market, in particular by the approval of a misleading draft announcement. A contravention alleged against Mr Morley raised more directly that JHIL had not in fact provided full funding for asbestos liabilities, but the contravention was not found and there was no cross-appeal by ASIC. The issues in this Court did not include inadequacy of the Foundation's funding as a contravention. 19 In the penalty judgment the judge first addressed whether, under ss 1317S and 1318 of the Act, the appellants should be relieved from liability because of the contraventions. He was not satisfied either that the appellants had acted honestly or that they ought fairly to be excused. Nor was he satisfied that the discretion to relieve from liability should be exercised. 20 The judge ordered each of the appellants to pay a pecuniary penalty. The appellants other than Messrs Shafron and Morley were ordered to pay $30,000. Mr Shafron was ordered to pay $75,000. Mr Morley was ordered to pay $35,000. The judge ordered that each of the appellants be disqualified from managing a corporation. The appellants other than Mr Shafron were disqualified for 5 years. Mr Shafron was disqualified for 7 years. 21 The appellants comprehensively appealed against the findings of contravention, the refusals to relieve from liability, the pecuniary penalties and the disqualification orders. Mr Morley also appealed against a costs order made by the judge. 22 Apart from resisting the appeals, ASIC supported the findings of contravention on notice on contention grounds including grounds challenging certain evidentiary rulings in the course of the trial. 23 ASIC cross-appealed that the judge should have found certain other contraventions by the appellants, all in relation to the February meeting. As against the appellants other than Messrs Shafron and Morley, the cross-appeals were defensive, as fall-back positions if those appellants' appeals were successful and depending on the basis for the success. The cross-appeals as against Mr Shafron and Mr Morley sought to add to their contraventions. 24 In general terms, the cross-appeals – relied on what appellants ought to have known rather than what they knew about the misleading nature of the draft announcement; relied also on failure to inquire into or make known the limited nature of the PwC and Access Economics reviews or inquire into or make known the unsuitability of two actuarial estimates by Trowbridge Deloitte Ltd ("Trowbridge"), in the proceedings identified as the February 2001 Trowbridge Report and the Trowbridge 50 Year Estimate, as a basis for establishing the Foundation or making the statements in the draft announcement as to its funding; and as against Messrs Gillfillan and Koffel, relied also on voting in favour of approval of the draft announcement. 25 As against Messrs O'Brien and Terry, ASIC also cross-appealed against a costs order made by the judge. 26 For the reasons which follow, in our opinion - (a) the appeals against the findings of contravention by the appellants other than Messrs Shafron and Morley succeed, and the defensive cross-appeals as against them do not arise; (b) the appeal by Mr Shafron against the finding of contraventions and the cross-appeal as against him each succeed in part, leaving Mr Shafron with contraventions in two respects concerning failure to advise the board; (c) the appeal by Mr Morley against the finding of a contravention and the cross-appeal as against him both fail; (d) Relief of Mr Shafron and Mr Morley from liability, and pecuniary penalties and disqualification, should be determined after an opportunity for further submissions; and (e) Mr Morley's costs appeal should await final resolution of his position, and ASIC's costs cross-appeal falls away. 2. SOME STATUTORY PROVISIONS 27 We set out some key statutory provisions. They will be supplemented as appropriate. 2.1 Exercise of care and diligence by officers 28 Section 180(1) of the Law provided - "180(1) A director or other officer of a corporation must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they: (a) were a director of officer of a corporation in the corporation's circumstances; and (b) occupied the office held by, and had the same responsibilities within the corporation as, the director or officer." 29 Section 180(2) and (3) made particular provision for a director or other officer of a corporation who made a "business judgment". It was not suggested that this was material to any contraventions by the appellants. 30 It was not disputed that the non-executive directors were directors of JHIL for the purposes of s 180(1). Whether Mr Shafron was an officer of JHIL in what he did or failed to do in relation to the February meeting, and whether Mr Morley was an officer of JHIL, were in dispute. 31 The judge considered the legal principles with respect to the duty of care and diligence under s 180(1) at LJ [236]-[257]. We do not understand any party significantly to contest the principles there set out. The application of the principles was in lively dispute. 32 Particular attention was given in submissions to the position of a non-executive director. 33 In Vines v Australian Securities and Investments Commission [2007] NSWCA 75; (2007) 73 NSWLR 451 at [109] Spigelman CJ took up the conclusion of Austin J at first instance (Australian Securities and Investments Commission v Vines [2003] NSWSC 995; (2003) 48 ACSR 282 at [38]), in relation to the preceding ss 229(2) and 232(4) of the Companies (New South Wales) Code, that they - " … encompass an objective standard measured by reference to what a reasonable man of ordinary prudence would do, enhanced where the directorial appointment is based on special skill by an objective standard of skill referable to the circumstances." 34 In summary, the non-executive directors submitted that their circumstances included that, as non-executive directors, they were entitled to rely on competent management and advisers and other directors unless there was cause for suspicion or further enquiry. They cited Daniels v Anderson (1995) 37 NSWLR 438 at 502-3; Australian Securities and Investments Commission v Adler [2002] NSWSC 171; (2002) 168 FLR 253 at [372]; Vines v Australian Securities and Investments Commission at [109]-[110], [730]-[731], [743] and [863]-[866]; and Australian Securities and Investments Commission v Rich [2009] NSWSC 1229; (2009) 236 FLR 1; (2009) 75 ACSR 1 at [7213]. 35 Also in summary, ASIC responded that whatever the reliance on others, there was a "core, irreducible requirement of diligence" (Deputy Commissioner of Taxation v Clark (2005) 45 ACSR 332 at [109]), and that the circumstances of the non-executive directors included that they brought to the discharge of their duties the extensive individual skills and qualifications described by the judge at LJ [304]-[311]. It said that even as non-executive directors, in the circumstances due care and diligence was not exercised. 36 The non-executive directors and ASIC both proffered many other matters said to be material to the application of the statutory duty. We will return to the positions of the non-executive directors when we come to breach of s 180(1). 2.2 Civil penalty proceedings 37 Section 1317E of the Act relevantly provides - "1317E(1) If a Court is satisfied that a person has contravened 1 of the following provisions, it must make a declaration of contravention: (a) subsections 180(1) … (2) A declaration of contravention must specify the following: (a) the Court that made the declaration; (b) the civil penalty provision that was contravened; (c) the person who contravened the provision; (d) the conduct that constituted the contravention; (e) if the contravention is of a corporation/scheme civil penalty provision - the corporation or registered scheme to which the conduct related." 38 The definitions in s 9 of the Act include that "civil penalty provision" has the meaning given in subsection 1317E(1)". By the definitions of s 1317DA, "corporation/scheme civil penalty provision" includes s 180(1). 39 A declaration of contravention is the foundation for ordering payment of a pecuniary penalty. Section 1317G relevantly provides - "1317G (1) A Court may order a person to pay the Commonwealth a pecuniary penalty of up to $200,000 if: (a) a declaration of contravention by the person has been made under section 1317E; and (aa) the contravention is of a corporation/scheme civil penalty provision; and (b) the contravention: (i) materially prejudices the interests of the corporation or scheme, or its members; or (ii) materially prejudices the corporation's ability to pay its creditors; or (iii) is serious." … "(2) The penalty is a civil debt payable to ASIC on the Commonwealth's behalf. ASIC or the Commonwealth may enforce the order as if it were an order made in civil proceedings against the person to recover a debt due by the person. The debt arising from the order is taken to be a judgment debt." 40 Section 1317L provides - "1317L The Court must apply the rules of evidence and procedures for civil matters when hearing proceedings for: (a) a declaration of contravention; or (b) a pecuniary penalty order." 41 The nature of civil penalty proceedings, including whether they attract to ASIC a duty akin to that of a prosecutor in criminal proceedings or an obligation of fairness in relation to calling evidence, is considered later in these reasons: see [626]-[777] below. 42 A declaration of contravention is also the foundation for a disqualification order under s 206C of the Act, but it is not necessary for a disqualification order under s 206E. Section 206E is available if a person has at least twice contravened the Act: they need not be contraventions of a civil penalty provision. 43 Section 206C provides - "206C(1) On application by ASIC, the Court may disqualify a person from managing corporations for a period that the Court considers appropriate if: (a) a declaration is made under section 1317E (civil penalty provision) that the person has contravened a corporation/scheme civil penalty provision; and (b) the Court is satisfied that the disqualification is justified. (2) In determining whether the disqualification is justified, the Court may have regard to: (a) the person's conduct in relation to the management, business or property of any corporation; and (b) any other matters that the Court considers appropriate." 44 Section 206E relevantly provides - "206E(1) On application by ASIC, the court may disqualify a person from managing corporations for the period that the Court considers appropriate if: (a) the person: … (ii) has at least twice contravened this Act while they were an officer of a body corporate … (b) the Court is satisfied that the disqualification is justified. (2) In determining whether the disqualification is justified, the Court may have regard to: (a) the person's conduct in relation to the management, business or property of any corporation; and (b) any other matters that the Court considers appropriate." 2.3 Relief from liability 45 A power to relieve from liability is conferred by ss 1317S and 1318 of the Act. For s 1318, the contravention need not be of a civil penalty provision. 46 Section 1317S relevantly provides - "1317S(2) If: (a) eligible proceedings are brought against a person; and (b) in the proceedings it appears to the court that the person has, or may have, contravened a civil penalty provision but that: (i) the person has acted honestly; and (ii) having regard to all the circumstances of the case (including where applicable, those connected with the person's appointment as an officer, or employment as an employee, of a corporation … ), the person ought fairly to be excused for the contravention; the court may relieve the person either wholly or partly from a liability to which the person would otherwise be subject, or that might otherwise be imposed on the person, because of the contravention. … (7) Nothing in this section limits or is limited by, section 1318." 47 In s 1317S "eligible proceedings" means proceedings for a contravention of a civil penalty provision. 48 Section 1318 relevantly provides - "1318(1) If, in any civil proceeding against a person to whom this section applies for negligence, default, breach of trust or breach of duty in a capacity as such a person, it appears to the court before which the proceedings are taken that the person is or may be liable in respect of the negligence, default or breach but that the person has acted honestly and that, having regard to all the circumstances of the case, including those connected with the person's appointment, the person ought fairly to be excused for the negligence, default or breach, the court may relieve the person either wholly or partly from liability on such terms as the court thinks fit. … (4) This section applies to a person who is: (a) an officer or employee of a corporation … ". 3. LEADING UP TO THE FEBRUARY MEETING 49 The draft announcement on which ASIC relied took the form of a press release. We set out its sequential versions later in these reasons. The dispute over whether at the February meeting the draft announcement was approved for sending to the ASX extended to whether a particular draft announcement, or any draft announcement at all, was at the meeting. 50 The judge found that the particular announcement was at the meeting, and that it was approved for sending to the ASX. The appellants challenged these findings. Much of the parties' submissions was directed to the challenge and its refutation. 51 A fairly detailed understanding of the events leading up to the February meeting is necessary, particularly the attention given to establishing the Foundation and its funding. 3.1 Separation of asbestos liability 52 After 1987 no company in the James Hardie group was involved in the manufacture or sale of asbestos products. Coy and Jsekarb, as the primary recipients of asbestos claims, were something of a millstone hanging around the group's neck. There was also concern that, by court decision or government intervention, liability for or responsibility to meet asbestos claims might fall upon JHIL itself. 53 In mid 1998 the board of JHIL acted upon a proposal formulated by management, known as Project Chelsea, one of the objects of which was a partial separation within the James Hardie group of the companies primarily liable for asbestos claims. Other objects were relocation of the group's base from Australia to the United States and listing on the New York Stock Exchange, with a view to fostering the growth of the group's businesses in that country. 54 Pursuant to Project Chelsea, James Hardie NV ("JHNV") was incorporated in the Netherlands and became a subsidiary of JHIL. JHNV acquired the operating companies from JHIL. It did not acquire Coy or Jsekarb; they remained subsidiaries of JHIL. Senior management was relocated to the United States. However, the listing of JHNV and an offering of 15 per cent of its shares to the public were abandoned, due to unfavourable market conditions. Project Chelsea was not fully implemented. 55 In December 1999 Mr Morley circulated a paper entitled "Potential Separation Structure Outline", containing a proposal which became known as Project Green. It involved the creation of a new ultimate holding company of the operating companies. The company would be incorporated in the Netherlands. JHIL shareholders would become shareholders in the new company. JHIL would remain within the group as the holding company of Coy and Jsekarb. Although the objects were not solely separation, but also financial restructuring and business growth, the significance of separation is indicated by the observation in the paper that there was an increased takeover risk with "the asbestos litigation poison pill clearly separated from operating assets". 56 A working party was established to consider the proposal. Project Green evolved, and variants within it were the subject of board papers and presentations at board meetings throughout 2000. Three main alternatives of "business as usual", restructuring without separation, and restructuring with separation were canvassed. 57 The board papers and presentations spoke extensively of the adverse impact of the exposure to asbestos claims. For example, an April 2000 board paper included in the executive summary that, in an effort to capitalise on its global market potential and at the same time improve James Hardie's investment profile, management was recommending a number of matters including "[c]omplete preparation for the corporate restructuring to create a new list vehicle and separate the asbestos liability"; and, as part of the section "Background and Need for Action" - "The company's asbestos liability has a range of consequences. - It prevents James Hardie from using its scrip as currency for acquisitions, mergers etc as potential targets and partners are not prepared to assume exposure to asbestos liability. - It prevents the company's operating assets from being fully valued by the equity markets. Just as targets and partners will not hold James Hardie shares, neither will some equity investors. - A change in Australian GAAP for liabilities is expected to become effective around July 2001 and may result in James Hardie having to disclose the full expected future liability of all asbestos related claims. This liability may be more than the market is currently estimating." 58 The last of these matters should be further explained. Under Australian Generally Accepted Accounting Principles ("GAAP"), JHIL was not required to include in its balance sheet a provision for future asbestos claims. Under United States GAAP it would be obliged to do so. There were proposals to move in Australia to United States GAAP. It was considered that the increased disclosure would have a significant effect on JHIL's balance sheet. 59 The board papers and presentations showed a keen awareness that the success of a separation proposal depended upon the reaction of "stakeholders". Stakeholders went beyond shareholders. Compensation of asbestos claimants had become a matter of public interest. In the board papers the stakeholders included asbestos victims groups, unions, plaintiffs' law firms, the Government, the courts, and the media. The media was seen as important in moulding reaction to what was done to remove asbestos liability from the group. And important to the reaction of what an April 2000 board paper described as "a raft of potentially hostile and emotional stakeholders" was the sufficiency of available funding, upon separation, to meet asbestos claims against Coy and Jsekarb. 60 The judge referred at LJ [396] to "a continuous flow of communications strategies papers in the board packs that highlighted the importance of market and stakeholder perception". He said at LJ [397], speaking of what Mr Shafron knew or ought to have known - " … that there was significant public and market interest, especially from asbestos sufferers and those who represented them, in any communications concerning the adequacy of funding made available for Asbestos Claims. The material advised that a successful communications strategy was essential to the achievement of any separation and central to that was the need to convince stakeholders that there were sufficient assets available to meet Asbestos Claims." 61 The April 2000 board papers, for example, included statements – that it was necessary that there be a strong probability that the transactions to establish the new structure could be completed "without disruption by spoilers or legal/regulatory difficulties"; that it was important to communicate to the public that the amount of assets available to the asbestos liability companies after separation was sufficient to meet all claims, and that "a lower figure would be difficult to defend in the wider community, and politically, and could leave directors exposed to future suits and prompt legislative intervention … "; that there was a "political/legislative perspective … relevant to risk in achieving the separation", and that a comprehensive communications plan would be prepared "with appropriate assurances likely to prove satisfactory to stakeholders"; that the "real issue" was whether "we convince a raft of potentially hostile and emotional stakeholders of the merits and integrity of our case, such that they will not act in a way which prevents us from separating the asbestos liability"; that "being in a position to manage stakeholder reactions is critical to the success of the project"; and that there should be a "comprehensive communication plan". 62 Management's recommendation at this time was that funding on the basis of an actuarial estimate of asbestos liability plus "a buffer" gave the best chance of separation success. The buffer could be cash, insurance or shares in the new company. 63 However, management expressed concerns. Their intensity appears from a Project Green presentation part of the August 2000 board papers. Under the heading "Stakeholders – What we have learned" it was said - " ˙ Major points of 'credible' attack could include: - separation amount will be insufficient - basis of calculating amount is unreliable/incorrect - restructuring is a means of escaping obligation ˙ There are numerous, hostile stakeholders ˙ Stakeholders are well informed, well organised, well funded and likely to act in concert ˙ Stakeholders can 'spoil' Green ˙ Risk of intervention aimed at spoiling is 'high' ˙ The overall environment is unpredictable - The number and cost of claims has increased - New areas of claims are being advanced … ˙ Stakeholder interest in asbestos is intensifying - Law firms have renewed aggressive touting - Media coverage is increasing - Wharf cases have emerged as a large source of claims - Unions have called for Govt to fund more medical research ˙ James Hardie is still regarded with suspicion and animosity ˙ The draft actuarial report currently has limited use as a tool for defending our position - heavily qualified findings - numerous disclaimers would be attacked - review conducted within limited scope - actuaries have favoured 'low side' numbers - spoilers could use report to argue higher numbers - this and previous reports could be discoverable". 64 The presentation included - "Our preliminary case is currently inadequate - we cannot argue strongly that the funds left behind will be sufficient under every conceivable scenario - we have not established a credible rationale for separation - we do not yet have sufficient evidence to support our position - our fallback position is weak we are left holding a large target for claimants we 'permanently' disable our investment case - a strong legal position may not be decisive". 65 We explain the reference to "a strong legal position". An issue in James Hardie & Co Pty Ltd v Putt (1998) 43 NSWLR 554 was whether JHIL as holding company owed a duty of care to employees of a New Zealand subsidiary. It was held that, absent evidence that the subsidiary's separate legal identity was a "mere façade" (at 584), it did not. JHIL's solicitors Allen Allen & Hemsley ("Allens") advised that, on this position, JHIL was not subject to the asbestos liabilities of its subsidiaries. 66 Nonetheless, as the reference in the presentation indicates and as we have already noted, there remained concern that, by court decision or government intervention, liability for or responsibility to meet asbestos claims might fall upon JHIL itself. James Hardie & Co Pty Ltd v Putt was not necessarily the last word, and in CSR Ltd v Wren (1997) 44 NSWLR 463 it had been held that direction, control or involvement by CSR in its subsidiary's operations and common management staff gave rise to a duty of care owed by it to an employee of the subsidiary. The public interest in compensation of asbestos claimants could bring government action. 67 In the August board papers management proposed to do further work in order to recommend "whether we could neutralise stakeholder opposition". Management was asked by the board to "continue its work" and report again at the November meeting. 68 In the result, at the November meeting separation was not favoured by management. The Project Green presentation in the board papers recommended restructuring, but without separation. In brief, funding difficulties and adverse stakeholder reactions were foreseen. Of the alternative "Restructure and separate", it was said - " ˙ likely cost of total insurance solution expensive ˙ cannot be funded today ˙ alternative is to fund with cash and other assets and no insurance takeout ˙ stakeholder reaction concerns". 69 But separation remained in consideration. The presentation noted, amongst the disadvantages of the favoured restructure without separation - "Does not address asbestos issues - management directions continue - maintains asbestos related discount in the market - interest of US investors expected to be limited - scrip still of limited acceptability for participating in industry consolidation". 70 According to the minutes of the November meeting, management was asked "to continue developing the concept for further discussion at the next meeting". 3.2 The net assets model 71 In the development of the concept, separation returned to favour and became prominent. 72 On 13 December 2000 Mr Macdonald sent a Project Green update memorandum to members of JHIL's board. He foreshadowed that management would seek board approval in January 2001 to establish a trust over the shares in Coy, thereby deconsolidating it from the James Hardie group. The memorandum referred to an Australian accounting exposure draft, ED88, by which the accounting standards might be amended so that JHIL had to account, under United States GAAP, for an undiscounted estimate of the total long term asbestos cash flows to which it might be subject. It was explained that, because of the trust, Coy would no longer be controlled by JHIL and neither it nor any new Netherlands holding company would have to report the asbestos liabilities. The memorandum included that "press releases would explain the creation of the trust as providing certainty for creditors and potential claimants that the assets of Coy were irrevocably secured for their benefit". 73 This was more a new concept than a development of the concept presented at the November board meeting. It was essentially concerned with separation alone, not as an element in the restructuring to which Project Green was addressed. From the "Proposed Trust Structure Update" paper next mentioned, it seems that the impetus for the attention to separation through a trust structure was the expectation that United States GAAP would be adopted, and would bring an undesirable impact of the subsidiaries' asbestos liabilities on JHIL's balance sheet and other consequential difficulties. Separation was accelerated, although the wider restructuring remained under consideration, and in fact was undertaken in late 2001 (see our reasons in the resolved JHINV appeal, (James Hardie Industries NV v Australian Securities and Investment Commission [2010] NSWCA 332). 74 The board papers for the meeting held on 17 January 2001 included a paper entitled "Proposed Trust Structure Update". It recommended that a company be incorporated to act as trustee of a trust, to which JHIL would give its shares in Coy and Jsekarb and $2 million for research. The assets of Coy and Jsekarb would be dedicated to meeting existing and future asbestos claims. At the trial this was called the net assets model. 75 The paper described the objectives and rationale for establishing the trust. The announcement of the trust would "clarify the liability of James Hardie relating to asbestos liabilities to the market", and significantly mitigate if not remove "the 'uncertainty discount' relating to the unknown quantum of future liabilities that JHIL may incur". The outsourcing of management of asbestos claims would eliminate management distraction; costs associated with asbestos would no longer affect James Hardie's earnings; and the deconsolidation would remove the potentially significant "distortion", after ED88, of an accounting provision affected by changes in estimates of future claims or changes in interest rates. The "negative implications associated with James Hardie's exposure to asbestos liabilities" would be removed, and the prospects of future corporate activity would be enhanced. It was said - "The Trust concept would ensure that approximately $214m in cash, receivables and assets, plus earnings from those assets, are earmarked solely for creditors of JH & Coy and Jsekarb, including the funding of future asbestos related claims. Ultimately any surplus funds would be available for the charitable purposes of the Trust, being asbestos and lung disease research. In addition to the shares in JH & Coy and Jsekarb, JHIL also could also provide a grant of approximately $2 million directly to the Trust to enable it to support current and ongoing research into asbestos related and other lung disease from the time of its establishment." 76 The paper described the available alternatives as doing nothing; resolving and announcing that JHIL would not in the future support Coy and Jsekarb; or establishing the trust. 77 The prospect of change in the Australian accounting standards was prominent in rejecting the alternative of doing nothing. It was said in the paper that adoption of ED88 was likely to occur prior to March 2003, whereupon JHIL would be required "to book a potentially significant provision against asbestos contingencies, discounted to net present values" and would have to make significant disclosure concerning the nature and extent of potential asbestos liabilities. It was said - "We have confirmed that CSR intends to materially increase its asbestos provisioning – to circa $180 million. JHIL is likely to come under pressure to state its position on asbestos liabilities when CSR clarifies its position with publication of its year ended 31 March 2001 accounts in May 2001. If ED88 is released as a standard, and should CSR early adopt ED88 prior to its year ending 31 March 2003, then there may also be significant pressure on JHIL to early adopt ED 88 as well. The disclosure of this expected future liability, with no apparent final resolution of the exposure would be expected to be negatively received by the market due to: the range of the estimate may be materially higher than the current implied estimates of the research analysts (circa $150 m); … changes in the quantum of the future expected claims requiring provisioning; and the continuing uncertainty surrounding the ultimate cost to the JHIL Group." 78 The alternative of declaring no future support was rejected in part because it might not negate ED88 requirements, and also because it would expose James Hardie to the "negative market implications" associated with the trust proposal but without the advantages of separation: in more detail - " Board resolution of no future support for JH & Coy and Jsekarb An alternative to doing nothing is the Board making a public declaration that it will not provide any future support for either JH & Coy or Jsekarb. This would allow James Hardie to logically argue that, from the James Hardie Group perspective, the amount of future economic loss is limited to the net assets of JH & Coy and Jsekarb, and to therefore limit the provision established under ED88 in the consolidation accounts to the net assets of those companies, ie an increase of $142 million in the provision. Hence on consolidation the assets of JH & Coy and Jsekarb would be included in the total assets of the James Hardie Group, with total liabilities of the Group including a provision of an amount equal to the net assets of JH & Coy and Jsekarb. This treatment would be the same under US GAAP and IAS. The entity accounts of JH & Coy and Jsekarb would however have to establish a full provision using ED88 logic. The accounts of JH & Coy would therefore be expected to show a significant deficiency of net assets. Given the requirements of AASB1024 "Consolidated Accounts" which requires aggregation of subsidiary company accounts to arrive at the consolidated position, it is possible that limiting the provisioning in the consolidated accounts to the net assets of JH & Coy and Jsekarb may invite inquiry from ASIC as to whether the James Hardie accounts comply with the Corporations Law. In addition to opening up an avenue for possible regulatory inquiry, this strategy would expose James Hardie to many of the negative market implications associated with the Trust proposal, including the potential for government legislative change, whilst securing few of the advantages associated with the separation introduced by the Trust structure." 79 Thus establishing the trust was the favoured alternative. Of the restriction to the net assets of Coy and Jsekarb, plus the $2 million, the paper said - " QUANTUM OF FUNDS AVAILABLE TO ASBESTOS CLAIMANTS Under current Australian law, the maximum quantum of funds available to Australian asbestos claimants is the existing net assets of JH & Coy and Jsekarb, the two legal entitles which have been found legally liable to compensate asbestos victims. Apart from minimal exposure in JHIL to pre 1937 manufacturing of asbestos containing products and some minor NZ exposure described above, there are no other James Hardie companies with asbestos exposure. There is no sound rationale for increasing the net assets of JH & Coy and Jsekarb and thereby expanding this quantum of funds available to claimants: there is no legal requirement to do so; contributing more funds may suggest that JHIL has some obligation or intends to fund claims in excess of the net assets of JH & Coy and Jsekarb; in view of the first two points above, there is no current basis under which directors could resolve to contribute further funds without appearing to fail to act in the interests of JHIL shareholders; and there is no reliable basis for determining what amount any such future contribution should be if attempting to fund all future claims. Previous indicative advice obtained as to the potential quantum of future claims has been quite variable and unreliable." 80 A section of the paper considered risks, principally "stakeholder issues and possible stakeholder legal responses". One risk was that because of the restriction to net assets, creation of the trust would "carry with it the message that JHIL would not support JH & Coy and Jsekarb in the event that funds prove to be insufficient (see 'Communications Strategy' below)". There was little risk of legal challenge, but the possibility of "legislative attack". This possibility was seen as unlikely. 81 As anticipated in this section of the paper, another section headed "Communications Strategy" dealt with that subject. It was accompanied by a draft news release and draft questions and answers. The draft news release can be seen as the beginnings of the draft news release in issue in these proceedings and the eventual announcement to the ASX on 16 February 2001. 82 Mr Gregory Baxter held the title of Senior Vice President, Corporate Affairs within JHIL. He was responsible for investor, media and government relations. Mr Stephen Ashe was a member of his corporate affairs team. Both were involved in Project Green. 83 Mr Baxter had often been asked to report on or make presentations to the board on aspects of market or stakeholder issues. He had made a presentation at the April 2000 board meeting. He was responsible for the presentation concerning stakeholder issues at the August 2000 board meeting, and although he did not recall it he accepted that he had prepared and made a presentation on "key selling messages" and "communications strategy" at the November 2000 board meeting. He had been made aware of Mr Macdonald's memorandum of 13 December 2000. He prepared the communications strategy section of the "Proposed Trust Structure Update" paper, and the draft news release and the draft questions and answers. 84 In the communications strategy it was recommended that an announcement in the form of the draft news release should be made at the same time as the announcement of the group's third quarter results on 16 February 2001 and related management presentations to analysts and business media. The timing was to help position the creation of the trust as a business story, and to obtain recognition in the financial markets "that the establishment of the Trust means that JHIL no longer has any significant liability for asbestos" and recognition of the announcement of the trust "as providing special funds for compensation and medical research for the sole benefit of victims of asbestos diseases". Detailed proposals were outlined for "management" of key stakeholders, for example, by direct contact with government officers, parliamentarians, union officers and others. 85 For present purposes, the particular relevance of the draft news release and the draft questions and answers is for what they conveyed, or did not convey, about full funding. 86 We set out the draft news release in full. It was in the terms - " LEGALLY PRIVILEGED AND CONFIDENTIAL – FOR LEGAL ADVICE ONLY DRAFT NEWS RELEASE James Hardie Industries Limited (JHIL) announced today that it has established an independent trust to compensate victims of asbestos related diseases and fund medical research aimed at finding cures for these diseases. The new trust, the Medical Research and Compensation Trust (MRCT) has earmarked $2 million for scientific and medical research programs, which, it is hoped, will attract additional support from government and industry, unions and plaintiff law firms. MRCT will also manage all future litigation arising from the past manufacturing of asbestos-containing products by former subsidiaries of JHIL. It is estimated that JHIL's subsidiaries have accounted for approximately [25] per cent of all compensation settlements related to asbestos illnesses in Australia. Various other organisations, such as companies involved in asbestos mining and manufacturing and organisations including government departments which used asbestos have been responsible for the remaining 75 per cent. James Hardie Industries Limited Chairman, Mr Alan McGregor, said MRCT would be a completely independent organisation with significant assets which would be available solely for the purposes of compensating victims of asbestos related diseases. 'MRCT has been established as a company limited by guarantee under the terms of a trust deed. An independent board of trustee directors will govern the trust.' Mr McGregor said. 'The creation of MRCT sets aside guaranteed, unencumbered funding for compensation and future medical research into asbestos related diseases with a Board of trustees and management team 100 per cent committed to this role.' 'The inclusion of a special $2 million grant for medical research will enable the trust to continue work on existing programs established by James Hardie as well as launch new programs to further recent ground-breaking achievements that offer the best opportunity for many years of finding an effective treatment for diseases such as mesothelioma.' Mr McGregor said MRCT would be chaired by Sir Llewellyn Edwards, who has resigned as director of James Hardie Industries Limited to take up his new appointment. Sir Llewellyn has enjoyed a long and distinguished career in medicine, politics and business. He is a director of a number of organisations including Westpac Banking Corporation and is also Chancellor of the University of Queensland. The other trustee directors include [name and brief bio details] and [name and brief bio details]. 'The new trust will control assets of about A$216 million which include portfolios of commonly traded shares, a substantial cash reserve, properties which earn rent and insurance policies which cover certain types of claims.' 'Recognised fund managers have been appointed by the trust to manage its share portfolios and invest its cash reserves in order to generate capital growth and investment income.' Mr McGregor said it was expected that the annual investment income of MRCT would be used to meet compensation claims and the trust's expenses. In the event that these costs in any one year exceeded the investment income, MRCT would draw on its significant capital. When future claims have been concluded, MRCT will convert any remaining assets to cash and these surplus funds will be donated to a reputable medical and or scientific research organisation involved in work on lung diseases." 87 Other than by assumption in the last paragraph, nothing was said in the draft news release to the effect that the net assets would be sufficient to meet all present and future asbestos claims. 88 It was said in the communications strategy that the draft questions and answers were intended to deal with "the specific financial implications for JHIL arising from the creation of the trust". A number of the questions and answers touched on or were directed to the adequacy of the trust's funding to meet future asbestos claims. 89 It is not necessary to detail the questions and answers. The answers included that James Hardie did not know what the ultimate cost of asbestos claims would be; that it was not possible reliably to measure how many claims there would be or what the total cost would be and there was no sound basis for estimates "sometimes thrown around by plaintiff lawyers to attract attention"; that the directors believed that the assets would be sufficient to fund claims "for many, many years into the future, and possibly all claims"; that while the availability of the trust's assets was guaranteed, the extent to which the assets and income would be sufficient would depend on many factors "including the number of claims, the cost of those claims, the rate of return received from the trust's investments etc"; and that whether additional assets would be vested in the trust if it ran out of funds would be addressed if and when the question arose. 90 Neither the draft news release nor the draft questions and answers conveyed full funding. Quite the opposite, at least in the draft questions and answers. That is not unexpected, when the funds were restricted to the net assets of Coy and Jsekarb. The drafts did convey certainty of funding, in the sense that availability of the net assets to meet asbestos claims was assured. 3.3 Rejection of the net assets model 91 The proposed trust was discussed at the board meeting on 17 January 2001. Mr Baxter gave a presentation on the communications strategy. The judge said succinctly, at LJ [89], "The board rejected the net assets model … and management was sent away to do more work on the separation proposal to ensure sufficient funds were available to meet all present and future asbestos claims." 92 The judge made few detailed findings. At LJ [144] he referred to evidence of Mr Brown that, from the meeting, he expected that if management was going to put up a proposal again it would be fully funded, and that that was the message they would be conveying to the market. (We refer later to what Mr Brown said he meant by full funding, see [392] below.) The judge said at LJ [179], apparently accepting the evidence - "179 Mr Willcox had been concerned that the Net Assets Model considered at the board meeting on 17 January 2001 was unacceptable. He agreed that likely negative reaction to the announcement of that decision would be triggered by what he anticipated would need to be said about the sufficiency of funding. He agreed that part of his duty in making a decision as to whether or not to approve the setting up of the Foundation was to assess the likely reaction of the community to the announcement. He said he spoke at length about why the Net Assets Model was completely unacceptable. It would violate community expectations and would damage James Hardie's reputation. He agreed that he had said words to the effect that if they made a decision in which they did not provide sufficient funds to cover all of the expected future debts then there would be a negative reaction to it when it was announced." 93 Some further reference to the evidence, albeit in summary, is appropriate. 94 According to Mr Baxter, Mr Willcox spoke "passionately, articulately and eloquently" to the effect that the net assets model "doesn't work"; Mr Brown and Ms Hellicar also said that it did not work; but Mr Terry said that it was not for the company to consider moral issues and the shareholders had rights. 95 Mr Morley made notes at the meeting. They included someone saying that it was a good thing to separate and remove asbestos, and that ED88 was a big issue; that Mr Brown said that there were moral issues; that Mr Willcox said "PR questions are important" and that there was potential for government legislation and "JHIL cannot say all debts are covered"; and that Ms Hellicar asked how much is enough and said "JHIL will look guilty". 96 Mr Morley elaborated on the meeting and his notes in an affidavit, the principal matters being - Mr Peter Cameron, a partner of Allens, gave advice that, on the position established in James Hardie & Co Pty Ltd v Putt the corporate veil would generally protect JHIL itself from asbestos claims, but said that if separation went ahead, there was "a likely escalation of claims and a chance that JHIL will be held liable"; Mr Cameron (who should not be confused with Mr Donald Cameron, the other joint secretary of JHIL) or Mr Shafron said that, in accordance with their duties to the company and shareholders, the directors had to have a basis for giving the subsidiaries' assets away, and they were constrained in putting more funds into the trust because there was no legal basis for doing so and no reliable basis for determining the amount; Mr Brown identified as his moral issue, "Are we prepared to use the corporate veil argument?"; Ms Hellicar said, apropos of how much is enough, "Enough to pay all claims would be OK but if the amount is less than the Trowbridge estimates then what can we do about that? JHIL would look guilty", and later said, "We have to stop funding beyond net assets somewhere with an actuarial report"; Mr Terry regarded the moral issue as one of plaintiffs' solicitors "making no fault claims against James Hardie", and Mr Gillfillan or Mr Koffel said that the moral issue "has been resolved by the plaintiffs' bar". 97 There were various positions at the meeting. Mr Brown's moral issue was concern over reliance on the corporate veil; implicitly, he thought that JHIL had a moral responsibility towards asbestos claimants and should not leave them to the net assets of Coy and Jsekarb if the net assets were insufficient. Mr Terry appears not to have shared that concern, and to have supported the net assets model. Messrs Gillfillan and Koffel do not appear to have shared the concern. Ms Hellicar appears to have contemplated funding beyond net assets, up to an actuarial estimate. As we later describe, Trowbridge had periodically provided estimates of the asbestos liability. The estimate in a draft report of 16 June 2000 was $294 million, significantly qualified as to uncertainty and sensitivity. This was considerably more than the $214 million in net assets. 98 According to Mr Morley, at the conclusion of the discussion the chairman, Mr McGregor observed that there were "huge conflicts in people's minds". Updated estimates by Trowbridge were expected. Mr McGregor said, "The concept has some merit. The question of funding requires some more work. Management should continue to develop the concept and report progress in relation to funding at the February meeting". 99 Although the judge made limited findings, we consider that we can accept the thrust of this evidence. Plainly, the adequacy of the funding of the proposed trust was a significant, and rather contentious, matter amongst the directors. In part this was as a moral issue, but it was also because the net assets model would not be well received by stakeholders. Mr Willcox said in his evidence that he did not recall referring to PR questions, and that his view had been that if the decision was right it would communicate itself and he was not concerned with communications strategy. But it is clear enough that the reaction of stakeholders was in the directors' minds. A subsequent draft communications strategy, prepared in early February 2001, included that "[a]t the January Board meeting, Directors raised concerns about whether the communications strategy presented at that time would be able to neutralise potential stakeholder opposition effectively". 3.4 The proposal for the February meeting 100 Management's development of the trust proposal involved additional funding of the trust by JHIL, in return for indemnities and other matters, under what became the DOCI. The DOCI was seen as consideration for putting more funds into the trust, bringing consistency with the directors' duties to JHIL and shareholders. The development was speedy, in line with the earlier recommendation to announce the establishment of a trust on 16 February 2001. 101 In a draft paper "conveying legal and structural issues for the February Board paper" attached to an e-mail on 4 or 5 February 2001, Mr Shafron wrote - "There has been one major structural change since the January Board discussion. In return for a substantial capital injection ($57M), JHIL will now obtain a waiver and indemnity from Coy and Jsekarb. These elements address in large part concerns about JHIL vulnerability post separation. [Coy will also commit to acquire the JHIL shares should JHIL become a non operating subsidiary at some time in the future; query whether this can be structured as a non disclosable commitment in relation to JHIL shares – Allens to advise]." 102 In the draft paper the $57 million was $50 million from Coy and $7 million from Jsekarb. The amounts were later increased. 103 Board papers for the February meeting were sent to the directors shortly before 15 February 2001. They included a "Project Green Board Paper" dated 5 February 2001, over the name of Mr Macdonald. 104 The paper recommended the immediate establishment of what became the Foundation, and said that delay significantly increased "the risk of ED88 complications". It recommended that the board "agree to the creation of the Foundation at its Thursday 15 February meeting for announcement, together with JHIL's Q3 results, on Friday 16 February". This was the same timing as had been recommended in the January board paper. 105 There were two attachments to the Project Green Board Paper. One, headed "Separation Issues", went into detail on the establishment of the Foundation. The other, headed "Communication Strategy", dealt with that subject. 106 In the first attachment, the proposal for establishing the Foundation now included payments by JHIL to Coy and Jsekarb of $100 million over time, net present value $70 million. In return, JHIL would receive indemnities and other matters as eventuated in the DOCI. It was said that this "effects a separation of JH & Coy and Jsekarb from the remainder of the JHIL Group". 107 There was considerable further detail. Adequacy of funding once the $100m was to be added to the Foundation's funds was not specifically addressed. At one point there was reference to injection of additional capital funds committed to medical research, no change to JHIL capital structure and "the entrenchment of Coy assets for the benefit of future claimants", with the comment that as a result there was "no valid basis for attack on directors from claimants". At another point it was said, "The main risks to the creation of the Foundation are political and legislative", with reference to the communication strategy. 108 The second attachment, the communication strategy, was lengthy, some 35 pages and rather rambling. Mr Baxter said that he wrote, edited or reviewed most of the pages after he had prepared a draft in early February 2001 "with input from the senior management team of James Hardie and external advisers such as …". His evidence was no more precise. The advisers named included Allens, and also Gavin Anderson & Co ("Anderson") and UBS Warburg Australia Equities Ltd ("UBS"), to whose roles in relation to media announcements and otherwise we will later refer (see at [180]-[185] below), but the input or other attention from these advisers was not made clear by Mr Baxter. 109 At the beginning of the attachment the belief was expressed that the strategy "will deal effectively with the numerous risks involved in executing the separation proposal and that therefore the separation proposal can be implemented as recommended". Reasons were given, including that the "major stakeholder risks" had been identified and a comprehensive plan had been developed to neutralise them. 110 After an outline of contents of the document, it was said - "Our central communications conundrum is that we will not be able to provide key external stakeholders with any certainty that the funds set aside to compensate victims of asbestos diseases will be sufficient to meet all future claims. We have analysed how key external stakeholders are likely to react to this uncertainty. From this point, we have developed our strategy. In short, we believe opposition from stakeholders could be significant and that their major questions will be: Will the funds set aside be sufficient to meet all future claims? What will JHIL do if those funds are insufficient? What will be the fate of victims if the funds are insufficient?" 111 Over many pages there were described key working assumptions; anticipated risks, principally in the reactions of shareholders, the media, the government and other stakeholders; and a general approach and "specific communication strategies and tactics which are targeted at specific stakeholder groups". The timing of announcing the Foundation with the Q3 results, to present it as a business story and "focus attention on the financial outcomes", was elaborated. 112 There was frequent recognition that there would be concern or claims that the Foundation would not have sufficient funds to compensate all asbestos claimants. The general approach was to "position separation as a win:win for shareholders and creditors", with the message that the value of the assets vested in the Foundation far exceeded that which the James Hardie directors were obliged to provide. It was said - "We will try to turn the question of uncertainty to our advantage. For shareholders and creditors, separation means there will be greater certainty than has ever before [sic]. For example, we can argue that it is uncertain that JH will exist in 5, 10 or 20 years but that separation provides much greater certainty that funds will be available to compensate victims past these time periods than if JH was merged into another company." 113 "Key messages" were stated, with the observation that "the overriding message is that separation represents a win:win for shareholders and creditors". The first message was that James Hardie had "effectively resolved its asbestos liability for the benefit of shareholders and future claimants". Others were that the position of claimants was significantly improved because, amongst other things, there was "much greater certainty that adequate compensation will be available in the future to sufferers of asbestos diseases", and that the position of shareholders was also significantly improved because, amongst other things, JHIL's exposure to asbestos liabilities was effectively terminated. Another was that the Foundation's primary aim "will be to ensure that the highest possible proportion of [its assets] and the substantial income they will generate, is used to compensate asbestos diseases sufferers until all claims have been met". There was no more specific message concerning adequacy of funding. 114 There was a reference in these pages to a "general news release from JH about the Foundation for … general news audiences", and a reference to incorporating information supporting that "asbestos is not simply a JH problem" into "key messages, Q & A and other documents such as the announcements". However, a draft news release was not part of or a companion to the attachment. 115 There were draft questions and answers. They were a little more positive, on the subject of adequacy of funding to meet all asbestos claims, than those which had accompanied the board paper for the January meeting. They still fell far short of full funding. 116 The answer to the first question, which asked how James Hardie could be confident that the Foundation had sufficient assets to meet all future claims, was - "While it is not possible to reliably measure what the total number or cost of claims will be, we have used our 20 year experience of asbestos compensation and a range of independent projections to form the view that there is a very real prospect that all claims can be met. Under certain scenarios, it is possible to project that there will actually be a surplus once all claims are met. This surplus would not be returned to JH but used to fund other important research into lung diseases." 117 However, subsequent answers included that there was no certainty in determining what future claims might be, and that actuarial advice was not a reliable basis for assessing the ongoing exposure to claims although it could provide "a reference point which should be considered along with many other factors". In the answer to the question whether JHIL would provide extra funding to the Foundation should the initial funding prove to be insufficient, it was said that it would not be known for very many years whether or not funding was sufficient and it was "impossible to prove today whether any particular level of funding would be more or less than might be required". It was said that the assets vested in the Foundation were not a reflection of what JHIL thought the future costs would be, and - "The ultimate cost of asbestos claims cannot be measured reliably at this time. Neither James Hardie nor anyone else knows the future extent of ACM and BM's liability, nor is there any way to determine this with any certainty. Therefore, James Hardie cannot make a determination as to the adequacy of funding. However, to provide certainty for those injured by exposure to asbestos it is important that the maximum possible amount be made available to pay claims and the amount that is available is the entire net worth of ACM and BM … ". 118 The answer to another question included that neither JHIL nor anyone else knew the future extent of the asbestos liability of Coy and Jsekarb and, while it was hoped that all genuine claims could be met, "[i]t may be that the assets available prove insufficient; it is also possible that there will be a surplus". 119 The notion of certainty in the sense of assured availability of funds was repeated in answer to another question - "What James Hardie has done, however, is to provide certainty to claimants by putting it beyond anyone's power to deplete the available funds prior to the settlement of all future claims. If JH had not taken the steps that it has in creating the Foundation, the available funds would have been at risk from business failure, takeover, imprudent investing, imprudent dividending, liquidation and the like. The creation of the Foundation is a proactive and a very positive development for claimants and shareholders alike." 120 As will appear, we think the communication strategy as presented to the board in the Project Green Board Paper is of some significance in determining whether the draft news release on which ASIC relied was approved at the February meeting for sending to the ASX. 121 The issue being board approval of the draft news release for sending to the ASX, we observe at this point that the only reference to board resolutions in the Project Green Board Paper (including its attachments) was in the first attachment - " JHIL Board Resolutions JHIL is required to resolve the following matters: 1. establish a trust (on terms outlined below); 2. settle $3 million on the trust for research purposes; 3. agree payments to JH and Coy; 4. allow the allotment of shares in JH and Coy and Jsekarb to the trust for nil consideration and reduce capital in JH and Coy for nil consideration (the transfer mechanism)." 122 It should be accepted, however, that this proposed resolutions only in general terms. The absence of reference to approval of a news release, or an ASX announcement, is not of great moment. 123 The paper was, of course, not the only relevant material before the board. It was supplemented by a powerpoint presentation at the meeting. Prints of slides used in the presentation were available late on 14 February 2001, and were sent to directors. What was before the board through the slides must also be considered. They referred to Trowbridge's estimates and JHIL's cash flow modelling, and first we explain those matters. 3.5 Trowbridge's estimates and JHIL's cash flow modelling 124 For some years the board of JHIL had received regular reports on asbestos litigation and costs, and JHIL had received reports from Trowbridge estimating future asbestos liabilities. The Trowbridge reports were provided through Allens, it seems with the objective of clothing them with client legal privilege; we make no comment on the efficacy of this. It will be recalled that various board papers had recognised uncertainty in actuarial estimates, as had the draft questions and answers. 125 A Trowbridge report in October 1996 estimated net asbestos liability as at 31 March 1996, discounted to present value at 8 per cent, at $230 million. It was said that the estimates of asbestos liabilities were subject to considerable uncertainty, and a trend of increasing mesothelioma cases was noted. A management summary of the report was before JHIL's board at its meeting on 7 November 1996. 126 Notes to JHIL's accounts in the March 1997 and March 1998 annual reports referred to "a contingent liability in respect of the ultimate cost of settlement of any claims yet to be made which cannot be measured reliably at the present point in time". 127 Trowbridge provided a summary of its then draft report for the board's consideration of Project Chelsea in June 1998. The summary included an estimated net liability as at 31 March 1998 of $254 million. It was said that the estimates "are subject to considerable uncertainty and significant deviations from our estimates are to be expected". Reasons for this were given. It was also said, in relation to sensitivity of the estimates, that - "Our results are quite sensitive to any changes in many of the assumptions we have used, including: anticipated future reporting of claims to the company settlement costs, legal and other costs rates of settlement economic factors, including future inflation and discount rates. In each of these cases, plausible scenarios can be developed that would increase or decrease our estimate of Hardie's liability by over 50%. In addition, while we have estimated a wide variety of areas of potential new sources of claim identified by Allens and ourselves, none of them have sufficient likelihood or existing experience to enable us to make a reasonable estimate of the effect they might have on the liability." 128 The Trowbridge report was later provided, dated 10 September 1998. The estimated net liability, using a discount rate of 7 per cent, remained at $254 million. The stated uncertainty and sensitivity also remained. 129 The next Trowbridge report was provided in draft in June 2000. The estimated net liability, using a discount rate of 7 per cent, was $294 million. The same or similar warnings of uncertainty and sensitivity were given. A sensitivity analysis identified assumptions from which future experience might differ and the effect of changes - " Table 9.4 – Results of Sensitivity Analysis Scenario Estimate Change from Base Difference from Base $m $m % Base case 294 1. High Claim Numbers 420 126 43 2. Low Claim Numbers 167 (126) (43) 3. Change in Meso 'peak' 264 (30) (10) 4. High Average Claim Size 337 43 15 5. High Claim Inflation 424 130 44 6. Higher Legal Costs 328 34 12 7. Low Discount Rate 344 51 17 8. High Discount Rate 229 (64) (22) 9. No discounting 559 266 90 It can be seen that there is a large variation in the results under some of the scenarios shown. This degree of variation gives some indication of the limited knowledge and history of asbestos-related claims and the uncertainty that exists in respect of the potential impact of their emergence on Hardies' exposure." 130 Mr Shafron spoke to a number of slides as part of the Project Green presentation at the August 2000 board meeting. One slide set out a comparison of the 1996, 1998 and 2000 Trowbridge estimates. (The 2000 estimate, described as "draft", was $263 million. It is not clear why this figure was used, rather than $294 million.) Graphs projected cessation of asbestos claims in 2025 and cash flow peaking in about 2010 and tailing off to about 2035. Another slide set out, referable to the estimated asbestos liabilities - " Major Assumptions No further substantial deterioration in general liability claim payments Claim payout inflation of 4% compound p.a. JH will be involved in 20% (and no more) of all mesos Discount rate: 7% No additional non Australian claims or new types of liability Legal and associated costs steady." 131 At the end of November 2000 a new factor emerged. Messrs Bruce Watson and Mark Hurst of Trowbridge presented at an actuaries' seminar a study suggesting that insurers and others exposed to asbestos-related diseases might be significantly under-reserved, and that the current approach to reserving was out-dated. The study was posted on Trowbridge's web site. 132 The study came to the notice of Mr Shafron, who told Mr Macdonald and Mr Morley that it "suggested that future claims experience is likely to be worse than first thought". On 2 December 2000 Mr Shafron sent an e-mail to Messrs Macdonald, Morley and Baxter saying that Trowbridge's reports "are now out of date and would seem to require an uptake factor of at least 40%", and that discussion was needed. 133 There was subsequent discussion within JHIL. At a meeting on 19 January 2001, attended by Messrs Morley and Shafron for JHIL, Trowbridge was asked to update the June 2000 draft report to take account of the study. 134 Apparently with a view to confirmation of the request, Mr Shafron sent to Allens a draft of what became a letter dated 30 January 2001 from Allens to Trowbridge. Allens "confirm[ed]" that the June draft report was not a final report. The writer said that, after discussion with JHIL, "for a number of reasons, including unresolved issues relating to the sensitivity analysis, we did not feel comfortable asking you to sign the report". The letter continued - " … it now appears that Trowbridge Consulting has undertaken additional work in relation to the future level of asbestos liability in Australia generally that I understand further puts in doubt the existing work. In light of the foregoing, particularly your most recent work, I would be grateful if you could analyse the future of the James Hardie subsidiaries' prospective asbestos liability in: 10 years time; 15 years time; and 20 years time We and the company would be interested in seeing the prospective liability represented on a total cost basis, and on a net present value basis, discounted at 7%, 8%, and 9%. Please do not take the analysis further than 20 years hence and, at this stage, keep the material brief – preferably in tabular form – and in draft." 135 The response was prompt. Trowbridge provided to Allens, generally copied to Mr Shafron, an evolving series of tables and graphs involving estimates of asbestos liabilities. There were meetings with Mr Shafron on 7 or 8 February 2001. 136 Amongst these materials were spreadsheets provided to Allens on 9 February 2001 in which, going beyond the instructions in the letter of 30 January 2001, Trowbridge projected cash flows on estimated asbestos liabilities for 50 years into the future. Mr Minty of Trowbridge told Mr Shafron that he was concerned with the limitation to 20 years. Mr Shafron told him that the projections should not go beyond 20 years. Notwithstanding this, Mr Minty prepared and sent the 50 year projection because he thought it provided a more accurate picture of the asbestos liabilities and "[t]he 20 years of figures only presented part of the story". This was the Trowbridge 50 Year Estimate to which we referred at [24] above in connection with ASIC's cross-appeals. 137 A final draft report was provided to Allens on 13 February 2001, and was sent to Mr Shafron on 14 February 2001. This was the February 2001 Trowbridge Report to which we also referred at [24] above. It and the Trowbridge 50 Year Estimate gave figures on current, "best estimate" (or medium) and high claim numbers. In the February 2001 Trowbridge Report the estimated net asbestos liability for 20 years ranged from $234 million to $317 million according to the claim numbers and the discount rate, but with warning of "inherent uncertainty". The figures in the Trowbridge 50 Year Estimate were higher, from $264 million to $378 million. 138 Turning to JHIL's cash flow modelling, from at least September 2000 JHIL had undertaken cash flow modelling for Project Green. There were a series of models. They were initially concerned with JHIL's funds after the restructuring considered as Project Green. After the Foundation was proposed, there was modelling of its funding. Estimates of asbestos liabilities were necessarily part of the modelling, and took up Trowbridge's "best estimate" claim numbers. 139 Mr Stephen Harman, a financial controller within JHIL reporting to Mr Morley, carried out the cash flow modelling. It is sufficient to go to February 2001. Between 7 February 2001 and late on 14 February 2001 eight versions of the cash flow model were prepared. Variance in the models related to matters such as the estimates of asbestos liabilities, the rate of return on investments and the amount of the payments to be made by JHIL to the Foundation. The version current as at the time of the February meeting appears to have been that known at the trial as the twelfth cash flow model. 140 The twelfth cash flow model was for a period of 50 years. The assumed asbestos liabilities were taken from the Trowbridge 50 Year Estimate, and its workings included projections taken from the February 2001 Trowbridge Report. The model showed a range of outcomes, including that on Trowbridge's "best estimate" or "most likely" scenario and at an investment earnings rate of 11.7 per cent, together with other assumptions, there would be a surplus of assets over liabilities of $159 million after 20 years and $38.5 million after 51 years. However, amongst the other outcomes - On Trowbridge's "high" scenario at an investment earnings rate of 11.7 per cent, there would be a deficiency of assets over liabilities of $5.4 million after 20 years and $7.4 billion after 51 years; or On the "best estimate" scenario at an investment earnings rate of 10.7 per cent, the funds would be exhausted after between 20 and 25 years. 141 According to Mr Baxter, the cash flow model was shown to the JHIL board on 15 February 2001. As will be seen, when JHIL's modelling was referred to in the slides an earnings rate of 11.7 per cent was specifically stated, and it was said, "Surplus most likely outcome". 142 The model was very sensitive to the earnings rate. Mr Harman said that the 11.7 per cent resulted from a request to him by Mr Morley, on 14 February 2001, to run the model "to ascertain the lowest rate of return that would keep the trust solvent for 50 years, using the Best Estimate from the Trowbridge data". He did so, and ascertained the 11.7 per cent rate. Mr Morley's evidence was to the same effect, that he asked Mr Harman to run the model "to calculate what earnings rate leave the fund in surplus after 50 years, which is when the asbestos claims are predicted by Trowbridge to end". 143 As will be seen, at [173] below, one of the slides in the Project Green presentation at the February meeting said of JHIL's modelling, "Analysis reviewed by PwC and Access Economics". It is convenient at this point to describe how the reviews by PwC and Access Economics came about and what they were. It will be recalled that failure to advise the board of the limited nature of the reviews was found as contraventions by Mr Shafron and Mr Morley. 144 On 7 February 2001 Messrs Baxter and Ashe met Mr Stephen Loosley and Mr David Pigott of PwC. Mr Loosley led the "strategic advice and public policy group" within PwC, which provided strategic advice with particular regard to dealings with state and federal governments. Mr Pigott was a member of the group. The purpose of Messrs Baxter and Ashe was to obtain assistance with the media and communications strategy for the announcement of the establishment of the Foundation. 145 Mr Pigott's notes of the meeting indicated that Mr Baxter said, in relation to adequacy of funding, that "we can't guarantee certainty". They recorded discussion of how to respond if it was said that there was not enough. They included, "Absence of certainty is a weakness", and – "SXL [Mr Loosley] – need something from a firm to sign off that is enough. ie put some aside inside fund – [unreadable] – and compounds over income – Towers Perrin perhaps could sign off. 30 year time frame enough to meet most probable scenarios." 146 According to Mr Pigott, it was explained at the meeting that JHIL "needs credibility on the issue of sufficiency of funds to cover its liabilities", and that advice had been received "as to what would be a reasonable scenario to cover all claims, that a sum would be set aside to be grown over time, and that there would be funding for medical research." Mr Loosley said, "You have to demonstrate certainty that there will be sufficient funds". Mr Baxter replied, "We can't guarantee certainty". The discussion included Mr Loosley saying, "You will need an independent assessment of the figures produced by JHIL to be undertaken in order to resolve any issue of certainty. Perhaps Towers Perrin could sign off". 147 According to Mr Ashe, Mr Loosley suggested that independent experts be retained to review JHIL's cash flow model. Mr Loosley said words to the effect that "it would be helpful if you had a credible firm look at the model and say that they agree with your conclusions". It does not appear that the then current cash flow model was provided to Mr Loosley. 148 There was a subsequent meeting between the same persons on 9 February 2001, attended also by Messrs Macdonald and Shafron. According to Mr Pigott, Mr Loosley said that JHIL "need to go out and get independent reviews done", and Access Economics, Grant Samuel and PwC were identified. Mr Loosley said, "This is all about giving certainty and confidence to the market and that James Hardie is doing the right thing". 149 The judge said in the liability judgment – "435 Mr Morley learned from Mr Macdonald that Mr Loosley had suggested verification of the cash flow model. He received an email from Mr Ashe on 9 February 2001 confirming willingness on the part of PwC and Access Economics to do the work. Shortly thereafter he received an email from Mr Shafron to Mr Harman that in relation to PwC and Access Economics said: " Get these guys to bless your model ". On 10 February 2001 he received an email from Mr Macdonald in reviewing his meeting with Mr Loosley." 150 The last-mentioned e-mail was sent by Mr Macdonald to Mr Baxter, copied amongst others to Mr Shafron and Mr Morley. He recorded that Mr Loosley said that "our strategy was sound". He referred to the positioning of the media strategy. Of immediate relevance, the e-mail included – "4 Funding – will it be enough? and independent verification. Stephen felt the new numbers put us in a very powerful position. We should attempt to get independent verification of the funding outcomes we had modelled (Access Economics, Grant Samuel, PwC were suggestions) so that funding out comes were not solely on our say so. For example, we should be ready to say 'James Hardie's Board has taken a very responsible and fair approach. They have provided for future victims. Two independent reviews have agreed with James Hardie's calculations – that in all probability there will be sufficient money for victims'." 151 PwC and Access Economics were engaged. They were provided with the then version, it seems the ninth cash flow model. 152 In passing, these events were brought into Mr Baxter's development of the communications strategy. On 11 February 2001 Mr Baxter prepared revised key messages and sent them to Mr Macdonald. Mr Macdonald e-mailed them back with his comments. Incorporating one of the comments, the messages now included – " · Based on the company's analysis, and independent verification undertaken by [Grant Samuel, Access Economics and PwC], the Foundation is expected to have sufficient funds to meet all future claims and produce a substantial surplus. · Independent actuarial assessments, using a range of scenarios including the worst case, have verified that the Foundation should have sufficient funds to meet all claims." 153 This message, however, did not appear in the key messages in the slides. Relevantly, they said in relation to JHIL's modelling, "Surplus most likely outcome" and that the analysis had been reviewed by PwC and Access Economics. 154 Also on 11 February 2001, Mr Ashe sent an e-mail to Messrs Macdonald, Shafron and Morley headed "Subject: suggested report wording". Without other introduction, it set out an "Executive Summary" for a report on the cash flow model. 155 According to Mr Ashe, but denied by Mr Morley, the Executive Summary was dictated to him by Mr Morley at some time between 9 and 11 February 2001. Mr Ashe said that Mr Morley told him that the reviews by PwC and Access Economics should be "limited to commenting on the reasonableness of the model in projecting future cash flows including whether the model is logically sound and technically correct", because enough work had been done on the assumptions and "we are comfortable with them". The judge did not make a finding. 156 The Executive Summary set out by Mr Ashe was - "This report comments on a model for estimating future costs in asbestos litigation involving JH& Coy P/L and Jsekarb P/L. Specifically, we are asked to comment on the reasonableness of the model in projecting future cash flows. … has reviewed the 'forecast in JH & Coy Pty Limited and Jsekarb Pty Limited assets and future cash flow' model and finds it to be logically sound and technically correct. The model works effectively by inputting classes of assets, generating predetermined returns on those assets, and deducting management and claims related costs and settlements. Given the assumptions used in the model and the 'most likely estimate' future claims cost scenario as provided by the actuarial firm Trowbridge, the model shows that a surplus of funds will exist after all claims have been paid. Key variables in the model which we have not checked and on which we express no opinion are: investment earnings rates litigation and management costs future claims costs." 157 An e-mail dated 12 February 2001 from Mr Shafron's computer to Mr Macdonald, Mr Morley and Mr Baxter, but signed "Peter M", said that "most likely is better than best estimate which can be interpreted as 'best case' which it clearly isn't". 158 Mr Ashe met Mr David Brett of PwC and "outlined the work we wanted PwC to undertake". He sent an e-mail to Access Economics outlining the report required. 159 On 14 February 2001 PwC forwarded a draft report to Mr Harman. It did not use the Executive Summary, but took up the language of being "logically sound and technically correct". It said that PwC's "response" was based on a particular Excel spreadsheet containing the cash flow model, information provided by Mr Ashe and Mr Harman in discussions on 12 February 2001, and subsequent discussions by phone and in face to face meetings. 160 The PwC draft report began - "I refer to a request from Mr Stephen Harman (Financial Controller) and Mr Steve Ashe (Vice President, Public Affairs) to comment on the reasonableness of a model prepared by Mr Harman which is designed to project cash flows in relation to the proposed Medical Research and Compensation Foundation (MRCF). 'Reasonableness' in this context refers to logic and technical correctness given the purpose for which the model has been designed." 161 The central paragraphs of the report read - "We understand that the purpose of the model is to demonstrate to you, the Directors of James Hardie Industries Limited, that there is a surplus of funds available to MRCF when all claims against it have been paid (in the worst case scenario this is in FY 2052/53). We understand that the plan is to fully fund the outstanding liabilities of the MRCF entity over a period of five years so that once fully funded it will be able to meet all liabilities on its own account. We have reviewed the model referred to above and find that it is logically sound and technically correct, within the constraints imposed by the nature of this kind of model. The model has been verified by reproducing the results provided by JHIL in a spreadsheet we have built ourselves, using your starting balances and assumptions (see Attachment – Model). Further on the question of 'reasonableness', we have some minor reservations about the type of model used for the purpose described, discussed below." 162 There was then a discussion of the nature of the model, included in which was – "We have not independently verified any of the inputs to the model and model assumptions. In particular, key values and parameters used in the model that we have not checked and on which we express no opinion are: investment earnings rate over the period to 31 March 2053 future claims costs (subject of actuary's report) costs associated with litigation (eg preparation of defence) other cost of ongoing operations (eg costs of company directors) interest rate earned on proceeds of loan from JH & Coy to JHIL inflation rate over the period to 31 March 2053 (used for inflating running costs, rent, and property asset values) The model results are sensitive to these values and assumptions, and we urge the directors of JHIL to seek an independent view, or otherwise satisfy themselves as to whether the values and assumptions used in the model are reasonable." 163 There were then expressed the "minor reservations", for which reasons were given. 164 Also on 14 February 2001, Access Economics e-mailed to Mr Ashe and Mr Harman a draft report which, while not using the language of logical soundness and technical correctness, was limited in its endorsement. It said that Access Economics had been asked "to comment on the reasonableness of the model for projecting future cash flows". After reference to review and adjustment of the model, it was said - "The structure of the model itself appears sound for the analytical work for which it has been designed. As with any modelling of this nature, the results depend importantly on the underlying assumptions, which the management of James Hardie needs to be comfortable with. We have not been asked to provide an opinion on some of the key assumptions, particularly: The investment earnings rate; The inflation rate; Litigation and managements costs; and Future claim costs. You have indicated that you are obtaining independent, expert advice on those assumptions. We would like to note, however, some points about the results generated by the model. It should also be noted that small changes in inflation/rates of returns at the start of the forecast period can also be highly significant to the results. For example, a poor return in an early year can jeopardise the viability of the entire scheme over the forecast horizon. This effect illustrates the importance of performing sensitivity analysis on the results. While returns may average a particular rate over the forecast horizon, the dispersion of returns in individual years can be of critical importance to the final result. The results depend importantly on the assumption concerning the investment earnings rate. The adjustment to the Trowbridge figures means that a nominal return of around 11.6% is required in the 'worst case scenario' (8.6% per annum in real terms) to keep assets in the fund. This is still a high figure, especially over such a long period of time. We remain cautious about assuming a relatively high return on assets invested and believe that this is something that James Hardie will need to test more fully. We understand that James Hardie is seeking separate advice on this issue." 165 The last paragraph of this draft commented on the assumed investment earnings rate. Either Mr Ashe or Mr Harman contacted Access Economics. The next draft replaced the paragraph with a paragraph stating - "The results depend importantly on the assumption concerning the investment earning rate. We have not been asked to comment on the specific assumptions employed, but it is something that warrants detailed consideration by James Hardie." 166 On the evening of 13 February or the morning of 14 February 2001, Mr Harman told Mr Morley that both PwC and Access Economics had found the cash flow model to be logically sound. However, Mr Morley did not see the draft reports prior to the February meeting. There were discussions after the meeting which produced slightly varied reports by PwC and Access Economics. 167 The twelfth cash flow model before the meeting differed from the ninth cash flow model the subject of the draft reports of PwC and Access Economics, but in relation to their reviews the the figures do not particularly matter since only the structure of the model was reviewed, not its assumptions. 3.6 The slides 168 The preparation of the slides is not particularly clear. It appears that some were prepared by UBS and some were prepared by Mr Baxter. Mr Andrew Cowper of UBS had distributed an outline or some slides themselves, and comments had been made by Mr Macdonald and Mr Morley on or about 10 February 2001. Prints of the slides (and copies of the cash flow model) were sent to Messrs Gillfillan and Koffel in the early hours of 15 February 2001 (Australian time). 169 The slides were concerned with more than establishment of the Foundation. Under "Actions being sought", a slide referred to approval of the immediate establishment of the Foundation, approval of commencement of a sale process to test the value of a gypsum business, and continuation of the wider restructuring for board approval in May 2001. It was said that the first action was to bring about "immediate separation from asbestos liabilities through the creation of the Foundation". 170 The majority of the slides, however, were concerned with establishment of the Foundation. 171 A slide read - " Foundation update What has changed since the last Board meeting Increased funding available to JH&Coy in exchange for indemnity and waiver to JHIL - $112m over time/$72m NPV of additional funding Foundation directors have signed on Detailed review of funding indicates that it is manageable Additional $1m to support proposed Asbestos Diseases Research Institute (ADRI) - emphasises that JHIL is not walking away - provides a seat at the table to keep abreast of developments Gross assets should be sufficient for future claims" 172 It will be noted that the figures had now become $112 million and $72 million, and an additional $1 million was to be given for research. As to adequacy of funding, this slide was more positive ("manageable" and "should be sufficient"), but still short of full funding. 173 The slides for what was described as a key issue of "Quantum of funds contributed – foundation life expectancy" were - " Quantum of funds contributed Assets of JH&Coy and Jsekarb $112m over time/$72m NPV Directors' duties regarding ability to contribute these assets are discussed below Additional $1m contribution by JHIL for ADRI supported by: - impact on success of transaction and transaction benefits (Allsop advice) Fund life expectancy/sensitivity Trowbridge analysis revised: - same basic assumption as previously - higher claim numbers predicted - predicted future cash flows Future funds availability depends on: - Trowbridge cash flows ('most likely') - asset classes (land, debt, and invested cash) - assets earnings (some known and some predicted) JH modelling Key assumptions - Trowbridge actuarial data - earnings on investment portfolio 11.7% - JHIL loan 8.13% p.a. return - running costs of $2.4m p.a. - inflation - 3% p.a. rent, running costs - 4% p.a. litigation costs - no tax paid (no realisation of investment earnings in early periods) - land increases in value by 3% p.a., buildings not depreciated, through $1m p.a. sinking fund Surplus most likely outcome Analysis reviewed by PwC and Access Economics". 174 A number of the slides were concerned with a second key issue of "Positioning/key stakeholder messages". In a slide headed "Update on Board paper" it was said that management and its advisers had become much more confident in their "ability to 'sell' the proposal to external stakeholders". Advisers were recently consulted and their views were described. This included that Mr Loosley had "counselled us to strengthen the adequacy of funding so that we could argue that the most likely outcome was that all claims would be met". The slide headed "Key messages" read - " ˙ JH has effectively resolved its asbestos liability for the benefit of shareholders and claimants ˙ A new, independent Foundation has been established to manage JH's liabilities, compensate people injured by asbestos and fund medical research ˙ The Foundation's assets will be used solely for compensating people with asbestos diseases ˙ The Foundation expects to have enough funds to pay all claims ˙ The position of claimants is substantially improved because the Foundation provides much greater certainty that compensation will be available to meet all future claims ˙ The position of shareholders is also substantially improved because the company's results and financial strength will no longer be affected by asbestos costs". 175 Slides headed "Communication strategy" included - " Overall Approach Attract as little attention as possible Position as a business story Win the support of shareholders and the investment community Openly engage other stakeholders and address their concerns Minimise the potential of government intervention All media filtered by GB [Mr Baxter] Shareholders and Investors Announce in conjunction with Q3 results Include a detailed presentation on separation in the Q3 results briefing to analysts Include separation in Q3 results news release and MD&A, and provide detailed briefing notes as well as the news release on the Foundation itself At the results briefing, emphasise the case for shareholders but also explain the benefits for creditors Minimise provocative statements in written material but make these points clearly in verbal briefings Provide follow-up one on one briefings to major institutions and brokers Conduct post announcement survey of major institutions week after announcement Business Media Invite business journalists to the briefing Arrange detailed briefings for key, opinion leading columnists Provide detailed briefing notes as well as other material Peter Macdonald to handle all interviews". 176 The contemplation of a "news release on the Foundation itself" in one of these slides was matched in a statement in a later slide, "Provide Foundation specific news releases from both JH and the Foundation as well as detailed briefing notes". 177 The closing recommendation in the slides was brief - "It is recommended that the Board approve the establishment of the Foundation based on the matters outlined in the Board paper and this presentation." 178 The slides still spoke of less than full funding. One key message was expectation of enough funds to pay all claims, and it was conveyed that Mr Loosley's counsel of ability to argue for a most likely outcome could be fulfilled ("Surplus most likely outcome"). This was clearly enough based on the modelling, and so depended on the assumptions in the modelling. But it was a "most likely" outcome, and one of expectation. 3.7 The versions of the draft news release 179 We now describe the announcement to the ASX, at the time referred to as a news release, press release or media release, in its various drafts following Mr Baxter's draft part of the communications strategy in the Proposed Trust Structure Update paper for the January board meeting. The drafts should be seen in their relationship with draft key messages and questions and answers documents under contemporaneous development, and with obtaining the PwC and Access Economics reviews. 180 In early December 2000 JHIL engaged UBS as its "general and financial adviser" in relation to, amongst other matters, Project Green. According to the letter of engagement, the advice and assistance to be provided as required included "preparation of required announcements and circulars". The letter said - "The Company will ensure that all announcements and documents published or statements made by it or on its behalf in the course of, and relevant to, the Engagement will only be made or published after discussion with UBS Warburg." 181 The relevant personnel at UBS were Mr Cowper, Mr Ian Wilson and Mr Anthony Sweetman. The evidence of their involvement was rather scant. Mr Baxter had sent a first draft press release to Mr Sweetman in December 2000 for comment. He sent a revised draft and a draft communications strategy to Mr Sweetman on 8 January 2001. The evidence included a UBS outline of questions and answers. We have referred to Mr Baxter's evidence that he received input to the February 2001 communications strategy from UBS amongst others, and to preparation of slides by UBS. 182 While Mr Wilson and Mr Sweetmam probably had some appreciation of the communication strategy proposed by Mr Baxter, it does not appear that UBS was involved in the drafting in February of a news release or associated communications documents; nor is it clear that there was the discussion to be expected from its engagement letter. 183 Anderson provided public affairs and financial relations advice to corporate clients, including in the development of media releases and key messages and question and answer documents and in the the writing and development of presentations and media training. It had provided its services to JHIL at earlier times, for example in connection with Project Chelsea. 184 In late 2000 Anderson was briefed by JHIL, according to a memorandum prepared by Ms Jane Rotsey of Anderson dated 25 January 2001 to prepare a "communication strategy outline" for the Foundation with the aim of ensuring that it was viewed as a credible, independent Foundation with the functions of compensating asbestos disease sufferers with genuine claims and funding medical research aimed at seeking treatment and cures for the diseases. One of the objectives identified in the memorandum was to "[m]anage the public announcement of the formation of the Foundation in such a way as to ensure its credibility and independence remains intact". 185 Ms Rotsey led Anderson's communications team. Her primary contact was with Mr Baxter, but she also dealt with Mr Ashe. 186 The communications strategy in the February board papers, with key messages and questions and answers, broadly followed the January documents, although the documents did not include a draft news release. Drafts of the documents were sent to Ms Rotsey on 3 February 2001. Mr Baxter later sent a draft communications strategy and draft questions and answers for the Foundation. 187 So far as appears, there was no immediate action. Late on 13 February 2001 Ms Rotsey sent to Ms Wheeler, Mr Baxter's executive assistant, with copies to Mr Baxter and Mr Ashe amongst others, a "work in progress report". The outstanding work included "finalising media release, QA and key messages". 188 At the request of Mr Baxter, Ms Wheeler called an "all hands on deck meeting". It took place at about lunchtime on 14 February 2001. It was attended by Mr Baxter, Mr Ashe and Ms Wheeler for JHIL and Ms Rotsey and others for Anderson. A deadline was set for the completion that day of the media releases for JHIL and the Foundation, the questions and answers and the key messages. 189 A draft news release for JHIL was e-mailed by Ms Rotsey to Mr Baxter and Mr Ashe at 7.28 pm on 14 February 2001 ("the 7.28 pm draft news release"). It was accompanied by a draft news release for the Foundation, a key messages document, and draft questions and answers for each of JHIL and the Foundation. The documents were modelled on Mr Baxter's drafts. They now spoke, however, of full funding and of sufficiency of funding for all asbestos claims. 190 The 7.28 pm draft news release was in the terms - " Legally privileged and confidential – for legal advice only Draft news release 14 February 2001 James Hardie resolves its Asbestos Liability Favourably for Claimants and Shareholders James Hardie Industries Limited (JHIL) announced today that it had established a foundation to compensate sufferers of asbestos-related diseases with claims against the company and fund medical research aimed at finding cures for these diseases. The Medical Research and Compensation Foundation (Foundation), to be chaired by Sir Llewellyn Edwards, will be completely independent of JHIL and will commence operation with assets of $284 million. The Foundation's purpose is to manage all future litigation arising from the past manufacturing of asbestos-containing products by two former subsidiaries of JHIL and fund legitimate compensation claims. JHIL CEO, Mr Peter MacDonald [sic, throughout] said that the establishment of a fully-funded Foundation provided the best resolution for all stakeholders 'The establishment of the Medical Research and Compensation Foundation provides certainty for people with a legitimate claim against the former James Hardie companies which manufactured asbestos products,' Mr MacDonald said. 'It also resolves James Hardie's asbestos liability and allows it to pursue its very exciting growth prospects for the benefit of shareholders.' A separate fund of $3 million has also been set aside [for] scientific and medical research aimed at finding treatments and cures for asbestos diseases. The $284 million vested into the Foundation includes portfolios of commonly traded shares, a substantial cash reserve, properties which earn rent and insurance policies which cover workers compensation claims. Fund manager, Towers Perrin has been appointed to manage the Foundation's investments, which will generate investment income and capital growth. In establishing the Foundation, James Hardie sought information from a range of specialist advisors. It also has many years of experience in managing this issue and has formed a very well rounded view of the funding required to meet current and future claims. 'The directors of James Hardie are satisfied that the Foundation will have sufficient funds to meet all future claims,' Mr MacDonald said. The initial $3 million for medical research will enable the Foundation to continue work on existing programs established by James Hardie as well as launch new programs. When all future claims have been concluded, the Foundation will convert any remaining assets to cash and these surplus funds will be donated to a reputable medical and or scientific research organisation involved in work on lung diseases. Mr MacDonald said, Sir Llewellyn Edwards, who had resigned as a director of James Hardie Industries Limited to take up his new appointment as chairman of the Foundation has enjoyed a long and distinguished career in medicine, politics and business. He is a director of a number of organizations including Westpac Banking Corporation and is also Chancellor of the University of Queensland. The other Foundation directors include Mr Michael Gill, Mr Peter Jollie and Mr Dennis Cooper. -ends- For further information: Greg Baxter Bus: Mob:" 191 Ms Rotsey could not recall how it came about that the fourth paragraph of the draft news release referred to "a fully funded Foundation". She was not asked about the eleventh paragraph referring to sufficient funds to meet all future claims. Mr Baxter said that "the expression 'fully funded' is not an expression that I remember coming up with and stylistically is not the sort of way I would refer to something". 192 The draft news release for the Foundation included - "A new, fully funded organisation, the Medical Research and Compensation Foundation (MRCF) has been established to handle asbestos-related claims against former James Hardie companies, and to fund medical research. The non-profit Foundation, which will be chaired by former Queensland Deputy Premier Sir Llewellyn Edwards, has been vested assets worth $284 million by James Hardie to meet the cost of current and future claims. … [Mr Macdonald said] 'These funds will be invested for the sole purpose of meeting all current and future claims against the former James Hardie subsidiaries. The Foundation has also taken over insurance policies which cover many claims, such as workers compensation'." 193 The key messages document differed considerably from the draft key messages document sent by Mr Baxter to Mr Macdonald on 11 February 2001. It was much shorter, and was in the bold terms - " James Hardie Industries Limited Key Messages The establishment of the Medical Research and Compensation foundation provides the best resolution for both claimants and shareholders. As a fully-funded Foundation, the MRCF provides certainty for claimants injured by asbestos that there will be sufficient funds to meet all legitimate compensation claims. The move also provides certainty to shareholders of the listed company, which no longer has an asbestos related liability and can focus 100 per cent on its exciting growth prospects. The Foundation is fully funded and will meet all future compensation claims. The Directors of JHIL are satisfied that on the basis of independent advice sourced from experts and actuarial advisers that the fund will more than meet all future claims. When all future claims have been concluded the Foundation will convert any remaining assets to cash and donate these to a reputable medical or scientific research organisation involved in work on lung diseases." 194 Ms Rotsey gave no evidence about the further references, in various ways, to full funding. 195 The draft questions and answers for JHIL included - " 1. How can James Hardie be confident that the Foundation has sufficient assets to meet all future claims? We have established a fully-funded Medical Research and Compensation Foundation which provides much greater security than ever before for people with legitimate asbestos-related claims against James Hardie, and for James Hardie shareholders. The Foundation has assets of $284 million, which have been set aside for the prime purpose of compensating people injured by asbestos. These assets will be managed and invested and will start to grow from day-one. The Foundation also has insurance policies over and above its liquid assets which will cover many claims, such as workers compensation claims from past or current employees. In addition, $3M research funding provides to the Foundation will enable the continuation of promising research that is seeking treatments and cures for asbestos related diseases. According to our expert advice, including actuarial advice, there will be sufficient funding for the Foundation to meet all expected future claims. 2. What work has James Hardie undertaken to determine what future claims might be? Using independent advice and our own experience in this issue, James Hardie is confident that the growing base of $284 million in assets in the Foundation will be sufficient to meet all future claims against the company's former subsidiaries. 3. A recent media article in the AFR reports that a leading actuarial firm is warning that asbestos related compensation claims could more than double previous expectations. In light of this, do you think the Foundation has sufficient funds to meet all compensation claims? It is worth noting that the James Hardie subsidiaries which have been the subject of past claims are only two of 150 companies and organisations which have asbestos liabilities. Our expert advice is that the Foundation, which has been set up to compensate people with legitimate claims against former James Hardie subsidiaries, has sufficient assets and earning potential to cover all expected future claims against those companies. 4. Will James Hardie provide sufficient extra funding to the Foundation should its initial funding prove to be insufficient? According to our expert advice the Foundation will have sufficient assets to meet all future claims against the former James Hardie subsidiaries which have an asbestos liability. … 8. How many claims does James Hardie expect the Foundation to receive, over what time period and what does it expect the cost of these claims will be? Based on the claims received to date, as well as independent expert advice, we estimate that the Foundation will be able to meet all future claims against the former James Hardie subsidiaries. 9. How can future plaintiffs be guaranteed there will be sufficient funds in the Foundation to meet their claims when they arise? The Foundation has been fully funded with assets of some $284 million. These assets will be managed, in a similar way to superannuation funds, and will start earning money for the Foundation from today. It is important to remember, too, that many of the claims received by James Hardie are covered by insurance policies, which the Foundation now has access to. What James Hardie has done, however, is to provide certainty to claimants by putting it beyond anyone's power to deplete the available funds prior to the settlement of all future claims. … 11. On what basis would the Directors of James Hardie guarantee that funds would be provided in the future to prop up the Foundation if necessary? According to our independent expert advice there will be sufficient funds in the Foundation to meet all future claims against the former James Hardie subsidiaries. … 17. What do you say to the 39 year old mother of three whose husband dies when there is no money left in the trust and James Hardie is not prepared to contribute more ? According to our independent, expert advice, the Foundation will have sufficient assets to meet all future claims." 196 Again, Ms Rotsey gave no evidence about how these references to full or sufficient funding came about. 197 The draft questions and answers for the Foundation included - " 1. Do the directors believe that the assets vested into the trust will be sufficient to meet all future claims for asbestos related disease? What guarantees can you give that there will be enough money? According to the best independent advice available the Foundation will have sufficient funding to meet all future claims against the former James Hardie subsidiaries. The Foundation assets will be earning income from day-one and many of the claims which will be processed, including workers compensation claims, will be paid from insurance policies to which the Foundation has access. … 6. How far will the $284 million stretch given that the numbers of people likely to get an asbestos disease has not yet peaked and there's even a suggestion that an epidemic is looming? According to our advice, the Foundation will have sufficient assets to meet all legitimate current and future claims. The Foundation will only be responsible for compensating people injured by asbestos which was contained in products manufactured by two companies. Based on the experience of the past 20 years, these companies have been solely responsible for asbestos diseases in only about 20% of cases. … 8. What happens when the trust runs out of money? Where will the Foundation get more money from? Will JHIL provide more money? According to our expert advice the Foundation will have sufficient assets to meet all future claims. Many of these claims, such as workers compensation claims, will be covered by insurance policies. The Foundation's assets will start earning income from day-one." 198 The first paragraph in the answer to the first question differed from the draft sent by JHIL in its reference to sufficiency of funding. Ms Rotsey did not recall why. 199 Even allowing for hindsight and the focus which these proceedings have brought, there was a remarkable change in the manner in which these documents represented the Foundation's funding. The evidence did not satisfactorily explain the change at Anderson's hands, or how (as will shortly appear) Mr Baxter came largely to go along with the change without demur, when in early February he had expressed the "central communications conundrum … that we will not be able to provide key external stakeholders with any certainty that the funds set aside to compensate asbestos victims will be sufficient to meet all future claims". However, neither Ms Rotsey's nor Mr Baxter's conduct is the issue, but the conduct of the appellants in their (the appellants') states of knowledge. As we note later in these reasons, in the conduct of the proceedings no attention appears to have been given to any presence of Ms Rotsey's key messages or questions and answers documents at the February meeting, and they must be put out of the appellants' knowledge. 200 Mr Baxter said in his affidavit that he sent the 7.28 pm draft news release to Mr Macdonald, Mr Shafron, Mr Morley, Mr Ashe "and possibly Mr Attrill and Mr Robb" for their comment. He said in his oral evidence that he had a "general recollection" of sending the draft. Mr Attrill was JHIL's litigation manager for asbestos claims. Mr David Robb was a partner at Allens, deeply engaged in advising and otherwise acting for JHIL including in relation to Project Green; we will have more to say of his involvement. 201 There was no documentary record of Mr Baxter sending the draft news release to any of these persons. Mr Morley and Mr Attrill denied receiving it. Mr Ashe said that he had no involvement in drafting the news release; he had already received it from Ms Rotsey, and it may be asked why Mr Baxter would send it to him. The judge did not make a finding. 202 Mr Baxter said that he recalled discussing the 7.28 pm draft news release that evening with Mr Macdonald. He could not recall detail, but said that Mr Macdonald "provided me with feedback on the draft release". 203 The next version of the draft news release was sent by Mr Baxter to Ms Rotsey by e-mail at 7.24 am on 15 February 2001 ("the 7.24 am draft news release"). This was the draft ASX announcement alleged by ASIC to have been approved at the February meeting, and in the FFASC was called the Draft ASX Announcement. It was sent as a changed version of the 7.28 pm draft news release, with Mr Baxter's changes explained in boxes. Mr Baxter said that the changes reflected the feedback from Mr Macdonald. 204 Diverging briefly, the e-mail of 7.24 am was preceded by an e-mail sent by Mr Baxter to Ms Rotsey at 6.57 am on 15 February 2001, with his changes to the other documents. The 6.57 am e-mail to Ms Rotsey relevantly read - "some comments and changes and so on. I don't think there are any major issues and I don't think it is particularly productive to agonise over these documents much longer. If possible, can you have these amended and back to Melissa [Ms Wheeler] by 10 am so that she can bring me a fresh set to the Bd meeting. If not, can you let me know that before 9.30 am please." 205 Mr Baxter did not make any changes to the key messages document. A number of changes were made to the questions and answers for JHIL and for the Foundation, and Mr Baxter suggested some additional or alternative matters to be dealt with without framing their terms. In particular, the answer to the 39 year old mother of three now read - "Anyone with a legitimate claim at any time in the future can be confident that there will be sufficient funds available to compensate them." 206 The changes to the questions and answers for the Foundation deleted the reference to it being a "new, fully funded organisation", and described it as a "new independent, not for profit organisation". But the changes added in the second paragraph that the assets had been vested to meet the cost of "all" current and future claims. 207 Returning to the 7.24 am e-mail to Ms Rotsey, it included - " … here are my comments on the news release – no doubt we can refine further later today – this is the version I will take to the Bd meeting." 208 Without the boxes, the 7.24 am draft news release was in the terms - " Legally privileged and confidential – for legal advice only Draft news release 14 February 2001 James Hardie resolves its Asbestos Liability Favourably for Claimants and Shareholders James Hardie Industries Limited (JHIL) announced today that it had established a foundation to compensate sufferers of asbestos-related diseases with claims against the company and fund medical research aimed at finding cures for these diseases. The Medical Research and Compensation Foundation (Foundation), to be chaired by Sir Llewellyn Edwards, will be completely independent of JHIL and will commence operation with assets of $284 million. The Foundation will have sufficient funds to meet all legitimate compensation claims from people injured by asbestos products manufactured in the past by two former subsidiaries of JHIL. JHIL CEO, Mr Peter Macdonald said that the establishment of a fully-funded Foundation provided the best resolution for all stakeholders. 'The establishment of the Medical Research and Compensation Foundation provides certainty for people with a legitimate claim against the former James Hardie companies which manufactured asbestos products,' Mr Macdonald said. 'The Foundation will concentrate solely on asbestos for the benefit of claimants allowing James Hardie to pursue its very exciting growth prospects for the benefit of shareholders [sic].' A separate fund of $3 million has also been set aside for scientific and medical research aimed at finding treatments and cures for asbestos diseases. The $284 million vested into the Foundation includes portfolios of commonly traded shares, a substantial cash reserve, properties which earn rent and insurance policies which cover workers compensation claims. Fund manager, Towers Perrin has been appointed to manage the Foundation's investments, which will generate investment income and capital growth. In establishing the Foundation, James Hardie sought expert advice from a number of firms, including actuaries Trowbridge, Access Economics and PricewaterhouseCoopers. This advice supplemented the company's long experience in the area of asbestos and formed the basis of determining the level of funding required to meet all future claims. 'The directors of James Hardie are satisfied that the Foundation will have sufficient funds to meet all future claims,' Mr Macdonald said. The initial $3 million for medical research will enable the Foundation to continue work on existing programs established by James Hardie as well as launch new programs. When all future claims have been concluded, the Foundation will convert any remaining assets to cash and these surplus funds will be donated to a reputable medical and or scientific research organisation involved in work on lung diseases. Mr Macdonald said, Sir Llewellyn Edwards, who had resigned as a director of James Hardie Industries Limited to take up his new appointment as chairman of the Foundation has enjoyed a long and distinguished career in medicine, politics and business. He is a director of a number of organizations including Westpac Banking Corporation and is also Chancellor of the University of Queensland. The other Foundation directors include Mr Michael Gill, Mr Peter Jollie and Mr Dennis Cooper. -ends- For further information: Greg Baxter Bus: Mob:" 209 The sixth paragraph of the draft news release read oddly: what was meant by the Foundation concentrating solely on asbestos? This version referred in the tenth paragraph to advice from the named advisers Trowbridge, Access Economics and PwC. 210 Mr Baxter did not prior to the February meeting send a copy of this draft to the persons to whom he said he had sent the 7.28 pm draft news release, save that in some of his evidence he said that he recollected sending it to Mr Robb "on that day". There was no documentary record of his doing so. We further refer to Mr Baxter's evidence concerning communications with Mr Robb at [352] below. 211 The next version of the draft news release was e-mailed by Ms Rotsey to Mr Baxter and Ms Wheeler at 9.35 am on 15 February 2001 ("the 9.35 am draft news release"). The covering e-mail read simply, "Please find revised material". The material was the draft news release, a key messages document, a draft media release for the Foundation, and the draft questions and answers for JHIL and for the Foundation. The dispute below and in this Court over approval of a draft ASX announcement at the February meeting included whether, if there was approval, it was of the 9.35 am draft news release rather than the 7.24 am draft news release. 212 The 9.35 am draft news release, as e-mailed, contained a remnant of one of Mr Baxter's boxes. It was in the terms of the 7.24 am draft news release save for amendment to the sixth paragraph. That paragraph still read oddly, although in a different respect. The amendment was not explained in the evidence. 213 Omitting the remnant of a box, the 9.35 am draft news release was in the terms - " Legally privileged and confidential – for legal advice only Draft 2 news release 15 February 2001 James Hardie resolves its Asbestos Liability Favourably for Claimants and Shareholders James Hardie Industries Limited (JHIL) announced today that it had established a foundation to compensate sufferers of asbestos-related diseases with claims against the company and fund medical research aimed at finding cures for these diseases. The Medical Research and Compensation Foundation (Foundation), to be chaired by Sir Llewellyn Edwards, will be completely independent of JHIL and will commence operation with assets of $284 million. The Foundation will have sufficient funds to meet all legitimate compensation claims from people injured by asbestos products manufactured in the past by two former subsidiaries of JHIL. JHIL CEO, Mr Peter Macdonald said that the establishment of a fully-funded Foundation provided the best resolution for all stakeholders. 'The establishment of the Medical Research and Compensation Foundation provides certainty for people with a legitimate claim against the former James Hardie companies which manufactured asbestos products,' Mr Macdonald said. 'The Foundation will concentrate solely meeting the needs of and allowing James Hardie to pursue its very exciting growth prospects for the benefit of shareholders [sic].' A separate fund of $3 million has also been set aside for scientific and medical research aimed at finding treatments and cures for asbestos diseases. The $284 million vested into the Foundation includes portfolios of commonly traded shares, a substantial cash reserve, properties which earn rent and insurance policies which cover workers compensation claims. Fund manager, Towers Perrin has been appointed to manage the Foundation's investments, which will generate investment income and capital growth. In establishing the Foundation, James Hardie sought expert advice from a number of firms, including actuaries Trowbridge, Access Economics and PricewaterhouseCoopers. This advice supplemented the company's long experience in the area of asbestos and formed the basis of determining the level of funding required to meet all future claims. 'The directors of James Hardie are satisfied that the Foundation will have sufficient funds to meet all future claims,' Mr Macdonald said. The initial $3 million for medical research will enable the Foundation to continue work on existing programs established by James Hardie as well as launch new programs. When all future claims have been concluded, the Foundation will convert any remaining assets to cash and these surplus funds will be donated to a reputable medical and or scientific research organisation involved in work on lung diseases. Mr Macdonald said, Sir Llewellyn Edwards, who had resigned as a director of James Hardie Industries Limited to take up his new appointment as chairman of the Foundation has enjoyed a long and distinguished career in medicine, politics and business. He is a director of a number of organizations including Westpac Banking Corporation and is also Chancellor of the University of Queensland. The other Foundation directors include Mr Michael Gill, Mr Peter Jollie and Mr Dennis Cooper. -ends- For further information: Greg Baxter Bus: Mob:" 214 It is convenient to complete this account by referring to the subsequent draft news release and to the ASX announcement as sent. 215 The next version of the news release was sent by Mr Baxter to Ms Wheeler by e-mail at 7.42 pm on 15 February 2001, after the February meeting ("the 7.42 pm draft news release"). There was no covering message. The news release was described in the heading as "Final". A number of changes had been made to the 9.35 am draft news release, not only in that the sixth paragraph now read sensibly. 216 The 7.42 pm draft news release was in the terms - " Legally privileged and confidential – for legal advice only Final 15 February 2001 James Hardie resolves its Asbestos Liability Favourably for Claimants and Shareholders James Hardie Industries Limited (JHIL) announced today that it had established a foundation to compensate sufferers of asbestos-related diseases with claims against two former James Hardie subsidiaries and fund medical research aimed at finding cures for these diseases. The Medical Research and Compensation Foundation (Foundation), to be chaired by Sir Llewellyn Edwards, will be completely independent of JHIL and will commence operation with assets of $285 million. The Foundation has sufficient funds to meet all legitimate compensation claims anticipated from people injured by asbestos products that were manufactured in the past by two former subsidiaries of JHIL. JHIL CEO, Mr Peter Macdonald said that the establishment of a fully-funded Foundation provided certainty for both claimants and shareholders. 'The establishment of the Medical Research and Compensation Foundation provides certainty for people with a legitimate claim against the former James Hardie companies which manufactured asbestos products,' Mr Macdonald said. 'The Foundation will concentrate on managing its substantial assets for the benefit of claimants. Its establishment has effectively resolved James Hardie's asbestos liability and this will allow management to focus entirely on growing the company for the benefit of all shareholders.' A separate fund of $3 million has also been granted to the Foundation for scientific and medical research aimed at finding treatments and cures for asbestos diseases. The $285 million assets of the Foundation include a portfolio of long term securities, a substantial cash reserve, properties which earn rent and insurance policies which cover various types of claims, including all workers compensation claims. Towers Perrin has been appointed to advise the Foundation on its investments, which will generate investment income and capital growth. In establishing the Foundation, James Hardie sought expert advice from a number of firms, including PricewaterhouseCoopers, Access Economics and the actuarial firm, Trowbridge. With this advice, supplementing the company's long experience in the area of asbestos, the directors of JHIL determined the level of funding required by the Foundation. 'James Hardie is satisfied that the Foundation has sufficient funds to meet anticipated future claims,' Mr Macdonald said. The initial $3 million for medical research will enable the Foundation to continue work on existing programs established by James Hardie as well as launch new programs. When all future claims have been concluded, surplus funds will be used to support further scientific and medical research on lung diseases. Mr Macdonald said Sir Llewellyn Edwards, who has resigned as a director of James Hardie Industries Limited to take up his new appointment as chairman of the Foundation, has enjoyed a long and distinguished career in medicine, politics and business. His experience with James Hardie will assist the Foundation to rapidly acquire the knowledge it needs to perform effectively. Sir Llew is a director of a number of organisations including Westpac Banking Corporation and is also Chancellor of the University of Queensland. The other Foundation directors are Mr Michael Gill, Mr Peter Jollie and Mr Dennis Cooper. -ends- For further information: Greg Baxter Bus: xxxxxx Mob: xxxxxx" 217 We have excluded the telephone numbers at the end of the draft news release. We will return to the changes from the 9.35 am draft news release, see [316]-[336] below. 218 The ASX announcement was sent to the ASX on 16 February 2001. In the FFASC it was called the Final ASX Announcement. Apart from the changes next mentioned it was in the terms of the 7.42 pm draft news release, but without the headings concerning legal privilege and being final and with a JHIL logo and the title "media release". The changes were that $285M had become $293M; "(MRCF)" replaced "(Foundation)" after the first reference to the Foundation in the second paragraph, although the acronym was not thereafter used in the document; and there was added at the end of the document that it was available from the James Hardie website and - "This document contains forward-looking statements. Forward-looking statements are subject to risks and uncertainties and, as a result, readers should not place undue reliance on such statements. The inclusion of these forward-looking statements should not be regarded as a representation that the objectives or plans described will be released." 4. WAS THE DRAFT ASX ANNOUNCEMENT APPROVED? 4.1 General 219 The February meeting was held at the offices of PwC in Sussex Street, Sydney. It commenced at 9 am. 220 The directors present, in addition to the appellants, were Mr McGregor, Sir Llewellyn Edwards and Mr Macdonald. As we have said, Messrs Gillfillan and Koffel were present by telephone from the United States. Sir Llewellyn Edwards was to be the chairman of the Foundation, and tendered a conditional resignation as director and retired from the meeting shortly after it commenced. He was not present for the discussion of establishing the Foundation. 221 According to the minutes of the meeting, and it was not suggested that they were inaccurate in this respect, Mr Morley and Mr Shafron were in attendance throughout the meeting, and Mr Baxter, Mr Harman, Messrs Wilson and Sweetman of UBS and Mr Peter Cameron and Mr Robb of Allens were all in attendance for part of the meeting. The minutes recorded that these persons joined the meeting early in its course, although no time was specified, and prior to the discussion of establishing the Foundation. 222 The meeting closed at 12.50 pm. 223 Evidence of what occurred at the meeting was given by Mr Baxter and Mr Harman in ASIC's case, and by Mr Brown, Mr Gillfillan, Ms Hellicar, Mr Koffel, Mr Morley and Mr Willcox. 224 Mr McGregor and Mr Peter Cameron had died prior to the trial. In 2004 they had given evidence in the Special Commission of Inquiry into James Hardie asbestos liability issues undertaken by the Honourable David Jackson QC ("the Jackson inquiry"), and parts of their evidence then given were tendered by ASIC. Mr Robb had also given evidence in the Jackson inquiry, and part of his evidence then given was tendered by ASIC. 225 None of Mr Wilson, Mr Sweetman or Mr Robb was called to give evidence, by ASIC or by the defendants. None of Mr Macdonald, Mr O'Brien, Mr Shafron or Mr Terry gave evidence. 226 The meeting was not concerned solely with Project Green. For example, the minutes record Mr Macdonald reporting on other matters, Mr Morley commenting on other financial matters, and consideration of the third quarter reports. The separation proposal, however, was plainly a significant item of business for the meeting. 4.2 ASIC's allegation 227 The FFASC was lengthy, with many alternatives within the allegations of contravention. There were "background" allegations (paras 26-49), essentially historical. In relation to the February meeting and the draft ASX announcement, there were general allegations (paras 50-69), followed serially by allegations of contravention by JHIL (paras 70-81), by Mr Macdonald (paras 82-85), by Mr Shafron (paras 96-106), by Mr Morley (paras 107-110), and by Mr Brown, Mr Gillfillan, Ms Hellicar, Mr Koffel, Mr O'Brien, Mr Terry and Mr Willcox treated together (paras 111-119). 228 In the general allegations it was alleged that on 15 February 2001 Mr McGregor, Sir Llewellyn Edwards and each of the appellants, in the case of Messrs Gillfillan and Koffel by telephone, attended a meeting of the board of JHIL (para 52). It was alleged that at the meeting documents were tabled, discussions took place and resolutions were agreed to giving effect to the proposal to separate the liability to asbestos claims from the group's operating businesses, including establishing the Foundation and entering into the DOCI (paras 53, 54). It was then alleged - "55. At the February 2001 Board Meeting, McGregor tabled a draft announcement to the ASX concerning the establishment of MRCF (the 'Draft ASX Announcement'). 56. The Draft ASX Announcement was in the form attached hereto, marked 'A' and it: (a) announced that JHIL had established a foundation to compensate sufferers of asbestos related diseases, with claims against the company, and to fund medical research aimed at finding cures for these diseases; (b) stated that, 'The Foundation will have sufficient funds to meet all legitimate compensation claims for people injured by asbestos products manufactured in the past by two former subsidiaries of JHIL'; (c) quoted Macdonald as stating that, 'the establishment of a fully funded Foundation provided the best resolution for all stakeholders'; (d) quoted Macdonald as stating that the establishment of MRCF, 'provides certainty for people with a legitimate claim against the former James Hardie companies which manufactured asbestos products'; (e) stated that, in establishing MRCF, 'James Hardie sought expert advice from a number of firms, including actuaries Trowbridge, Access Economics and PricewaterhouseCoopers. This advice supplemented the company's long experience in the area of asbestos and formed the basis of determining the level of funding required to meet all future claims'; (f) quoted Macdonald as stating that, 'The directors of James Hardie are satisfied that the Foundation will have sufficient funds to meet all future claims'; and (g) stated that, 'Fund manager, Towers Perrin has been appointed to manage the Foundation's investments, which will generate investment income and capital growth'. 57. At the February 2001 Board Meeting, and after the tabling of the Draft ASX Announcement, each of Brown, Gillfillan, Hellicar, Koffel, Macdonald, McGregor, O'Brien, Terry and Willcox voted in favour of a resolution that: (a) JHIL approve the Draft ASX Announcement; and (b) JHIL authorise the execution of the Draft ASX Announcement and send it to the ASX. (the 'Draft ASX Announcement Resolution')" 229 The Draft ASX Announcement as attached was in the form of the 7.24 am draft news release. 230 The key allegation was the passing of the Draft ASX Announcement Resolution. The resolution was stated in terms very close to those of a resolution recorded in the minutes of the February meeting, and in the FFASC was tied to the 7.24 am draft news release. 231 ASIC's reliance on the minutes is quite understandable, although as will be seen their accuracy came under severe challenge. But the reliance, as translated to the allegations in the FFASC, meant that ASIC had to establish the passing of a resolution as framed in the FFASC. ASIC alleged more than discussion in which the directors were content that a message of sufficiency of funding could and should be conveyed as part of announcing the establishment of the Foundation. The allegation was of a resolution approving the specific 7.24 am draft news release, as an ASX announcement and one which was to be executed and sent to the ASX. 4.3 The judge's findings 232 Neither Mr Baxter nor Mr Harman had an actual recollection of what occurred at the meeting. The judge said in the liability judgment - "130 Mr Baxter said he had no specific recollection of what happened during the course of the 15 February 2001 Meeting. He was unable to say that the directors ever saw the press release at any time up to or during the course of the board meeting. He was unable to say that the chairman tabled the press release at the meeting. He was unable to say that the directors took a vote on the resolution. He was unable to say whether a vote was affirmative or negative. He could not recall saying anything about the Draft ASX Announcement during the meeting nor was he certain that anyone else said anything about it at the meeting. He thought it was handed around. He did not know who handed it around. He was asked whether he handed it around and he said he probably did. He did not recall whether it was handed to any person during the course of the meeting. 131 Later in his cross-examination the following exchange occurred: 'Q. You didn't, did you, distribute hard copies of any announcement that the JHIL board was to consider to each member of the board and others present; correct? A. I believe I did do that. Q. I want to suggest to you that you've got no recollection whatsoever of doing so; correct? A. Correct. Q. And I want to suggest to you that, in fact, your recollection is that you didn't; correct? A. No, that's incorrect.' 132 In his affidavit, Mr Baxter said that it was his usual practice in attending JHIL board meetings that if proposed announcements had not been sent to the board members in the board packs prior to the meeting, he distributed hard copies of any announcement that the board was to consider to each of the board and others present. He said that in the case of the overseas directors a copy was either emailed or faxed to them, or if it was not, or they indicated they had not received it, Mr McGregor would read out the terms of the proposed announcement to them. He said that while he could not specifically recall distributing to those present at the 15 February 2001 meeting copies of the draft ASX announcement he had no reason to believe he departed from his usual practice of distributing copies to those present. He said he also had no reason to believe that the announcement was not either sent to the board members attending by telephone or that Mr McGregor did not read out its terms. … 141 Mr Harman was unable to say that the draft ASX announcement was tabled at the meeting or that there was any discussion or resolution in relation to it." 233 We note at this point that the judge found that the draft news release was not sent to Messrs Gillfillan and Koffel, and that his Honour was not prepared to find that it was read out at the meeting: LJ [231]. This accorded with the evidence of Mr Gillfillan and Mr Morley. ASIC did not challenge these matters on appeal. 234 Mr Baxter did recall presenting slides with respect to the communications strategy to the meeting. As the judge noted at LJ [140], the slides did not suggest that an announcement would be made by JHIL that it was certain that the Foundation had sufficient funds to meet potential asbestos claims, or that it was fully funded. The key messages slide included that "[t]he Foundation expects to have enough funds to pay all claims", and referred to greater certainty for claimants that compensation would be available to meet all future claims. Another slide included that Mr Loosley had "counselled us to strengthen the adequacy of funding so that we could argue that the most likely outcome was that all claims would be met". On the modelling, a surplus was the "most likely outcome". 235 This fell short of full funding, and did not go against the "central communications conundrum" from which the strategy had developed as stated in the communications strategy attachment in the board papers. The judge perhaps understated it. It seems to us that the slides and the board papers as a whole were contrary to an announcement being made that it was certain that the Foundation had sufficient funds to meet potential asbestos claims, or that it was fully funded. 236 The substance of the evidence of Mr Brown, Mr Morley and Mr Willcox, canvassed by the judge at LJ [142]-[180], was that they did not recall a draft announcement or discussion of a draft announcement. Mr Morley and Mr Willcox said that they would have opposed the release of the Draft ASX Announcement, or required qualifications to parts of it, because of what it said about adequacy of funding. Ms Hellicar went further, and said that to the best of her recollection there was no discussion at all of the terms of an announcement to the market. She also would not have approved the Draft ASX Announcement because of what it said. Mr Gillfillan had no recollection of discussion of an announcement to the ASX. Mr Koffel accepted that someone could have outlined what was to be in an announcement (although that did not provide evidence that they did). 237 None of the tendered evidence of Mr McGregor, Mr Peter Cameron or Mr Robb given to the Jackson inquiry dealt with whether a draft announcement or any version of a news release was tabled, discussed or approved at the meeting. 238 Mr Morley recalled discussion of the communications strategy, which he said was presented by Mr Macdonald and Mr Baxter. Mr Brown also recalled discussion of the communications strategy, and we will come to ASIC's reliance on what it said was a correlation between his recollection of the matters discussed and the draft news release. 239 The judge came to his findings in two stages. He first asked whether the 7.24 am draft news release (which was the Draft ASX Announcement in the FFASC) was at the February meeting. He then asked whether the directors resolved to approve it. On appeal his findings were sometimes referred to as the tabling finding and the approval finding. 240 This is not to suggest any formality either in tabling documents or in voting. It was accepted that distribution of a draft ASX announcement at the meeting, if there was thereafter discussion, amounted to tabling it. And the judge said in the liability judgment, and it was common ground - "234 The practice of the board of JHIL was not formally to put a matter to a meeting as a resolution. No one recalled a formal vote ever being taken. Mr McGregor summarised the position and directors indicated their approval or remained silent. In either case the directors regarded that procedure as the passing of a resolution by the board. … " 4.3.1 The tabling finding 241 The judge was satisfied that Mr Baxter took the 7.24 am draft news release with him to the meeting and, in accordance with his practice, provided copies to those present: LJ [220]. 242 We summarise his Honour's reasoning in so finding - Mr Baxter said he took a document to the February meeting, and there was no reason to doubt that evidence. Because there was a "strong correlation" (LJ [194]) between the statements as to the key messages to be communicated to the market that Mr Brown agreed were likely to be made, and to a lesser extent Mr Koffel agreed could have been made, and the 7.24 am draft news release or the 9.35 am draft news release, the document was one or other of those draft news releases. In the 7.24 am e-mail of 15 February 2001 Mr Baxter had told Ms Rotsey that he intended to take the 7.24 am draft news release to the meeting. A copy of the 7.24 am draft news release was produced to ASIC by BIL Australia Pty Ltd ("BIL") in answer to a notice to produce board papers of JHIL. Mr O'Brien was a director of BIL. Mr Terry was a director of BIL's ultimate holding company. Two copies of the 7.24 am draft news release were produced by Allens containing handwritten annotations of (probably) Mr Peter Cameron and of Mr Robb. It should be inferred from Mr Baxter's stated intention and the production of the copies by BIL and Allens that copies of the 7.24 am draft news release were taken to, and provided to Messrs O'Brien, Terry, Peter Cameron and Robb at, the February meeting, and also to the remaining directors. The inference was reasonable and definite and there was no inference of equal degree of probability. It was not an impediment to drawing the inference that ASIC had failed to call direct evidence that it could have called (that is, evidence from Mr Robb, Mr Wilson and Mr Sweetman), because ASIC had called Mr Baxter who "said it was the draft ASX announcement he took to the 15 February 2001 meeting" and because Messrs Robb, Wilson and Sweetman were "in the camp of the defendants or at least in the camp of [JHIL]" (LJ [207]). 243 We have taken this reasoning from LJ [193]-[219]. The paragraphs were detailed, and included recounting a number of submissions against drawing the inference and his Honour's reasons for rejecting the submissions. 244 As appears from the last dot point in our summary of the judge's reasoning, the submissions against drawing the inference included reliance on the fact that ASIC had not called Mr Robb, Mr Wilson or Mr Sweetman to give evidence of what had occurred at the meeting. The judge's reasons referred to Jones v Dunkel (1959) 101 CLR 298 and observations in Whitlam v Australian Securities and Investments Commission [2003] NSWCA 183; (2003) 57 NSWLR 559 at [119] and Cook's Construction Pty Ltd v Brown [2004] NSWCA 105; (2004) 49 ACSR 62 at [42]. He recorded also the formal submission that ASIC was under a duty akin to that of a prosecutor in criminal proceedings. These matters, and more, were canvassed on appeal, and we will come to them (see [626]-[777] below). 245 The judge said at LJ [222] that it was sufficient to find that those of the appellants who swore that the draft ASX announcement was not before the February meeting were mistaken. 4.3.2 The approval finding 246 The judge was satisfied that one or both of Mr Macdonald and Mr Baxter spoke to the draft news release, and that they put the statements as to the key messages to be stated to the market set out in it that Mr Brown agreed were likely to have been stated and to a lesser extent Mr Koffel agreed might have been stated: LJ [223]. This was on the basis of the "strong correlation" (LJ [194]) earlier mentioned, seen by the judge between the draft news release and key messages Mr Brown and to a lesser extent Mr Koffel said were likely to have been or could have been stated by management: we consider the issue of correlation at [385]-[424] below. 247 His Honour continued - "224 The purpose of the distribution of the Draft ASX Announcement to those present and the discussion of its contents was to approve its release. It was submitted that this contravened the standard practice of obtaining the approval of a draft press release by line management and senior executives before its provision to the board. And it offended the disclosure policy approved by the board. That is so. But this was a last minute affair. None of the board, or management, or Allens, had seen the document before the board meeting commenced. Its distribution to the board in those circumstances provided all the more reason for a detailed consideration of its content by each director. 225 I am satisfied that the Draft ASX Announcement was approved. It has not been suggested that the board rejected it. The defences were that the Draft ASX Announcement was not before the board, was not considered and was not approved. A rejection of the first and second propositions leads to the conclusion that it was approved. The board had been forewarned in the board papers for the January 2001 board meeting that an announcement of the formation of the Foundation would be made after the February board meeting if management's proposal was accepted. The discussion of the Draft ASX Announcement at the 15 February 2001 Meeting could be for one purpose only – for the board to approve the release of the announcement. 226 Mr Brown agreed that part of the communication to the market would be an announcement to the ASX. He said it was likely that the board's approval of that message was summarised by Mr McGregor in the usual fashion saying "is the board happy with that?" and everybody nodded or otherwise indicated their agreement. 227 And an announcement was made to the ASX in the form of the Final ASX Announcement and that was based on the Draft ASX Announcement." 248 His Honour said at LJ [228] that it was sufficient "at this stage" to find that those of the appellants who swore to the contrary were mistaken. 249 The judge went on to reject a submission said to be that, because further consideration was given by management and Allens to the terms of the Draft ASX Announcement after the February meeting, the approval of the directors "was subject to this further consideration and did not constitute final board approval": LJ [229]. He said - "230 I reject that submission. The fact that management made alterations to the Draft ASX Announcement may put in question their authority to have done so. But it does not detract from the inference that the approval of the board to the release of the announcement was sought and obtained at the 15 February 2001 Meeting. None of the defendants raised a case that there was a resolution by the board but it was conditional. The defences were that the Draft ASX Announcement was not before the meeting, was not discussed and was not approved. That is a different case." 250 His Honour referred at LJ [231]-[233] to the particular position of Mr Gillfillan and Mr Koffel in relation to voting, ending with the observation that they "did not abstain from" approving the draft ASX announcement. There was some contention on appeal over what the finding was. We return to this at [840]–[857] below. 4.4 Appellate constraints 251 The task of this Court, under s 75A(5) of the Supreme Court Act 1970, is to conduct an appeal by way of re-hearing. Under s 75A(10), the Court can make any finding or assessment which ought to have been made or which the nature of the case requires. 252 The Court must conduct "a real review of the trial and, in cases where the trial was conducted before a judge sitting alone, of that judge's reasons": Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at [25] per Gleeson CJ and Gummow and Kirby JJ. Their Honours continued - "Appellate courts are not excused from the task of 'weighing conflicting evidence and drawing [their] own inferences and conclusions, though [they] should always bear in mind that [they have] neither seen nor heard the witnesses, and should make due allowance in this respect'. In Warren v Coombes , the majority of this Court reiterated the rule that: '[I]n general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge. In deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusion of the trial judge but, once having reached its own conclusion, will not shrink from giving effect to it.' As this Court there said, that approach was 'not only sound in law, but beneficial in ... operation'." (citations omitted) 253 This approach was affirmed in CSR Ltd v Della Maddalena [2006] HCA 1; (2006) 224 ALR 1 at [13]-[22]. 254 There are constraints in the review by this Court, considered in Fox v Percy at [26]-[29]. Their Honours particularly referred to the effect on trial judges' decision-making of "their impression about the credibility of witnesses whom the trial judge sees but the appellate court does not". But the appellate court must still perform its function of conducting a rehearing, and it may be that "incontrovertible facts or uncontested testimony will demonstrate that the trial judge's conclusions are erroneous, even when they appear to be, or are stated to be, based on credibility findings", or that "an appellate conclusion may be reached that the decision at trial is glaringly improbable or contrary to compelling inferences in the case". 255 The constraints stem from respect for the advantages of trial judges. In Gett v Tabet [2009] NSWCA 76; (2009) 254 ALR 504 the Court (Allsop P and Beazley and Basten JJA) said at [15] that the qualification to the appellate obligation to assess the evidence, inferences and evaluative judgments required to be made to determine a case - " … involves the limitations on the ability of the appellate court to comprehend fully the evidence and process of the trial. The appellate court suffers from three kinds of limitation in that regard: (a) not having seen or heard witnesses give evidence and not having seen the whole of the evidence develop and fall out at the trial; (b) even in respect of documentary evidence and transcripts of oral evidence, not having complete familiarity with the whole of the record often occurring over an extended period of time which the trial judge is likely to have had; and (c) notwithstanding the requirement that the trial judge provide written reasons for his or her decision, not having access to every detail of the reasoning process which, almost inevitably, will escape the resources and ability of the most diligent trial judge to record in full." 256 The first of these limitations can involve the credibility impressions to which reference is made in Fox v Percy. However, as their Honours pointed out in Gett v Tabet at [16], the constraints are not restricted to that situation. In Seiwa Australia Pty Ltd v Beard [2009] NSWCA 240 Campbell JA, with whom Macfarlan JA agreed (Allsop P seeing no inconsistency with Gett v Tabet), said at [150] - "At 126 [23] of Fox v Percy , their Honours made clear that the advantage of a trial judge is by no means confined to the making of factual findings that are affected by demeanour. Deliberately not being exhaustive, their Honours said that the limitations on an appellate court: ' … include the disadvantage that the appellate court has when compared with the trial judge in respect of the evaluation of witnesses' credibility and of the "feeling" of a case which an appellate court, reading the transcript, cannot always fully share. Furthermore, the appellate court does not typically get taken to, or read, all of the evidence taken at the trial. Commonly, the trial judge therefore has advantages that derive from the obligation at trial to receive and consider the entirety of the evidence and the opportunity, normally over a longer interval, to reflect upon that evidence and to draw conclusions from it, viewed as a whole.'" (citations omitted) 257 It should not be forgotten that, to the contrary of these constraints, the appellate court may have advantages not available to the trial judge, essentially lying in mature consideration, with the detailed assistance of counsel, removed from added complexities of the trial: see Yarrabee Coal Company Ltd v Lujans [2009] NSWCA 85; (2009) 53 MVR 187 at [3] per Allsop P and Seiwa Australia Ltd v Beard at [2] per Allsop P. 258 Although this Court conducts a rehearing, it is necessary that error be shown: Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424 at [24]; Gett v Tabet at [10]-[23]. But where advantages of the trial judge do not restrict appellate review, error can lie in the appellate court coming to a conclusion different from that of the trial judge: Yarrabee Coal Company Ltd v Lujans at [4]. 259 We do not think the parties disputed these principles. But they differed in their application. 260 In summary, the appellants submitted that the judge made clear at LJ [222] and [228] that he did not base his findings on the credit of any of the witnesses, and specifically said at LJ [1150] that he had reached his decision without resort to evidence on which ASIC relied as damaging to credit (in context, of the appellants or some of them). They said that, although credit may have been in issue at the trial, this Court's review on appeal should take it that his Honour derived no significant assistance from hearing the witnesses give their evidence, and should be in accordance with the approach in Warren v Coombes (1979) 142 CLR 531; (1979) 23 ALR 405 as affirmed in Fox v Percy. 261 Also in summary, ASIC submitted that the judge had advantages other than the ability to observe the demeanour of witnesses, in the opportunity to consider and reflect upon the evidence and draw conclusions from it viewed as a whole and in assessing the evidence so as to separate the credible from the less credible. It said that it could not be said that the judge's findings were at odds with "incontrovertible facts or uncontested testimony", were "glaringly improbable" or were "contrary to compelling inferences", and that the appellants did not contend that they were. ASIC emphasised that it was necessary for this Court positively to find error in the judge's findings, and said that the Court should give weight to the judge's advantages as mentioned above. 262 To an extent there was common ground. Neither the appellants nor ASIC invoked the occasions for departure from credit-based findings. In our view, the judge's reasons gave rise to a rather more complex position than these submissions recognised. 263 The judge said at LJ [222] that it was sufficient to find that the appellants who gave evidence were mistaken, and at LJ [228] sufficient "at this stage". There came a later stage, under the heading "Subsequent events and credit issues", in LJ [1148]-[1255]. 264 The judge said - "1148 ASIC relied upon events subsequent to the matter in issue that called for a response that was not forthcoming as an admission that the matter in issue occurred or as damaging the credit of the non-responding person. 1149 There is a difficulty in this line of submission in a multi-party proceeding such as the present. Does the attack on the credit of one party affect the credit of all other parties who failed to respond? Is it significant if the matter in issue is the intention of the board of directors of JHIL? Is the intention of one director indicative of the collective intention of all the directors? 1150 I have reached my decision without resort to this evidence. But where a response was called for if my decision on a matter in issue was incorrect and none was forthcoming, I drew support for my decision from that circumstance. 1151 Likewise, if the credit of a witness was damaged, I drew comfort for my rejection, on other grounds, of that person's evidence on a matter in issue." 265 Thereafter the judge referred to evidence concerning subsequent events which he appears to have regarded as providing comfort because it told against the credit of some or all of the appellants. (We think there is some difficulty in attribution amongst appellants, see at [778[-788] below). The comfort was not particularly in relation to approval of the Draft ASX Announcement Resolution. The judge repeated at LJ [1255] that he "did not rely on issues of credit in arriving at my conclusions on the matters at issue". But he did express views on credit. 266 On appeal, ASIC relied quite heavily on subsequent events in relation to approval of the draft ASX announcement. The appellants responded to the reliance on subsequent events. To the extent, then, that credibility findings were made in relation to subsequent events, and were seen by the judge as providing comfort, there may be occasion for constraint in our rehearing. Therefore this formed part of our review, notwithstanding that regard to the subsequent events played only a supporting role in the judge's reasoning. 267 We will take the following course. In the main we can weigh the evidence and draw our own inferences and conclusions, with due regard to the judge's conclusions, without reference to the judge's credibility findings so far as they were seen as providing comfort. To the extent that those findings might bear upon particular issues, we will as appropriate explain and consider what the judge said. 268 There is a particular complication. After dealing with the evidence concerning subsequent events, with expressions of views as to credit, the judge concluded this part of his reasons - "1252 Attacks were made on the credit of other witnesses. For example, Mr Koffel said he did not attend the board meeting on 12 July 2001 because he was in Houston at a meeting of his company that occurred over two days and required his attendance. He was deeply involved in preparation as well. 1253 But a sound recording of the chairman's address to the annual general meeting on that day confirmed that Mr Koffel attended on the telephone for at least half an hour from the commencement of the address until he confirmed his attendance. 1254 Mr Koffel said he did not recall his attendance by telephone and he maintained that he would not have attended the directors' meeting that followed the annual general meeting. 1255 There were not nearly so many attacks on the credit of the other non-executive directors who gave evidence as there were in relation to Ms Hellicar. I do not catalogue them because, as I have said, I did not rely upon issues of credit in arriving at my conclusions on the matters in issue." 269 It is clear from these paragraphs that the judge's views on credit were not fully stated. He did not deal with the "attacks … on the credit of other witnesses". 270 The example of the attack on the credit of Mr Koffel was left rather up in the air: was it genuine misrecollection by Mr Koffel? Recalling the judge's statements, in relation to the tabling finding (LJ [222]) and the approval finding (LJ [228]), that it was sufficient to find that those of the appellants who swore to the contrary were mistaken, it might be thought unfair to the appellants to make incomplete findings as to credit, and leave mistake as to those matters pregnant with the possibility of untruthfulness. More to the present point, so far as the credit of the appellants may be material, the catalogue of issues of credit was expressly incomplete. 271 We should say that we have had the appellate advantage of mature consideration with detailed assistance from the parties' representatives. 4.5 Review of submissions on the evidence 4.5.1 Introduction 272 The issue is whether the appellant non-executive directors (and Messrs McGregor and Macdonald) voted in favour of the Draft ASX Announcement Resolution, as pleaded in para 57 of the FFASC. As we have emphasised, the Draft ASX Announcement Resolution was a resolution approving the draft news release as an ASX announcement, to be executed and sent to the ASX, and the news release was the 7.24 am draft news release. 273 Two matters particularly arise from pleading specific approval of a specific version of the announcement. 274 First, the appellants' submissions included, perhaps with some hesitancy, that ASIC's case in this respect would fail if the draft ASX announcement at the February meeting was not the 7.24 am draft news release, but the 9.35 am draft news release. The pleading point was not put to the test at trial, because the judge found that Mr Baxter took the 7.24 am draft news release to the meeting. The appellants' submissions were directed to whether any draft news release was taken to the meeting, but included that, if one was taken, it was the 9.35 am draft news release. 275 The paragraphs of the Draft ASX Announcement said by ASIC to be material to the contraventions were set out in para 56 of the FFASC. Like paragraphs appeared in the 9.35 am draft news release. There was no material difference between the two versions in these paragraphs, and so far as they were concerned it would not have mattered to the board's consideration which version of the draft news release was at the meeting. 276 The tie to the 7.24 am draft news release rather than the 9.35 am draft news release could be a defect to which objection could not be taken or allowed, within s 15 of the Criminal Procedure Act 1986 and the enactments in its lengthy pedigree, if the proceedings were criminal proceedings. Albeit that these are civil penalty proceedings, the procedures for civil proceedings must be applied when hearing them, and in civil proceedings amendment is available. For a reason or reasons other than the content of the two versions, and especially if the conduct of the proceedings may have been moulded by the tie to one version, amendment could be refused. Other facts could make the version important: for example, if the pleaded version was the 9.35 am draft news release, the reasoning from the BIL and Allens copies of the 7.24 am draft news release would not be available. No doubt that was not lost on either ASIC or the appellants, but the example would be unlikely to weigh against amendment. It is difficult to see that amendment would not have been available in the face of the pleading point. 277 Had an application to amend been made, it may well have succeeded. However, neither at the trial nor on appeal did ASIC seek to amend. There has been no occasion for the appellants to put submissions against ASIC being confined to its pleading of approval of a specific version of the announcement, or to proffer reasons for holding ASIC to the tie to the 7.24 am draft news release which might not be immediately evident. We can not say that success would be inevitable. Despite the congruity in the content of the two versions, in the circumstances we consider that ASIC must stand or fall on establishing that the draft ASX announcement at the meeting was the 7.24 am draft news release. 278 Secondly, and in contrast with the version of the announcement, there is considerable significance in the specific pleading of approval of the draft news release as an ASX announcement, to be executed and sent to the ASX. Although it might have been passed with some informality, as we have described at [240] above, if the Draft ASX Announcement Resolution was passed it was a definitive act of JHIL, and one of high importance. It was not enough for ASIC to prove that the directors were provided with the 7.24 am draft news release and in discussion indicated satisfaction that a message of sufficiency of funding could be put out to the market. Approval of the news release as an ASX announcement, and of its sending to the ASX, was necessary. 279 If the Draft ASX Announcement was not at the February meeting, it would not have been approved for sending to the ASX. ASIC did not suggest otherwise. But the reverse is not correct. If the Draft ASX Announcement was at the meeting, it does not automatically follow that it was approved as an ASX announcement to be executed and sent to the ASX. The appellants challenged the judge's reasoning, at LJ [225], that the discussion of the draft news release at the meeting could only be for approval of its release as an ASX announcement. They pointed to the specificity of the Draft ASX Announcement Resolution, and said that distribution of a draft news release at the meeting, followed by sending an announcement to the ASX did not mean approval of the former for sending as the latter. In particular, they said that the changes to the 7.24 am (or 9.35 am) draft news release after the February meeting suggested that it had not received the definitive board approval indicated by the Draft ASX Announcement Resolution. 4.5.2 Our approach to the review 280 As we have explained, Mr Baxter and Mr Harman could give little evidence of what occurred at the February meeting, nor did the tendered evidence of Mr McGregor, Mr Peter Cameron and Mr Robb deal with tabling, discussion or approval of a draft news release. 281 ASIC tendered direct evidence of what occurred through the minutes of the meeting and some other documentary evidence in the nature of admissions that the Draft ASX Announcement Resolution was passed. We come to this evidence in due course. Through documentary evidence and otherwise, the accuracy or reliability of the minutes and the other evidence was challenged by the appellants. ASIC relied also, and considerably, on inferences from other matters to the conclusion that the resolution was passed. Its submissions went beyond the reasoning of the trial judge which we have earlier summarised, and included reliance on evidence of subsequent events. The availability of the inferences was challenged by the appellants. Our review on appeal goes well beyond the judge's path to his conclusions. 282 ASIC's submissions on the evidence followed some broad themes, which we identify as follows - A news release and ASX announcement conveying full funding was a necessary part of establishing the Foundation, in order to counter stakeholder opposition. Board approval of an ASX announcement was in accordance with JHIL's practice. Mr Baxter took the 7.24 am draft news release to the February meeting and there distributed it. Evidence of statements at the February meeting as to "key messages" correlated with the draft news release. Consideration of the draft news release at the February meeting could only have been for its approval as an ASX announcement. There were no protests that subsequent ASX announcements conveying full funding were incorrect or should not have been released. The minutes of the February meeting recorded the Draft ASX Announcement Resolution, and were confirmed as a correct record. There was later acceptance that the Draft ASX Announcement Resolution had been passed. 283 A summary in ASIC's written submissions read - "106. The directors were told and understood that it was not feasible to separate the asbestos liabilities of Coy and Jsekarb from JHIL without an unequivocal public statement as to sufficiency of funds. They were told and understood that they were obliged to consider the likely reaction to the announcement of the separation in considering whether or not to approve the separation. As a matter of logic, it is not possible to fulfil that duty without asking to see the terms of the proposed announcement. There is no dispute that they approved the separation. The trial judge correctly found that they also considered and approved the public announcement which contained the very assurances they had been told were necessary. 107. Mr Baxter's 7.24 am e-mail on 15 February 2001 is contemporaneous evidence of a draft announcement being taken to the meeting. His evidence was that his practice was to circulate such drafts at board meetings and he believes he did so. The documents produced by BIL Australia and Allens are powerful documentary support for the conclusion that the document which Mr Baxter says he took to the meeting was circulated at the meeting. The only evidence as to the purpose of any such circulation was for board approval. That is what the anticipatory draft minutes envisaged. That is what the approved minutes recorded. Mr Brown's evidence is that there was discussion as to the terms and approval of the announcement. The 20 February 2001 follow up meeting facsimile is contemporaneous evidence supporting that conclusion. The failure of the directors to raise an issue on receipt of the final ASX and the 23 February 2001 ASX Announcements all support the conclusion of approval, as do the subsequent declarations." 284 We will consider the parties' submissions by reference to the broad themes, taking up as appropriate additional matters on which ASIC or the appellants relied. 285 We remind ourselves, however, that "in dealing with circumstantial evidence, we have to consider the weight which is to be given to the united force of all the circumstances put together" (re Belhaven and Stenton Peerage (1875) 1 App Cas 278 at 279 per Lord Cairns LC; see Chamberlain v The Queen (No 2) (1984) 153 CLR 521 at 535-61 per Gibbs J; Shepherd v The Queen (1990) 170 CLR 575 at 580-1 per Dawson J). As was said by Winneke P in Transport Industries Insurance Co Ltd v Longmuir (1997) 1 VR 125 at 128 - "In cases of circumstantial evidence each proven fact may gain support from the others and, although each, considered in isolation, might not provide a sound basis for inferring the ultimate fact to be proved, a combination of all facts might provide a compelling basis from which to draw that inference." 286 This is not wholly a case of circumstantial evidence, because there is evidence such as the minutes of the meeting. Nonetheless, we consider that we should take a similar approach, and so will determine whether ASIC proved the passing of the Draft ASX Announcement Resolution from "the united force" of all the evidence. While we express some views within each theme, we will come to our decision on that basis. 4.5.3 A necessary part of establishing the Foundation 287 This draws upon what we have said of the lead-up to the February meeting. In essence, the reasoning to which ASIC appealed was that communication of full funding was seen as essential in order to quell stakeholder opposition; therefore in establishing the Foundation the board was likely to have approved an announcement of full funding. ASIC contended that the very fact that the board approved the separation proposal supported "that they approved an unequivocal public assurance as to the sufficiency of funds in the form of the Draft ASX Announcement". 288 It may be accepted that separation of "the asbestos litigation poison pill" from JHIL's operating businesses was a central consideration in Project Green, and that the separation was seen as urgent because of ED88; and further, that in deciding whether to approve a separation proposal, it was necessary that the board consider the reaction of stakeholders. The announcement of the establishment of the Foundation was very important. Considerable attention was given to a communication strategy. But we do not think that the step from there to essential announcement of full funding, approved by the board in the form of the Draft ASX Announcement, is well taken. 289 At least in August 2000, management wished to be able to argue that "the funds left behind will be sufficient under every conceivable scenario", lest stakeholders "spoil" Project Green. Although other statements were less florid, ability to say that there was sufficient funding for asbestos claims in the asbestos liability companies was at that time put forward by management as of high importance. 290 The language of sufficient funding was used, not full funding, and had inherent ambiguity. It was well recognised that the future could not be foreseen with certainty, and as at August 2000 management's proposal was an actuarial assessment plus a buffer. Actuarial assessment depended on the underlying data and assumptions, and even sufficiency "under every conceivable scenario" rested upon the conceptions of scenarios. The better the buffer, the less stakeholders were likely to "spoil", but it was still a buffer, not an absolute assurance of sufficiency. 291 The net assets model retreated from sufficient funding. Asbestos claimants would be left to the net assets of Coy and Jsekarb, in part because there was no reliable way of determining the amount of further contribution if attempting to fund all future claims. It was accepted, as part of the separation proposal at this time, that there could not be an assurance of sufficiency. The communications strategy was one of certainty in the sense of availability of the net assets but, from the questions and answers in particular, without any assurance of sufficiency of funding. Management considered this an acceptable strategy. 292 The board brought some return to sufficiency of funding at the January meeting, in part on moral grounds but also because of anticipated adverse stakeholder reaction to the net assets model. Even then, sufficiency of funding seems to have been regarded as an actuarial matter, less than an assurance of full funding: see the evidence of what Ms Hellicar said. 293 The outcome, in the proposal for the February meeting, was more funding, not full funding. The additional funding, over and above the companies' net assets of approximately $214 million, was initially $57 million, later rising to $112 million. How the amount was struck is not particularly clear, although it is plain enough that it was tested by the cash flow modelling based, inter alia, on Trowbridge's estimates. 294 The outcome was not presented to the board as one of full funding, in that language or at all. On the contrary, the board was told in the board papers that an assurance of sufficient funding could not be given. Prominent in the communication strategy attachment part of the Project Green Board Paper for the February meeting was the "central communications conundrum" of inability to provide key stakeholders with "any certainty that the funds set aside … will be sufficient to meet all future claims". The strategy was to emphasise certainty in availability of funds, as the 'positive' for asbestos claimants. The draft questions and answers recognised the unreliability of an actuarially based assessment of sufficiency of funding, and were explicit that "James Hardie cannot make a determination as to the adequacy of funding" and that "[i]t may be that the assets available prove insufficient". Mr Loosley's advice was presented as counselling "to strengthen the adequacy of funding so that we could argue that the most likely outcome was that all claims could be met". 295 The slides also did not indicate full funding. They included that detailed review of funding "indicates that it is manageable" and "[g]ross assets should be sufficient for future claims", and in relation to JHIL's modelling, "Surplus most likely outcome". But the qualified assurance was reflected in the limited key message that the Foundation "expects to have enough funds to pay all claims", and the "central communications conundrum" was not displaced in the communication strategy. 296 Nor was the same importance now seen in the ability to say that there was sufficient funding for asbestos claims. Unlike the pessimism in 2000, a slide included that management and its advisers had become much more confident in their "ability to 'sell' the proposal to external stakeholders". In line with this slide, the communication strategy attachment told the board that the strategy would deal effectively with the risks of executing the separation proposal, and that it could be implemented as recommended. In light of the "central communications conundrum", the "comprehensive plan" to neutralise major stakeholder risks must have included that stakeholders would not be told that it was certain that the funds set aside would be sufficient to meet all future asbestos claims. But there was confidence that stakeholder reaction could successfully be managed. 297 Two difficulties in ASIC's submission are exposed. First, as the separation proposal was presented to the board in the board papers and the slides, communication of sufficiency of funding (let alone full funding) was not necessary in order to quell stakeholder opposition. Secondly, as the separation proposal was presented, sufficiency of funding was not going to be communicated; on the contrary, apart from a draft news release the presence of which at the meeting is in issue, the communication strategy eschewed conveying that certainty and at most the message was of expectation. The communication strategy recognised, by the "central communications conundrum", that the certainty could not be conveyed, and took a different approach in order to counter stakeholder opposition, with confidence of success. 298 A news release was plainly contemplated. A news release broadly to the effect of the draft news release at the January meeting ("sets aside guaranteed, unencumbered funding") would have been consistent with the communication strategy in the board papers. The 7.24 am (or the 9.35 am) draft news release was not consistent with that communication strategy. What it said about full funding was out of step with it. The divergence had begun with the 7.28pm draft news release and other documents prepared by Anderson, and can be seen particularly in the contrast between the Anderson key messages document, which included that the Foundation "is fully funded and will meet all future compensation claims", and the much less bold key messages in the communications strategy attachment and in the slides. The evidence did not explain how the Anderson drafts came to ramp up the message of full funding. According to the communication strategy in the board papers, it was not necessary that that be done. More than that, it was not to be done. 299 It should be recognised that, as we later note at [415], Mr Brown agreed that "the levels of assurance that we received in the meeting about the sufficiency of funding are stronger than what is implied in [the key messages slide]". Management may have expressed greater confidence at the meeting, and in the paragraphs of our later discussion we refer to Mr Macdonald's assurance that "[w]e are providing enough funds for future claims". But this did not go to essentiality of communication of full funding in order to quell stakeholder opposition. 300 We do not think that the fact that the directors approved the separation proposal materially supports that they approved a public assurance as to the sufficiency of funds in the form of the Draft ASX Announcement. For this reason alone the step to essential announcement of full funding, approval by the board in the form of the Draft ASX Announcement, is not well taken. 301 Let it be assumed that an inference is available, from approval of the separation proposal, that the board approved an announcement to the effect that there were sufficient funds to meet asbestos claims. That was not ASIC's pleaded case. The pleaded case was one of approval of the Draft ASX Announcement, by the Draft ASX Announcement Resolution. It was not ASIC's case that the board agreed that a strong funding message could and should be made, but that the specific 7.24 am draft news release was before the meeting and was approved as an ASX announcement to be executed and sent to the ASX. Even with the assumption, no inference is available that the board approved the specific announcement. Indeed, it might be thought that if the 7.24 am draft news release had been before the board for approval, the ramped up message of full funding would not have been accepted, given the clear notice of the "central communications conundrum". 4.5.4 In accordance with JHIL's practice 302 According to Mr Baxter, within JHIL there was a process for drafting and approving ASX announcements. Some were "usually considered at Board level". These were announcements concerning the financial results of the company "and significant announcements concerning the company such as a proposed restructuring like Project Chelsea, Project Green and the establishment of the Medical Research and Compensation Foundation". (We note that according to the minutes, at its 30 June 1998 meeting the board had resolved to approve a press release concerning Project Chelsea and to authorise the company secretary to release it to the ASX.) 303 Still according to Mr Baxter, announcements of the significant kind - " … were initially drafted by Corporate Affairs and required the approval of the CEO, the CFO, General Counsel, and the company's external legal advisers before they were finalised to go to the board. Any contrary views from any of these people as to the information contained therein required resolution before the ASX announcement was presented to the JHIL board for final sign off. The normal practice was that when the ASX announcement was approved by the board either the CEO, CFO, company secretary or General Counsel would cause the announcement to be lodged with the ASX." 304 In cross-examination Mr Baxter agreed that his practice was that no announcement would go to the board for approval unless and until the process stated above had been undertaken. He said that, generally speaking, the announcement would be checked with external advisers prior to it going to the board, in order to ensure accuracy and obviate a return to the board because an adviser would not agree to the announcement. 305 The establishment of the Foundation was a significant matter. The parties relied on this evidence for different purposes. 306 ASIC relied on the JHIL practice to support that an ASX announcement was before the board for approval at the February meeting. It also drew attention to what it said was Mr Brown's understanding that the draft news release was included in the January board papers for the purpose of the board's approval. 307 Mr Brown's evidence was not as put forward in the submission. He was asked whether at the January meeting he understood that "a communications strategy which included a draft press release was being recommended to you for your approval". He answered, "In principle, yes sir". What was for approval was the communication strategy; it happened to include a draft press release. We do not think that this is of great assistance when the issue in relation to the February meeting is not the communication strategy, which did not include a draft news release, but a draft news release. There was no question of a resolution approving a communication strategy although that is not to deny that the communication strategy was discussed and may have received acceptance. Further, an approval in principle (if that is how Mr Brown's answer should be understood) would be less than the passing of the Draft ASX Announcement Resolution. 308 The appellants relied on non-compliance with Mr Baxter's practice. They submitted that, because the 7.24 am (or 9.35 am) draft news release had not been approved by Mr Macdonald, Mr Shafron or Mr Morley, and had not received the prior approval of Allens, it would not have gone to the board for its approval. They said as well that the draft news release had not been discussed with UBS, nor had the consents of Trowbridge, PwC and Access Economics to what was said about them in it been received prior to the meeting, so again the draft news release would not have gone to the board for its approval because it may have had to change. Further, the appellants said, the news release did change after the February meeting, and Mr Baxter had contemplated that it would – see his 7.24 am e-mail saying "no doubt we can refine further later today". 309 We have referred to Mr Baxter's "general recollection" that he sent the 7.28 pm draft news release to Mr Macdonald, Mr Shafron, Mr Morley and possibly Mr Robb. That was disputed, and there is reason to doubt it. But the 7.28 pm draft news release was changed in the 7.24 am draft news release, including in the third paragraph stating sufficiency of funds to meet all legitimate asbestos claims, in the oddly worded sixth paragraph and in the references to Trowbridge, Access Economics and PwC (see [321]-[331] below). It was not approved by any of the four persons, or by anyone from Allens, prior to the meeting. UBS had not been consulted, and the three advisers had not consented to the references to them. 310 We do not think that JHIL's practice supports ASIC. What should have been done, according to Mr Baxter's practice, was not done. That undermines any conclusion, from the evidence of the practice itself, that the draft news release was before the board for approval as an ASX announcement. 311 Providing some support in the opposite direction, there is some merit in the appellants' submissions. For the present we put aside the subsequent changes to the draft news release. Inherent in the overall practice was that the board would be presented with the final form of an announcement, vetted by management and by Allens. A logical extension would be vetting by UBS when it had been engaged to advise on proposed announcements, and prior consent from Trowbridge, Access Economics and PwC should there be references to them. One would not expect presentation to the board "for final sign off" (Mr Baxter's words) of an unvetted ASX announcement, particularly one unvetted by Allens, and without prior reference to UBS or consents from the three advisers. 312 However, we do not think the merit should be over-stated, although the submissions give point to the absence of evidence from Messrs Robb, Wilson and Sweetman to which we come later in these reasons. 313 The circumstances were unusual. There was great haste, with the deadline of media announcement together with the Q3 results on 16 February 2001. (The judge said at LJ [224] that it was "a last minute affair".) There seems to have been delay in progressing the various communications documents, including the draft news release, since early February 2001, and Anderson's draft of the news release came only on the evening of 14 February and was still being changed on the morning of 15 February. Although the consents of Trowbridge, PwC and Access Economics had not been obtained, some steps towards obtaining them had been taken and Mr Baxter said that he "would have" presented a draft news release to the board although it had not been approved by Trowbridge, PwC and Access Economics, although he had no recollection of doing so. 314 It is possible that there was departure from the practice by putting a draft news release before the board for approval although the CEO, CFO and General Counsel had not seen it, Allens had not signed off, UBS had not seen it beforehand, and the consents had not been received. The company officers and Messrs Robb, Wilson and Sweetman were at the meeting, and under the exigencies it might have been intended that they could then and there consider the draft news release. 315 We do not think this is a strong possibility. Even in the circumstances of haste, it is not to be expected that such an important matter as an ASX announcement would be thrust upon senior management, or upon advisers, particularly Mr Robb, at the meeting. In our view, the absence of prior vetting, advice and consents tends against the definitive approval alleged by ASIC. 316 Another possibility is that there was departure in that the draft news release was not put before the board for approval, but was taken to the board as a work in progress or (as Mr Brown seemed to say of the communication strategy at the January meeting) for some kind of approval in principle. That would not suffice for the definitive approval alleged by ASIC. But that whatever occurred was no more than consideration of a draft news release as a work in progress, if it was before the board at all, is suggested by the subsequent changes to the draft news release. 317 The changes are largely unexplained, although as we later describe (see [345]-[352] below), some changes material to conveying full funding appear to have come about at the suggestion of Mr Robb after the February meeting. That would itself tell quite strongly against approval of the Draft ASX Announcement – if Mr Robb did not advise at the meeting that it was acceptable, it is unlikely that the board would have given the definitive approval. 318 We have earlier referred to this, but repeat that in the liability judgment the judge said of the subsequent changes – "229 It was submitted that because further consideration was given by management and Allens to the terms of the Draft ASX Announcement after the conclusion of the 15 February 2001 Meeting, the approval of the directors was subject to this further consideration and did not constitute final board approval. 230 I reject that submission. The fact that management made alterations to the Draft ASX Announcement may put in question their authority to have done so. But it does not detract from the inference that the approval of the board to the release of the announcement was sought and obtained at the 15 February 2001 Meeting. None of the defendants raised a case that there was a resolution by the board but it was conditional. The defences were that the Draft ASX Announcement was not before the meeting, was not discussed and was not approved. That is a different case." 319 The appellants submitted that the judge had missed the point of their submission. They said that their submission had been that the evidence of the conduct of management and Allens after the meeting, including changes to the Draft ASX Announcement, were inconsistent with ASIC's case that an unqualified and unconditional resolution was passed at the February meeting. Their submission was not one of approval but subject to the further consideration. 320 The judge may not have fully appreciated the submission. ASIC did not allege some kind of approval in principle, leaving open later change. In our view, the subsequent changes detract from an inference that the board passed the Draft ASX Announcement Resolution. 321 Some of the changes to the 7.24 am or 9.35 am draft news releases in the 7.42 pm draft news release were unexceptional. Others, however, were of more significance. 322 The reference in the first paragraph to claims against "the company" was changed to claims against "two former James Hardie subsidiaries". Perhaps this was a relatively formal correction: however, Mr Baxter agreed that it was very important. 323 The $284 million in the second and eighth paragraphs became $293 million. Mr Harman explained this as a change in the discount rate applied to payments under the DOCI. It was nonetheless an increase of $9 million in the announced funding of the Foundation; not a minor matter. 324 The third paragraph was changed as follows - "The Foundation has will have sufficient funds to meet all legitimate compensation claims anticipated from people injured by asbestos products that were manufactured in the past by two former subsidiaries of JHIL." 325 The addition of "anticipated" reduced the assurance of sufficiency of funds, and appears to have come at the suggestion of Mr Robb. Mr Baxter agreed that it was a significant change because it changed the meaning of the paragraph. 326 The fourth paragraph was changed as follows - "JHIL CEO , Mr Peter Macdonald said that the establishment of a fully-funded Foundation provided certainty for both claimants and shareholders the best resolution for all stakeholders ". 327 As we have said, the sixth paragraphs of the 7.24 am and 9.35 am draft news releases read oddly, although in different respects. It was changed to read - "The Foundation will concentrate on managing its substantial assets for the benefit of claimants. Its establishment has effectively resolved James Hardie's asbestos liability and this will allow management to focus entirely on growing the company for the benefit of shareholders." 328 The eighth paragraph changed the function of Towers Perrin from managing the Foundation's investments to advising the Foundation on its investments. 329 In the ninth paragraph, dealing with the advice from Trowbridge, Access Economics and PwC, the change was in part as follows- " With this This advice , supplementing supplemented the company's long experience in the area of asbestos , the directors of JHIL determined the level of funding required by the Foundation and formed the basis of determining the level of funding required to meet all future claims ." 330 The change was significant. The focus of the determination of the level of funding moved from the advisers to the directors. The reference to meeting all future claims was deleted. According to Mr Baxter, the changes were requested by PwC. 331 The tenth paragraph was changed as follows - "' The directors of James Hardie is are satisfied that the Foundation has will have sufficient funds to meet anticipated all future claims,' Mr Macdonald said." 332 Again, the change from "all" to "anticipated" reduced the assurance of sufficiency of funds. It may have come from Mr Robb. 333 Mr Baxter's evidence included that, if material changes to an ASX announcement approved by Allens came out of the board meeting, Allens would need to sign off again. He said that if Allens suggested a material change, it would go to Mr Macdonald, Mr Macdonald would consult with Mr McGregor, and Mr McGregor would decide whether to consult the rest of the board. He said that, although he could not do so if the board approval had "set in stone" the terms of the ASX announcement, he could make changes in consultation with Mr Macdonald "and others". 334 Mr Baxter did not refer the changes to the draft news release to the non-executive directors. He recalled a belief that Mr Macdonald discussed the final version of the draft news release with Mr McGregor. He said that Mr Macdonald approved it. The judge found that Mr Macdonald approved the release of the Final ASX Announcement: LJ [614]. 335 ASIC submitted that board approval did not preclude subsequent changes, whether at the instigation of Allens or otherwise, provided that there was reference to Mr Macdonald who might consult with Mr McGregor. (The tendered evidence of Mr McGregor to the Jackson inquiry did not touch upon this matter.) It submitted that making the changes, with Mr Macdonald's blessing, was consistent with the board having passed the Draft ASX Announcement Resolution. 336 However, the changes were significant. This suggests that making them was thought to be open despite whatever had occurred at the meeting, and thus that whatever had occurred at the meeting was less than the Draft ASX Announcement Resolution. If a draft news release was before the board, the board did not give it final sign off as an important announcement according to the process described by Mr Baxter, but the final terms of the news release and ASX announcement were left to management. 337 This gains some support from the fact that others at the meeting appear to have acted on the same basis. Mr Harman sent the 9.35 am draft news release to PwC for consent to the reference to it. There was only the change to paragraph 6, but it was not the version which, on ASIC's case, had been approved by the board. Mr Harman had no recollection of the meeting, but said in his evidence that it was "not my understanding that the press release was set in stone at the board meeting". Mr Shafron dealt with obtaining Trowbridge's consent to the reference to it. Through others, late on 15 February 2001 he asked for a "soft copy" of the news release. Ms Wheeler sent an e-mail to him which included "Greg [Baxter] is currently working on it so once final will send it through". Mr Shafron responded asking for "[w]hatever you have now please … ". It may be going too far to infer, as the appellants submitted should be inferred, that Mr Shafron could not have been given a copy of a draft news release at the meeting, because he was asking for a copy. He was asking for a soft copy, presumably to attach to an e-mail to Trowbridge. But Mr Shafron, who occupied a significant management position and had been at the February meeting, appears to have thought that the news release was a work in progress, and did not suggest that the version to be sent to Trowbridge had to be the 7.24 am draft news release on which the board had signed off. Mr Morley gave evidence that on 16 February 2001 Mr Shafron asked "who approved the press release?" He said that he answered that he assumed Mr Macdonald had. The judge did not make a finding, but this is consistent with Mr Shafron thinking that the news release was not one on which the board had signed off. 338 More detailed reference is necessary to evidence concerning Mr Robb, conveniently considered within this theme of accord with JHIL's practice although having wider significance. 339 Mr Peter Cameron and Mr Robb had attended the January meeting. They had provided a letter of advice dated 7 February 2001 on a number of aspects of the separation proposal as it was to go before the February meeting, a copy of which was in the board papers. In short, they advised that the "preferred option" of separation by the creation of a trust, followed by a group reconstruction via a scheme of arrangement, could be effected lawfully, but that the "second option" of separation by a more complex reconstruction achieved a "cleaner and more concrete legal result". As appears from what follows, they were alive to the importance of sufficiency of funding to the proposal to go before the board. 340 According to Mr Peter Cameron in his statement to the Jackson inquiry, on the morning of 15 February 2001 Mr Robb told him that he (Mr Robb) had just had a conversation with Mr Shafron, who had said that Trowbridge did not have the most recent months of claims data for the purposes of their actuarial assessment. 341 Mr Peter Cameron said that Mr Robb and he telephoned Mr Macdonald. Mr Shafron was with Mr Macdonald. There was a conversation on speaker phone, of which Mr Cameron said - "I do not recall the exact words that were spoken. In substance, I said that: 'We have just been told, for the first time, that the claims data underpinning the Trowbridge report did not include several months of the most recent data. I am very concerned that we may have been proceeding under a misapprehension, and as to the impact that may have on the advice to the Board.' My recollection is that Mr Shafron then explained the detail of what had occurred. He said, in substance, that: 'Trowbridge said that they do not require the most recent data and that it wouldn't make a difference to their conclusions because their report has been based on longer term trends and on a broader pattern of asbestos-related diseases in the wider community.' Mr Shafron and subsequently Mr Macdonald elaborated on the approach undertaken by Trowbridge in their report. I then said words to the following effect: 'With the Board meeting so soon, I am simply not in a position to absorb and assess the detail of what has happened. My primary concern is whether this information has any impact on the key conclusions in the proposals going to the Board and the financial models which are based on the Trowbridge report. In short, I need to understand the bottom line before we talk to the Board. Is there any reason to depart from the view that the Foundation will be fully funded?' Mr Macdonald said: 'Absolutely not'." 342 Mr Peter Cameron identified the file note taken by Mr Robb. It included at the end - "PC – had been concerned to confirm position Pmac – they are the most recent full set of numbers - last quarter is higher PC – no reason to depart from view that fully funded? P Mac – yes that is the case." 343 This must have been immediately prior to the February meeting. Mr Peter Cameron and Mr Robb must have gone to the meeting uncertain about whether (in the language of the slides) a surplus was the most likely outcome. 344 It may be noted that Mr Cameron and Mr Macdonald spoke of the Foundation being "fully funded". As will be seen (see [392] below), Mr Brown used that phrase, and explained that it was used at the meeting to mean sufficiently funded to the actuarial estimates. It may have become a common phrasing, so understood, in JHIL circles. 345 We have referred to the two copies of the 7.24 am version of the draft news release produced by Allens, containing handwriting of Mr Robb and some unidentified handwriting (which the judge said was probably Mr Peter Cameron's writing). 346 One copy contained Mr Robb's writing annotating the third paragraph. The writing is difficult to interpret. Our best interpretation, putting his writing in italics, is - " On the basis of (indecipherable) detailed analysis from actuaries, the Foundation will have has is expected sufficient funds to meet all legitimate compensation claims from people injured by asbestos products manufactured in the past by two former subsidiaries of JHIL." 347 There was no annotation to the fourth paragraph containing the words "fully funded Foundation", to the fifth paragraph referring to certainty or to the eleventh paragraph referring to satisfaction that the Foundation "will have sufficient funds to meet all future claims". Nor was the sixth paragraph, reading oddly, corrected in any way. 348 There were also annotations in Mr Robb's writing and the unidentified writing to the third paragraph in the other copy. Putting the unidentified handwriting in bold type, they were - " Following On the basis of detailed analysis from actuaries The Foundation is expected to will have sufficient funds to meet all legitimate compensation claims from people injured by asbestos products manufactured in the past by two former subsidiaries of JHIL." 349 It is not clear whether "is expected to" had been struck through. On this copy, the word "all" had also been struck out in the tenth paragraph, so that it referred to "determining the level of funding required to meet future claims". 350 Neither the 7.42 pm draft press release nor the Final ASX Announcement began the third paragraph by referring to a basis of detailed actuarial analysis. The third paragraph in those versions read that the Foundation "has sufficient funds to meet all legitimate compensation claims anticipated from people injured by asbestos products that were manufactured … " (emphasis added). In both, the tenth paragraph referred to determining "the level of funding required by the Foundation", without mention of meeting all future claims. 351 It is clear enough that, at whatever time he wrote on the copies of the 7.24 am draft news release, Mr Robb contemplated reduction in the level of assurance of adequate funding, by introduction of expectation and an actuarial basis. Clarity goes no further. In the subsequent versions of the news release the assurance in the tenth paragraph was gone. In the third and eleventh paragraphs there were functional equivalents to an actuarial expectation of sufficient funds, in sufficiency of funds to meet anticipated future claims. 352 It is likely that the changes to the 7.42 am draft news release, or some of them, came about at the suggestion of Mr Robb. Mr Baxter said that he had a number of conversations with Mr Robb about the draft news release, and that the 7.24 am draft news release was changed to include "the spirit of" amendments suggested by Mr Robb, although he could not recall whether it was after the February meeting. He said, in his affidavit referring to the 7.24 am draft news release - "98. I also have a recollection of having a number of conversations with Robb from Allens and receiving faxes from him regarding the draft JHIL media release. However I do not recall any communications with him regarding the handwritten comments that appear on these copies of the draft JHIL media release (ALNS.072.006.0062) and (ALNS.084.005.0087-0088). I recall that Robb and I discussed making changes to the draft JHIL media release and that I usually made the changes that he recommended. 99. There were many iterations of this draft JHIL media release and there was a file on my desk containing all the versions that Robb and others had sent me. It is possible that this file was misplaced, lost or destroyed during the move from York Street around 2002." 353 The appellants submitted that Mr Robb's involvement was inconsistent with approval of the 7.24 am (or the 9.35 am) draft news release at the February meeting. Allens had not been asked to sign off on the ASX announcement beforehand, and if the draft news release came to them before the meeting their advice would have been against approval without amendment. Being alive to the importance of sufficiency of funding, and uncertain about whether (in the light of what they had just been told about Trowbridge's data) a surplus was the most likely outcome, Mr Peter Cameron and Mr Robb would not have allowed JHIL to promulgate a news release or announcement with a definite assurance of full funding. They, or at least Mr Robb, suggested changes watering down the message of full funding. This must have been after the February meeting. The fact that the draft news release was thereafter changed in ways which reflected Mr Robb's annotations, they said, indicated that it had not been before the board for approval, or at least that it had not received the definitive approval of the Draft ASX Announcement Resolution. 354 The judge said in the liability judgment - "327 Why did neither Mr Peter Cameron nor Mr Robb react to the unequivocal and unqualified statements when they read their copies of the Draft ASX Announcement at the 15 February 2001 Meeting? The reason is that Mr Peter Cameron accepted the term " fully funded" as appropriate but earlier that morning he and Mr Robb had been advised of a new development that they had not had time to absorb." 355 His Honour referred to the evidence in Mr Peter Cameron's statement, ending with Mr Macdonald replying, "Absolutely not", and said - "329 … Presumably Mr Cameron and Mr Robb held back on voicing a view on the content of the Draft ASX Announcement consistent with Mr Cameron's need for time to absorb and assess the new development. Mr Robb had the opportunity later that day to give his view of the document." 356 We observe that the judge's explanation began from acceptance, in the first sentence of LJ [327], that the Draft ASX Announcement was at the February meeting. However, absence of any reaction went to whether the 7.24 am (or the 9.35 am) draft news release was at the meeting. With respect, we think the reasoning is flawed by starting, in part, with what was in issue. 357 We also have difficulty with the second sentence of LJ [327]. Advice that Trowbridge did not have the most recent months of claims data had caused Mr Peter Cameron and Mr Robb to question that the Foundation would be fully funded. If they had not had time to absorb that advice, why would they have accepted the language of full funding on the say-so of Mr Macdonald? And we have difficulty with LJ [329]. Rather than not voicing a view, would not a solicitor who had not had time to absorb something, which caused him to question the view that the Foundation would be fully funded, have advised the board not to approve the draft news release as an ASX announcement until he was in a position to provide advice? An opportunity to give a view later in the day was not a reason for saying nothing at the meeting. 358 In our opinion, that Allens suggested changes brings considerable pause to a conclusion that the 7.24 am draft news release was approved at the meeting, as required for the Draft ASX Announcement Resolution. 4.5.5 Taking a draft news release to the meeting 359 This was part of the tabling finding. We have summarised the judge's reasoning at [242] above. Within it is whether, if a draft news release was taken to the meeting and distributed, it was the 7.24 am draft news release. 360 Mr Baxter had no actual recollection of taking a draft news release to the February meeting. He said that it was his usual practice that, if proposed announcements had not been sent to the board members in their board packs prior to the meeting, he distributed hard copies of any announcement that the board was to consider to each member of the board and others present. He said in his first affidavit - "113 Having regard to the terms of my e-mail sent at 7.24 am, the fact that a further version was sent by e-mail at 9.35 am after the meeting started and the terms of the final announcement, the version that I took to the Board meeting is the version that was attached to my e-mail to Rotsey sent at 7.24 am … ". 361 Mr Baxter later clarified that the version he took did not have the boxes in the version attached to the e-mail to Ms Rotsey. In our opinion, it is clear from the affidavit that he was re-constructing in the absence of recollection, and that taking any draft news release to the meeting was founded on the e-mail and his usual practice. 362 It should be repeated that Mr Baxter also had no recollection of tabling a draft news release or of discussion at the meeting concerning a draft news release. The judge appears to have accepted this: LJ [130]. It is amply borne out by Mr Baxter's answers in cross-examination - "Q. Who tabled the press release, do you say? A. I'm not sure. Q. It couldn't have been Mr McGregor because he didn't have it, did he? A. It would have been myself or Mr Macdonald. Q. Do you remember tabling it? A. No. Q. You didn't table it, did you? A. I don't recall. Q. Mr Macdonald didn't table it, did he? A. I don't remember if he did or not." and "Q. What happened? It was handed around, was it? A. I think so. Q. Who handed it around? A. I don't know. Q. Who had it before the meeting? A. I did. Q. Did you hand it around? A. I probably did. Q. That's the first time you've ever suggested that in all the evidence you've ever given. Isn't it? A. I can't recall specifically any discussion about the press release. Q. You can't even recall whether the press release was handed to any person during the course of the meeting, can you? A. I'm not sure. Q. In other words, you can't recall? A. Right." and "Q. Secondly, you have absolutely no recall whatsoever of what happened during the course of the board meeting? A. That's correct. Q. Thirdly, you are unable to say on your oath that the directors of the company ever saw the press release at the meeting aren't you? A. Yes. Q. You are unable to say that the directors took a vote on the resolution, aren't you? A. Yes. Q. You are unable to say whether that vote, if it took place, was in the affirmative or in the negative; correct? A. Yes." 363 In our view it can not reasonably be doubted that Mr Baxter took a draft news release to the meeting, although whether it was distributed by way of tabling and was approved is a different matter. That a draft news release was taken to the meeting is not because of JHIL's practice earlier considered, but because Mr Baxter's 6.57 am and 7.24 am e-mails referred to his taking the communication documents – news release, key messages and questions and answers – to the meeting. There is no sound reason to think that he would not have done so, although it must then be asked for what purpose and what was then done with them. 364 We should say that, as the trial was conducted, little attention was given to the draft questions and answers and draft key messages which were sent in the various e-mails. The latest versions were the subject of Mr Baxter's 6.57 am e-mail to Ms Rotsey. Presumably they were as sent back with the 9.35 am e-mail. According to the 6.57 am e-mail, Mr Baxter intended to take them to the meeting, but whether he took them and what, if anything, was done with them was not explored in the evidence. We do not understand that it was suggested to any witness that the boldly stated key messages document as drafted by Ms Rotsey, quite different from the key messages slide, was distributed or used in Mr Baxter's presentation in place of or in addition to the key messages slide, and it is unlikely that the board would have been taken to the detail of the questions and answers documents. Perhaps rather artificially, resolution of the issue at trial over approval of the draft news release was not elucidated by material attention to what was done with or about the accompanying documents. 365 There was considerable dispute over which version of the draft news release was taken to the meeting. The appellants submitted that, if any was taken, it was the 9.35 am draft news release. We have described ASIC's commitment, in the FFASC, to the earlier 7.24 am version. 366 It will be recalled that Mr Baxter's e-mail to Ms Rotsey at 7.57 am on the morning of 15 February 2001 said, "If possible, can you have these amended and back to Melissa by 10 am so that she can bring me a fresh set to the Board meeting". Ms Wheeler gave evidence that she received the 9.35 am e-mail from Ms Rotsey attaching the key messages document, draft news releases for JHIL and the Foundation and draft questions and answers for JHIL and the Foundation, and that she "printed out one or more copies of the documents attached to this e-mail and provided them to Baxter. I recall he was late leaving for the meeting". 367 The judge found that the 7.24 am draft news release was taken to the meeting, and that Ms Wheeler was mistaken in her evidence of providing the 9.35 am draft news release to Mr Baxter. His Honour's finding was based upon Mr Baxter's evidence, his 7.24 am e-mail saying that he intended to take that news release to the meeting, and the documents produced by BIL and Allens: LJ [200]-[201]. 368 The appellants submitted that Mr Baxter anticipated receiving amended versions of all the documents for the board meeting, albeit to be brought to him at the meeting, and that on the evidence of Ms Wheeler he received the amended versions before leaving (late) for the meeting; so that if anything was taken, it was the 9.35 am draft news release. It is difficult to see how, if Ms Wheeler's evidence were accepted, it could be contested that the 9.35 am draft news release was taken. Again, whether it was tabled and approved is another matter. 369 ASIC responded that, on Mr Baxter's evidence that he arrived at the meeting on time at 9 am and was called into the meeting approximately half an hour later, together with Mr Morley's evidence that Mr Baxter entered the meeting with Mr Robb approximately an hour after it commenced, he could not have taken the 9.35 am draft news release to the meeting. He was already at Sussex Street, probably in the meeting, at 9.35 am. 370 The appellants in turn pointed to a document in Mr Robb's handwriting with the date 15 February 2001 and "10.30 am Board meeting", suggesting that it recorded Mr Robb attending at 10.30 am and so that the joint entry of Mr Baxter, Mr Robb and others into the meeting was well after 9.30 am. The note was not otherwise explained. 371 We turn to the documents produced by BIL and Allens. 372 Brierley International Ltd ("BIL International") was a substantial shareholder in JHIL. Mr O'Brien and Mr Terry were its appointees to JHIL's board. BIL was a subsidiary of BIL International. Mr O'Brien was a director of BIL International from 11 November 1999 to 4 March 2003 and a director of BIL from 29 June 2000 to 21 December 2001. Mr Terry was a director of BIL International from 11 November 1999 to 4 March 2003. 373 By a notice to produce served on BIL dated 18 July 2005 ASIC required the production of, inter alia, its books relating to creation of the Foundation and board papers of JHIL received during the period 1 January 2000 to 31 May 2001. The documents produced included January and February 2001 board papers, the Project Green presentation in February 2001 and a copy of the 7.24 am draft news release without the boxes. 374 ASIC submitted that, given Mr Baxter's evidence that no director had the 7.24 am draft news release prior to the February meeting, the production by BIL could only have been because a copy had been provided to Mr O'Brien or Mr Terry at the meeting. It said that there was no reason for a copy to be provided to them after the meeting, because the 7.24 am draft news release had been superseded by the 9.35 am draft news release, which was itself superseded later in the day by the 7.42 pm version. There was no evidence of a copy being sent to them after the meeting. 375 The appellants submitted that this was speculation, and that much could have happened in February 2001 or in the years to mid-2005 which otherwise explained BIL's production of the draft news release. The production in 2005, they said, revealed nothing about when and in what circumstances the copy came into BIL's possession, and they pointed to evidence that non-executive directors received documents relating to board or audit committee meetings in the course of the Jackson inquiry and to evidence which they said showed that Mr O'Brien had "separate lines of communication outside of JHIL Board meetings with management and in particular Mr Macdonald … ". 376 Pursuant to another notice to produce served in 2005, Allens produced two copies of the 7.24 am draft news release without the boxes, identical to the copy produced by BIL, being the copies contained handwriting of Mr Robb and unidentified handwriting to which we have earlier referred. Similar submissions were made. 377 Before going further, a material question is whether JHIL's records included a copy of the 7.24 am draft news release, other than in the e-mail. JHIL did not produce a copy in answer to a notice to produce. The appellants submitted that this was because the draft news release was not at the meeting. ASIC submitted that the non-production was explained by the evidence of Mr Donald Cameron that, once an ASX announcement was approved, he destroyed earlier drafts that he had been able to collect or had been given at the conclusion of the meeting, and kept on file only the announcement that was sent to the ASX. 378 Mr Donald Cameron said - "Q. Then if we go to the ASX announcement we'll see a reference there to the chairman having tabled an announcement? A. Yes. Q. If that had occurred, would you expect that announcement to have made it into your files in accordance with the system? A. If that particular version of the announcement had been the one that had gone to the stock exchange, it would have finished up in the file. Q. If an announcement had been tabled as recorded in these minutes and there had been a resolution as recorded in these minutes to prove its execution, you would expect, if that document was before the board, it would make its way straight into your files in accordance with the system you've described? A. The exception – another exception were stock exchange announcements. We did not keep drafts. We kept only the one that went to the stock exchange and they were kept in a separate file. So the exception in the system was that drafts that were tabled or – because from time to time there might be several drafts of that before the one was finally determined that would go, and all of those drafts would not be filed in the system: they would be destroyed. Q. If a document, being a draft press release, had been presented to the board, if the board had approved it in exactly the terms that had been presented, you would expect that document, in accordance with the system, to have got into your files, wouldn't you? A. I don't know whether you could say 'that document', but certainly what was in them – maybe Baxter might have produced another copy of that document that went to the stock exchange, but the approved document content was what went into the stock exchange files. Q. That was the point I was trying to get at and perhaps I expressed myself poorly. The content of the document that was approved by the board would, in accordance with the system, make its way into your files? A. Into the stock exchange files in – that I maintained." 379 There was difference over the meaning of this evidence. The appellants said that it meant that the copy of the draft news release presented to the board would go into the stock exchange files, so that JHIL should have produced a draft news release if one had been at the February meeting. ASIC said that it meant that a copy of the news release sent to the ASX as an announcement, rather than the copy of the draft which was before the meeting, would go into the stock exchange files. In our view, the words "I don't know whether you could say 'that document'" and the reference to the content of the document indicate the latter meaning. 380 Mr Donald Cameron spoke of his practice up to the end of 1998 or 1999 when he was usually at board meetings. He was not at the February meeting, and it was a year or more after the time of which he spoke. He said that after 1999 he received documents to be lodged with the ASX from either Mr Baxter or someone from Mr Baxter's department. There does not appear to have been any evidence of a practice in February 2001 similar to that of Mr Cameron whereby, if a draft news release had been distributed to the board and approved, a copy of the draft would not have been retained by JHIL. 381 The practice of which Mr Cameron spoke could have continued, explaining why JHIL did not produce a copy of the 7.24 am draft news release. But there was no evidence that it did, and the non-production could be regarded as casting some doubt on approval of the draft news release. 382 It is by no means clear that production of the 7.24 am draft news release by Allens must have been because copies were provided to Messrs Peter Cameron and Robb at the February meeting. The various draft news releases were headed "Legally privileged and confidential – for legal advice only", and the copies may well have been provided to the Allens advisers at the meeting to better clothe them with privilege, and in any event for consideration and advice. Allens had not previously vetted them, and their advice was necessary. Possession of the 7.24 am draft news release by Allens is readily enough explicable otherwise than by distribution to all those at the meeting. If that were so, the production by BIL standing alone would be of diminished weight; in particular, a copy of the draft news release could have come into BIL's possession in the course of the Jackson inquiry. 383 However, we consider that it is more probable than not that the production of the 7.24 am draft news release was because it was provided to Messrs Peter Cameron and Robb at the February meeting. They did give it consideration, as shown by the handwriting, and it is not likely that they would have done so unless they received it at the meeting, since it was supplanted by the 9.35 am version. That leads to the conclusion that the draft news release taken to the meeting by Mr Baxter was the 7.24 am version, and that the judge correctly considered that Ms Wheeler was mistaken in her evidence. The judge's findings in these respects should be upheld. 384 The limited extent to which this makes out ASIC's case should be appreciated. It does not follow that the draft news release was generally distributed at the meeting, by way of tabling. The production by BIL does not significantly support that it was given to Mr O'Brien or Mr Terry at the meeting. Even if there was a general distribution, it may have been for information or discussion and not with a view to the definitive approval of the Draft ASX Announcement Resolution. What was done involves other matters, one of which is the next theme of correlation. 4.5.6 Correlation 385 The judge saw a "strong correlation" (LJ [194]) between the statements as to the key messages that Mr Brown agreed were likely to have been made and to a lesser extent Mr Koffel agreed could have been made, and the Draft ASX Announcement. We have referred to his consequential satisfaction, expressed at LJ [223], that one or both of Mr Macdonald and Mr Baxter spoke to the draft news release and put those statements. He said at LJ [223] that "[n]obody suggested any other document as the source of the statements". This was an important part of the judge's reasoning to his conclusion about the approval of the news release, and was important in ASIC's submissions. 386 The relevant evidence was in cross-examination of Mr Brown and Mr Koffel. 387 We go first to Mr Brown. The judge's summarised what Mr Brown agreed was likely to have been said and stated the correlation at LJ [153]-[160], and we add to the following paragraph [161] - "153 Mr Brown agreed it was likely that one of the members of management, most likely Mr Macdonald or Mr Baxter, indicated to the meeting that the key message to be communicated included that JHIL had established a Foundation to compensate sufferers of asbestos-related diseases with claims against the company and to fund medical research aimed at finding cures for these diseases. That statement correlates with para 1 of the draft ASX announcement. 154 Mr Brown agreed it was likely that Mr Macdonald or Mr Baxter also said that the Foundation would have sufficient funds to meet all legitimate compensation claims from people injured by asbestos products manufactured in the past by two former subsidiaries of JHIL. That statement correlates with paragraph 3 of the draft ASX announcement. 155 Mr Brown also agreed it was likely that Mr Macdonald or Mr Baxter said the establishment of a fully funded Foundation provided the best resolution for all stakeholders, which correlates with para 4 of the draft ASX announcement. Mr Brown qualified this answer by saying it was in the context of " fully funded " as discussed which he said meant a form of shorthand developed at the meeting to say it was fully funded but in the context of sufficiently funded to the actuarial estimate. But he agreed that the expression "fully funded" was used at the meeting in relation to the Foundation and it was expected that the message to be conveyed to the market was that the Foundation was fully funded. 156 Mr Brown agreed that it was likely that Mr Macdonald or Mr Baxter said the Foundation provides certainty for people with a legitimate claim against the former James Hardie companies which manufactured asbestos products. That statement correlates with para 5 of the draft ASX announcement. But Mr Brown said the term "certainty" was ambiguous. It might mean that a sufficient or a certain amount of funds were available and put aside and were not dependent on the fortunes of James Hardie in the future. Or it could mean absolutely certain that there was no possibility whatsoever that the funds were not enough and he would not concur in the company making that suggestion. 157 Mr Brown agreed that it was likely said that the fund manager, Towers Perrin, had been appointed to manage the Foundation's investments, which would generate investment income and capital growth, a statement that correlates with para 9 of the draft ASX announcement. 158 Mr Brown agreed it was likely that Mr Macdonald or Mr Baxter said that James Hardie sought expert advice from a number of firms including actuaries, Trowbridge, Access Economics and PricewaterhouseCoopers. That statement correlates with portion of para 10 of the draft ASX announcement. 159 Mr Brown agreed that it was likely said that the advice supplemented the company's long experience in the area of asbestos and formed the basis of determining the level of funding required to meet all future claims, which correlates with the balance of para 10 of the draft ASX announcement. 160 Mr Brown also agreed that it was likely that Mr Macdonald or Mr Baxter said that the directors of James Hardie were satisfied that the Foundation would have sufficient funds to meet all future claims, a statement correlative with para 11 of the draft ASX announcement. 161 It was put to Mr Brown that it was likely that whoever made these statements did so by reference to some form of writing. Mr Brown said: " I don't recall, Sir quite conceivably; I just do not recall ". To the proposition that the draft ASX announcement was distributed at the meeting, Mr Brown said that if that had happened he would have looked at it and probably made some comments and the fact that he did not recall that led him to think that it was not at the meeting. But he did not recall specifically. He did not agree there was a discussion by reference to a document as to what was to be conveyed by way of an announcement to the ASX. He could not point to any document other than the draft ASX announcement as the source of the statements as to the messages to be conveyed to the market." 388 Some context should be provided. 389 Mr Brown agreed during cross-examination that when he read the board papers for the February meeting, he did not think the communications message was satisfactory because it did not convey "that there would be a certainty of funding". He agreed that his expectation following the January meeting was that if management was going to put up a proposal again "it would be fully funded", and that that was the message they would be conveying to the market. The change from "certainty of funding" to "fully funded" was in the cross-examiner's question, not in Mr Brown's words. 390 The cross-examination continued - "Q. And yet the board paper you got, which dealt in detail with a communication strategy, didn't say 'fully funded'? A. That is correct, and that's where there was a whole lot of discussion in the board meeting, and that was the focus of the board meeting, for the board to be satisfied that the Foundation had sufficient funds to meet its obligations." 391 Mr Brown said that there was discussion of the key messages that were to be provided to the market, also referring to it as discussion of the proposed terms of communication with the market. He said that he did not recall the words used by management to describe the message to the market. He said that the discussion satisfied his expectation, and that the board was content to leave the drafting of the news release to management. 392 In this regard Mr Brown explained what he understood by "fully funded" - "Q. And your expectation was that the message to the proposed terms of communication to the market accorded with what you expected should be said? A. I believe so, sir, yes. Q. And your expectation was that the message to the market would be that the Foundation was fully funded? A. My expectation was that the market – that the message to the market was, in the terms that had been provided to us, sufficiently funded. Q. Your expectation was that the message to be conveyed to the market would be that the Foundation was fully funded? A. It depends what you mean by the word 'fully', sir, but if you mean by 'fully' sufficiently funded, then I would agree with you. Q. Can I read this evidence to you which you gave on Friday, 2042 line 7: 'Q. You had expected from the previous meeting that if the management was going to put up a proposal again, there were two things that you expected of them: one, it would be fully funded: A. Yes, sir. Q. And, two, that's the message they would be conveying to the market. A. Yes, sir.' A. Okay. And may I explain the term 'fully funded'? I believe that at probably the January but certainly the February meeting, the concept was that the board was looking at and it was being proposed to the board that the actuarial estimate provided sufficient funds. That's a longwinded way of expressing something. I believe that the shorthand way that was developed in that meeting was to say it was fully funded, but fully funded in the context of sufficiently funded to the actuarial estimate, and so I probably used the same type of shorthand, sir, as I recall the February meeting when we had that discussion on Friday." 393 Secondly, Mr Brown said in his witness statement - "195. Because the board papers for the February 2001 board meeting did not expressly state that the additional funding for the Foundation would be adequate to satisfy all claims, this question was at the forefront of my mind during the discussion. The oral presentations at the board meeting had made evident management's view that the funding would be sufficient, and this occurred without prodding by the non-executive directors. However, further to satisfy myself that the funds provided for the Foundation would be sufficient to meet all future claims, I initiated an exchange with Mr Macdonald in words to the following effect. I said: 'Can we be sure that the funds we allocate to the Foundation on the basis of the Trowbridge report are sufficient? Is the Trowbridge report sound and fit for purpose?' Mr Macdonald said: 'If we can't tell all of the interested stakeholders that there will be enough funds then we will have great difficulty getting acceptance of the plan and it won't work.' I said: 'I appreciate that difficulty, but that is not an answer. My question is: are you sure there are going to be sufficient funds in the trust?' Mr Macdonald said: 'Yes there are. We have got the best actuarial modelling. We have shown that we can meet the cash requirements each year. We are providing enough funds for future claims.' 196. No-one else at the meeting said anything to qualify what Mr Macdonald had said." 394 In his oral evidence Mr Brown said that he was concerned about sufficiency of funding on the basis of Trowbridge's actuarial best estimate, and that his "I appreciate that difficulty" did not refer to making a public statement or anything in a draft news release. He said of this exchange with Mr Macdonald - "A. My recollection, sir, of that conversation with Mr Macdonald was after the main substance of the presentation was gone through; it was not in relation to a press release or anything like that. It was my trying to make that final bridge to make me comfortable as a director that this was the right decision to make, and I asked Mr Macdonald for a further confirmation that the Trowbridge estimate was – the Trowbridge best estimate – well, putting the Foundation together on the basis of the Trowbridge best estimate was something we could be sure would result in there being sufficient funds. That is the context of my question, solely. It is nothing to do with – my question was nothing to do with public relations statements." 395 We observe at this point that, even if from Mr Brown's evidence there was correlation as seen by the judge from which it could be concluded that management was speaking to the draft news release, there remained a significant further step to approval of the draft news release as an ASX announcement. Mr Brown's evidence was of a discussion of the key messages to go to the market, with the drafting of the news release to be left to management. At best, his evidence was of some kind of approval in principle, less than the Draft ASX Announcement Resolution. But we do not think it properly founded a conclusion that management was speaking to the draft news release. 396 The relevant cross-examination was not entirely as summarised by the judge. It began - "Q. Would you accept that it is likely that one of the members of management indicated that one of the key messages to be communicated would be that the Foundation will have sufficient funds to meet all legitimate compensation claims from people injured by asbestos products manufactured in the past by two former subsidiaries of JHIL? A. Yes, sir. Q. And do you accept that it is likely that one of the members indicated that one of the key messages to be conveyed by one of the communications you have described was that JHIL had established a Foundation to compensate sufferers of asbestos-related diseases with claims against the company, and to fund medical research aimed at funding cures for these diseases? A. I believe so, sir. Q. And would you agree that it is likely that one of the members of management indicated that one of the terms of the key messages of the proposed communications included that the establishment of a fully funded Foundation provided the best resolution for all stakeholders? A. In the context, sir, of 'fully funded' that we just discussed, yes. Q. But you wouldn't dispute that it is likely that words to that effect were indicated by somebody from management as one of the key messages to be conveyed? A. Words to that effect, yes, sir, in the context of the definition of 'fully funded'." 397 This was taken up by the judge at LJ [153], [154] and [155]. 398 In further questions or answers, all in terms of likelihood, Mr Brown agreed with key messages of the Foundation providing certainty for people with a legitimate asbestos claim (meaning certainty in the sense of assured availability, rather than sufficiency) (LJ [156]); that expert advice had been sought from a number of firms, including Trowbridge, PwC and Access Economics (LJ [158]); that the advice supplemented the company's long experience in the area of asbestos and formed the basis of determining the level of funding required to meet all future claims (LJ [159]); that the directors of James Hardie were satisfied that the Foundation would have sufficient funds to meet all future claims (LJ [160]); and that funds manager Towers Perrin had been appointed to manage the Foundation's investments which would generate investment, income and capital growth (LJ [157]). Each of these matters was put to Mr Brown in or close to language found in the 7.24 am draft news release. 399 Mr Brown agreed that it was "unlikely" that "the speaker at the meeting as to the key messages" was speaking solely by reference to the communication strategy in the board paper. It was ultimately suggested to him that the key messages were drawn by the speaker from a document, and he agreed that he could not point to any document other than the draft news release "which would support the types of statements that you agree were likely to have been made at the meeting by a member of management as to the messages to be conveyed to the market". This was taken up at LJ [161]. 400 Although the judge did not refer to it, the 7.24 am draft news release was in due course put to Mr Brown. He did not agree that, if "each of the matters in that document" had been described as elements of the messages to the market, he would have approved of them. He had difficulty with certainty, because of its ambiguity: the judge referred to this at LJ [156]. Mr Brown said that he may well have "raised a comment" about what fully funded meant in a document to go to outsiders, although he understood it to mean sufficiently funded. 401 The judge's reasoning, which ASIC supported, was - (a) the draft news release contained a number of statements; (b) Mr Brown recalled management (Mr Macdonald or Mr Baxter) voicing statements in the terms of those in the draft news release at the February meeting; (c) the only source for the statements was the draft news release; and (d) it should be inferred that management voiced the statements from the draft news release. 402 From this, the judge reasoned to discussion of the draft news release at the meeting for the purpose of approval for its release: LJ [223]-[224]. 403 The inference at (d) depends on (b) and (c). Both were challenged by the appellants. 404 As to (b), the appellants submitted that reliance on the evidence given by Mr Brown was unsound, because the agreement to what was "likely" to have been put by management as key messages was no more than speculation, and was not his recollection. 405 The appellants referred in particular to Mr Brown's evidence, answering a question whether words to the effect that the Foundation provided certainty for people with legitimate claims "were used and indicated at the meeting as part of a message to be included in a communication to the market" - "A. Specifically, sir - and I thought I said this - that I don't specifically recall the words that were used by the members of management to describe the message to the market. I think you are asking me did I consider that it was possible, or something like that. Q. 'Likely' is the word. A. Likely. And I think there would have been a discussion of certainty and – but I can't be explicit as to the exact way in which it was used." 406 They said that this showed that Mr Brown understood and used likelihood to mean possibility, and was saying what would have occurred as a possibility and not from recollection. 407 On a number of occasions Mr Brown said that he did not have a clear recollection of who said or did what at the meeting. In the appellants' submission, Mr Brown made clear that he did not recall the words in which management described the messages to the market, and meant by likelihood no more than possibility. They referred also to his answer, "I don't recall, sir, quite conceivably; I just do not recall" to the suggestion that there was a document by reference to which management was speaking (see LJ [161]). They pointed out that it was not put to Mr Brown that he was given a copy of the draft news release, or that he read it and approved it. They submitted that the assurance which Mr Brown said he received, an assurance of sufficiency of funding in the sense he explained, was less than the "fully funded" in the draft news release, and was not consistent with its unalloyed message of full funding. 408 We recognise that the judge saw and heard Mr Brown give his evidence. Mr Brown's evidence must be taken as a whole. We consider that we are in a position to decide whether his evidence was not acceptance that the various matters were put by management as key messages, but only that it was possible that they were put by management as key messages. 409 A question or answer in terms of likelihood has inherent difficulty. It may represent a best but uncertain recollection. It may represent reconstruction from other matters. Or it may represent no more than acceptance of a possibility where recollection is empty. We do not think that recollection lay behind Mr Brown's answers involving likelihood, nor was a basis laid for reconstruction. It would be remarkable if Mr Brown had a recollection, even an uncertain one, which enabled him to agree to the rather lengthy statements put to him, when he had indeed made clear (and the judge appears to have accepted) that he did not recall the words in which management described the messages to the market. 410 There is some force in the appellants' submission to the effect that, if key messages were voiced in the language of the 7.24 am draft news release as put to Mr Brown, that was tantamount to reading out the draft news release; yet the judge found that the Draft ASX Announcement was not read out for Messrs Gillfillan and Koffel. 411 That leads to the challenge to (c). Although not fully reflected in the judge's reasons, each of the various statements was put to Mr Brown as one of "the key messages" to be communicated. That suggests the "key messages" in the slides. 412 There was a management presentation through the slides. The judge effectively found that Mr Baxter presented the slides dealing with the communication strategy (LJ [140]) and that Mr Macdonald, Mr Morley and Mr Shafron made other slide presentations (LJ [273]-[276]; [285]-[302]; [345]; [385]). The slides were prepared in order to structure management's presentation, and were used for that purpose. Where Mr Brown's evidence had at best been of uncertain recollection and he had made clear that he did not recall management's words, it was necessary to consider correlation of the tenor of the statements, not their precise words, with the slides and with what may well have been said in a presentation based on the slides. It may fairly be asked why, if there was a presentation based on the slides, management would also voice key messages by reading out a number of paragraphs of the draft news release. 413 The judge did not undertake this analysis. He appears to have acted on Mr Brown saying that he "could not point to any document other than the draft ASX announcement as to the source of the statements as to the messages to be conveyed to the market": LJ [161]. 414 We have referred to Mr Brown's agreement, see [399] above, that he could not point to any document other than the draft news release "which would support the types of statements that you agree were likely to have been made at the meeting by a member of management as to the messages to be conveyed to the market". This was not quite as the judge put it, or a complete rendition of Mr Brown's evidence. 415 Mr Brown was referred to the key messages slide, and gave the evidence - "Q. And would you agree that it is unlikely that this was the document to which reference was had by the speaker in conveying the key messages which you have agreed were likely to have been conveyed in this meeting? A. I don't recall the extent to which this slide was used, if it was used, but, yes, I would agree that the levels of assurance that we received in the meeting about the sufficiency of funding are stronger than what is implied in these key messages. Q. I think you have already agreed that the board paper which was provided to you, which had a communications strategy equally didn't provide with sufficient clarity the assurances which you thought appropriate in any messages to the marketplace? A. I didn't think it provided – well, the board papers didn't provide the assurances the board required to establish the Foundation, to begin with, and, therefore, any messages that would be derived from it." 416 It was subsequently put to Mr Brown that it was "unlikely" that the speaker as to the key messages was speaking by reference to the communication strategy in the board papers and he answered, "Certainly not solely to that document". Some time later he gave the evidence about not pointing to any document other than the draft news release. 417 All this went some way towards excluding other sources, but was not entirely as the judge put it, and taken as a whole it did not exclude that the slides were the documentary source but were spoken to in stronger terms. Mr Brown's account should be recalled, set out at [393] above, of management's view in the "oral presentations" that the funding would be sufficient and Mr Macdonald's assurance that "[w]e are providing enough funds for future claims". To repeat, the slides were prepared to structure the presentations to the board, and on the evidence were used. Discussion may well have ranged beyond them, but it does not seem likely that, instead of the structured presentation, management would effectively have read out, as the key messages, paragraphs from the draft news release. 418 We have set out or referred to a number of the slides, but by no means all. They were given numbers. With two exceptions, the substance of each of the key messages to which Mr Brown agreed in terms of likelihood can in our view readily be seen as sourced, although not always expressed as a key message, in the slides. A table using the paragraphs in the liability judgment in which Mr Brown's agreement was taken up is as follows: slide 29 is the key messages slide - Judgment Slide 153 29 154 29; see also 8 (sufficiency of gross assets for future claims) and 24 (Mr Loosley's counselling) 155 29 156 29 158 14, 15: (Trowbridge analysis and review by PwC and Access Economics) 160 29 419 The first exception is LJ [157], the appointment of Towers Perrin; but that can well have come in management's elaboration of slides concerning generation of investment income and capital growth (slides 12-16). The second exception is LJ [159], that the advice supplemented the company's long experience et cetera. If management did speak to that effect at the meeting, it was not clearly an elaboration of the slides. Something may have been said apart from the slides although not from the draft news release, and the correspondence of language would be important. 420 The correlation with the draft news release seen by the judge is in our view weak. Precision in the language in which management spoke of the key messages is necessary for the correlation, but it can readily be accepted that, as he said, Mr Brown did not have a clear recollection of the words used by management, and the description of "key messages" is itself not apt to invoke the draft news release. 421 All at the meeting were aware of the importance of sufficiency of funding in communicating the establishment of the Foundation to stakeholders, and in our view it is rather artificial to find the correlation in the manner the judge did. While Mr Brown agreed that the levels of assurance about sufficiency of funding was stronger than "what is implied in [the key messages slide]", the use of stronger language by management does not mean that they were speaking by reference to the draft news release. And to repeat, acceptance by the board that a strong assurance of sufficiency of funding should be given does not satisfy the pleaded case of the specific Draft ASX Announcement Resolution. 422 We go then to the evidence of Mr Koffel. It should be remembered that Mr Koffel was on the telephone from the United States. The judge found that he did not have a copy of the draft ASX announcement, and that it was not read out. 423 The judge did not specifically refer to relevant evidence given by Mr Koffel, and we do not think it necessary to set the evidence out. Mr Koffel agreed that various matters founded on the draft news release "could have" or "might have" been said. His agreements were interspersed with observations that "[a]nything could have been said" and "anything was possible". He doubted that some of the things put to him could have been said. One was the certainty for people with legitimate claims because, although he did not recall it being said or a reaction, he thought there would have been a reaction to it. Another was seeking advice from firms, because he would not have expected the lengthy passage put to him from the draft news release to have been stated at such length. He also said, in response to the suggestion of a message that the directors of James Hardie were satisfied that the Foundation would have sufficient funds to meet all future claims, that it was very unlikely because it would have attracted comment and there would have been very active discussion. 424 We do not think that Mr Koffel's evidence warranted even the lesser extent of agreement to which the judge referred. It did not rise above possibility, devoid of recollection. Nor, for similar reasons to those given in relation to Mr Brown's evidence, do we think that correlation with the draft news release was clearly to be found. 4.5.7 The purpose of consideration 425 At this point we consider the judge's reasoning to the approval finding at LJ [224]-[227]. For convenience, we repeat it - "224 The purpose of the distribution of the draft ASX announcement to those present and the discussion of its contents was to approve its release. It was submitted that this contravened the standard practice of obtaining the approval of a draft press release by line management and senior executives before its provision to the board. And it offended the disclosure policy approved by the board. That is so. But this was a last minute affair. None of the board, or management, or Allens, had seen the document before the board meeting commenced. Its distribution to the board in those circumstances provided all the more reason for a detailed consideration of its content by each director. 225 I am satisfied that the draft ASX announcement was approved. It has not been suggested that the board rejected it. The defences were that the draft ASX announcement was not before the board, was not considered and was not approved. A rejection of the first and second propositions leads to the conclusion that it was approved. The board had been forewarned in the board papers for the January 2001 board meeting that an announcement of the formation of the Foundation would be made after the February board meeting if management's proposal was accepted. The discussion of the draft ASX announcement at the 15 February 2001 Meeting could be for one purpose only – for the board to approve the release of the announcement. 226 Mr Brown agreed that part of the communication to the market would be an announcement to the ASX. He said it was likely that the board's approval of that message was summarised by Mr McGregor in the usual fashion saying "is the board happy with that?" and everybody nodded or otherwise indicated their agreement. 227 And an announcement was made to the ASX in the form of the final ASX announcement and that was based on the draft ASX announcement." 426 The finding rested in part (at LJ [226]) on Mr Brown's evidence that it was "likely" that the board's approval of "that message" was summarised by Mr McGregor, with indications of agreement. 427 Mr Brown's evidence was - "Q. In other words, what I want to suggest to you – you agree, don't you – management indicated what it was proposing to say and the board indicated that it approved of that? A. Yes. I don't recall the specific terms that management used in describing the communications, but, in principle, your suggestion or statement is correct. Q. And they indicated that this was what was going to be communicated by various means to the market, including an ASX announcement? A. that would have been part of it, I would assume. Q. After they had indicated that, it is likely that the board's approval of that message was summarised, may we take it, by Mr McGregor, in the usual fashion, saying 'Is the board happy with that?' and everybody nodded? A. I do not recall, sir exactly what the -- Q. But you wouldn't dispute that that might have happened in that form? A. It could well have happened in that form, yes." 428 We do not think this rises above possibility in the absence of recollection or reconstruction; it was in truth no evidence of what occurred. 429 The "message" was what management indicated it proposed to say, or to communicate, including by an ASX announcement. At that point in the cross-examination, it was the message to which Mr Brown had agreed, namely, that the Foundation was fully funded in the sense he explained of sufficiently funded to the actuarial estimate. Whether management's indication was from or with reference to a draft news release before the meeting depended on the further cross-examination. 430 Further, we do not agree that, as stated in the last sentence of LJ [225], if there was discussion of the Draft ASX Announcement at the meeting, it could only have been for the purpose of the board approving the release of the announcement. We do not agree that if it was before the meeting and was considered, it was necessarily approved. 431 ASIC submitted that the judge did not reason that, as a logical necessity, rejection of the first two propositions meant that the board approved the Draft ASX Announcement. It said that the reasoning incorporated the earlier identified facts of distribution and discussion and the subsequently identified facts of everybody indicating agreement and sending the announcement to the ASX. It said that reasoning that the only purpose of distribution and discussion could have been for the announcement to be approved was not essential. 432 It is not necessary to debate logical necessity. The board papers did not include a draft news release. Without repeating ourselves, the draft news release was still being worked on in the hours before the meeting. It was expressly subject to "refinement"; it had not been considered by Allens or UBS; it was subject to consents of Trowbridge and others; and it was materially changed after the meeting. There was a sound basis for concluding that, in the unusual circumstances of "a last minute affair", any distribution and discussion of a draft news release was to inform the board of the work in progress, as part of explaining the communication strategy, but with the ASX announcement to be finalised by management following consideration by the advisers. That is what Mr Brown said – the drafting of the news release was to be left to management. That, in essence, is what happened. We do not accept the singularity of purpose on which the judge proceeded. 4.5.8 Absence of protest 433 Having made the tabling finding and the approval finding, the judge did not "resort to" evidence upon which ASIC relied for "events subsequent to the matter in issue that called for a response that was not forthcoming", but "drew support for [his] decision from that circumstance": LJ [1150]. 434 On appeal, ASIC relied on absence of response to subsequent events. It submitted that the appellants were made aware, after the February meeting, that announcements had been made that the Foundation was fully funded or that its funding was such that all asbestos claims would be satisfied, and did not protest that this was incorrect or should not have been said. It submitted that this supported that the board had approved an ASX announcement conveying full funding. 435 The evidence on which ASIC relied was concerned with - (i) the Final ASX Announcement; (ii) the 23 February 2001 ASX announcement; and (iii) the 21 March 2001 ASX announcement. (i) The Final ASX Announcement 436 The announcement sent to the ASX, relevantly in the terms set out and described at [216]-[218] above, had the words "fully funded" in the fourth paragraph. It referred in the third paragraph to the Foundation having "sufficient funds to meet all legitimate compensation claims anticipated … ", and in the eleventh paragraph to JHIL's satisfaction that the Foundation had "sufficient funds to meet anticipated future claims". The fourth and fifth paragraphs referred to certainty for claimants and shareholders and certainty for people with legitimate claims against the former JHIL companies. 437 It was the usual practice for directors to be sent copies of ASX announcements. According to Ms Wheeler, they were sent by facsimile, with pre-set distribution lists within the facsimile machine. Ms Wheeler said also that she sent e-mails, with web links to the Final ASX Announcement, to each of the directors. She recalled this because one of the e-mails "bounced back". Her evidence was challenged to an extent, but the judge accepted it. There is no basis for us to do otherwise. 438 This was the first area in which the judge appears to have drawn support for his decision, as indicated at LJ [1150]. He also appears to have found comfort in it as telling against the credit of one or more of the appellants. He said in the liability judgment - "1160 Mr Brown said he had no recollection of receiving the final ASX announcement. Mr Gillfillan had no recollection of seeing it or being provided with a copy. Ms Hellicar said she believed she first saw the final ASX announcement in the report of the Special Commission. Mr Koffel did not recall receiving a copy. Mr Willcox believed that he had received a copy of the final ASX announcement but during preparation for this case he came to believe that he might not have received it based upon the absence of any documentary evidence of its dispatch. 1161 It is extraordinary that none of the non-executive directors who gave evidence recalled seeing the document that announced a most significant event in the life of the James Hardie group, an event that they were at pains to ensure was well received by the market. Had they received copies of the final ASX announcement, and had it been true that they would not have approved the draft ASX announcement, they would have expressed the concern that it made forward-looking statements with which they disagreed. There is no evidence that any of the non-executive directors complained about the content of the final ASX announcement on or soon after 16 February 2001, or at all. 1162 What is also extraordinary is that the usual practice was for directors to be sent copies of ASX announcements and yet there was no complaint from any of non-executive directors who gave evidence that they had not received their copy of the final ASX announcement. 1163 To feign a lack of recollection was in the interests of non-executive directors. By it they escaped the problem of explaining why, according to them, the document contained material so unequivocal and unqualified that they never would have approved it and yet they raised no complaint about its content. 1164 But the fact of the matter is that they did approve the draft ASX announcement and the receipt of a copy of the final ASX announcement would not have surprised them." 439 We have some difficulty with these paragraphs. Lack of complaint about the contents of the Final ASX Announcement was seen as support for sending the announcement. The question, however, was whether it was sent, and there was some circularity. Further, the judge did not find that the non-executive directors were feigning lack of recollection. With respect, a clear finding one way or the other was called for. The ultimate reasoning at LJ [1164] appears to have been that lack of recollection and lack of complaint were explicable because, when they had approved the Draft ASX Announcement, the Final ASX Announcement would not have been surprising or brought complaint. This did not involve lack of credibility through feigned non-recollection. 440 Going to the submissions on appeal, ASIC submitted that the Final ASX Announcement was in similar "emphatic terms" as to full funding as the Draft ASX Announcement. It said that to varying degrees the appellants who gave evidence said that, had they been aware of too emphatic statements in the Draft ASX Announcement, they would have raised an objection, and that it had been contended on their behalves that this supported that they had not approved the draft news release. In ASIC's submission, the contention turned against the appellants if they did not object to similar emphatic terms in the Final ASX Announcement. 441 The appellants submitted that there was nothing extraordinary about lack of protest. They said that the directors were not called on to respond to, or to make any decision as a result of, receipt of the Final ASX Announcement. If they read it, they may just have scanned its contents. Even if read with attention, it was not emphatic as to full funding: the appellants pointed to evidence of market analysts, including of Mr Alan Humphris, ASIC's expert witness, that a prudent investor would not read it as conveying that there was certainty of sufficiency of funding (which Mr Humphris contrasted with Mr Macdonald's statements at a press conference). The ASX announcement, it was said, had been overtaken in communication to the market or to the wider public by Mr Macdonald's separate presentations, and there was no occasion for the directors to react to what it said. 442 ASIC's submissions are to be borne in mind, but in our view they are not of great weight. 443 None of the evidence of the appellants to which ASIC referred was concerned with too emphatic statements in the Final ASX Announcement. The evidence was directed to statements in the 7.24 am draft news release. Some of the language to which objection would have been taken is found in the Final ASX Announcement, for example "fully funded" and references to certainty. One source of objection, the forward-looking "will have" sufficient funds, had gone. There was a basis for transposing the objections to objections to the Final ASX Announcement, but by no means inevitability. 444 In our view, the Final ASX Announcement could readily have been seen as Mr Macdonald's document, finalised consistently with leaving management with that responsibility and not calling for reaction or response from the directors. The judge did not make a finding, but we note that Mr Willcox gave evidence that, although he had no recollection, he would not have reviewed the Final ASX Announcement but would have taken it to have been checked and approved by management and Allens. There is also force in the appellants' submission that the ASX announcement had been overtaken by Mr Macdonald's presentations. 445 There is a difficulty in ASIC's submissions. There were the changes to the 7.24 am draft news release to which we have referred. If the directors had approved the Draft ASX Announcement with the finality of the Draft ASX Announcement Resolution, it can be said with some force that, if they read it with attention, they would be expected to have protested that the Final ASX Announcement departed from it. Would not a director have asked how JHIL came to be giving an additional $9 million to the Foundation? Or why the focus of the determination of the level of funding moved from the advisers to the directors? That they did not protest might suggest that the Draft ASX Announcement Resolution had not been passed. This other way of looking at the matter contributes to our view. (ii) The 23 February 2001 ASX Announcement 446 On 24 February 2001 Mr Macdonald sent an e-mail to, amongst others, Ms Hellicar, Mr O'Brien, Mr Terry, Mr Gillfillan, Mr Koffel, Mr Morley and Mr Shafron, attaching a news release dated 23 February 2001. The e-mail said "FYI – In response to recent and anticipated media articles". The news release had been sent to the ASX, as an announcement, on 23 February 2001. 447 We note that this was an ASX announcement sent by management without prior reference to the board. It was on the same important matter, the establishment of the Foundation and its funding, albeit not announcing separation with the same immediate potential for stakeholder interest in sufficiency of funding. The practice of board approval of important ASX announcements was plainly flexible. 448 The news release welcomed "the opportunity to continue discussions with NSW Government officials about the benefits of the Medical Research and Compensation Foundation which the company established last week". It included, as part of the "significant breakthrough" represented by the Foundation - "The Foundation provides certainty that funding for compensation will be available for all people who have a legitimate claim that they were injured by asbestos contained in products previously manufactured by James Hardie. The Foundation will start with assets of $293 million which will appreciate significantly in value over the long term and more than meet all legitimate future claims. The JHIL Board determined the quantum of assets after seeking detailed, independent and expert advice from a large number of advisers." 449 The e-mail and attachment were relevantly admitted against Mr Brown, Ms Hellicar, Mr Gillfillan, Mr Koffel and Mr Shafron. It is not clear to us why they were admitted against these appellants and not against other appellants. Neither the appellants nor ASIC took issue with the extent of admission. 450 This was another area in which the judge appears to have drawn support for his decision, and also to have found comfort in it telling against the credit of one or more of the appellants. He said in the liability judgment - "1186 Mr Brown said he did not recall receiving the 23 February 2001 ASX announcement. Mr Gillfillan said he could not recall seeing it. Ms Hellicar said she did not know whether she read it or not. Mr Koffel said he did not recall reading it. He said he might not have been given the press release by his assistant and even if he had, he may not have looked at it. He said it would not have had any immediacy to it. 1187 There was no evidence that any of the non-executive directors objected to the content of the 23 February 2001 ASX announcement or took the opportunity to respond to Mr Macdonald with a complaint about the content of the final ASX announcement or the press conference statements. 1188 If the non-executive directors considered the draft ASX announcement to be over-emphatic such that they would not have approved it, one would have expected them to have had the same attitude to the 23 February 2001 ASX announcement and to have voiced their concern upon receipt of Mr Macdonald's email. 1189 Instead, again we have a chorus by most of the non-executive directors (the issue was not explored with Mr Willcox) saying they had no recollection of reading the email. 1190 I do not accept that not one of them read the attached 23 February 2001 ASX announcement. 1191 The fact of the matter is that if they had read the 23 February 2001 ASX announcement it would have given them no concern because, having approved the draft ASX announcement, they would have endorsed the content of the 23 February 2001 ASX announcement or, at least, they would not have objected to it." 451 We will say something of the credibility observations later in these reasons, see at [777]-[778]. 452 Again, we understand his Honour to have considered that the fact that the non-executive directors did not protest that the 23 February 2001 ASX Announcement was over-emphatic supported that the board had approved the draft news release, for sending to the ASX, at the February meeting. Presumably, his Honour had in mind only the persons against whom the documents were admitted. 453 ASIC and the appellants made similar submissions to those in respect of the Final ASX Announcement. Specifically as to this announcement, the appellants submitted that there was no evidence that the directors read the e-mail. Rather, the evidence of Mr Brown was that he did not recall receiving it, of Mr Gillfillan and Mr Koffel that they did not recall seeing or reading it, and of Ms Hellicar that she did not know whether she read it or not. They submitted that the judge did not find who read it, only saying at LJ [1190] that he did not accept that "not one of them" read it. That left any inference from lack of complaint unsound. In any event, it was said, it was an inference drawn because the judge had already found that the board had approved the Draft ASX Announcement, so there was circularity in his reasoning. 454 There are difficulties in the judge's reasoning. We do not think it necessary to repeat or expressly adapt what we have said in relation to the Final ASX Announcement. For like reasons, we do not think there is great weight in ASIC's submissions. (iii) The 21 March 2001 ASX Announcement 455 On 20 March 2001 Mr Ashe e-mailed a draft news release to Mr Macdonald and Mr Shafron, copied to Mr Baxter, in anticipation of a protest march the next day. He asked for comments. Mr Shafron e-mailed it to, amongst others, Mr Morley, with his comments marked up. On 21 March 2001 Mr Morley e-mailed it back to Mr Ashe with the inclusion of his own comments. The document was then prepared for release, and was released and sent to the ASX later on 21 March 2001. 456 The draft news release began that the Foundation - " … will safeguard the rights to compensation of all who have, or will, develop illnesses as a result of exposure to James Hardie products. This certainty for claimants, not possible under the previous structure, represents a significant breakthrough in the area of asbestos diseases compensation." 457 It later said, without change in this respect by Mr Morley or Mr Shafron - "The Foundation has been established with starting assets of $293 million in addition to insurance coverage for many types of claims. These assets will be invested to generate income and capital growth to a total many times the original amount. This will enable the Foundation to meet all future claims." 458 As we understand it, these documents were admitted generally save that the relevance of the e-mail of 21 March 2001 was reserved as against Messrs Morley and Terry. The resolution does not appear expressly to have been resolved. It is not clear to us how admissibility could go beyond Mr Macdonald, Mr Morley and Mr Shafron. 459 The judge did not refer to these documents in his consideration of subsequent events. He referred to them at LJ [709]-[713] in connection with contravention by Mr Macdonald in allowing release of the 21 March 2001 ASX Announcement. 460 We note that this ASX announcement also was released without prior board approval. 461 While ASIC identified the documents, or at least Mr Morley's e-mail, as documents on which it relied, its submissions were not specifically addressed to them. We take ASIC's reliance to have been that lack of objection from Messrs Morley and Shafron, who had been at the February meeting, to the inclusion in the news release of an assurance that the Foundation would be able to "meet all future claims" supported that the Draft ASX Announcement to the same effect had been approved at the meeting. We take the appellants to respond in similar vein to their submissions in relation to the 23 February 2001 ASX Announcement. 462 In our opinion, again ASIC's submissions do not carry great weight. In this instance, involving Mr Morley and Mr Shafron rather than the non-executive directors, there was acceptance of a statement that the Foundation's assets and income would enable it "to meet all future claims". It was now over a month since the February meeting. We do not think that the acceptance materially assists in inferring what occurred in relation to approval of a draft news release at that meeting. 4.5.9 The minutes of the February meeting 463 As we have said, the February meeting was not concerned solely with Project Green. The minutes occupied eight pages. Towards the bottom of the second page was the heading, "Creation of Foundation". The items under that heading continued until half way down the eighth page. 464 In very general terms, over the seven pages were recorded that the Chairman reported on the proposal to establish the Foundation; that the Chairman "tabled" a number of documents; and that there were discussions and a number of resolutions. 465 In the middle of the eighth page, as the last of the resolutions, was - " ASX Announcement The Chairman tabled an announcement to the ASX whereby the Company explains the effect of the resolutions passed at this meeting and the terms of the Foundation (ASX Announcement). Resolved that: (a) The Company approve the ASX Announcement; and (b) The ASX Announcement be executed by the Company and sent to the ASX." 466 We will call this the ASX Announcement minute. The Draft ASX Announcement Resolution in para 57 of the FFASC took up the substance of the resolution. 467 The minutes provided at their end for signature by the Chairman as a correct record. They were signed by Mr McGregor at or following the board meeting of 3 April 2001. 468 At trial ASIC relied on what it contended was a statutory presumption, by force of s 251A of the Law and the Act, that the ASX Announcement minute was "evidence of the proceeding, resolution or declaration to which it relates, unless the contrary is proved": s 251A(6). The judge held that, because the minutes were not recorded in a minute book within one month as referred to in s 251A(1), they did not attract the evidentiary value specified in s 251A(6): LJ [72]. He held that, in any event, s 251A(6) did not "create any statutory presumption in favour of the events recorded in the minute": LJ [79]. ASIC did not challenge these holdings. 469 The minutes nonetheless remained as evidence, and ASIC submitted that they were a business record (Evidence Act 1995, s 69), and were evidence of the tabling of an announcement to the ASX and the passing of the resolution. We do not understand the appellants to have said otherwise. 470 The minutes would ordinarily be good evidence of passing of the resolution, requiring only identification of the announcement, and as we have said ASIC's reliance on the minutes is quite understandable. They were an important part of ASIC's case. The appellants submitted, however, that the history of the minutes and their signing as a correct record was such that they were of little evidentiary value. 471 Mr Julian Blanchard was a solicitor at Allens, apparently working with or under Mr Robb. In an e-mail sent on 31 January 2001 he asked Mr Shafron whether he (Mr Shafron) was, or Allens should be, "doing a first draft of the various minutes of meeting". On 2 February 2001 Mr Shafron replied, "Yes, please get started on some draft resolutions for all concerned". 472 On 7 February 2001 Mr Blanchard e-mailed to Mr Shafron, copied to Mr Robb and Ms Mowat, "draft JHIL Board minutes for your consideration". Ms Mowat was another solicitor at Allens apparently assisting Mr Robb. The draft minutes were solely concerned with establishment of the Foundation. The time of the meeting and the persons present were left blank. The draft minutes included a series of resolutions for execution of the Foundation trust deed, execution of the DOCI, formalising loans to Coy and Jsekarb, transferring the shares in Coy and Jsekarb, and giving money (at that time $3 million) to the Foundation. At the end of the draft was a minute in the same terms as the ASX Announcement minute save for a slightly different heading. 473 On 8 February 2001 Mr Shafron replied to Mr Blanchard that he would "make small changes to reflect house style and the state of the documents", and suggested the addition of a resolution by which JHIL ratified all acts of the directors of Coy and Jsekarb "in connection with all this (esp the indemnity)". Such a resolution appeared in the later draft minutes. 474 There were a number of further drafts in evidence. A second Allens draft bore the footer date 9 February 2001. A third Allens draft bore the footer date 13 February 2001. It contained manuscript amendments, and a draft incorporating the amendments bore the footer date 14 February 2001. 475 On 14 February 2001 Mr Robb sent an e-mail to Mr Shafron saying, "JHIL Board minute is attached. There will be quite a bit of paper to pull together once the documents are settled". Mr Shafron forwarded the minutes to Ms Susan Stevenson, Mr Morley's personal assistant, saying, "You might Hardi-ize this as discussed". 476 This draft still had a series of resolutions, but was considerably changed from Mr Blanchard's original draft, well beyond small or stylistic changes. The ASX Announcement minute remained throughout the drafts. 477 What must have been the final draft was sent by Mr Robb to Mr Shafron by e-mail at 8.05 am on 15 February 2001. The draft anticipated a meeting at 10.45 am on that day. The directors and other persons present now represented the persons who in fact attended. Some changes were made to the resolutions, but the ASX Announcement minute remained. 478 The draft minutes were not included in the board papers for the February meeting. The only relevant reference to resolutions in the board papers was to the resolutions in general terms as set out at [121] above. There was no evidence that the draft minutes were produced at the February meeting, for example as a guide to the meeting's business. 479 By an e-mail dated 21 March 2001 Mr Shafron sent to Mr Macdonald, copied to Mr Morley, "Draft Feb 00 Minutes and Draft April Program". The "00" was a slip, no doubt because of a slip in the heading to the draft saying that the meeting was held on 15 February 2000. The draft minutes included the matters other than the establishment of the Foundation, and in relation to the establishment of the Foundation took up much of the 8.05 am draft of 15 February 2001 but with a slightly different setting out. 480 On 30 March 2001 Mr Shafron sent an e-mail to Mr Robb saying, "JHIL minutes are done in draft (attached) – they have not been confirmed by the Board yet". The attached minutes were in the form of those last mentioned. Mr Shafron asked Mr Robb, in substance, whether it was necessary that the minutes be disclosed to the Foundation's board. We return to this in connection with disclosure of the DOCI, see [977] below. 481 Allens invoiced JHIL for legal services under a covering letter dated 29 March 2001. The work to which the letter referred included "settling various completion documents and board minutes as required by Alan Kneeshaw for JHIL … ". Mr Kneeshaw was the Manager, Secretarial Services for the James Hardie group. He had died prior to the trial. 482 The board pack sent out shortly prior to the meeting of 3 April 2001 included minutes of the February meeting in the form of the draft sent by Mr Shafron on 21 March 2001, save for correction to 2001. 483 According to the minutes of the April meeting, the minutes of the February meeting were confirmed as a correct record. All appellants except Mr Willcox were at the meeting. 484 The judge said in the liability judgment - "1193 At the JHIL board meeting on 3 April 2001 the draft minutes of the 15 February 2001 Meeting were approved by all the directors with the exception of Mr Willcox who was absent. None of them raised any concern with the resolution approving the draft ASX announcement. The draft minutes had been included in the April 2001 board packs sent to each of the defendants with the exception of JHIL and JHINV. ... 1194 Mr Brown said he reviewed the first couple of pages of the draft minutes but noted that the remaining six pages were in the nature of legal documentation and he only flicked through those pages to recognise that they were formal legal resolutions affecting [sic] the intent of what had been agreed. He said he did not notice the resolution approving the draft ASX announcement. Mr Brown accepted that the 15 February 2001 Meeting was one of the most important he had attended. 1195 Mr Gillfillan gave similar evidence. He said he believed that he did not study that portion of the draft minutes appearing below the heading "Creation of the Foundation" once he had ascertained that it dealt in the main with formalities in relation to the creation of the Foundation. He said he did not even review the bold headings on the fourth to eighth pages of the minutes which included the bold heading "ASX Announcement" on the seventh page. 1196 Ms Hellicar said she always wanted to make sure that minutes reflected the substantive decisions that had been taken. But she said her practice was only to skim read minutes recording formal preambles and resolutions required to implement decisions taken by the board and she only skim read that portion of the minutes below the heading "Creation of Foundation" as she believed it reflected a lawyer's drafting of the steps considered necessary and not a record of what actually transpired at the meeting. 1197 Mr Koffel said he did not read the draft minutes. He said it was his practice not to read minutes. He did not think an individual director had an obligation or responsibility for the minutes. He said he relied on the managing director and other directors to ensure the minutes were correct. 1198 Mr Willcox had no recollection of reviewing the draft minutes when he read the board papers for the April 2001 Meeting. His normal practice was to read minutes to assure him that the essence of major decisions had been recorded. He said he did not recall seeing anything in the minutes so badly misleading that he had cause to do anything about it. 1199 On the other hand, Mr Morley, who attended the 3 April 2001 board meeting said that he always believed that the minutes of the 15 February 2001 Meeting were correct. 1200 There was no suggestion from Mr Shafron, who was involved in the preparation of the draft minutes, or Mr Morley, that anyone suggested at the 3 April 2001 board meeting that the draft minutes were incorrect. Mr Morley said he did not raise any objection to the draft minutes and he did not recall anybody else suggesting that they were incorrect. 1201 Mr Robb, who had attended both meetings and was involved in the preparation of the minutes of the 15 February 2001 Meeting, did not suggest any amendment to the draft minutes sent to him by Mr Shafron on 30 March 2001. That document included the ASX announcement resolution. 1202 That none of the non-executive directors who gave evidence were aware of the resolution approving the draft ASX announcement in the minutes of the 15 February 2001 Meeting, meant that they did not have to explain why they did not seek an amendment to the minutes if their contention that they would not have approved the draft ASX announcement was true. 1203 On each occasion when one would have expected the non-executive directors to challenge statements if their contention was true, they have professed ignorance of the statements that should have caused them to complain. This was one such occasion. I do not accept that not one of the non-executive directors who gave evidence was aware of the recorded resolution in the draft minutes approving the draft ASX announcement." 485 The judge was in error in saying that Mr Robb was at the 3 April 2001 meeting. Further, the appellants submitted that LJ [1199] did not accurately reflect Mr Morley's evidence. That is correct. Mr Morley said that he had held the relevant belief at the time of the Jackson enquiry, because of the board's approval of the minutes and without casting his mind back to what had occurred at the February meeting. He said that his best recollection was that no draft news release was tabled or read out at the February meeting, and that had one been read out it would have stuck in his mind. If the judge meant in LJ [1199] that Mr Morley affirmed, through a belief in correctness of the minutes, that the Draft ASX Announcement Resolution was passed, we cannot agree. 486 We find a little puzzling the observation in LJ [1200] that Mr Shafron did not suggest that anyone at the April meeting suggested that the draft minutes were not correct. Mr Shafron did not give evidence. The judge may have meant that Mr Shafron did not record in the April meeting minutes, or otherwise so far as the evidence showed, any suggestion that the draft minutes were not correct. 487 ASIC submitted that the circulation of the draft minutes and their approval were in circumstances of "intense focus" on public communication of the establishment of the Foundation and the sufficiency of its funding, including the teleconference on the following Tuesday (see below at [507]) and the subsequent ASX announcements on 23 February 2001 and 21 March 2001. It said that none of Mr Macdonald, Mr Morley or Mr Robb questioned the accuracy of the circulated draft minutes containing the ASX Announcement minute, and that it would be extraordinary if Mr Shafron had circulated and allowed approval of minutes which recorded the tabling of an ASX announcement and its approval when that had not occurred. ASIC supported the judge's reliance on the confirmation of the minutes. 488 The appellants submitted to the effect that the paucity of evidence did not support the formality of the series of tablings of documents and passing of resolutions as recorded in the minutes, and that it was evident that the formal series of resolutions was not as the meeting had been conducted. They said that it should be found that the pre-meeting draft presented what Allens thought ahead of time would be appropriate, and that it had been taken up for the minutes and could not be taken accurately to record what had occurred. They said that on their face the minutes were falsified so far as they recorded that the tabled ASX announcement "be executed by the Company and sent to the ASX". The press release was not executed by JHIL. Nor was it sent to the ASX. Rather, Messrs Morley, Shafron, Baxter, Harman and Robb, all of whom had been at the meeting, further worked on it, and the Final ASX Announcement was in materially altered language. And the appellants said that the minutes as confirmed were inaccurate in other respects, giving plausibility to lack of attention to them by the directors and detracting from any significance of the confirmation at the April meeting. 489 We have referred to the changes to the ASX announcement, and do not repeat ourselves. As to inaccuracies in the minutes, the judge said in the liability judgment - "1204 It was submitted that the minutes of the 15 February 2001 Meeting contained inaccuracies that rendered them not a reliable contemporaneous record of the matters that took place at the meeting. 1205 The simple answer is that I have found that the ASX announcement resolution accurately recorded what happened at the meeting. That there may have been inaccuracies with respect to other matters recorded in the minutes does not detract from this finding." 490 His Honour detailed the inaccuracies, and said - "1220 The rescheduling errors are to be expected when, as here, the minutes were drafted before the meeting. Some of the errors such as the date of the substantial shareholder notice are relatively immaterial. But, in any event, it does not follow that because there were inaccuracies with respect to some events, the minutes could not be regarded as accurately recording other events and, in particular, the resolution approving the draft ASX announcement." 491 With respect, in his answer to the submission at LJ [1205] the judge proceeded from a finding of accuracy in relation to the ASX Announcement minute, when the point of the submission was that the finding should not be made. This was not correct reasoning. 492 We do not refer to all the inaccuracies detailed by the judge. One was that a resolution in relation to the DOCI recorded a figure of $65m when the relevant figure in the cash flow model at the meeting was $72m. The same wrong figure was later repeated. This was a significant inaccuracy. The rescheduling errors mentioned in LJ [1220] were also significant. 493 In the liability judgment the judge described these errors - "1213 Fifthly, the minutes recorded a chronological sequence of events in accordance with the agenda whereas Mr Morley gave unchallenged evidence that items 6, 7 and 10 were deferred until after the discussion of Project Green, item 11 on the agenda. Material documents, item 5 on the agenda, were recorded in the minutes as happening after Sir Llewellyn Edwards retired from the meeting whereas that item was dealt with before he retired. 1214 Sixthly, item 8 on the agenda was the chief executive officer's report. The minutes recorded it being considered prior to Mr Baxter, Mr Harman, Mr Wilson, Mr Sweetman, Mr Cameron and Mr Robb joining the meeting. Mr Morley's unchallenged evidence was that item 8 was considered after they joined the meeting. 1215 Seventhly, in incorrect sequence was item 10 on the agenda, 'Australia/Asia Restructure'. It was deferred until after discussion on Project Green. 1216 Eighthly, Mr Morley said that item 7 on the agenda, 'Finance ' , was deferred until after the discussion on Project Green. The minutes recorded it as being considered before Project Green." 494 We have difficulty with the judge's apparent dismissal of the rescheduling errors on the basis that they were to be expected when the minutes were drafted before the meeting. The point of the appellants' submission was that the minutes were drafted before the meeting, and were not a true record of what had occurred at the meeting because they had been drafted before the meeting; so they did not record the reality of what had occurred. A like conclusion was open in relation to the $65 million - $72 million. In our opinion, there was and is force in the appellants' submission concerning inaccuracies. 495 Mr Morley was led to agree in cross-examination that the minutes of the February meeting were "full of holes and unreliable"; of course, he may have been led willingly. The appellants submitted that there were other inaccuracies, not detailed by the judge. One was that, according to Ms Hellicar and Mr Willcox, many of the documents recorded as "tabled" by the Chairman were not provided to the directors. Ms Hellicar said that the DOCI, which the minutes recorded was tabled, was not produced to the meeting; in Mr McGregor's evidence before the Jackson inquiry, he said that he did not physically table it but it "was there". The DOCI was a very important document: that it "was there" is unclear, but at the least there was informality belying strict accuracy of the minutes. 496 In our opinion, there are substantial grounds for treating the reliability of the minutes with some care. It can be accepted that, as ASIC submitted, the resolution in the ASX Announcement minute was fairly prominent, even on a scan of the minutes with the meeting's main topics in mind or with a view to their recording the substance of what had occurred. Although the judge did not refer to it, Mr Brown came to agree in cross-examination that he had noticed that the minutes recorded "seventeen separate resolutions which [he] … believed were not passed", but had remained silent. He at least had read the draft minutes with a degree of attention, and the submission was well available that, from his silence at the time, it should not be accepted that he believed that the resolutions were not passed. But there was no specific finding by the judge that, contrary to his evidence, Mr Brown was aware of the resolution in the ASX Announcement minute. 497 The minutes, and their approval as a correct record, are a significant matter in ASIC's case for the Draft ASX Announcement Resolution. However, their reliability and thus their weight in that case is very much open to question. The weight to be given to them must be assessed in the light of other matters considered in these reasons. 4.5.10 Later acceptance 498 ASIC submitted that acceptance that the Draft ASX Announcement had been passed was to be found in or in relation to - (i) a teleconference on 20 February 2001; (ii) submissions to the Jackson inquiry; (iii) declarations of interest in 2004 and 2005; and (iv) the JHINV Explanatory Memorandum. 499 Some of the evidence tendered by ASIC on these matters was rejected, or was admitted only against particular appellants or limited in its use to the case against particular appellants. There were challenges to the rejection or limitation through ASIC's notices of contention. 500 The consideration of later acceptance is rather lengthy. Foreshadowing our conclusion, we think that little support is given to discussion and approval of a draft news release or passing the Draft ASX Announcement Resolution. (i) The teleconference 501 Mr Brown, Ms Hellicar, Mr Gillfillan, Mr Koffel, Mr Willcox and Mr Morley had said that they did not recall discussion about or the occurrence of a teleconference on 20 February 2001. In the part of his reasons dealing with subsequent events the judge found that a teleconference was arranged for, and held on, 20 February 2001. He found that Ms Hellicar participated. The judge said in the liability judgment - "1179 As Mr Gillfillan and Mr Koffel said, it was an unusual event. One would have expected, therefore, that some of the non-executive directors would have a recollection of it. I do not accept the chorus of denial of recollection to be genuine. 1180 This was another opportunity on which one would have expected the non-executive directors to voice their disapproval of the final ASX announcement if their testimony that they would not have approved the draft ASX announcement were true. 1181 While I reject the chorus of non-recollection from the non-executive directors who gave evidence, my non-acceptance of their evidence does not establish the identity of any other person who participated in the teleconference. 1182 All that is established is that Ms Hellicar participated in the teleconference and there is no evidence that she took the opportunity to complain about the content of the final ASX announcement. If her evidence that she would not have approved the draft ASX announcement was true, one would have expected a complaint from her at the teleconference if she had not already complained upon receipt of the final ASX announcement. 1183 Again, the reason for her lack of complaint about the content of the final ASX announcement during the teleconference was because she had approved the draft ASX announcement and the terms of the final ASX announcement caused her no concern. 1184 I held that evidence of the teleconference did not establish what was discussed at the 15 February 2001 Meeting in relation to the Draft ASX Announcement ( Australian Securities and Investments Commission v Macdonald (No 5) [2008] NSWSC 1169 at [12]; Australian Securities and Investments Commission v Macdonald (No 6) [2008] NSWSC 1175 at [10]). Having found, however, that the board of directors approved the draft ASX announcement, the failure of Ms Hellicar to complain about the content of the final ASX announcement during the teleconference supports my conclusion." 502 This was another area in which the judge found support in absence of protest following receipt of the Final ASX Announcement, and apparently also comfort in relation to the credit of one or more of the appellants. As expressed, it is starkly circular reasoning: approval of the Draft ASX Announcement is found, then failure to complain is a reason for that finding. 503 Again, we will say something of the credibility observations later in these reasons, see at [777]-[788]. 504 ASIC took issue with the judge's statement, in the first sentence of LJ [1184], that the evidence of the teleconference "did not establish what was discussed at the 15 February meeting in relation to the draft ASX announcement". It submitted that it had been agreed at the February meeting, which was on a Thursday, that there would be a teleconference on 20 February 2001, the following Tuesday, "to hear a report on the aftermath of the separation announcement". These words come from an e-mail to which we will refer. It submitted that the fact of agreement for that purpose supported that the draft news release had been discussed and approved at the meeting. 505 The submissions challenged the judge's rejection of ASIC's tender of a number of e-mails relating to the teleconference. In chronological order, the e-mails were - (a) the 15 and 17 February 2001 e-mails; (b) the 19 February 2001 e-mail and responses; and (c) the 20 February 2001 e-mail. 506 Our consideration of the 15 and 17 February 2001 e-mails will largely resolve the positions of the others, and will explain why we are not persuaded that the judge was in error in the first sentence of LJ [1184]. (a) The 15 and 17 February 2001 e-mails 507 On 15 February 2001 Mr Shafron e-mailed Mr Macdonald asking whether he should arrange a "Board Hook Up" for the following Tuesday. Mr Macdonald replied in the affirmative. 508 On 17 February 2001 Mr Shafron e-mailed Ms Stevenson asking her to arrange a teleconference for the Tuesday, and to inform the directors (other than Sir Llewellyn Edwards). The message he asked to be sent to the directors included, "At the last meeting it was agreed that there would be a teleconference set up for Tuesday morning Australia time so that interested directors could hear a report on the aftermath of the separation announcement". 509 In Australian Securities and Investments Commission v Macdonald (No 5) [2008] NSWSC 1169 the judge rejected ASIC's tender of these two e-mails. He rejected them on two bases. 510 The first basis was relevance. His Honour said at [12] that the reference to agreement at the last meeting - " … says nothing about board consideration of the terms of any announcement to the ASX and while it does record an agreement to hold a teleconference to discuss the aftermath of the separation announcement, that should not be restricted to the ASX announcement. The press conference held on the same day also constituted separation announcements. In my view, any agreement to hold a teleconference is not tied to any discussion at the board meeting of 15 February 2001 of the terms of any ASX announcement." 511 The second basis was that the e-mails had been improperly obtained, within s 138(1) of the Evidence Act, and the desirability of admitting them did not outweigh the undesirability. The impropriety lay in ASIC finding the e-mails on Mr Shafron's laptop by search outside an agreed protocol, although the departure from the protocol had not been wilful. 512 There were extensive submissions on appeal in relation to the s 138 basis of rejection. It is not necessary to consider that matter. 513 The judgment in Australian Securities and Investments Commission v Macdonald (No 5) was given on 4 November 2008. On 8 December 2008 ASIC tendered an undated facsimile from Mr Shafron to Messrs Brown and Willcox. It said - "At the last meeting it was agreed that there would be a teleconference set up for Tuesday morning, Australian time, so that interested Directors could hear a report on the aftermath of the separation announcement. Accordingly, a call has been arranged as follows … ". 514 The facsimile bore Ms Stevenson's e-mail address, and may have been sent by Ms Stevenson at Mr Shafron's request. ASIC had put receipt of the facsimile to Mr Brown, but Mr Brown did not recall it. The only objection to the tender was by counsel for Mr Morley, on the grounds that "it is after the period and there is no reference to Mr Morley". The facsimile was admitted "noting the relevance objection of the third defendant". 515 Through this facsimile, which could easily be placed in date shortly after the February meeting, there was available against all appellants, including Mr Morley, evidence that the teleconference had been agreed "[a]t the last meeting … to hear a report on the aftermath of the separation announcement". The later tender of the facsimile made the rejection of the e-mails presently in question on the s 138 basis irrelevant, but left the rejection on the basis of relevance. It is curious that there was no objection to the facsimile on the ground of relevance – perhaps the cross-examination of Mr Brown was thought to make it admissible. 516 The relevance basis of the judge's ruling necessarily extended to this facsimile, hence no doubt the wider reference to "the evidence of the teleconference" in LJ [1184]. The judge did not expressly refer to the facsimile, but we take the wider reference to include it as evidence of agreement that there would be a teleconference. 517 ASIC submitted that the e-mails were evidence that there was discussion at the February meeting of a "separation announcement". It said that of the two candidates for a separation announcement, an ASX announcement was more likely than the press conference or conferences to be held by Mr Macdonald, and that an ASX announcement must have been discussed. It said that in any event, if the board approved a public statement on separation it was likely that it approved an announcement to go to the ASX. 518 The appellants submitted that the compelling inference was that the teleconference was to be concerned with the reaction to the announcement of the Foundation, not the contents of any ASX announcement about funding, and with the reactions following the comprehensive strategy of briefing key stakeholders and media representatives and Mr Macdonald's press conferences and not necessarily following a news release or ASX announcement. They said, correctly, that the slides described a programme of briefings, interviews and press conferences in considerable detail. 519 In our view, it is not correct to postulate that the separation announcement was one or other of a press conference or conferences or an ASX announcement. The point of the teleconference was to receive a report on what must have been the reaction of stakeholders to the whole of the communication strategy. Any news release or ASX announcement was likely to be less significant than the programme of briefings, interviews and press conferences. That no doubt was why the questions and answers had been prepared, to provide the framework for a consistent message outside any relatively formal news release or announcement. We do not think that a meaningful inference can be drawn from the e-mails as to the board's consideration and approval of a draft news release, let alone of a formal ASX announcement as required for the Draft ASX Announcement Resolution. 520 Perhaps the e-mails were not wholly irrelevant, so far as they suggested that (as the communication strategy already showed) there was to be a separation announcement. But that did not mean simply a news release, or an ASX announcement. In our view, the e-mails did not materially support the passing of the Draft ASX Announcement Resolution. (b) The 19 February 2001 e-mail and responses 521 On 19 February 2001 Ms Stevenson sent an e-mail to, amongst others, Ms Hellicar, Mr Gillfillan, Mr Koffel, Mr O'Brien, Mr Terry, Mr Morley and Mr Shafron. The stated subject was "Message to Directors", with "Importance: High". The e-mail was in the same terms as the facsimile to Messrs Brown and Willcox. 522 There were e-mail responses, not in themselves of significance. They included an apology from Mr Terry that he was unable to "take the call". 523 In Australian Securities and Investments Commission v Macdonald (No 6) [2008] NSWSC 1175 the judge rejected the tender of the e-mail and responses. His Honour considered that "none of the e-mails has relevance and ought not to have been admitted into evidence so late in the proceedings": at [19]. 524 For the lack of relevance, his Honour took up what he had said in relation to the e-mails of 15 and 17 February 2001 in Australian Securities and Investments Commission v Macdonald (No 5). The e-mail from Ms Stevenson said nothing about board consideration of the terms of any announcement to the ASX. While it did refer to a report on the aftermath of the separation announcement, that should not be restricted to the ASX announcement because a press conference was held on the same day "and it also produced separation announcements": at [9]. As well - "10 Further, in my view, any agreement to hold a teleconference is not tied in to any discussion at the board meeting of 15 February 2001 of the terms of any ASX announcement. Any arrangement to hold a teleconference after separation of James Hardie & Coy Pty Ltd and Jsekarb Pty Ltd from JHIL and their transfer to the Medical Research and Compensation Foundation Trust (MRCF Trust) is explicable in terms of a desire to ascertain market reaction to separation announcements generally by JHIL rather than any reaction to the particular terms of the announcement of the ASX. In my view the email is of peripheral significance only ... ". 525 His Honour considered that the responsive e-mails were in no better position. 526 All these e-mails had been found on the laptop of Mr Shafron by a later search according to another agreed protocol, following the earlier search outside the then protocol. In the judge's view, the lateness was because at the time the e-mails were tendered all oral evidence in ASIC's case had been heard and its case was about to be closed, and the e-mails could have been found at an earlier time by a search within the earlier protocol. 527 ASIC submitted that the judge was in error in seeing "peripheral significance only" in the e-mails. It repeated its submissions in relation to the e-mails of 15 and 17 February 2001, and added that the significance of the responses was that none suggested that the e-mail from Ms Stevenson contained an inaccurate description of what occurred at the meeting. 528 We do not repeat what we have said in relation to the e-mails of 15 and 17 February 2001. While the e-mails and responses may not have been entirely irrelevant, they did not materially advance ASIC's case. It is not necessary to consider the rejection so far as on the ground of lateness. (c) The 20 February 2001 e-mail 529 On 20 February 2001 Mr Macdonald sent an e-mail to Mr O'Brien headed "Foundation Announcements", reading - "Got your message about missing the Directors' update teleconference call. The snapshot is that things have gone better than we hoped so far. Media, union and Government interest has subsided to the point that it is almost non-existent. The share price has lifted to $3.84 (Monday's close) and is sitting at $3.82 at 4 pm on Tuesday." 530 The judge rejected ASIC's tender of the e-mail, initially in Australian Securities and Investments Commission v Macdonald (No 5) [2008] NSWSC 1169 and then in Australian Securities and Investments Commission v Macdonald (No 6) [2008] NSWSC 1175. 531 The e-mail was tendered and re-tendered at the same times as the e-mails to which we have earlier referred, and was considered together with them. We do not think it necessary to detail the judge's reasons, or to repeat what we have said. It could be inferred that there had been an "update teleconference call" in connection with "Foundation Announcements", and that there was interest in the reaction to the announcements. But the e-mail had no greater relevance than the other e-mails. (ii) Submissions to the Jackson inquiry 532 JHIL (by then ABN 60 Pty Ltd) and JHINV made submissions to the Jackson inquiry. 533 Draft submissions were prepared. They appear to have been prepared by Allens or by counsel briefed through Allens, but in any event there was no evidence of direct involvement by any of the appellants. 534 Under the heading "Alleged contravention of Corporations Law s 995", the submissions addressed "whether the matters published by JHIL following the establishment of the MRCF contravened any legal norm of conduct". The submissions on what the "media release" conveyed about funding included – "4.11 Generally: The terms of the media release (described in the minutes as the ASX Announcement) were considered and the subject of a resolution at the JHIL Board meeting on 15 February … ". 535 Early on 29 July 2004 Mr Stuart Lawrance of Allens e-mailed the draft submissions to, amongst others, Ms Hellicar, Mr Macdonald, Mr Morley, Mr Shafron, Mr Ashe and Mr Peter Cameron. Late on the same day Mr Lawrance e-mailed to the same persons "a copy of our submissions in reply, as filed with the Commission this afternoon". The submissions as filed contained the same statement that the terms of the media release were considered and the subject of a resolution at the February meeting ("the statement"). 536 In Australian Securities and Investments Commission v Macdonald (No 3) [2008] NSWSC 1099 the judge rejected the draft and final submissions and the two e-mails ("the documents"). ASIC had tendered the documents as admissions by the relevant recipients of the e-mails, including by their silence in failing to contradict the statement. The judge rejected them because the submissions were not made by the recipients of the e-mails; JHIL, JHINV and their solicitors and counsel lacked authority to make representations on behalf of the individuals; and the e-mails did not invite scrutiny or observation of the submissions by the recipients and it "could not reasonably be supposed that a reasonable person in the position of the recipients would have contradicted the statements in the submissions": at [36]. 537 The documents were subsequently admitted, limited in their use to the case against Mr Morley. The basis for this is not clear to us. Through a notice of contention, ASIC challenged the otherwise rejection of the documents to the extent that it sought to have them admitted against Ms Hellicar. There were like notices of contention as against Mr Brown, Mr Gillfillan and Mr O'Brien, but they were not maintained. ASIC submitted that the documents should be received as admissions of the statement through failure to contradict or correct it. 538 There was no evidence that Ms Hellicar was involved at the drafting stage. The submission was founded on her receipt of the draft submissions and the submissions as filed. ASIC said that as at July 2004 Ms Hellicar was the chair of the special committee of the board of JHINV established to oversee the company's participation in the Jackson inquiry, including its submissions in reply. It said that her particular involvement as chair of the committee, the importance of the matter and the fact that it was one of which she had direct personal knowledge were "circumstances … such as to make it unlikely that [she] would allow an erroneous statement to pass unchallenged": Lustre Hosiery Limited v York (1935) 55 CLR 134 at 143. 539 We are not persuaded that the judge's ruling was in error. 540 At the time the judge gave his ruling, Ms Hellicar's position as chair of the committee and what it entailed for her attention to the detail of the submissions to the Jackson inquiry had not been explored. The e-mails did not invite comment or instructions. The draft submissions were filed as final submissions on the same day as they were sent, with but brief opportunity for comment or instructions. Without other evidence of the committee's role and actual participation, we do not think that the foundation was laid for the reasonable probability of correction by Ms Hellicar, and we do not think that an affirmation or acknowledgment by Ms Hellicar of the correctness of the statement should be found. 541 Ms Hellicar subsequently gave evidence that she had "never read those submissions, to this day", and that the committee's attention was given to a different matter in the Jackson inquiry, the adequacy of the current funding arrangements and whether reform was desirable. That is supported by the further description of the committee's remit, to supervise on behalf of JHINV "its contribution to or participation in any further arrangements in respect of its efforts to achieve a comprehensive resolution of these matters … ". ASIC's submissions are not assisted by regard to this later evidence. (iii) Declarations of interest in 2004 and 2005 542 In brief, ASIC relied on evidence concerning declarations of interest in 2004 by some of the appellants, as members of the supervisory board of JHINV, in which they said that they had participated in approving the Draft ASX Announcement; and the appellants' responses included reliance on evidence concerning modified declarations of interest and a draft letter in 2005. 543 The report of the Jackson inquiry was published on 21 September 2004. JHINV's then solicitors, Atanaskovic Hartnell, prepared a summary of the findings. By an e-mail dated 21 September 2004 the summary was sent to, amongst others, Mr Brown, Mr Gillfillan and Ms Hellicar, it seems for consideration by the committee chaired by Ms Hellicar to which we have earlier referred or by the supervisory board of JHINV. Mr Gillfillan was another member of the committee. Mr Brown, Mr Gillfillan and Ms Hellicar were members of the supervisory board. 544 The summary included that the Commissioner had found that the "media release" of 16 February 2001 - " … was defective because (paras 22.14-22.22): the Foundation was not 'fully funded' in any relevant sense, it was massively under-funded; as a consequence, the separation did not provide 'certainty' for either claimants or shareholders; the references to PwC and Access conveyed a quite incorrect view of the role of those entities." 545 The summary further stated that the Commissioner found that "the misleading nature of the Media Release" involved contraventions of certain provisions of the Law by JHIL and/or Mr Macdonald. 546 The e-mail of 21 September and summary were admitted against Mr Brown, Mr Gillfillan, Ms Hellicar, and Mr Shafron, and them alone. The basis for this extent of admissibility is not clear to us. 547 Minutes of the committee meeting on 22 September 2004 included that all the directors had received a copy of the report and that there was discussion of "the seriousness of the findings". Minutes of the board meeting on 23 September 2004 included the Chairman saying that ASIC "had announced an investigation that would include Directors and Officers". The board members were advised by Dutch lawyers that they were required to disclose conflicts of interest in relation to matters investigated by the Jackson inquiry. The disclosure notices were referred to as declarations of interest. 548 By an e-mail dated 25 September 2004 sent to, amongst others, Mr Brown and Mr Gillfillan, Ms Hellicar said that subject to any corrections from Mr Atanaskovic "attached is my declaration which I will sign and provide to whomever John [Atanaskovic] advises … ". 549 The attached declaration was addressed to each member of the supervisory board of JHINV. It was dated 25 September 2004. After saying that it was made more for abundance of caution, it said that as a director of JHIL, Ms Hellicar participated in certain decisions and acts of JHINV and JHIL while a director and - "4. Certain of those decisions and acts have been or may become subject to criticism, including without limitation during the New South Wales Special Commission of Inquiry into the Medical Research and Compensation Foundation (the "Foundation") or in its report to the New South Wales government and may become the subject of an investigation by the Australian Securities and Investments Commission ("ASIC") or of claims by third parties. 5. To the extent that my participation or involvement in the decisions or acts referred to in paragraph 4 above results m my being materially personally interested in any decisions to be considered by the Supervisory Board of JHINV I hereby declare them. 6. By way of example of the decisions described in paragraph 4, but without limiting the declaration made under paragraph 5, in my capacity as a director of JHIL, I participated in the deliberations leading to the decision taken by the Board of Directors of JHIL on 15 February 2001, and in the decision itself, to approve the terms of the press release made by JHIL to the Australian Stock Exchange Limited on that day announcing the establishment of the Foundation." 550 There was no evidence of a signed declaration by Ms Hellicar, as distinct from the one she proposed to sign. Ms Hellicar said that, to the best of her recollection, she did not sign the declaration, but that its contents were disclosed at the meeting of the JHINV supervisory board on 28 September 2004. 551 The evidence included an unsigned declaration of interest by Mr Gillfillan, also dated 25 September 2004, in the same terms as the Hellicar declaration. Mr Gillfillan said that he did not recall signing the declaration but most likely he did. 552 The evidence also included a signed declaration of interest by Mr Brown, dated 26 September 2004, in the same terms as the Hellicar declaration. 553 The minutes of a meeting on 28 September 2004 recorded that the members of the board noted that Mr Brown, Ms Hellicar, Mr Gillfillan and some others "had given disclosure notices in relation to interests and that the terms of such notices had been provided by e-mail or fax to each other director in each case". 554 In cross-examination, the whole of his signed declaration was read to Mr Brown. He confirmed his signature and agreed that he signed it having "carefully read it", although he could not recall the detail with which he considered it. He said that he presented his declaration to be filed with the records of JHINV. He was asked whether it reflected what he honestly thought to be the true position, and he answered that it "obviously reflected what I believed to be the true position at the time I signed this document" ("Mr Brown's oral evidence"). 555 All this occurred without express objection from Mr Brown or any other appellant. 556 A little later ASIC tendered Mr Brown's signed declaration. The judge asked whether that was necessary because "you read the entirety into the record". The tender was pressed. The appellants other than Mr Brown objected to the tender. There was no significant debate. The ruling was reserved. 557 In due course the judge ruled that the Brown declaration should be admitted against him alone. He said - "I am going to admit the disclosure notice of Mr Brown against him alone. In my view, section 83 of the Evidence Act applies. It provides that section 81, which allows the tender of evidence of an admission as an exception to the hearsay and opinion rules, does not prevent those rules applying to evidence of an admission in respect of a third party. For this purpose, the other defendants are third parties. That does not, as I presently think, prevent Mr Bannon [counsel for ASIC], if other parties seek to rely on the evidence of Mr Brown, making submissions as to the attitude that I should adopt to his evidence as a result of the admission. I propose to make this following order: I order that the disclosure of Mr Brown to the members of the supervisory board of James Hardie Industries NV, dated 26 September 2004, be admitted as an exhibit by the inclusion of its digital content in the court record database, but that, pursuant to section 136 of the Evidence Act 1995, its use be limited to the plaintiff's case against the fourth defendant [Mr Brown]." 558 The Gillfillan and Hellicar declarations were tendered later, and in that order. 559 As to the Gillfillan declaration, tendered by ASIC some time later, the judge said that he proposed to take the same course as he had in relation to Mr Brown "and exercise the discretion under s 136 and make it available only against the fourth [sic: fifth] defendant". Again there was no significant debate, and an order was made in like terms to the order in relation to the Brown declaration. 560 The Hellicar declaration, tendered later again, appears to have been admitted as the document referred to in a supplementary statement of Ms Hellicar tendered by her counsel. We take this from ASIC's transcript reference to where it was admitted – in the manner documents were dealt with at the trial, no doubt the parties knew what was occurring, but it sometimes is not apparent from the appeal materials. Without debate, the judge made an order in like terms to the order in relation to the Brown declaration. 561 It appears that in final submissions ASIC took up the implicit opportunity to put submissions about Mr Brown's oral evidence. In the liability judgment the judge said - "1226 I had limited the use that ASIC could make of these documents [the unsigned and signed declarations] to its case against Mr Brown, Mr Gillfillan and Ms Hellicar. ASIC submitted that Mr Brown's oral evidence in relation to his declaration was admissible against all defendants as a prior inconsistent statement to what was to come in relation to revised declarations in 2005, or as an admission. 1227 I reject those submissions. If the declaration was a prior inconsistent statement, it could only go to Mr Brown's credit. It could have no relevance to the cases ASIC mounted against the other defendants. If it was an admission its use was, like the document itself, confined to ASIC's case against him." 562 In the result, the Brown declaration, the Gillfillan declaration and the Hellicar declaration were each admitted against Mr Brown, Mr Gillfillan or Ms Hellicar alone, purportedly through orders pursuant to s 136 of the Evidence Act limiting their use to the case against that party. The use of the minutes of the 28 September 2004 meeting was limited to the cases against Mr Gillfillan, Mr Brown, Ms Hellicar, Mr Koffel, Mr Willcox and Mr Shafron. It is not clear to us how the use of the minutes came to extend to the cases against Messrs Koffel, Willcox and Shafron but no further. The judge declined to admit Mr Brown's oral evidence as evidence against parties other than Mr Brown. 563 ASIC relied on the declarations of interest as evidence that, as stated in para 6, there were deliberations and a decision by the JHIL board "to approve the terms of the press release made by JHIL to the Australian Stock Exchange Limited on that day announcing the establishment of the Foundation". (In fact the ASX announcement was not sent to the ASX on 15 February 2001, but on 16 February 2001; and it had been changed from the news release that, on ASIC's case, had been approved.) Through notices of contention, ASIC challenged the limitations to the cases against each of the three appellants, and sought to have the unsigned and signed declarations admitted against all the appellants. The notices of contention extended to the minutes, but that was not maintained. ASIC also sought to rely on Mr Brown's oral evidence as evidence admissible against all appellants that what he had said in the Brown declaration about the deliberations and decision was correct. It challenged the judge's ruling, at LJ [1227]-[1228], on the admissibility of Mr Brown's oral evidence against all appellants. 564 We go first to admission of the signed and unsigned declarations against all the appellants, in the case of the Brown declaration otherwise than by reason of Mr Brown's oral evidence. It is not clear that ASIC made at trial the submissions it made on appeal. They were first, that Mr Brown's declaration should have been admitted as a business record; and secondly, that the judge had erred in making the limiting orders under s 136 because the declarations were evidence that each of Mr Brown, Mr Gillfillan and Ms Hellicar recollected that they and the board had approved the draft ASX announcement at the February meeting and involved assertions by each of them about events they directly participated in. 565 When the judge ruled that the Brown declaration would be admitted against him alone, ASIC foreshadowed "the possibility of seeking to make a submission on a business records basis in relation to that document". So far as we are aware, that was not done, and none of the declarations were tendered as a business record. It is too late now to seek to have the declarations admitted as business records. In any event, we were not referred to evidence of the provenance of the tendered unsigned and signed declarations, and the minutes do not close this gap. We do not accept the first basis for general admission of the declarations. 566 There was some confusion in the admission of the declarations. They were admitted as admissions. An admission is within the legal concept of hearsay evidence. At common law, an admission was admissible as an exception to the general exclusion of hearsay evidence. Under the Evidence Act, it is admissible as an exception to the hearsay rule (s 81) but, unless by consent, not against a party other than the admitting party (s 83). There was no occasion to resort to s 136 to limit the use of the declarations to ASIC's cases against the respective admitting parties. Section 136 presupposes that the evidence is otherwise admissible against a party. The judge's reasons for his ruling in relation to the Brown declaration, taken up for the other declarations, treated the Brown declaration as an admission not admissible against the other parties, but then unnecessarily went on to make a limiting order pursuant to s 136. 567 We do not accept the second basis for general admission of the declarations. The s 136 limiting orders were not a correct course. The declarations were admissible only against each admitting party, quite apart from the orders. It was therefore not to the point to challenge the making of the limiting orders. 568 We add that, had it properly arisen, we are not persuaded of error in making a limiting order. The making of an order is discretionary. There must first be a danger that a particular use of the evidence might be unfairly prejudicial to a party, or be misleading or confusing. Then there is a discretion to limit the use of the evidence. ASIC did not address prejudice or confusion, or attempt to show error of the kind explained in House v The King (1936) 55 CLR 499. It is not self-evidently unreasonable that use of an admission, if otherwise more widely admissible, should be limited so as not to be used against a party other than the admitting party, even where the admitting party is available for cross-examination. Other minds might have seen it differently, but without an attempt to identify the unfair prejudice or possibility of misleading or confusing use, we do not think ASIC has made good that there was discretionary error. 569 In our opinion, therefore, their 2004 declarations are evidence against Mr Brown, Mr Gillfillan and Ms Hellicar respectively, but not against other appellants. 570 We go then to Mr Brown's oral evidence. 571 ASIC submitted that the judge's ruling was in error. It submitted that at the time the evidence was given no limitation was placed on the use of Mr Brown's oral evidence, and that it was evidence available against all appellants that the "true position" was as Mr Brown believed. It said that Mr Brown's oral evidence was "oral evidence of a business record, kept in the books of JHINV as part of its business; alternatively, that as a prior inconsistent statement of Mr Brown of what he had seen or done as well as an admission it was generally admissible for a non-hearsay purpose". For the second of these bases it cited R v Adam [1999] NSWCCA 197; (1999) 47 NSWLR 267; Adam v The Queen [2001] HCA 57; (2001) 207 CLR 96 (together Adams Case). 572 We do not accept the first basis in these submissions. It does not seem to have been put to the judge. The oral evidence was not a business record, and if anything was a business record it would have been the Brown declaration itself. 573 We do not understand the judge to have ruled, at the time the Brown declaration was admitted into evidence, that the use of Mr Brown's oral evidence should also be limited to the case against Mr Brown. The ruling was specifically as to the declaration, not what Mr Brown had said about it. 574 It is implicit that ASIC did not contend that, simply because there was no express objection at the time, Mr Brown's oral evidence was available against all parties. The ruling may have come in the last sentence of LJ [1227], but under the misconception of confining the use of an admission to ASIC's case against Mr Brown. 575 ASIC's submission was, or at least was primarily (as recorded by the judge), that Mr Brown's oral evidence was admissible against all defendants "as a prior inconsistent statement to what was to come in relation to revised declarations in 2005". If the submission was made to the judge as it was made on appeal, the judge did not correctly deal with it. He rejected the submission because, if it was a prior inconsistent statement, the Brown declaration went only to Mr Brown's credit. The point of the submission was that the evidence of the prior inconsistent statement, the Brown declaration, was admissible against all defendants because it went to Mr Brown's credit. 576 The second basis implicitly accepted that, at the time Mr Brown gave his oral evidence, its status was a matter for further submissions. That may be reflected in what the judge said about "submissions as to the attitude that I should adopt to his evidence as a result of the admission", although the judge may have been referring to Mr Brown's credibility if the other parties sought to rely on his other evidence of what occurred or did not occur at the February meeting. From LJ [1226]-[1227], the extent of use of Mr Brown's oral evidence appears to have been debated in later submissions, with the ruling in those paragraphs of the liability judgment. 577 ASIC's submissions on appeal as to the second basis relied on general admissibility of a prior inconsistent statement, otherwise hearsay, because it was admissible for a non-hearsay purpose: Adam's Case. 578 Adam was charged with murder. Sako was called in the Crown case. He gave evidence that he saw nothing. He had made statements in a police interview. Leave was given to cross-examine him on a prior inconsistent statement, and he acknowledged that he had told the police interviewer that he had seen and done certain things, although he maintained that he was only reciting what he had been told by others. Taking up an analysis in Lee v The Queen (1998) 195 CLR 594 at 601, it was held in the Court of Criminal Appeal (R v Adam) that the evidence of what Sako told the police interviewer was admissible as evidence of what he had seen and done. The analysis in Lee v The Queen was that evidence that a witness had seen what was recorded in his prior statement was relevant to the issues in the case, but his representation out of court that he had seen those things was hearsay; however, because that representation was also relevant to show that he had made a prior statement inconsistent with his evidence in court, the hearsay rule did not apply; and so the representation would be admissible to prove the fact that the witness intended to assert by the representation. 579 In Lee v The Queen the fact that the witness intended to assert was only that certain things had been said to and by him, not what he had seen. This was not relevant evidence, and so it was not admitted. In Adam's Case it was held that the prior inconsistent statement recorded what Sako had seen and done, and the evidence was admitted. 580 In the High Court (Adam v The Queen) the reasoning of Gleeson CJ and McHugh, Kirby and Hayne JJ was that the evidence of Sako's prior inconsistent statements was relevant both to his credibility and to the issues in the case; because it was relevant to more than his credibility, the credibility rule was not engaged; and - "The evidence being relevant for purposes which included the attack on Thaier Sako's credibility, but extended to its direct relevance to the facts in issue, it was therefore within the exception to the hearsay rule provided by s 60 [of the Evidence Act] and admissible as evidence of the truth of the contents of the statements." (at [39]) 581 Section 60 of the Evidence Act provides that the hearsay rule does not apply to evidence of a previous representation "that is admitted because it is relevant for a purpose other than proof of an asserted fact". 582 The reasoning in relation to the credibility rule is no longer valid, following the insertion of s 101A into the Evidence Act reversing the High Court's holding that the credibility rule was not engaged. Section 101A came into operation on 1 January 2009; it was not suggested that it applied in relation to the admissibility of Mr Brown's oral evidence. But ASIC submitted that, in what he said at LJ [1226]-[1227], the judge had not appreciated that its submission that Mr Brown's oral evidence was evidence of a prior inconsistent statement, the Brown declaration, was the basis for asserting a non-hearsay purpose and consequential admissibility of the oral evidence under the exception to the hearsay rule in s 60 of the Evidence Act. 583 The appellants did not address ASIC's submissions in relation to Adam's Case. The thrust of their submissions was that the judge had correctly treated Mr Brown's oral evidence as an admission and limited its use pursuant to s 136 of the Evidence Act, as he had done in relation to the Brown declaration, and that no error had been shown in his doing so. This rather missed the point, and involved the misconception as to s 136. 584 ASIC's submissions on appeal did not clearly identify with what the prior statement was inconsistent. According to LJ [1226], the inconsistency was with "what was to come in relation to revised declarations in 2005". We will come to the declarations of interest in 2005; they were to the effect that, having since given thought to the matter, the relevant directors could not positively recall at the time they signed the 2004 declarations, and currently had no positive recollection, that what was recorded in the ASX Announcement minute had actually occurred. But it was put rather differently on appeal, by the submission that Mr Brown's oral evidence was "about matters Mr Brown had done or observed" – meaning, it seems, the fact of the passing of the Draft ASX Announcement Resolution, not the state of his recollection on that subject. 585 Where ASIC's submissions fall down, in our view, is in identification of inconsistency. 586 ASIC had put inconsistency to Mr Brown - "Q. You see, this is the position, isn't it: you've told your fellow directors privately in that document that you did approve the press release, but when it comes to the court you seek to give the impression that you don't recall: that's true, isn't it? A. No, sir. Q. Indeed, you seek to give the impression it may be the case that it may not have been approved by you. You want to give that impression, don't you? A. I stand on my evidence, sir, that I've already provided to the court. Q. I suggest to you, Mr Brown, that you have failed to be full and frank with the court in disclosing your recollection of your involvement in the approval of the press release? A. I don't agree with that suggestion, sir." 587 The Brown declaration spoke of a decision to approve the terms of the press release made to the ASX. It may be that, over three years later, the declaration should be understood as asserting only a current belief, rather than the fact, akin to the distinction in Lee v The Queen. But even if this be incorrect, there was no inconsistency with his evidence at the trial, the substance of which was that he had no recollection of the fact. 588 We add two observations. First, the Brown oral evidence was available, for such weight as might properly be given to it, as evidence that in 2004 Mr Brown believed that the "true position" was as stated in the Brown declaration. This differs from ASIC's submission: it was not evidence that the "true position" was as Mr Brown believed, but of what Mr Brown believed was the "true position". Secondly, if we are incorrect as to general admissibility of the Brown oral evidence, we do not think that its weight is any greater than that of the declarations as admissions by the three directors. To that we now go. 589 The appellants submitted that the weight to be attributed to the declarations of interest, and to Mr Brown's oral evidence, was negligible, and that no support was given to tabling and approval of the Draft ASX Announcement at the February meeting. They principally relied on the modified declarations of interest in 2005, which we next describe. They also pointed to the inaccuracies in the 2004 declarations, and submitted that they and the 2005 declarations suggested that the 2004 declarations were prepared "in the immediate aftermath" of the publication of the report of the Jackson inquiry, without detailed consideration of the past events and on the assumption that the minutes of the February meeting were correct. In this connection they referred to Ms Hellicar's evidence - "Q. The reason you gave the declaration, I suggest, is because you honestly believed it was true? A. The reason I accepted the process of giving that declaration is because at that point in time, without any time at all to sit back and consider the truth or otherwise, I had a report by Commissioner Jackson that said that the board had approved it and some minutes that said we had, and I could get no further in the thinking at that point, other than to be careful in case we'd had some aberration and perhaps, unbeknownst to me, I had approved it." 590 In short, the appellants submitted, the declarations of interest and Mr Brown's oral evidence reflected their 2004 states of mind about events in 2001, but were mistaken and were later corrected. 591 In early 2005 Ms Hellicar was told by JHINV's then general counsel, Mr Benjamin Butterfield, that Dutch law required that the directors provide further disclosure notices. 592 The judge said in the liability judgment - "1229 Ms Hellicar said she then considered the possibility that she may have provided an earlier disclosure notice that was incorrect to the extent that it acknowledged that she had participated in a decision at the 15 February 2001 Meeting to approve the terms of a press release to be made by JHIL. She said she recalled that her state of mind at the time was that she had no recollection of participating in a resolution or agreement of directors at that meeting to approve the terms of a press release. 1230 Ms Hellicar approached Mr Brown and Mr Gillfillan about a potential inaccuracy in the minutes of the 15 February 2001 Meeting. Each considered a revised declaration a draft of which was circulated at the meeting of 16 May 2005. Solicitors settled the final form of the declarations and an accompanying letter. Each declaration contained a paragraph 7 the opening portion of which was as follows: 'By way of example of the decisions described in paragraph 4, but without limiting the declaration made under paragraph 5: in my capacity as a director of JHIL, I participated in the deliberations leading to the decisions taken by the Board of Directors of JHIL on 15 February 2001, and in those decisions themselves. However, in certain respects I and other directors present at that meeting have raised an issue concerning a potential inaccuracy of the minutes of that meeting as previously adopted by the Supervisory Board. We have raised our concerns in that regard with the company secretary by way of a separate letter … '." 593 The meeting of 16 May 2005 to which the judge referred was a meeting of JHINV's supervisory board on 10 May and 15-16 May 2005. It was chaired by Ms Hellicar, and was attended by, amongst others, Mr Brown and Mr Gillfillan. 594 The minutes of the May meeting recorded that Mr Butterfield confirmed advice from Atanaskovic Hartnell - " … that no new Declarations were necessary but the decision, nevertheless, by individual Directors to update their previous declarations and it was agreed that such declarations would be appended to the minutes of this meeting." 595 The minutes also recorded that the board members "noted the respective draft declarations of interest that were circulated to SB members prior to this meeting and acknowledged that they still required finalization", and that Mr Butterfield "confirmed that final drafts will be distributed together with the final minutes to the SB members". 596 There was evidence of evolving draft declarations and a draft accompanying letter. 597 By an e-mail dated 9 May 2005 Mr Mark Wilson of Atanaskovic Hartnell sent to Mr Butterfield "Meredith's [Ms Hellicar's] revised declaration", and said that "[t]he remaining declarations will follow shortly". 598 By an e-mail dated 26 May 2005 Mr Butterfield sent to Ms Hellicar "the declarations prepared by Mark Wilson". Ms Hellicar replied by an e-mail dated 13 June 2005 saying that she was "waiting on what is now to be a draft group letter from Brown, Hellicar and Gillfillan along the lines of the draft I sent to you several weeks back", and attaching the "latest version you sent to me with one additional mark-up". 599 By an e-mail dated 14 June 2005 Atanaskovic Hartnell sent to Mr Butterfield "a fresh draft of the letter which Meredith, Michael Brown and Michael Gillfillan have indicated they wish to send regarding last September's declarations". 600 On 17 June 2005 Mr Wilson sent to Mr Butterfield "the proposed final forms of declarations for Meredith, Michael Brown and Michael Gillfillan". 601 The evidence included draft declarations for Mr Brown, Mr Gillfillan and Ms Hellicar dated May and June 2005 (the days being left blank) and a draft joint letter. The drafting stage(s) are not clear to us, but we do not think the precise evolution is of significance. 602 One version of the May 2005 draft declarations was generally in the form of the September 2004 declarations, but contained edits to the paragraphs of those declarations. The edits were relevantly - " … in my capacity as a director of JHIL, I participated in the deliberations leading to the decisions taken by the Board of Directors of JHIL on 15 February 2001, and in th os e decisions themselves itself, to approve the terms of the press release made by JHIL to the Australian Stock Exchange Limited on that day announcing the establishment of the foundation ;" 603 Another version of the May 2005 draft declarations, and the June 2005 draft declarations, expanded this paragraph by an addition after the reference to participation in deliberations leading to the decisions, so that it read - " … in my capacity as a director of JHIL, I participated in the deliberations leading to the decisions taken by the Board of Directors of JHIL on 15 February 2001, and in those decisions themselves. However, in certain respects I and other directors present at that meeting have raised an issue concerning a potential inaccuracy of the minutes of that meeting as previously adopted by the Supervisory Board. We have raised our concerns in that regard with the company secretary by way of a separate letter to the Supervisory Board." 604 There is an oddity in this, although we do not think it significant. The reference is to the minutes of the February meeting. They were not adopted by the supervisory board. 605 The draft joint letter included - "We enclose further (updated) declarations, the substance of which were declared orally to the Supervisory Board of JHINV on [date]. You will note that in the attached declarations, in paragraph 7, it is noted that in certain respects each of the directors present at the James Hardie Industries Limited (JHIL) meeting of 15 February 2001 have raised an issue concerning a potential inaccuracy of the minutes of that meeting as previously adopted by the Board. The purpose of this letter is to bring that issue to your attention. … In this respect, each of the undersigned directors has discussed an issue of potential inaccuracy of the minutes of the JHIL Board meeting of 15 February 2001 as previously adopted by the JHIL Board. That discussion occurred for the limited purpose of testing whether our memories were accurate, since while each of us recalls being in attendance at that meeting and having given the matter significant thought over the extended period of time since the occasion of our September 2004 Declarations, none of us could positively recall, when we signed the September 2004 Declarations and we cannot now recall, our involvement as being as extensive as that described in the September 2004 Declarations. On reflection, we currently have no positive recollection of the following matter recorded in the 15 February 2001 Board minutes as having actually occurred: ASX Announcement The Chairman tabled an announcement to the ASX whereby the Company explains the effect of the resolutions passed at this meeting and the terms of the Foundation (ASX Announcement). Resolved that: (a) the Company approve the ASX Announcement; and (b) the ASX Announcement be executed by the Company and sent to the ASX. This announcement appears to refer to the announcement regarding the establishment of the Medical Research & Compensation Foundation, which announcement (we see from JHIL's records) was announced to the ASX on 16 February 2004. We have made enquiries concerning JHIL's records of Board meetings, and note that the Board materials circulated on or about 5 February 2001 in advance of the 15 February Board meeting, did not include a draft press release for review in advance by JHIL directors. Having noted that fact, the undersigned directors have raised this issue among themselves, and have discovered that none of us specifically recall a draft press release being physically tabled at the 15 February 2001 meeting or otherwise circulated to directors in advance in the form in which it was proposed to be released; and none of the undersigned directors can specifically recall seeing and reviewing the said press release before it was released to the ASX in the manner described in the 15 February minutes and set out above. Further, none of the undersigned directors positively recall reviewing the terms of the press release until [directors to note when they first reviewed its terms - was it when the MRCF first raised the issue of significant underfunding, or when Allens provided advice in relation to the underfunding, when the Jackson Commission reviewed expressed an opinion on the terms of the press release, or otherwise?] We would like to request that a search of JHIL's email records be undertaken for the fortnight prior to 15 February 2001, and the 3 or 4 days after that date, to identify all emails which were sent between JHIL Board members on the one hand and JHIL, executives (particularly any of Peter Macdonald, Peter Shafron, Steve Ashe and Greg Baxter) on the other hand, to determine whether a draft of the 16 February 2001 press release was in fact sent electronically before being released and/or whether the actual release was sent to directors once settled/announced. Even if the form of press release was sent electronically, of course this does not necessarily indicate that any director positively reviewed the same or that he or she was given sufficient time to do so. This letter has been written as a joint letter since, although each of the undersigned directors has raised the potential inaccuracy of the minutes of the 15 February 2001 Board meeting independently, when those directors sought to test the accuracy of their current memories in the light of their reflection, they discovered that their current recollections identify a common issue with respect to a potentially inaccuracy of the 15 February 2001 JHIL Board minutes." 606 There was no evidence that the June 2005 declarations, or the joint letter, were sent to JHINV. Ms Hellicar said that a revised declaration was not signed or lodged, and that the draft letter did not get beyond a draft. The evidence did not show distribution of final drafts, as foreshadowed in the minutes of the May meeting. However, it is clear enough that (as the draft joint letter said) the substance of the correction sought to be made was made known to the board in May 2005. It was not something kept to Mr Brown, Mr Gillfillan and Ms Hellicar, but was conveyed to JHINV. 607 Each of Mr Gillfillan and Ms Hellicar dealt in evidence with retraction of his or her 2004 declaration. Mr Brown was not asked about it. 608 Mr Gillfillan said that he was told to sign the 2004 declaration and "glanced cursorily" at it, but did not know whether he signed it or not. He had no recollection of signing a 2005 declaration or joint letter. He recalled a discussion with Ms Hellicar about a potential inaccuracy in the minutes, and that the previous declarations had to be corrected; he thought Mr Brown was present. He relied on Ms Hellicar's research. 609 Ms Hellicar said that at the time of the 2004 declaration she accepted what was in it: "I knew that that was what Jackson had determined, that the minute appeared to say that we had been, and I didn't have time to question or think whether that was so or not, so yes … ". She said that she was "willing to accept in the speed of this activity that the minutes must have been right and that Jackson had evidence that we had". When Mr Butterfield spoke of further disclosure notices, she considered the possibility that she may have provided an earlier disclosure notice which was incorrect in relation to approval of the press release. At that time she had no recollection of participating in a resolution to approve the terms of a press release. She asked someone within JHINV to search the James Hardie records, including those of JHIL. She spoke to the other two directors to see if they had any recollection. She was told by Mr Wilson that "the minutes say you did", and she said "I think the minutes must be wrong". Then a draft came and he (Mr Wilson) "used lawyer's words". 610 In the liability judgment the judge said of the 2005 documents - "1232 While suggestions were made as to the reasons for these documents [the 2005 draft declarations and draft letter] being brought into existence, no ulterior motive for them was established by ASIC." 611 The appellants submitted that this was a finding that the 2005 declarations and the joint letter reflected a genuine belief on the part of Mr Brown, Mr Gillfillan and Ms Hellicar that their recollections were misstated in the 2004 declarations, and that they genuinely wished to correct the record. They said that there was on this matter a favourable credit finding, negating ASIC's reliance as to those appellants on the 2004 declarations. 612 ASIC submitted that this was "overreaching". It said that the ulterior motive it suggested in its submissions at trial was that JHINV was seeking to obtain releases in favour of the directors and officers of JHIL and itself, in connection with provision of more funding following the report of the Jackson inquiry; that the 2005 draft declarations were prompted by perception that an investigation by ASIC was gathering pace and the releases were unlikely; and that the 2005 draft declarations and the joint letter were intended to "create some doubt as to their role in the approval of the ASX announcement". 613 That can be seen as the thrust of questions put to Mr Gillfillan and Ms Hellicar in cross-examination, and of ASIC's submissions. It was not directly put to any of the three that the 2005 draft declarations and draft letter were untruthful, or were manufactured in a false endeavour to get out from under the 2004 declarations. 614 The judge's consideration at LJ [1148] and following of matters damaging the credit of witnesses, which in fact went beyond subsequent events "that called for a response that was not forthcoming" (LJ [1148]) and included a consideration of the 2004 declarations and the 2005 draft declaration and draft letter culminating in LJ [1232], did not include in those matters an adverse credit finding in relation to the 2004 and 2005 documents. The only observation of a credit nature was what was said in LJ [1232]. 615 An ulterior motive as suggested by ASIC impugned the genuineness of the beliefs of the directors. It was rejected by the judge, and no other adverse credit finding was made. In our opinion, the judge's rejection of the ulterior motive left acceptance that the 2005 draft declarations and the draft letter represented beliefs then genuinely held by the relevant directors that at the time of the 2004 declarations they had no recollection of the passing of the Draft ASX Announcement Resolution. 616 ASIC submitted that, even so, the 2005 declarations spoke only of "potential" inaccuracy of the minutes of the February meeting, and that any meaningful potential was denied by the care which must have been given to the 2004 declarations. There are a number of difficulties with this submission. It assumes care in 2004 beyond reliance on the minutes, as Ms Hellicar said she relied. It passes over the draft letter, which explained the potential for inaccuracy. It misses the point of "potential", which was that the three directors said that they had no recollection - they did not positively deny the passing of the Draft ASX Announcement Resolution. 617 In our opinion, the judge's acceptance of lack of recollection substantially takes the force from ASIC's reliance on the 2004 declarations. A 2005 belief as to a 2004 recollection does not negate that there may have been a 2004 recollection and it may have been correct. But the weight of the admissions is severely compromised. (iv) The JHINV explanatory memorandum 618 JHINV issued an Explanatory Memorandum dated 12 December 2006, in which it explained for shareholders a proposal to provide long-term funding to a fund from which compensation would be provided to asbestos claimants. The directors recommended approval of the proposal. Mr Brown, Mr Gillfillan and Ms Hellicar were signatories to the Explanatory Memorandum. 619 A section of the Explanatory Memorandum referred at some length to the findings of the Jackson inquiry and their negative impact on JHINV and its share price. A statement of the key findings of the Jackson inquiry, part of a wider summary, included that the Commissioner "considered that certain elements of a press release and associated statements issued by ABN 60 [JHI] at the time of the establishment of the MRCF, which conveyed that the MRCF had been provided with sufficient funds, were 'seriously misleading'." At the beginning of references to the key findings it was said that James Hardie had "made comprehensive submissions in response to each of the Terms of Reference", and that a copy of all the submissions was available from the James Hardie web site. The web site address was given. 620 The submissions on the James Hardie web site included the submissions in reply to which we have referred at [535], with their reference to consideration and resolution on the terms of the media release at the February meeting. 621 In Australian Securities and Investments Commission v Macdonald (No 3) [2008] NSWSC 1099 the judge rejected ASIC's tender of the Explanatory Memorandum. The tender had been on a number of bases, only one of which was raised on appeal. Through its notices of contention, ASIC challenged the rejection so far as the tender had been as an admission by Mr Brown, Mr Gillfillan and Ms Hellicar of what was said in the submissions on the web site. 622 As to that basis, the judge said that the invitation to go to the James Hardie web site and view the submissions did not make the submissions part of the Explanatory Memorandum so as to be adopted by its signatories (at [24]); that the submissions had been by the companies' counsel or solicitors and not by the signatories (at [25]); and that the reference in the submissions to consideration and resolution on the terms of the media release did not call for comment in the Explanatory Memorandum, such that failure to comment in the Explanatory Memorandum was an admission that what had been said in the submissions was correct (at [29]-[31]). 623 On appeal, ASIC again relied on Lustre Hosiery Pty Ltd v York. It submitted that in light of the stated key finding that elements of the press release had been seriously misleading, the reference to availability of the submissions on the web site called for correction of what was there said in relation to the press release if it was not correct. It said that the circumstances were "such as to make it unlikely that [the signatories to the Explanatory Memorandum] would allow an erroneous statement to pass unchallenged": Lustre Hosiery Pty Ltd v York at 143. 624 We do not agree. The Explanatory Memorandum was a long and complex document. Its purpose was to explain and inform on a 2006 proposal to provide funding for the benefit of asbestos claimants. The major significance of the report of the Jackson inquiry lay in what it said about current insufficiency of funding, and reference in the Explanatory Memorandum to the submissions to the Jackson inquiry was historical. The historical reference did not amount to endorsement of the detail of the submissions made to the Jackson inquiry. It was not an occasion for JHIL, or the signatories to the Explanatory Memorandum, to re-address the submissions, or to correct what had been said about the consideration and resolution on the terms of the media release. In our opinion, the judge was correct in his ruling. 625 To summarise the subject of, in our view there is little evidence of weight. The evidence concerning the teleconference does not support discussion and approval of the draft news release. The draft and final submissions to the Jackson inquiry are in evidence as against Mr Morley, but we do not know on what basis and it is difficult to give any weight to them as support for the passing of the Draft ASX Announcement Resolution. The 2004 declarations of interest are in evidence as admissions by Mr Brown, Mr Gillfillan and Ms Hellicar respectively, but the weight of the admissions in support of the passing of the resolution is compromised by the 2005 draft declarations and draft letter and the finding of no ulterior motive. The Explanatory Memorandum was correctly rejected. 4.6 Calling witnesses 626 The judge began his reasons on the tabling finding by reminding himself that s 140 of the Evidence Act prescribes the standard of proof in civil proceedings as satisfaction on the balance of probabilities, and provides that the court may take into account, in deciding whether it is satisfied, the nature of the cause of action or defence, the nature of the subject matter of the proceedings and the gravity of the matters alleged: LJ [182]. He said that this reflected the discussion by Dixon J of the necessary quality of persuasion in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361–2, and that the statement of the majority of the High Court in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 at 449-50; (1992) 67 ALJR 170 was to similar effect: LJ [184]-[185]. 627 His Honour accepted that the seriousness of the nature of ASIC's cause of action and the gravity of the matters alleged were to be taken into account, referring to Adler v Australian Securities and Investments Commission [2003] NSWCA 131; (2003) 46 ACSR 504 at [146]-[148]: LJ [186]. He said - "This means that, ordinarily, the more serious the consequences of what is contested in litigation, the more a Court will have regard to the strength and weakness of evidence before it in coming to a conclusion ( CEPU v Australian Competition and Consumer Commission [2007] FCAFC 132, (2007) 162 FCR 466 at [30]). That means that if inferences are to be drawn, ASIC has to establish that the circumstances appearing in the evidence give rise to a reasonable and definite inference and not merely to conflicting inferences of equal degrees of probability." 628 His Honour said that the fact that none of the witnesses who were at the February meeting, or the tendered evidence of Mr McGregor or Mr Peter Cameron, said that the Draft ASX Announcement was before the meeting "does not augur well for ASIC in the discharge of its onus on the balance of probabilities": LJ [187]. 629 His Honour then said - "188 But there are countervailing circumstances that need to be considered in weighing the strengths and weaknesses of the evidence. 189 ASIC fails on this issue against the individual defendants if the evidence fails to establish that the Draft ASX Announcement was before the 15 February 2001 Meeting. The five defence witnesses who gave evidence were not disinterested in asserting that the Draft ASX Announcement was not before the meeting. 190 If a person was minded to dissemble, it would be an easy task for that person to say that he or she could not recall the Draft ASX Announcement being discussed at the meeting and he or she believed that it was not discussed because it contained such unqualified statements about the sufficiency of funding that the person would not have approved it and would have said so and he or she had no recollection of having said so. 191 Each of the eight witnesses who attended the 15 February 2001 Meeting said they had no recollection of the Draft ASX Announcement being tabled, its terms being discussed, or it being approved. Each of the non-executive directors who gave evidence said they would not have approved the Draft ASX Announcement because it was too broadly stated or they would have made comments seeking to modify its terms. 192 ASIC is not confined to establishing its case by positive evidence. Thus, the fact that neither Mr Baxter nor Mr Harman could say the Draft ASX Announcement was before the meeting, is not fatal. The Court may draw inferences but must be careful that those inferences are reasonably definite and not merely inferences conflicting with other inferences of equal degree of probability." 630 Some of the reasoning to this point could give rise to concern. 631 First, it is always necessary that an inference must be reasonable and definite (or reasonably definite), in contrast with conflicting inferences of equal degrees of probability. The two references to that necessity, at LJ [186] and [192], may not have allowed for the regard to the seriousness of the nature of ASIC's cause of action and the gravity of the matters alleged. 632 Secondly, in coming to his tabling finding the judge did not find that any of the appellants was dissembling. He said at LJ [222] that it was "sufficient to find that those individual directors who swore that the draft ASX announcement was not before the 15 February meeting were mistaken". That the five non-executive directors who gave evidence (and Mr Morley) were not disinterested may have contributed to rejection of their evidence, but dissembling is another matter. The occasion for LJ [190], and its part in the judge's reasoning, is not clear. 633 Three matters arose at trial in relation to drawing inferences and failure to call witnesses. 634 The first matter was the familiar, although often misunderstood, Jones v Dunkel reasoning from a party's unexplained failure to call a witness the party would be expected to call. The fact-finding tribunal may infer that the evidence of the absent witness would not assist the case of that party, or it may draw with greater confidence an inference unfavourable to that party. There is no compulsion to reason in either way. The reasoning cannot make up for absence of proof: before there can be greater confidence in an inference unfavourable to a party, the inference must already be available on the evidence. Conversely, if the party's case is otherwise proved, the inference that the absent witness would not assist the party's case does not detract from the proof. It is sufficient to refer to Manly Council v Byrne [2004] NSWCA 123 at [44]-[55], [69]-[74]. 635 The judge recorded at LJ [1137] that the appellants had submitted "that the rules in Jones v Dunkel should be applied" because ASIC had not called Mr Robb, Mr Wilson or Mr Sweetman. From LJ [1141] it seems that the submission extended to failure to call Mr Blanchard and Mr Frangeskides, another Allens solicitor. His Honour recorded at LJ [1138] that "the failure of Mr Macdonald, Mr Shafron, Mr O'Brien and Mr Terry to give evidence led to similar submissions", meaning by ASIC. 636 The judge said at LJ [1139] that he had "come to conclusions on each of the issues raised in these proceedings without the need to draw a Dunkel inference". He said, after adopting the analysis of the principles in Jones v Dunkel by Glass JA in Payne v Parker (1976) 1 NSWLR 191 at 200-2 - "1141 Mr Wilson, Mr Sweetman, Mr Robb, Mr Blanchard and Mr Frangeskides were not in ASIC's camp and, in the absence of a duty akin to prosecutorial fairness, I would have inclined to the view that they should not have been expected to have been called by ASIC rather than a defendant. They were independent experts and the general rule that there is no property in a witness of fact applies also to an expert ( Harmony Shipping Co SA v Saudi Europe Line Ltd [1979] 1 WLR 1380, Phipson on Evidence 16th ed (2005) Sweet & Maxwell, London at [33-49]). They should have been equally available to both sides of the bar table. 1142 It was suggested that Mr Robb had indicated that he was not prepared to meet with some of the defendants. But that does not make him a witness expected to be called by ASIC rather than a defendant. He was subject to a subpoena to give oral evidence served by ASIC. He could have been served with a subpoena by a defendant. 1143 I chose not to draw a Dunkel inference against ASIC. Had I been minded to do so, I would have inclined to the view that the first condition for its operation was not established." 637 His Honour further said at LJ [1145] that, had it been necessary to decide, he "would have tended to agree that Mr O'Brien and Mr Terry bore no legal or evidentiary onus". We understand him to have tended to decline to engage in Jones v Dunkel reasoning by reason of their failure to give evidence. Any tendency in relation to Mr Macdonald and Mr Shafron was left unstated. 638 His Honour concluded this part of his reasons - "1146 It was further submitted that the decision in Adler [ Adler v Australian Securities and Investments Commission [2003] NSWCA 131; (2003) 46 ACSR 504] at [661] that it was open to the judge at first instance to draw Dunkel inferences in civil penalty proceedings should not be followed since the decision of the High Court in Rich [ Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 220 CLR 129]. 1147 That is an important matter into which I should not venture by way of obiter dictum ." 639 The second matter was a particular instance, and extension, of reasoning from failure to call a witness. Clearly enough responding to a submission founded on failure by ASIC to call Mr Robb, Mr Wilson and Mr Sweetman, his Honour dealt with it in the liability judgment as follows - "202 Reference was made to Cook's Construction Pty Ltd v Brown [2004] NSWCA 105; (2004) 49 ACSR 62 at [42] where Hodgson JA said: '…In my opinion, where a party has to prove something and prima facie has available evidence that would directly deal with the question, a court will be very hesitant in drawing an inference in that party's favour from indirect and second-hand evidence, when the party doesn't call the direct evidence that prima facie it could have called, at least unless some explanation is given, or the circumstances themselves provide an explanation…' 203 Reference was made to a similar observation in Whitlam v Australian Securities and Investments Commission [2003] NSWCA 183; (2003) 57 NSWLR 559 at [119]. 204 ASIC did call the witness who might have proved the fact directly, Mr Baxter. He said it was the Draft ASX Announcement he took to the 15 February 2001 Meeting. ASIC chose not to call Mr Wilson and Mr Sweetman from UBS or Mr Robb, all of whom attended that meeting. 205 ASIC had indicated that it would call each of the above gentlemen. It served an affidavit of Mr Sweetman and a list of topics that Mr Wilson and Mr Robb respectively would discuss. The proceedings had commenced when the decision not to call was announced. No adjournment was sought. … 207 So far as the above observations are concerned, notwithstanding the cooperation of the three gentlemen with ASIC in the production of proofs of evidence, they remained in the camp of the defendants or at least in the camp of the eleventh defendant. JHIL was a client of UBS and of Allens. There is no suggestion that the three gentlemen could not have been called in the case of any of the defendants and there is no suggestion that they would not have cooperated to the same extent as they had been prepared to do with ASIC. They were the last surviving independent advisers." 640 The passage from Cook's Construction Pty Ltd v Brown need not be repeated, but in Whitlam v Australian Securities and Investments Commission the Court (Hodgson, Ipp and Tobias JJA) said at [119] - "In our opinion, the principle in Briginshaw calls attention to the requirement that a party seeking a finding of serious misconduct produce adequate material to enable a court to reach a comfortable satisfaction on such a serious matter. Although this is not the same as the obligation of the Crown to call available evidence in a criminal prosecution, we think it is fair to say that a person seeking such a finding does need to be diligent in calling available evidence, so that the court is not left to rely on uncertain inferences: cf. the article Hodgson "The Scales of Justice: Probability and Proof in Legal Fact Finding" (1995) 69 ALJ 731, particularly at 739-740. In the circumstances of this case, if the respondent were seeking to make out a case that the appellant was given good reason to believe that the fourth point had not been accepted, we would have expected that at least Mr. Hamilton would have been called, if his evidence in any way supported its case." 641 The third matter was the obligation of the Crown to call available evidence in a criminal prosecution. The judge correctly disposed of it in the liability judgment - "206 A formal submission has been made that ASIC has failed to act fairly and, as a prosecutor in civil penalty proceedings, it has an obligation akin to that of a prosecutor in criminal proceedings. I am bound by the decision of the Court of Appeal in Adler at [678] to dismiss that submission. It was held that the concept of prosecutorial fairness that applies in criminal jurisprudence has no application to civil penalty proceedings." 642 Each of these matters arose on appeal. In brief, the appellants submitted that the judge was in error in failing to draw Jones v Dunkel inferences against ASIC from its failure to call Mr Robb, Mr Wilson and Mr Sweetman, and was further in error in being satisfied that ASIC had proved the passing of the Draft ASX Announcement Resolution although it had not called them to give evidence of the presence of the draft news release at the February meeting and its approval. As to Mr Robb, the submission extended to his involvement in preparation of the minutes of the February meeting. For its part, ASIC submitted that Jones v Dunkel inferences should be drawn by reason of the failure of Messrs O'Brien, Terry and Shafron to give evidence. 643 As well, Mr Terry submitted that the decision of this Court in Adler v Australian Securities and Investments Commission [2003] NSWCA 131; (2003) 46 ACSR 504 was no longer good law after the decision of the High Court in Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 220 CLR 129, and that in any event it was incorrect. He submitted that in failing to call Messrs Robb, Wilson and Sweetman, ASIC had breached an obligation akin to that of a prosecutor in criminal proceedings. Although without an applicable ground of appeal, the other appellants joined in that submission. 644 The last-mentioned submission related to a specific ground of appeal by which Mr Terry appealed against dismissal of an application made by him alone, at the trial. On 27 October 2008, after ASIC had made known that it would not call Mr Robb and Messrs Wilson and Sweetman, Mr Terry applied by notice of motion for an order that it be directed to call them in its case in chief, and in the alternative that the proceedings be stayed as against him until they were called ("the stay application"). None of the other appellants made a like application. The stay application was founded on a prosecutor's obligation to call these persons. It was briefly dealt with. The notice of motion and affidavit in support were filed in court. Counsel for Mr Terry volunteered that the judge was bound to dismiss the application. It was dismissed. 4.6.1 The circumstances of Messrs Robb, Wilson and Sweetman 645 The judge made brief reference at LJ [205] to ASIC's initial intention to call Messrs Robb, Wilson and Sweetman. His Honour was not inclined to adopt Jones v Dunkel reasoning adverse to ASIC (LJ [1141]), and appears to have thought that the hesitancy of which Hodgson JA spoke in Cook's Construction Pty Ltd v Brown was not enlivened because these three persons were not in ASIC's camp but were in the appellants' camp (LJ [207]). This was despite the co-operation of Messrs Robb, Wilson and Sweetman with ASIC, and because they were "independent experts" (LJ [1141]) equally available to the appellants and ASIC, and were advisers to JHIL (LJ [207]). 646 We should say at once that, so far as his Honour saw these persons as independent experts, their prospective roles as witnesses was not as experts but as witnesses of fact. If called, they would be called to give evidence of what occurred in the preparation of a draft news release prior to the February meeting and as to its presence, consideration and approval at the meeting. In Mr Robb's case, he would also be called to give evidence in relation to the pre-meeting and post-meeting draft minutes. 647 There was considerably more history to the non-calling of these persons than the judge's brief observations recognised. The appellants submitted that it was not correct to regard them as available to the appellants equally with their availability to ASIC, and that they were properly to be seen as in ASIC's camp or, if not, as witnesses whose direct evidence should have been put before the court by ASIC in fulfilment of the diligence to call available evidence spoken of in Whitlam v Australian Securities and Investments Commission. 648 We go to the history; first Mr Robb, then Messrs Wilson and Sweetman. 649 By a letter dated 7 March 2008, ASIC's solicitors served lists of topics of a number of witnesses. They included, amongst Allens witnesses, Mr Robb. 650 Over the period June to August 2008, subpoenas were served on witnesses proposed to be called by ASIC. They included Mr Robb. 651 In a letter dated 9 September 2008, ASIC's solicitors said that a matter preventing it from obtaining affidavits or outlines of evidence from the witnesses for whom lists of topics had been provided had been that JHIL and JHINV claimed that an ongoing duty of confidentiality prevented the witnesses disclosing information concerning JHIL and JHINV affairs. The letter said that JHIL and JHINV had for the purposes of the proceedings "relaxed the duty of confidentiality" and permitted the witnesses to "provide statements which may be adduced by our client in its case in chief in the proceedings". It continued - "As a result of this, we will attempt to obtain affidavits or outlines of evidence for each of the witnesses listed above for whom lists of topics have previously been served. We will serve any such affidavit or outline of evidence if and when they become available. While at this stage we are unable to nominate a time frame, obviously we will endeavour to serve the material at the earliest opportunity." 652 On 16 September 2008 ASIC's solicitors informed the judge's associate, by letter of that date copied to the solicitors for the other parties, that ASIC "intends to call a number of witnesses who are or were partners or employees of [Allens]". The witnesses were listed, and included Mr Robb. The letter said that lists of topics had been served, and that it was believed "that we will be in a position to obtain affidavits or outlines of evidence from those witnesses. We are in the process of attempting to do so as soon as is practicable". 653 The trial was to begin on 29 September 2008. At a directions hearing on 22 September 2008, the prompt availability of affidavits or statements was an issue. Counsel for ASIC told the judge that a statement of Mr Robb was expected in the week of 6 October 2008. His explanation for the date's distance included that ASIC had had "exemplary co-operation" from the Allens witnesses, but in fairness the witnesses were entitled to be "completely happy" with their statements. The judge directed ASIC to use its best endeavours to serve affidavits of Mr Robb and another witness by no later than 10.15 am on 29 September 2008. 654 The hearing began on 29 September 2008. The affidavits had not been served. 655 Mr Harman was an early witness. Amongst many other matters, he was cross-examined to the effect that the minutes of the February meeting were "incorrect and unreliable" insofar as they referred to the $65m rather than $72 million. At the end of his cross-examination it was suggested that he may have to be recalled because Mr Robb's affidavit had not been served. Mr Donald Cameron was called, and amongst other matters was cross-examined to suggest that, if the draft news release had been approved at the February meeting, it would have been in his files (see [378] above). 656 On 7 October 2008 Mr Robb's solicitors provided to ASIC's solicitors "the progress to date on Part 1 of the draft [statement] for your consideration". They said that they anticipated providing a draft of Part 2 later that week. The solicitors asked whether ASIC's solicitors and counsel "would like to meet with Mr Robb tomorrow or on the weekend". 657 On 8 October 2008 counsel for ASIC informed the judge - "We still do not have an affidavit from Mr Robb, and that's been the subject of some concern from some of the parties. There is an inevitable hiatus which will develop – and I'm not being critical of those with Mr Robb. The hiatus has caused us to consider whether or not the Allens' witnesses are truly part of our case in chief and we've reviewed the defences. We had anticipated calling two of Allens' witnesses this afternoon, Ms Harman and Ms Gallagher. I think there's also been some consternation expressed as to whether they should be called before Mr Robb, and we have some sympathy with that view. What I was going to ask the court is if we could have the opportunity to make a final decision on whether we need the Allens witnesses at all by the end of today, 5pm today. … A review of the defences indicates that there is no positive defence of relying on any Allens' advice. We are just going through the process of working out whether it is truly part of our positive case – any aspect of the Allens' advice. We have a present inclination to think it is not, and if that decision is made, obviously, that would safe an awful lot of time and, quite frankly, a lot of concern for Mr Robb to finish off the mammoth task he is undertaking." 658 From the ensuing discussion involving counsel for other parties, it became clear that the appellants did not see evidence from Mr Robb as going only to reliance on Allens' advice. The cross-examinations of Messrs Harman and Donald Cameron had raised dispute over what had occurred at the February meeting. Counsel for Mr Terry said - "Mr Robb, attending that meeting, is a witness who must be called in my friend's case in chief because he will give first-hand evidence of what occurred. … Mr Robb no doubt can give first-hand evidence of what occurred at the meeting, and we're entitled to know what our friend's case is in that regard before we have to go into evidence, if that's his case in chief." 659 The response of counsel for ASIC recognised dispute over whether the Draft ASX Announcement Resolution had been passed. He said of the minutes of the meeting that they - " … are the minutes of the 15 February which [Mr Terry] affirmed as true and correct in the March [sic] meeting, which is also in evidence, as resolving that the draft announcement be approved. We didn't understand that the public company directors were going to assert that their own minutes, which they confirmed, are incorrect. If that's what my friend is saying, that they didn't approve the draft announcement, perhaps it is now on record, but so be it; we'll hear more about that in due course, or perhaps we won't." 660 The further response of counsel for Mr Terry included that Mr Willcox had denied the allegation of voting in favour of a resolution to approve and issue a draft ASX announcement, and that the other appellants had not admitted it. He expressed puzzlement that counsel for ASIC had said that he had not understood that that was in issue. 661 ASIC's solicitors conveyed its decision by a letter to the various solicitors dated 9 October 2008. The letter said that it was not proposed to read the affidavits of a number of Allens witnesses, who were named, and that "our client will not be serving a statement or affidavit for … David Robb, nor will it be calling any of those people to give evidence in its case in chief." The letter referred to subpoenas to give evidence served on the Allens witnesses, and said that it was proposed to stand the subpoenas over and that, if any appellant wished to call any of the witnesses, ASIC "is happy to facilitate their attendance by the subpoena issued at its request"; or if any appellant "makes a case which requires any of these witnesses to be called in reply, our client will be able to call on the subpoenas". 662 Some appellants had served a notice to produce on ASIC, requiring production of the whole or part of any statement or outline of evidence prepared for the purpose of the proceedings and a copy of the draft that Mr Robb had provided to ASIC. Documents had been produced, but privilege was claimed. On 21 October 2008 ASIC consented to all parties having access to the documents. 663 The draft Part 1 statement of Mr Robb was not put into the trial evidence. It was in evidence only on the stay application. For the purposes only of Mr Terry's appeal against dismissal of the stay application, we have regard to it. 664 The draft was some 18 pages in 171 paragraphs. It dealt with Mr Robb's involvement as adviser in relation to Project Green from early 2000 to 16 February 2001, largely by reference to letters, e-mails and file notes but with some independent recollection. As to the February meeting, the statement said he had "few recollections" and did not recall "any discussion of any proposed press-release". He believed that he was sent or otherwise obtained the copy of the draft news release on which his writing appeared early on 16 February 2001, and spoke to Mr Ashe about it with Mr Baxter and possibly others "on the call", suggesting that the statement that the MRCF had sufficient funding for all asbestos claims should be "pared back". As to the other copy of the draft press release on which his and someone else's handwriting appeared (he said that it was Mr Peter Cameron's handwriting), he believed he then had a discussion with Mr Peter Cameron about his conversation with Mr Ashe and others. 665 On 22 October 2008 Mr Robb's solicitors wrote to the solicitors for Mr O'Brien and Mr Terry that - "Since ASIC informed the Court that it was considering whether it would call any of the Allens' witnesses in chief, Mr Robb has been approached by a number of different interests in the litigation requesting a meeting. We are instructed that Mr Robb is not prepared to meet with you or those other parties at this time." 666 So far as the evidence showed, that is where it was left. It will be recalled that the stay application was made and dismissed on 27 October 2008. 667 Before going to Messrs Wilson and Sweetman, we make some observations on this history. 668 First, ASIC submitted that the appellants had had access to Mr Robb's draft statement (so far as it had been prepared), and had had the means to secure his attendance to give evidence. It said that, although as at 22 October 2008 Mr Robb was not prepared to meet with the lawyers representing Mr O'Brien and Mr Terry, or unspecified others, that may not have remained his position had appellants served their own subpoenas upon him or said that they would call him to give evidence. And it said that there was no evidence as to whether other appellants were in the same position as Mr O'Brien and Mr Terry. ASIC submitted that the judge was correct in saying at LJ [207] that "there is no suggestion that [Mr Robb, Mr Wilson and Mr Sweetman] would not have co-operated to the same extent as [they] had been prepared to do with ASIC", or at least that this should only be qualified in relation to Mr O'Brien and Mr Terry. 669 As to Mr Robb, we do not agree. In our opinion, the letter of 22 October 2008 made it sufficiently clear that Mr Robb was not willing to meet with the lawyers for any of the appellants. We think it no more than speculation that he would have changed his position if any of the appellants had pressed him. 670 Secondly, ASIC submitted (perhaps rather faintly) that its decision not to call Mr Robb was explained, and justified, by a view that Mr Robb's evidence would go only to reliance by the appellants on Allens' advice. It suggested that when it became apparent that the appellants did not say that they acted on his advice, there was no occasion for ASIC to call him. 671 Again, we do not agree. Whether or not reliance on Allens' advice was an issue, it is plain that on 9 October 2008, when ASIC conveyed its decision not to call the Allens witnesses, it was aware that the appellants contested the passing of the Draft ASX Announcement Resolution and maintained that Mr Robb was an important witness of fact material to that issue. The decision not to call Mr Robb must have been made in that knowledge. 672 Thirdly, we have difficulty with the proposition at LJ [204], it seems stated as the reason why the judge thought that ASIC had fulfilled Cook's Construction Pty Ltd v Brown, that ASIC "did call the witness who might have proved the fact directly, Mr Baxter". At that point in the liability judgment the fact was taking the 7.24 am draft news release to the meeting. But Mr Baxter had not given direct evidence of that fact. His evidence was reconstruction, without recollection (see above, at [360]-[362]). The fact was one to which evidence from Mr Robb would be material; his evidence would also be material to whether the draft news release was approved for sending to the ASX. The issue was whether the Draft ASX Announcement Resolution was passed. That it was passed did not follow automatically from taking the draft news release to the meeting. Mr Robb was potentially a very important witness of fact. 673 In our opinion, the history exposes ASIC's failure to call Mr Robb as a conscious decision not to call an important material witness who was available to ASIC. 674 Going to Messrs Wilson and Sweetman, the known history is brief. 675 Materials served by ASIC's solicitors on 3 and 14 March 2008 included "lists of topics in relation to which [ASIC] will seek to adduce evidence in chief". The witnesses included Messrs Wilson and Sweetman. The lists of topics were not in evidence. 676 By a letter dated 2 September 2008 ASIC's solicitors served an affidavit of Mr Sweetman "upon which [it would] seek leave to rely at the hearing". The letter said that the affidavit was intended to replace his list of topics. The affidavit was not in evidence. 677 By an e-mail dated 6 October 2008, ASIC's solicitors said that it would not be calling Mr Wilson to give evidence and would not be reading the affidavit of Mr Sweetman. No explanation was given. We were not referred to an explanation proffered to the judge in the course of the hearing. 4.6.2 Prosecutorial duty 678 If ASIC was under a prosecutorial duty, in our opinion the draft statement of Mr Robb was such that it should have called him. However, we do not accept that it was under a prosecutorial duty, and Mr Terry's specific ground of appeal does not succeed. As will appear, ASIC's failure to call Mr Robb, and possibly Messrs Wilson and Sweetman, nonetheless undermines the cogency of its case on the passing of the Draft ASX Announcement Resolution. 679 It is well established that a prosecutor should call material witnesses: Whitehorn v The Queen (1983) 152 CLR 657; The Queen v Apostolides (1984) 154 CLR 563. This is not because of a duty imposed by law, but because it "forms part of a description of the functions of a Crown Prosecutor": Whitehorn v The Queen at 674 per Dawson J. 680 The appellants contended for a duty akin to that of a prosecutor. They invoked analogy rather than direct application of the principle, in recognition of s 1317L of the Act by which the rules of evidence and procedures for civil matters are to be applied when hearing proceedings for a declaration of contravention or a pecuniary penalty order. 681 We have set out relevant provisions of the Act earlier in these reasons, see [27] above. Pursuant to s 1317E, if a court is satisfied that a person has contravened, relevantly, s 180(1) of the Act, then the court must make a declaration of contravention. Upon the making of such a declaration, in the circumstances further identified in s 1317G, the court may order a person to pay a pecuniary penalty. A disqualification order may be made pursuant to s 206C or s 206E. 682 The disqualification order itself is not a "pecuniary penalty order" within the meaning of s 1317L. It is a "civil penalty order" as defined in s 9, and the proceedings for a declaration of contravention within s 1317L leading to the making of a declaration pursuant to s 1317E are essential preliminary steps before the power to order disqualification under s 206C can be exercised. Nevertheless, there is no direct reference to proceedings for an order for disqualification in s 1317L. 683 What is now s 206C was originally enacted as a "civil penalty order" in s 1317EA(3)(a), when Part 9.4B was introduced into the then Law in 1992. Section 1317ED, the then equivalent of s 1317L, applied to proceedings for civil penalty orders. When the disqualification power was moved to s 206C by the Corporate Law Reform Program Act 1999, there was no suggestion that any substantive change was intended. In any event, nothing was said to turn on this in submissions before this Court. The appeals proceeded on the basis that s 1317L was applicable to that phase of the proceedings in which the application for orders under s 206C or s 206E was heard and determined. 684 A distinction between civil penalty proceedings and criminal proceedings is found in ss 1317N, 1317P and 1317Q. They provide for staying proceedings for a declaration of contravention or a pecuniary penalty order if criminal proceedings are started or have already been started against the person for substantially the same conduct (s 1317N); for starting criminal proceedings for conduct substantially the same as conduct constituting a contravention of a civil penalty provision (s 1317P); and for general inadmissibility in criminal proceedings against a person of evidence of information given or production of documents by the person in proceedings for contravention of a civil penalty provision for substantially the same conduct (s 1317Q). 685 In Adler v Australian Securities and Investments Commission this Court rejected a submission of the character now put on the basis of the application of s 1317L. With respect to the suggested duty of prosecutorial fairness, including the duty to call material witnesses, the Court said - "678 … The concepts have developed in the particular circumstances of criminal proceedings. By declaring that these proceedings are to be conducted as civil proceedings, the legislature has plainly declined to pick up the concepts. … Once it is recognised not only that the proceedings are not criminal proceedings, but also that they are by prescription civil proceedings, the basis for some analogous rules is hard to see." 686 This conclusion has been applied in subsequent cases, including by intermediate courts of appeal in several jurisdictions (see, for example, Visy Industries Holdings Pty Ltd v Australian Competition and Consumer Commission [2007] FCAFC 147; (2007) 161 FLR 122 at [112]-[113]; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission [2007] FCAFC 132; (2007) 160 FCR 466 at [74]; Adler v Director of Public Prosecutions (C'th) [2004] NSWCCA 352; (2004) 185 FLR 422 at [43]; O'Brien v Australian Securities and Investments Commission [2009] NSWCA 312 at [47]; Australian Securities and Investments Commission v Lindberg (No 2) [2010] VSCA 19 at [51]). The relevant case law has been set out in some detail by Austin J in Australian Securities and Investments Commission v Rich at [531]-[557]. 687 This Court has recently reviewed the principles applicable when the Court is asked to depart from its own earlier authority, see Gett v Tabet [2009] NSWCA 76 at [261]-[301]. It was not suggested that the reasoning in Adler v Australian Securities and Investments Commission satisfied those principles. 688 The appellants contended that the decision should be reviewed by reason of the judgment of the High Court in Rich v Australian Securities and Investment Commission. That case involved the applicability of the privilege against self-exposure to penalty which could arise at various stages of case management of a civil case, including discovery and the filing of evidence. The High Court determined that provisions of the character identified as "civil penalty provisions" in the Act were punitive. Their characterisation as protective, which had often been applied to such provisions, was not an appropriate, or at least not a complete, statement of their character for purposes of the penalty privilege. The joint judgment reaffirmed at [32] the analysis in an earlier judgment (Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Ltd [2003] HCA 49; (2003) 216 CLR 161) of the difficulties of classifying proceedings as either "civil" or "criminal". 689 In our opinion, nothing in the High Court's reasoning in Rich v Australian Securities and Investments Commission suggests that it is appropriate to reason by analogy from criminal procedure to civil penalty proceedings. Indeed, in our opinion, the analysis contained in the High Court's judgment is contrary to any such proposition. 690 The detailed requirements worked out in a considerable body of case law, as summarised, for example, in the joint judgment of the High Court in R v Apostilides at 575-576 (see also Whitehorn v The Queen at 663-664; 674-675) and now encapsulated in written policies issued by the respective Directors of Public Prosecutions, are not a source of direct analogy. The requirements that have been built up over centuries in the criminal context are, by the express provision of the Parliament in s 1317L, abjured as a directly relevant source of instruction. 691 That is not, of course, to say that the seriousness of the allegation of breach of a civil penalty provision and the severity of the orders that may be imposed consequent upon a finding of contravention of such provision, which is encapsulated in the High Court's reasoning, is not relevant in determining the content of civil procedure with respect to the failure to call a witness. The consequentialist analysis in Rich v Australian Securities and Investments Commission may well be a source of instruction in other civil contexts: see, for example, Vines v Australian Securities and Investments Commission at [133]-[134]. 692 The legislative history of the provisions in Australian statutes for a civil penalty regime, now found in Pt 9.4B of the Act, indicates that they were based expressly on the need to establish an enforcement mechanism of intermediate severity between civil proceedings for compensation and criminal proceedings that could lead to criminal sanctions. This approach, referred to as "strategic regulation theory", is often expressed in terms of the visual metaphor of a "pyramid" of enforcement sanctions, namely, that sanctions escalate as contraventions become more serious. 693 There is a danger in the employment of metaphors like "pyramid". As Benjamin Cardozo pointed out, it is desirable to avoid becoming "enveloped in the mists of metaphor". He warned that we should not be diverted by the "picturesqueness of the epithets", and concluded that "[m]etaphors in law are to be narrowly watched, for starting as devices to liberate thought, they end often by enslaving it." (Berkey v Third Avenue Railway Company 244 NY 84 (1926) at 94-5.) 694 Nevertheless, the idea of an intermediate position was at the heart of the original development of the civil penalty regime in corporations law, see Senate Standing Committee on Legal and Constitutional Affairs ("the Cooney Committee"), Company Directors Duties: Report on the Social and Fiduciary Duties and Obligations of Company Directors (1989) [10.21]-[10.24], [13.05]-[13.15]; Australian Law Reform Commission, Principled Regulation: Federal Civil and Administrative Penalties in Australia Report 95, December 2002, at [2.45]-[2.63]. For background see Kenneth Mann, "Punitive Civil Sanctions: The Middle Ground between Criminal and Civil Law" (1992) 101 Yale Law Journal 1795 and G F K Santow, "The Trial of Complex Corporate Transgressions – The United Kingdom Experience and the Australian Context" (1993) 67 ALJ 265. The history and significance of this regime continues to be discussed, see, for example, Thomas Middleton, "The Difficulties of Applying Civil Evidence and Procedural Rules in ASIC Civil Penalty Proceedings under the Corporations Act" (2003) 8 Companies and Securities Law Journal 507; Vicky Comino, "Civil or Criminal Penalties for Corporate Misconduct – Which Way Ahead?" (2006) UQLRS 1; (2006) 34 Australian Business Law Review 428; Vicky Comino, "The Challenge of Corporate Law Enforcement in Australia" (2009) 23 Aust Jnl of Corp Law 233. 695 Judgments of intermediate courts of criminal appeal subsequent to Rich v Australian Securities and Investments Commission have concluded that that case did not affect the conclusion in Adler v Australian Securities and Investments Commission (see Adler v Director of Public Prosecutions at [43]; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission esp at [74] and [76]; Visy Industries v Australian Competition and Consumer Commission at [112]; O'Brien v Australian Securites and Investments Commission at [47]. See also the observations of Austin J in Australian Securities and Investments Commission v Rich [2009] NSWSC 312 at [47]). 696 The focus of this Court's attention, by reason of s 1317L, should not be on whether the principles of criminal procedure apply by way of analogy. The focus should be to identify the particular content of the principles of civil procedure that apply. Just as in the judgment in Australian Securities and Investments Commission v Adler, the starting point is s 1317L. The Court must identify a relevant 'rule of evidence and procedure for a civil matter'. This is, as we understand their Honours' reasoning, precisely what the High Court did in Rich v Australian Securities and Investments Commission. At [19] the joint judgment referred to s 1317L and added - "[19] … It follows from s 1317L that the statute itself requires the application of the body of law which has developed in relation to the privileges against penalties and forfeitures, when deciding whether the appellant should be ordered to make discovery of documents in the proceedings." 697 Their Honours went on to state: "[20] … The operation of s 1317L requires consideration of whether the relief sought against the appellants or any head of that relief is a 'penalty, or anything in the nature of a penalty' … The body of law respecting the privileges relied upon by the appellants is encompassed within s 1317L, the debate between the parties being as to their application in the particular proceedings here in question." 698 Furthermore, the joint judgment said: "[25] … Section 1317L of the 2001 Act obliges the court to apply the rules of evidence and procedure for civil matters when hearing proceedings for a declaration of contravention. That provision requires the application of the principles governing the application of the privilege against exposure to penalties. The Commission pointed to no provision of the Act as abrogating or qualifying the privilege against exposure to penalties in relation to the procedure which gave that privilege its birth – discovery." 699 Nothing in this analysis, or its application to the facts of that case suggests that reasoning by analogy from criminal procedure is appropriate. It is, in our opinion, liable to lead to error. 700 No doubt many of the principles of a fair trial reflected in principles of civil procedure are the same as the principles reflected in criminal procedure. However, to approach the matter on the basis of adopting the particular rules that have evolved in one context to the other context is, in our opinion, directly contrary to the requirements of s 1317L as applied by the High Court in Rich v Australian Securities and Investments Commission. 4.6.3 Obligation to act fairly 701 ASIC accepted that it had an obligation to act fairly with respect to the conduct of the proceedings. However, it contended that the obligation did not oblige it to call any of the three witnesses. 702 It has often been said that a government agency, including a corporate regulator like ASIC, owes an obligation of fairness. In Australian jurisprudence the principle is usually traced to the observations of Griffith CJ in Melbourne Steamship Co Limited v Moorehead (1912) 15 CLR 333 at 342, where his Honour referred to "[t]he old fashioned traditional, and almost instinctive, standard of fair play to be observed by the Crown in dealing with subjects." 703 The obligation is sometimes expressed in general terms: "The duty of the executive branch of government is to ascertain the law and obey it … [W]here the matter is before the court it is the duty of the executive to assist the court to arrive at the proper and just result." ( P & C Cantarella v The Egg Marketing Board of New South Wales (1973) 2 NSWLR 366 at 383 per Mahoney J; referred to in Scott v Handley [1999] FCA 404; (1999) 58 ALD 373 at [45] per Spender, Finn and Weinberg JJ; and Mahenthirarasa v State Rail Authority (NSW) (No 2) [2008] NSWCA 2001; (2008) 72 NSWLR 273 at [16] per Basten JA (Giles and Bell JJA agreeing)); " … [T]here is expected of the Crown the highest standards in dealing with its subjects … [W]hat might be expected from others would not be seen as in full accord with the principles of equity and good conscience to be expected in the case of the Crown." ( Logue v Shoalhaven Shire Council (1979) 1 NSWLR 537 at 558-559, referred to in Hughes Aircraft Systems International v Air Services Australia (1997) 76 FCR 151 at 197 per Finn J). 704 The principle is manifest most often by reference to specific acts of alleged default by the relevant governmental agency - "Conscientious compliance with the procedures designed to minimise cost and delay" ( Kenny v State of South Australia (1987) 46 SASR 268 at 273, referred to in Scott v Handley at [44], [45]); The Crown should not "take or be seen to be taking, advantage of its own default" ( SCI Operations v The Commonwealth (1996) 69 FCR 346 at 368 per Beaumont and Einfeld JJ); The Crown should not take "technical points" ( Melbourne Steamship Co v Moorehead at 342); As a creditor, the Crown should provide assistance and information to a liquidator, so that the liquidator can determine whether to bring his own proceedings, before the government agency seeks leave to proceed in his place ( Commissioner for Revenue (ACT) v Slaven (2009) FCA 744 at [22]-[25] per Rares J). 705 There is, however, no case in which the failure to call a witness has been held to constitute a breach of the obligation of fairness. In Australian Securities and Investments Commission v Rich Austin J accepted that ASIC had a "special duty of fairness", although not a prosecutorial duty, but in the absence of a prosecutorial duty did not regard it as "under a duty … to call any particular witnesses" (at [560]). There can be a middle ground. The issue before this Court involves two questions. Can failure to call a witness constitute breach of the obligation of fairness and was there breach of the obligation in the particular circumstances of this case? What are the consequences of breach of the obligation if found to exist? 706 The relevant case law frequently refers to the obligation of fairness in terms of the duty to act as a "model litigant". This is an appropriate shorthand and has been adopted in formal statements by Australian governments, in the same manner as Directors of Public Prosecutions have set out their duties in formal prosecution policies (see the Legal Services Direction 2005 made under s 55ZF of the Judiciary Act 1903, with respect to the Commonwealth's "Model Litigant Obligation" at para [4.2], and the Model Litigant Policy for Civil Litigation issued by the New South Wales Government on 8 July 2008). 707 However, the terminology of "model litigant" should not detract from the flexibility of the idea of an obligation of fairness. The principle of a fair trial is one of the most basic principles of our legal system. It informs and energises many areas of the law. It is reflected in numerous rules and practices. It is continually adapted to new and changing circumstances. It manifests itself in virtually every aspect of our practice and procedure (see generally J J Spigelman, "The Truth Can Cost Too Much: The Principle of a Fair Trial" (2004) 74 ALJ 29). It lies behind the prosecutorial duty, see Whitehorn v The Queen at 603-4 stating that the Crown Prosecutor represents the State, and in the system of criminal justice must "act with fairness and detachment and always with the objectives of establishing the whole truth in accordance with the procedures and standards which the law requires to be observed and of helping to ensure that the accused's trial is a fair one". 708 Although expressed in terms of the law of criminal procedure, the following observations of Lord Devlin extend to civil practice and procedure - "Nearly the whole of the English criminal law of procedure and evidence has been made by the exercise of the judges of their power to see that what was fair and just was done between prosecutors and accused." ( Connolly v DPP (1964) AC 1254 at 1347) 709 The existence of an overriding and, perhaps, unifying principle was expressed by Deane J in Dietrich v The Queen (1992) 177 CLR 292 at 326 - "It is desirable that the requirement of fairness be separately identified since it transcends the content of more particularised legal rules and principles and provides the ultimate rationale and touchstone of the rules and practices which the common law requires to be observed in the administration of the substantive criminal law." 710 Again, in our opinion, this principle is not limited to the criminal law. 711 The following reasoning of Richardson J in the New Zealand Court of Appeal in Moevao v Department of Labour (1980) 1 NZLR 464 at 481 is also relevant - "It is not the purpose of the criminal law to punish the guilty at all costs. It is not that that end may justify whatever means may have been adopted. There are two related aspects of the public interest which bear on this. The first is that the public interest in the due administration of justice necessarily extends to ensuring that the court's processes are used fairly by state and citizen alike. And the due administration of justice is a continuous process, not confined to the determination of the particular case. It follows that in exercising its inherent jurisdiction the court is protecting its ability to function as a court of law in the future as in the case before it. This leads on to the second aspect of the public interest which is in the maintenance of public confidence in the administration of justice. It is contrary to the public interest to allow that confidence to be eroded by a concern that the Court's processes may lend themselves to oppression and injustice." 712 This passage has frequently been cited with approval by the High Court (see, for example, Jago v District Court (NSW) (1989) 168 CLR 23 at 29-30 (Mason CJ); Williams v Spautz (1992) 174 CLR 509 at 520 (Mason CJ and Dawson, Toohey and McHugh JJ); Walton v Gardiner (1993) 177 CLR 378 at 394 (Mason CJ and Deane and Dawson JJ); Ridgeway v The Queen (1995) 184 CLR 19 at 62 (Toohey J) and 74 (Gaudron J); Nicholas v The Queen (1998) 193 CLR 173 at 256 (Kirby J)). 713 As the joint judgment in Williams v Spautz noted at 520, "[t]hese considerations are not present with the same force in civil litigation where the moving party is not the State enforcing the criminal law". However, in our opinion, they are present with some force when the State is seeking to enforce the law with the sanctions of a civil penalty regime. 714 It is not possible to attempt to list exhaustively the attributes of a fair trial. The issue has arisen in an infinite variety of actual situations in the course of determining whether something that was done or said, either before or at the trial, deprived the trial of the requisite quality of fairness. What is required by fairness is not capable of reduction to a fixed body of rules. What a fair trial requires will depend on the particular status and capacity of the governmental agency invoking the procedures of the court and the scope, purpose and object of the legislative regime which it is seeking to enforce in the public interest. It must also depend upon the particular circumstances of the case. 715 With reference to the recognition of an obligation to call witnesses in this case, it is clear that the duty of fairness cannot rise higher than that imposed on prosecutors with respect to their duty to call material witnesses. In that respect it is well established that the court will not intervene with the decision of a prosecutor as to which witnesses will be called, and that the ex post facto assessment of the decision not to call a particular witness must be taken in the overall context of the conduct of the whole of the trial (see, for example, Apostilides v The Queen at 575-576). 716 The starting point for any such consideration in the context of enforcement proceedings by a regulatory agency, as distinct from proceedings in which a government corporation may have some commercial interest, is the recognition that the government agency has no legitimate private interest of the kind which often arises in civil litigation. It acts, and acts only, in the public interest as identified in the regulatory regime. 717 In such a context the usual rules and practices of the adversary system may call for modification. The most significant modification, likely to be true of most regulatory regimes, is that the public interest can only be served if the case advanced on behalf of the regulatory agency does in fact represent the truth, in the sense that the facts relied upon as primary facts actually occurred. It is not sufficient for the purposes of, at least, most regulatory regimes that, in accordance with civil laws of evidence and procedure in an adversary system, one party has satisfied the court of the existence of the relevant facts. The strength and quality of the evidence advanced on behalf of the State is a material consideration, which has received acknowledgement in the case law. 718 It is convenient to commence the analysis of the statutory scheme and the facts with a reference to the joint judgment of the High Court in Rich v Australian Securities and Investments Commission, where their Honours said, with respect to the disqualification orders there sought: "[29] … The order is sought by a regulatory authority; its grant would be founded on demonstration of a contravention of the law; it is an order which leads to the vacation of existing offices in a corporation and imposition of a continuing disability for the duration of the order." 719 ASIC was created to administer the laws of the Commonwealth, relevantly with respect to the Act. It has conferred upon it a range of functions and powers, including under the Act and under the ASIC Act. 720 Clause 1(2) of the ASIC Act relevantly provides: "In performing its functions and exercising its powers, ASIC must strive to: (a) maintain, facilitate and improve the performance of the financial system and the entities within that system in the interests of commercial certainty, reducing business costs, and the efficiency and development of the economy; and (b) promote the confident and informed participation of investors and consumers in the financial system; … (f) ensure that information is available as soon as practicable for access by the public; … " 721 The facts and matters which arise in the present proceedings concern a regulatory scheme directed to ensuring that corporations do not, in their public statements, engage in misleading conduct. Such conduct is perhaps of most immediate concern for investors and potential investors in that company. However, it is conduct which, by reason of the significance of corporations in Australian commercial life, is of broader public interest. The legislative scheme contains numerous detailed provisions requiring disclosure of various kinds and prohibiting false and misleading statements capable of affecting the decisions of investors with respect to the sale or acquisition of financial products or financial services relevantly, for present purposes, matters going to the value of shares in a publicly listed company. 722 Furthermore, duties of directors, relevantly of care and diligence, set out in Ch 2D of the Act, reflect the central significance of the board of directors in the administration of the affairs of corporations, confirming in many respects the position at common law. This reflects the public interest in the administration of corporations as well as the interests of the section of the public who have or may acquire financial interests in major corporations, whether directly as shareholders or through superannuation funds in which virtually all Australians have an indirect interest. 723 Of particular significance for present purposes is the special role which the legislative scheme confers upon ASIC with respect to the enforcement of the law. Perhaps most relevantly, it is only ASIC that is given the authority under s 1317J(1) of the Act to apply for a declaration of contravention or for a pecuniary penalty order. Similarly, the power conferred on the Court to disqualify a person from managing corporations can only be exercised on application by ASIC pursuant to s 206C or s 206E. 724 These provisions, of direct application in the present case, reflect the special role of ASIC as a regulator which is found throughout the scheme for enforcement of the obligations imposed by the Act. Some provisions confer powers on ASIC equivalent to a civil litigant seeking compensation: for example, both ASIC and the corporation that suffered damage may seek compensation orders (see s 1317J(1) and (2)). However, the full range of ASIC's enforcement powers goes well beyond anything available to a civil litigant. It has powers enabling examination of persons and production of documents under the Divs 2 and 3 of Pt 3 of the ASIC Act, and under 1317R of the Act it has a qualified power to "require a person to give all reasonable assistance in connection with" an application for a declaration of contravention or a pecuniary penalty order. 725 In more detail, ASIC's powers include: The power to conduct investigations into suspected contraventions (s 13 of the ASIC Act); The power to obtain a search warrant under the Crimes Act 1914 (Cth) for investigation of criminal offences; The power to apply for orders freezing assets, appointing receivers or delivering passports prohibiting a person from leaving Australia (s 1323 of the Act); The power to apply for an injunction to prevent contraventions (s 1324 of the Act); The power to apply for the enforcement of Listing Rules (s 793C of the Act); The power to itself disqualify, without application to a court, a person from managing corporations in defined circumstances (s 206F of the Act); The power to require persons to give assistance in connection with an investigation, including answering questions on oath (s 19 of the ASIC Act); The power to inspect books of a corporation (s 29 of the ASIC Act); The power to require the production of books relating to financial product, futures contracts and financial services (ss 31, 32 and 32A of the ASIC Act); The power to require the production by any person of books relating to the affairs of corporations and other regulated entities (s 33 of the ASIC Act); The power to apply for a warrant to seize books not produced (ss 35, 36 of the ASIC Act); The power to require a person to identify property of a corporation (s 39 of the ASIC Act); The power to require a person who carries on a financial services business to disclose particulars relating to the acquisition or disposal of financial products (s 41 of the ASIC Act); The power to require an officer of a corporation to disclose information relating to dealings with financial product (s 43 of the ASIC Act); The power to institute prosecutions for offences against corporations legislation (s 49 of the ASIC Act); The power to institute civil proceedings for the recovery of damages or property (s 50 of the ASIC Act); Abrogation of the privilege against self-incrimination with respect to ASIC's requirements (s 68 of the ASIC Act); The right to receive details of a client with respect to whose affairs a lawyer has claimed legal professional privilege (s 69 of the ASIC Act); The power to certify a failure to comply with a requirement of ASIC to a court (s 70 of the ASIC Act); The powers, without application to a court, to make orders restraining persons from disposing or acquiring interests, exercising voting rights, registering transfers, making payments and issuing securities (ss 72 and 73 of the ASIC Act); The power to order that a person pay the expenses of an investigation that led to conviction or declaration of contravention (s 91 of the ASIC Act); The power to apply to the court for enforcement of an undertaking given to ASIC (ss 93AA and 93A of the ASIC Act). 726 The powers of ASIC are reinforced by the creation of offences with respect to: Failure by a person to comply with a requirement by ASIC (s 33 of the ASIC Act); Provision of false information to ASIC (s 64 of the ASIC Act); The obstruction or hindering of a person in the exercise by ASIC of its powers (s 65 of the ASIC Act); The prohibition of conduct that results in the obstruction or hindering of ASIC (s 66 of the ASIC Act); The prohibition of the concealment, destruction or mutilation or alteration of a book pending an ASIC investigation (s 77 of the ASIC Act). 727 Furthermore, ASIC has a range of powers conferring upon it a discretion to give relief from the requirements of the Act by way of an exemption or by way of modification of the provisions of the Act. These encompass the provisions with respect to takeovers, compulsory acquisition, substantial shareholdings, restriction on voting at meetings, compliance with accounts and audit provisions, compliance with standards for protection of investors, and provisions which regulate the transfer of securities. Although none of these provisions are of direct relevance to the present case, they do indicate the extent and nature of the powers available to ASIC. 728 The cumulative effect of all these matters is that ASIC cannot be regarded as an ordinary civil litigant when it institutes proceedings. This is so particularly for proceedings of the character before this Court. No other person could have brought these proceedings. In partial answer to the first of the questions, whether its failure to call a witness can constitute a breach of the obligation of fairness, in our opinion it can. 729 We will return to the remainder of the first question, whether there was a breach of the obligation in the circumstances of this case. We go to the second of the questions, the consequences of breach of the obligation. 730 The failure of ASIC to call each of the three witnesses engages the principle in Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970 where Lord Mansfield said that "… all evidence is to be weighed according to the proof which it was in the power of one side to have produced and in the power of the other to have contradicted". As Hodgson JA noted in Ho v Powell [2001] NSWCA 168; (2001) 51 NSWLR 572 at [16], the principle in Jones v Dunkel, upon which the appellants relied, is a "particular application of [the] principle" in Blatch v Archer. 731 The application of Jones v Dunkel here leads only to an inference that the evidence of Messrs Robb, Wilson and Sweetman would not have assisted the ASIC case. Such an inference would be entitled to some weight but, as is often the case, would not be of high, let alone determinative, significance. 732 Of greater significance, for present purposes, is the effect of the failure to call any of these witnesses on the cogency of the evidence presented by ASIC in the discharge of its onus of proof. As Brennan and McHugh JJ said in G v H (1994) 181 CLR 387 at 391-392 - "When a court is deciding whether a party on whom rests the burden of proving an issue on the balance of probabilities has discharged that burden, regard must be had to that party's ability to adduce evidence relevant to the issue and any failure on the part of the other party to adduce available evidence in response." 733 In Payne v Parker the effect of a failure to call witnesses on the Blatch v Archer principle was translated to Jones v Dunkel reasoning. But it has a wider application, one material to the cogency of the case of the party in default quite apart from reasoning that the absent witness would not have assisted that party's case. This stems from the need for reasonable satisfaction of which Dixon J spoke in Briginshaw v Briginshaw. Whether the tribunal of fact is reasonably satisfied may include regard to failure to provide material evidence which could have been provided. 734 That, in our view, is the point made in Whitlam v Australian Securities and Investments Commission at [119], in the context of breach of the Law. We repeat in part the passage from that case earlier set out - "In our opinion, the principle in Briginshaw calls attention to the requirement that a party seeking a finding of serious misconduct produce adequate material to enable a court to reach a comfortable satisfaction on such a serious matter. Although this is not the same as the obligation of the Crown to call available evidence in a criminal prosecution, we think it is fair to say that a person seeking such a finding does need to be diligent in calling available evidence, so that the court is not left to rely on uncertain inferences." 735 It is now necessary to begin analysis with s 140 of the Evidence Act, which in large measure encapsulates in statutory form the relevant observations in Briginshaw v Briginshaw (see Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission at [31]; Qantas Airways Ltd v Gama [2008] 1 FCAFC 69; (2008) 167 FCR 537 esp at [125]-[139] per Branson J, with whom French and Jacobson JJ agreed, at [110]). 736 Section 140(1) provides that the standard of proof in civil proceedings is the satisfaction on the part of the court on the balance of probabilities. Section 140(2) goes on to identify three matters which the court "is to take into account" in deciding whether it is so satisfied - "(a) the nature of the cause of action or defence; and (b) the nature of the subject matter of the proceedings; and (c) the gravity of the matters alleged." 737 It is pertinent to note that, while s 140(2) requires these three matters to be taken into account, it permits other matters relevant to the formulation of the state of satisfaction to be taken into account. In this regard, whilst superimposing a mandatory statutory requirement, s 140 reflects the common law as stated in Briginshaw v Briginshaw and as explained and applied in subsequent authority. Sections 80 and 86 of the Marriage Act under consideration in Briginshaw expressly required the Court to be 'satisfied' of the relevant fact – in that case adultery. This explains Dixon J's use of the terminology of 'satisfaction' in that case. However, that terminology now has statutory force. 738 Dixon J's focus of attention in Briginshaw v Briginshaw was upon observations in certain authoritative legal texts which, with respect to the civil standard of proof, acknowledged that "the degree of satisfaction demanded may depend … on the nature of the issue" (at 361). His Honour said, in the frequently cited passage at 362 - "[R]easonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of a fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the Tribunal. In such matters 'reasonable satisfaction' should not be produced by inexact proofs, indefinite testimony, or indirect inferences." 739 Although it has not been cited frequently in subsequent authority, no doubt because of the exceptional respect with which Dixon J is treated, the equivalent reasoning of Rich J in Briginshaw v Briginshaw at 350 is also worthy of note - "In a serious matter like a charge of adultery the satisfaction of a just and prudent mind cannot be produced by slender and exiguous proofs or circumstances pointing with a wavering finger to an affirmative conclusion. The nature of the allegation requires as a matter of common sense and worldly wisdom the careful weighing of testimony, the close examination of facts proved as a basis of inference and a comfortable satisfaction that the tribunal has reached both a correct and just conclusion." 740 In Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd the joint judgment quoted from Briginshaw v Briginshaw and said at 17 - "[T]he strength of the evidence necessary to establish the fact or facts on the balance of probabilities may vary according to the nature of what is sought to prove. Thus authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary where so serious a matter as fraud is to be found. Statements to that effect … should be understood as … reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach to the court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct." 741 In the present case, the allegation is essentially negligence with respect to the issue of a news release. In the ordinary case an allegation of negligence in failing to give detailed attention to the content of a news release would not be seen to allege misconduct of a significant character. Such conduct is not equivalent to fraud or crime or sexual abuse or dishonesty, which are the examples generally referred to in the cases: (see, for example, G v H at 399 per Deane, Dawson and Gaudron JJ). The broader context of an ASX announcement and of the importance of the announcement to JHIL and to the persons who may otherwise have an interest in the adequacy of the provision for asbestos liabilities, suggests that a high level of attention was required, but conduct of the nature alleged would not necessarily attract the "conventional perception" referred to in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd. 742 However, the allegation of negligent conduct is the foundation for declarations of contravention and the imposition of penalties and orders for disqualification. This falls within what Dixon J referred to in Briginshaw v Briginshaw as the "gravity of the consequences". We do not think that this means only the gravity of consequences that would have been understood as possible or likely to flow at the time that the conduct occurred, rather than at the time of trial. In our opinion the "gravity of the consequences" can be assessed at the time of trial, for two reasons. First, the kinds of orders a court may make in the proceedings falls naturally within s 140(2)(a) of the Evidence Act which refers to "the nature of the cause of action" as a matter that the court is obliged to take into account. Secondly, there is authority in Australia which supports that conclusion. 743 In R v Jenkins; Ex parte Morrison (1949) VLR 277 the Full Court of the Supreme Court of Victoria was concerned with a dispute as to the paternity of a child by reason of an alleged mix-up at the hospital. In the context of a statutory scheme which required the welfare of the child to be the paramount consideration, the Court refused to order a change of custody. The principal judgment was given by Fullagar J, who expressly referred at 304 to the observations in Briginshaw v Briginshaw with respect, and only with respect, to "the gravity of the consequences", in the context of addressing the issue of the exercise of the discretion of the Court to make the order sought. This was equivalent to the decision in the present case to impose a penalty or make a disqualification order. Fullagar J said (at 304-305) - "The situation is not properly met by saying merely that a high standard of proof is required. It is no mere matter of finding a fact on adequate evidence. It is a matter of discretion, and therefore potentially taking risks, and there is one central fact, the parentage of Nola, with regard to which no risk – not even the slightest – should be taken. … If there is even the slightest room for doubt, no order, in my opinion, ought to be made." 744 On appeal, as Morrison v Jenkins (1949) 80 CLR 626, two members of the majority in the High Court expressly adopted Fullagar J's reasons: at 637 per Rich J and at 641 per Dixon J. Dixon J, like Fullagar J, indicated that the issue involved was "a problem of judicial discretion" (at 640). He referred to the statutory requirement that the child's welfare be the "first and paramount consideration" (at 641) and concluded that the exercise of the discretion required that the party seeking custody establish that they were the true parents "with such a high degree of certainty" that the court should uphold their claims at the expense of the considerations relating to the welfare of the child which indicate that the status quo should be maintained (at 644). The third member of the majority, Webb J, although not in terms adopting Fullagar J's reasons, referred to submissions to the effect that a higher standard was appropriate and said (at 654) that "[t]he court cannot change the standard of proof, but it can and should insist on exact or cogent proofs on issues of grave importance like that of parentage." 745 The applicability of the Briginshaw principles in civil penalty proceedings has been accepted in earlier authority (Adler v Director of Public Prosecutions (Cth) at [16]-[18]; Adler v Australian Securities and Investments Commission at [146]-[149]; Whitlam v Australian Securities and Investments Commission at [117]-[118]; Re HIH Insurance Ltd: Australian Securities and Investments Commission v Adler (2002) 41 ACSR 72 at [437]; Australian Securities and Investments Commission v Rich at [404]-[412]). Some of these cases alleged contraventions involving dishonesty, to which the Briginshaw principles clearly apply. 746 We note that in re Doherty (Secretary of State for Northern Ireland Intervening) [2008] UKHL 33; (2008) 1 WLR 1499 the House of Lords applied to both seriousness of the allegation and seriousness of the consequences the approach that, the more serious they were, the stronger should be the evidence before it was concluded that the allegation was established on the balance of probabilities. Lord Carswell gave an example at [28]: "If it is alleged that a bank manager has committed a minor peculation that could entail very serious consequences for his career, so making it the less likely that he would risk doing such a thing". 747 In the present case ASIC did not contest that the Briginshaw principles were applicable. Attention was not directed to the particular words of s 140. We proceed on the basis that, whatever its applicability to acts of negligence, s 140 applies because of the nature of the relief sought. 748 Just before the frequently cited passage, Dixon J said that "[w]hen the law requires the proof of any fact, the tribunal must feel actual persuasion of its occurrence or existence before it can be found". 749 The terminology of 'actual persuasion' has subsequently been adopted, see the references set out in Seltsam Pty Ltd v McGuiness [2000] NSWCA 29; (2000) 49 NSWLR 262 at [136], to which can be added the joint judgment in Rejfek v McElroy (1965) 112 CLR 521 where it was said that "[P]roof of fraud should be clear and cogent such as to induce, on a balance of probabilities, an actual persuasion of the mind as to the existence of a fraud". 750 References in the authorities to "actual persuasion" should be understood as equivalent to the state of "satisfaction", as that word is used in s 140. It should not be understood as requiring a subjective "belief". Sir Richard Eggleston in Evidence, Proof and Probability (1983, 2nd ed) Weidenfeld and Nicolson, London, 1983, at 132-133 substituted, perhaps tentatively, the word "belief" for Dixon J's actual language. This transposition by Sir Richard was accepted in the Australian Law Reform Commission Report No 26: Interim Evidence AGPS, Canberra, 1985, Vol 1 at [474], [995], [998]; Vol 2 at [286]-[287]. However, "persuasion" is not equivalent to "belief". It was deployed by Dixon J as equivalent to "satisfaction", and in the latter form has been given statutory effect. 751 As Dixon CJ put it on another occasion, what is required is "an affirmative conclusion … establish[ed] to the reasonable satisfaction of a judicial mind" (Jones v Dunkel at 305). His Honour went on to say (ibid at 308) that "[t]he facts proved must form a reasonable basis for an actual conclusion affirmatively drawn of the truth of which the tribunal of fact may reasonably be satisfied." See also West v Government Insurance Office of NSW (1981) 148 CLR 62 at 66. 752 In Rejfek v McElroy the court spoke of "clear and cogent" proof. In the usual case it is, in our opinion, preferable to use the positive language of cogency to the negative language in Briginshaw v Briginshaw of "inexact proofs, indefinite testimony or indirect inferences". Both positive terminology – "adequate material to enable a court to reach a comfortable satisfaction"; and negative terminology – "uncertain inferences", was used in the relevant passage in Whitlam v Australian Securities and Investments Commission. 753 In order to be satisfied on the balance of probabilities, within the meaning of s 140, the tribunal of fact must reach an affirmative conclusion, or a definite conclusion, or an actual persuasion. This state of mind turns on the cogency of the evidence adduced before it. Relevant to the cogency of the evidence actually adduced is the absence of material evidence of a witness who could have been called and in fulfilment of the duty of fairness should have been called. In Whitlam v Australian Securities and Investments Commission it was said that, absent diligence in calling available evidence, a court is left to rely on uncertain inferences. The case of the party in default suffers in its cogency, and it is made more difficult for the tribunal of fact to reach an affirmative conclusion, a definite conclusion or an actual persuasion: the more so if the Briginshaw principles involving the gravity of the consequences apply. In our opinion, that is the consequence of the breach of the obligation of fairness. 754 This is not a novel stance. In Ho v Powell Hodgson JA, with whom Beazley JA agreed, said at [14] that "in deciding facts according to the civil standard of proof, the court is dealing with two questions: not just what are the probabilities on the limited material which the court has, but also whether that limited material is an appropriate basis on which to reach a reasonable decision", and his Honour referred at [15] to the importance of having regard to "the ability of parties, particularly parties bearing the onus of proof, to lead evidence on a particular matter, and the extent to which they have in fact done so … ". In Shalhoub v Buchanan [2004] NSWSC 99 at [71] Campbell J (as his Honour then was) said of the consequence of failure to call witnesses, apart from Jones v Dunkell reasoning, that - " … failure of a party who bears an onus of proof to call an available witness who could cast light on some matter in dispute can be taken into account in deciding whether that onus is discharged, in circumstances where such evidence as has been called does not itself clearly discharge the onus. This is an application of Lord Mansfield's maxim … ". 755 In Australian Securities and Investments Commission v Rich at [474] Austin J concluded, after a discussion of these and other cases, that the absence of certain witnesses had the consequence - "(c) under the principle of Blatch v Archer , that ASIC's failure to call those witnesses can be taken into account in deciding whether it has discharged its onus of proof with respect to the facts in issue to which the documents relate (see Shalhoub … )". 756 The consequence that the case of the party in default suffers in its cogency is the more so where, as we have held, the failure to call a witness is contrary to an obligation of fainess. 757 We return to the remainder of the first question, whether there was a breach of the obligation in the circumstances of this case. 758 Relevant issues, some overlapping, were - whether the draft news release was tabled at the February meeting; how and in what circumstances Mr Robb and Mr Peter Cameron obtained the copies of the 7.24 am draft news release; whether there was any consideration of the content of the draft news release at the meeting; whether there was a resolution approving the draft news release for sending as an ASX announcement; and whether the minutes accurately recorded the events at the meeting. 759 To employ the terminology of Glass JA in Payne v Parker, as to each of Mr Robb, Mr Wilson and Mr Sweetman - Would ASIC be expected to call him? Would he "probably have knowledge" on any and if so which of these issues? 760 These are closely related questions in the context of assessing the cogency of ASIC's case. The present matter goes beyond a Jones v Dunkel inference, which is never of much strength. In the context of assessing the cogency of the case of a party subject to an obligation of fairness, the strength of the probability that a person has relevant evidence informs the expectation that that party will call the person as a witness. 761 We have referred to the role of Allens, and particularly of Mr Robb, on a number of occasions. It is pertinent to repeat that it was Allens, acting through or under the supervision of Mr Robb alone or jointly with Mr Peter Cameron, that prepared the drafts of the minutes of the February meeting even before the meeting occurred. There is no doubt that with respect to many legal aspects of the establishment of the Foundation, including, relevantly, the formal announcement to the ASX pursuant to legal obligation, the solicitors from Allens were expected to advise and to be involved. Mr Robb had been party to the telephone conversation with Messrs Macdonald and Shafron on the morning of 15 February 2001, and quite apart from the "legally privileged" note on the various draft news releases, the lead-up to the February meeting makes clear the importance of Allens' attention to avoidance of a misleading announcement. There is every reason to believe, subject to issues of memory and other matters that affect any witness, that matters of primary fact within the issues identified above would have been of sufficient concern to Mr Robb for him to have given attention to the events at the meeting. 762 Although referred to as a 'news release' it is clear that at all times the document was intended to be lodged with the ASX in discharge of JHIL's continuous disclosure obligation pursuant to ASX Listing Rule 3.1, as enforced by s 674 of the Corporations Act. As we have noted JHIL had a practice of obtaining legal clearance for documents of this character. The document itself was headed "Legally privileged and confidental – for legal advice only". Furthermore, Mr Robb and Mr Cameron made comments that led to changes of the draft. 763 Recalling the judge's analysis described at [241]-[245] above, the fact that copies of the 7.24 am draft news release were produced from the records of Allens, containing the writing of Mr Robb and probably Mr Peter Cameron, together with one copy from the records of BIL, was a critical step in the reasoning of Gzell J to the tabling finding. There could be alternative explanations for the possession of the copy in the case of BIL. ASIC's case received reinforcement from the fact that Allens also obtained copies of the same draft news release in circumstances not explained. As we have indicated, this was a matter to which considerable weight was given in the judge's reasoning. Mr Robb could be expected to be able to explain receipt of the Allens copies. 764 In this Court, ASIC sought to uphold the judge's finding that it was not expected to call the witnesses. It submitted that Mr Robb was not in anyone's camp, but had his own interests to protect. In this regards ASIC invoked the reasoning of Hodgson JA, with whom Mason P agreed (Heydon JA disagreeing on other issues), in Trevitt v NSW TAFE Commission [2001] NSWCA 363 at [45], where his Honour said - "In my opinion the primary judge was in error in applying Jones v Dunkel (1959) 101 CLR 298 to the appellant's failure to call Graham. In my opinion, Graham, although not in the respondent's camp, could not be regarded as being in the appellant's camp or a witness whom the appellant could be expected to call. He was a witness who could be expected to have his own interests in giving evidence, which would be quite likely to conflict with those of the appellant." 765 Mr Robb may have had his own interests, or interests of Allens. However, the difference between this case and a case like Trevitt v NSW TAFE Commission is that the latter involved adversarial proceedings in which neither party had an obligation of fairness. In proceedings of the character before the Court, ASIC had such an obligation. 766 In our opinion, ASIC would be expected to call Mr Robb and he would "probably have knowledge" on the issues identified above. They were important issues. 767 At this point our reasoning diverges, but not in a way which affects the result. 768 Spigelman CJ and Beazley JA consider that the position of Mr Wilson and Mr Sweetman is quite different from that of Mr Robb. Although they were present at the meeting and had an interest in the decisions being taken, including with respect to any announcement of the decision, they did not have the degree of involvement that Mr Robb had. They were copied with earlier drafts of the news release, but there is nothing to suggest that that was done for the purpose of consultation. Nor is there any evidence that they had a copy of the 7.24 am draft. In their opinion, by reason of their tangential involvement in the determination of the content of the press release ASIC would not, to use the terminology of Glass JA in Payne v Parker, "be expected to call" either Mr Wilson or Mr Sweetman. 769 Furthermore, to continue to use the terminology of Glass JA, in their opinion it cannot be concluded that either Mr Wilson or Mr Sweetman would "probably have knowledge" of whether the draft news release was tabled and approved at the February meeting. They were present at the meeting and, like any eyewitness or bystander, could possibly have a recollection of the relevant events. In their opinion, a possibility is not sufficient to require that they be called in the exercise of a duty of fairness on the part of the regulator. What is required is some basis for an inference that there was a significant degree of probability that the witness would have relevant knowledge. 770 On the basis of the materials before the Court, there is nothing to suggest that ASIC was, or ought to have been, aware of any information that could establish any such degree of probability. In these circumstances Spigelman CJ and Beazley JA consider that, unlike the case of Mr Robb, the duty of fairness was not triggered. A regulator is under no duty to call every bystander or eyewitness who could give relevant evidence. 771 Giles JA is of a different view. 772 UBS had been engaged to provide merchant banking advice in relation to Project Green, and although the evidence was not detailed it is apparent from the presence of Messrs Wilson and Sweetman at the February meeting that they had a real involvement. It included preparation of slides, input into the communications strategy, and being sent at least early drafts of the news release. He considers that Messrs Wilson and Sweetman would have attended the meeting not as disinterested observers, but with an interest which would extend to any draft news release put before the board for approval; according to the UBS engagement, it should not have been released without vetting by UBS. Subject to the ravages of time, they should have been able to give an account of what occurred at the meeting in relation to presence of a draft news release and its consideration and approval as an ASX announcement. 773 Messrs Wilson and Sweetman had initially been proposed by ASIC as witnesses, with lists of topics and in the case of Mr Sweetman an affidavit, although it is not known what the topics were. ASIC's decision not to call them was made before the discussion on 8 October 2008 in which it was made clear that there was dispute over whether the Draft ASX Announcement Resolution had been passed. The dispute could have been seen in the earlier cross-examination of Mr Harman and Mr Donald Cameron. The evidence did not reveal the reason for ASIC's initial intention to call these witnesses, but the decision could have been reversed after 8 October 2008. 774 Had Mr Robb not been at the February meeting, in the opinion of Giles JA ASIC would be expected to call one or both of Mr Wilson and Mr Sweetman, and each would "probably have knowledge" on most of the issues identified above, including the vital issue of what occurred at the meeting in relation to a draft news release. Even if Mr Robb was called, he considers that ASIC would be expected to call one or both of Mr Wilson and Mr Sweetman. The obligation of fairness would require that they be called in addition to Mr Robb. 775 Notwithstanding the divergence of the Bench as to Messrs Wilson and Sweetman, Mr Robb should have been called by ASIC. A body in the position of ASIC, owing the obligation of fairness to which it was subject, was obliged to call a witness of such central significance to critical issues that had arisen in the proceedings. The scope of its powers and the public interest dimensions of its functions, most relevantly with respect to ensuring proper internal governance of corporations and that the market for securities in shares was fully informed, was such that resolution of the civil penalty proceedings required it to call, if only with a view to showing (if it were the case) that he could not in fact recall anything on the factual issues and for cross examination by the appellants, a witness of such potential importance. 776 We are reinforced in this conclusion, but would have reached the same conclusion in any event, by the late stage of the proceedings at which the appellants were informed that their expectation that Mr Robb was to be called, would be disappointed. At that stage, as appears from the history earlier set out, the appellants had no practical ability to obtain statements or otherwise assess whether they wished to call him. It is understandable that, in circumstances where he had his own and his firm's interests to protect, they would not take the risk of calling him blind. Mr Robb could not be categorised as a witness who was equally available to both sides, in the manner that has been referred to in the authorities. It was ASIC, with its obligation to act in the public interest to ensure that proceedings of this character were determined on true facts, that should have called him. 777 As foreshadowed at [678], for these reasons the failure to call Mr Robb in our view significantly undermines the cogency of ASIC's case on the passing of this Draft ASX Announcement Resolution. We return to that in a further section of these reasons. 4.7 Credit findings 778 We have referred to two areas in which the judge seems to have found comfort in evidence concerning subsequent events as telling against credit, the areas of receipt of the Final ASX Announcement ([436]-[445] above) and receipt of the 23 February 2001 ASX Announcement ([446]-[459] above). As to the first of these areas, while there was mention of feigned lack of recollection, there was not a clear finding. As to the second, the judge said that there was "again … a chorus by most of the non-executive directors saying they had no recollection of reading the e-mail" (LJ [1189]), and that he did not accept "that not one of them read the attached 23 February 2001 ASX Announcement" (LJ [1190]). 779 The judge used similar language of common non-recollection in relation to two other subsequent events. 780 First, in relation to the teleconference of 20 February 2001, he said at LJ [1179] - "1179 As Mr Gillfillan and Mr Koffel said, it was an unusual event. One would have expected, therefore, that some of the non-executive directors would have a recollection of it. I do not accept the chorus of denial of recollection to be genuine." 781 The reference to a chorus in LJ [1179] explains "again" in LJ [1189]. 782 Secondly, in relation to approval at the April meeting of the minutes of the February meeting, after summarising their evidence the judge said - "1202 That none of the non-executive directors who gave evidence were aware of the resolution approving the Draft ASX Announcement in the minutes of the 15 February 2001 Meeting, meant that they did not have to explain why they did not seek an amendment to the minutes if their contention that they would not have approved the Draft ASX Announcement was true. 1203 On each occasion when one would have expected the non-executive directors to challenge statements if their contention was true, they have professed ignorance of the statements that should have caused them to complain. This was one such occasion. I do not accept that not one of the non-executive directors who gave evidence was aware of the recorded resolution in the draft minutes approving the Draft ASX Announcement." 783 These were three subsequent events – the telephone conference, receipt of the 23 February 2001 ASX Announcement and approval of the minutes of the February meeting – in relation to which the judge expressed adverse views as to credit. However, he did not resolve the difficulty he had identified at LJ [1149]. Rather, the difficulty was compounded by the global references to choruses and "not one of" the directors. We have difficulty with rejection of the "chorus of denial of recollection", rejection of the "chorus by most of the non-executive directors", and non-acceptance that "not one of them" recollected and "not one of the directors" was aware. These were not findings as to all the witnesses. That some of the non-executive directors would be expected to have a recollection leaves open that other of them were genuine in their lack of recollection. Whose credit was damaged? 784 The judge clearly enough considered that the credit of some of the non-executive directors was damaged. We understand that to have been because he thought it unlikely that all of them would have failed to recall seeing the Final ASX Announcement or complain of non-receipt, to recall the 20 February 2001 teleconference, to recall reading the 23 February ASX Announcement e-mail, or to have been aware that the draft minutes included the ASX Announcement minute. Unlikelihood is a valid consideration, and one of which we can take account. Any damage to credit is consequential. We do not think that these views as to credit materially constrain our appellate review. 785 The judge made particular reference to the evidence of Ms Hellicar. In relation to the 20 February 2001 teleconference, when faced with telephone records Ms Hellicar said that she must have been mistaken in her non-recollection, and the judge said that this told against her credit and "was not the only incident in her testimony that an adamant statement made by her turned out to be wrong" (LJ [1174]). He said at LJ [1238] that he found hard to accept a "categorical statement" made by Ms Hellicar that she had not read a part of the January 2001 board papers, and in subsequent paragraphs he found it "difficult to accept" her evidence that the earliest she saw the Final ASX Announcement was in the report of the Jackson inquiry and that her "shock with respect to [a particular 2004 document] put to her in cross-examination was feigned" (LJ [1244]). He said of one "incident", explained at LJ [1248]-[1250], that he "found Ms Hellicar's demeanour to be most unsatisfactory": from the printed page, the "incident" does not seem to us of great significance, but the judge saw and heard what occurred. The judge ended at LJ [1251] - "1251 I have set out at some length some of the incidents in the testimony of Ms Hellicar because I have grave doubts about her evidence and that may have some relevance to the exoneration provisions that are invoked on her behalf. There was a dogmatism in her testimony that I do not accept. She was proved to be inaccurate on a number occasions. I found Ms Hellicar to be a most unsatisfactory witness." 786 This must be accepted in our appellate review. But the matter to which Ms Hellicar's evidence was particularly important, the 2004 and 2005 declarations, was not in the catalogue of inaccurate or unacceptable evidence. The declarations were canvassed by the judge in this part of his reasons, at LJ [1221]-[1232]. His Honour's consideration of them was surrounded by the paragraphs in which adverse views of Ms Hellicar's evidence were stated, but without any such statement in relation to the declarations – rather, with the conclusory paragraph LJ [1232] that "[w]hile suggestions were made as to the reasons for these documents being brought into existence, no ulterior motive for them was established by ASIC." We do not think that the judge found Ms Hellicar inaccurate or an unsatisfactory witness as to that matter. 787 The judge referred to one matter on which Mr Koffel's evidence was controverted, concerning his attendance at a board meeting on 12 July 2001. As we have indicated (see [269] above), he did not catalogue or deal with "attacks … on the credit of other witnesses". 788 We have come to our decision conscious of the judge's reservations as to credit, but we do not think they preclude the decision to which we have come. 4.8 Decision 789 We agree that the 7.24 am draft news release was taken by Mr Baxter to the February meeting, but we differ from the judge in two respects important to the remainder of his tabling finding and to the approval finding. The first is the correlation from which he concluded that one or both of Mr Macdonald and Mr Baxter spoke to the draft news release, and reasoned to its approval by the board. The second is the significance of ASIC's failure to call Mr Robb. 790 At the risk of tedium, we repeat that ASIC alleged more than discussion at the meeting of a message of sufficiency of funding, even a strong message. The allegation was of a resolution approving the specific news release as an ASX announcement, to be executed and sent to the ASX: the Draft ASX Announcement Resolution. Any discussion with reference to the 7.24 am draft news release might not without more amount to tabling and approval as the ASX announcement, particularly given the informality of the conduct of the meeting. As we have said, the draft news release might have been taken to the board as a work in progress, or for some kind of approval in principle, with management to finalise and send the announcement. 791 Some strength in ASIC's case lies in the minutes of the February meeting and their adoption at the April meeting, together with the 2004 declarations as against some of the appellants. There are, however, significant considerations telling against the weight to be given to the minutes as a correct record, and to the 2004 declarations. We do not think the judge's credit findings preclude us from viewing the accuracy of the minutes with considerable reserve. As we have indicated the judge's adverse views of Ms Hellicar were not expressed as to the 2004 and 2005 declarations, and we think we can properly accept, as we do, that Mr Brown, Mr Gillfillan and Ms Hellicar were genuine in their beliefs that they made the 2004 declarations without actual recollection of the February meeting. 792 At best, there is but weak support for ASIC's case in the correlation we have discussed. There is some basis in the communication of full funding in order to quell stakeholder opposition, and in JHIL's practice, for inferring consideration and approval, but we do not think there is great force in those matters, and failure to follow the practice tends against the definitive approval alleged by ASIC. The draft news release was in fact treated as a work in progress, with subsequent changes of significance including upon consideration by Allens. Absence of protest when thereafter announcements were made, to varying extents conveying full funding, again provided some basis for inferring consideration and approval, although again we do not think one of great force. 793 We intend by these brief references to take up the detailed consideration of all matters earlier in these reasons. There must be assessment of the "united force" of the evidence. That means the whole of the evidence, taken together and not as the discrete subjects identified for exposition in these reasons. 794 The cogency of ASIC's proof of passing the Draft ASX Resolution must be assessed with regard to the Briginshaw principles, more correctly s 140 of the Evidence Act, and the nature of the relief claimed by ASIC and gravity of the consequences; and importantly, with regard to the failure of ASIC to call Mr Robb. What occurred at the February meeting was a critical factual issue. Mr Baxter and Mr Harman were unable to say what occurred, if anything, by way of consideration and approval of the draft news release. As a matter of fairness, and consistently with what was said in Whitlam v Australian Securities and Investments Commission and our more detailed discussion, Mr Robb should have been called by ASIC. If one or both of Messrs Wilson and Sweetman should also have been called, there was also departure from the obligation of fairness. 795 The significance of "should" rather than "could" in the preceding paragraph takes matters beyond Jones v Dunkel, and beyond what was said in, for example, Shalhoub v Buchanan. The failure to call Mr Robb means more than disinclination to draw inferences favourable to ASIC's case. Failure of a party with the onus of proof to call an available and important witness, the more so if the failure is in breach of the obligation of fairness, counts against satisfaction on the balance of probabilities: we repeat Dixon J's reference in Jones v Dunkel (at 304-5) to the facts proved "form[ing] a reasonable basis for a definite conclusion affirmatively drawn of the truth of which the tribunal of fact may reasonably be satisfied". Absence of evidence from Mr Robb, whom ASIC should have called, tells against achieving the "comfortable satisfaction" of which Rich J spoke (at 350), and the "reasonable satisfaction" of the truth of the allegation of which Dixon J spoke (at 368-9), in Briginshaw v Briginshaw. 796 There was some basis for finding that the Draft ASX Announcement Resolution had been passed, although in our view not with the weight seen by the judge. Having regard in particular to the failure to call Mr Robb, with consequences for the cogency of ASIC's case, we do not think ASIC discharged its burden of proof. We are not satisfied that the non-executive director appellants voted in favour of the Draft ASX Announcement Resolution. 5. CONTRAVENTION BY MR BROWN, MS HELLICAR, MR O'BRIEN MR TERRY AND MR WILLCOX 5.1 The pleaded contraventions 797 We have set out the allegations in FFASC culminating in the Draft ASX Announcement Resolution, see [227]-[231] above. 798 The general allegations continued by alleging the preparation of the Final ASX Announcement based on the Draft ASX Announcement and its sending to the ASX (para 61) and identification of certain of the contents of the Final ASX Announcement (para 63), that each of the Draft ASX Announcement and the Final ASX Announcement represented a number of matters (para 64); and that each was false and misleading as to each matter (para 65). 799 The pleading of the contraventions found against Mr Brown, Mr Gillfillan, Ms Hellicar, Mr Koffel, Mr O'Brien, Mr Terry and Mr Willcox, and for convenience also of the allegations the subject of ASIC's defensive cross-appeals, was relevantly as follows. We put the latter allegations in bold type. 800 First came allegations that "when they each voted in favour of the Draft ASX Announcement Resolution" each of these directors knew or ought to have known that the announcement was false or misleading in various respects: paras 112-116 - "112. On 15 February 2001, when they each voted in favour of the Draft ASX Announcement Resolution, each of Brown, Gillfillan, Hellicar, Koffel, O'Brien, Terry and Willcox: (a) knew, or ought to have known , that the Draft ASX Announcement: (i) conveyed, or was capable of conveying, that the material available to JHIL provided a reasonable basis for the assertion that it was certain that the amount of funds made available to MRCF would be sufficient to meet all legitimate present and future Asbestos Claims brought against Amaca and Amaba; or (ii) … (b) ought to have known, that the Draft ASX Announcement was, in those respects false or misleading. 113. On 15 February 2001, when they each voted in favour of the Draft ASX Announcement Resolution, each of Brown, Gillfillan, Hellicar, Koffel, O'Brien, Terry and Willcox: (a) knew, or ought to have known , that the Draft ASX announcement conveyed, or was capable of conveying, that Macdonald believed that it was certain that the amount of funds made available to MRCF would be sufficient to meet all legitimate present and future Asbestos Claims brought against Amaca and Amaba; (b) ought to have known, that the Draft ASX Announcement was in that respect false or misleading, in that: (i) they knew, or ought to have known, that Macdonald was not of that belief; and (ii) Macdonald had not advised any of them that he was of that belief. 114. On 15 February 2001, when they each voted in favour of the Draft ASX Announcement Resolution, each of Brown, Gillfillan, Hellicar, Koffel, O'Brien, Terry and Willcox: (a) knew, or ought to have known , that the Draft ASX Announcement conveyed, or was capable of conveying, that all of the directors of JHIL, or, in the alternative, a majority of the directors, believed that it was certain that the amount of funds made available to MRCF would be sufficient to meet all legitimate present and future Asbestos Claims brought against Amaca and Amaba; (b) ought to have known, that the Draft ASX Announcement was in that respect false or misleading in that he or she knew or ought to have known that: (i) each of the directors did not hold that belief; (ii) no other director had informed him or her that he or she held that belief; and (iii) the directors had not been presented with any material which justified such a belief. 115. On 15 February 2001, when they each voted in favour of the Draft ASX announcement Resolution, each of Brown, Gillfillan, Hellicar, Koffel, O'Brien, Terry and Willcox: (a) knew, or ought to have known , that the Draft ASX Announcement conveyed, or was capable of conveying, that JHIL had received expert advice from PwC, that supported the statement that it was certain that the amount of funds made available to MRCF would be sufficient to meet all legitimate present and future Asbestos Claims brought against Amaca and Amaba; (b) ought to have known that the Draft ASX Announcement was in that respect false or misleading, in that they each ought to have known, … that: (i) PwC's review of a version of the Cash flow Models was limited to reporting on the logical soundness and technical correctness of that version of the Cash flow Models; (ii) PwC had not verified, and was instructed not to advise on, the key assumptions adopted by that version of the Cash flow Models, being: (A) fixed investment earnings rates; (B) litigation and management costs; (C) future claim costs; and (D) inflation on rental income and asset values. 116. On 15 February 2001, when they each voted in favour of the Draft ASX Announcement Resolution each of Brown, Gillfillan, Hellicar, Koffel, O'Brien, Terry and Willcox: (a) knew, or ought to have known , that the Draft ASX Announcement conveyed, or was capable of conveying, that JHIL had received expert advice from Access Economics that supported the statement that the amount of funds made available to MRCF would be sufficient to meet all legitimate present and future Asbestos Claims brought against Amaca and Amaba; (b) ought to have known that the Draft ASX Announcement was in that respect false or misleading, in that they each ought to have known, … that: (i) the review undertaken by Access Economics of a version of the Cash flow Models was limited to reporting on the logical soundness and technical correctness of that version of the Cash flow Models; (ii) Access Economics had not verified, and was specifically instructed not to consider, the key assumptions adopted by that version of the Cash flow Models, being: (1) fixed investment earnings rates; (2) litigation and management costs; (3) future claim costs; and (4) inflation on rental income and asset values." 801 In paras 117 and 118 were like allegations that "when they each voted in favour of the Draft ASX Announcement Resolution" they knew or ought to have known that the announcement was false or misleading in other respects, not material to the contraventions found or the contraventions the subject of the cross-appeals. 802 It was then alleged - "119. In the premises, by each of the following aspects of their conduct on 15 February 2001, each of Brown, Gillfillan, Hellicar, Koffel, O'Brien, Terry and Willcox: (a) failed to discharge their duties to JHIL, with the degree of care and diligence that a reasonable person would exercise, if they were a director of a corporation in JHIL's circumstances and occupied the office of non-executive director, and had the same responsibilities within the corporation; (b) thereby breached s 180(1) of the Corporations Law, as carried over into the Corporations Act, in relation to each such aspect; namely: (i) voting in favour of the Draft ASX Announcement Resolution; (ii) failing to query the terms of the Draft ASX Announcement before voting in favour of the Draft ASX Announcement Resolution; … (v) failing to inquire as to the nature of the analysis of a version of the Cash flow Models undertaken by PwC; (vi) failing to inquire as to the nature of the analysis of a version of the Cash flow Models undertaken by Access Economics; (vii) failing to inquire, or inquire adequately, as to the suitability of the February 2001 Trowbridge Report and the Trowbridge 50 Year Estimate as a basis to: (A) establish the amount of funding to be provided to Amaca and Amaba; (B) make the statements made in the Draft ASX announcement; and (viii) in the alternative, in the case of each of Gillfillan and Koffel, failing to: (A) request that they each be provided with a copy of, or the terms of, the Draft ASX Announcement; (B) familiarise themselves with the terms of the Draft ASX Announcement; or (C) abstain from voting on the Draft ASX Announcement." 5.2 The contraventions found 803 Save for identification of the appellant, the declarations of contravention were in the same terms for each of these appellants. We use the declaration made against Mr Brown - "(1) The Fourth Defendant contravened s 180(1) of the Corporations Law as carried over into the Corporations Act 2001 (Cth) ( Section 180(1) ) in relation to ABN 60 Pty Ltd (formerly known as James Hardie Industries Ltd) ( JHIL ) by his conduct, as a director of that corporation, in voting on 15 February 2001 in favour of a resolution of the directors to approve a draft ASX announcement ( Draft ASX Announcement ) and authorise its execution and sending to the Australian Stock Exchange ( ASX ) in circumstances where: (a) he knew that the Draft ASX Announcement conveyed or was capable of conveying that: (i) the material available to JHIL provided a reasonable basis for the assertion in the announcement that it was certain that the amount of funds made available to the Medical Research and Compensation Foundation ( Foundation ) would be sufficient to meet all legitimate present and future asbestos claims brought against two of JHIL's former subsidiaries Amaca Pty Ltd ( Amaca ) and Amaba Pty Ltd ( Amaba ); (ii) JHIL's Chief Executive Officer, Mr Macdonald, believed that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba; (iii) all of the directors or at least a majority of them believed that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba; (iv) JHIL had received expert advice from PwC and Access Economics that supported the statement that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba; (b) he ought to have known that the Draft ASX Announcement was misleading in those respects." 5.3 Consideration of contravention 804 The contraventions rested upon voting in favour of the Draft ASX Resolution. We have found that ASIC failed to prove its case in that respect. For that reason, the declarations of contravention can not stand, and must be set aside. 805 We think, however, that we should address whether there would have been contravention on the assumption that these appellants voted in favour of the Draft ASX Announcement Resolution: Kuru v State of New South Wales [2008] HCA 26; (2008) 236 CLR 1. On that assumption, would they have exercised care and diligence as required by s 180(1) of the Act? 806 The judge dealt with this over a number of paragraphs. After the legal principles, he addressed breach by the non-executive directors in general at LJ [258]-[329], by Mr Brown, Ms Hellicar and Mr Willcox at LJ [330]-[336] and by Mr O'Brien and Mr Terry at LJ [341]-[343]. We summarise his reasoning as – the Draft ASX Announcement was "a key statement in relation to a highly significant restructure of the James Hardie group" (LJ [260]); if a misleading statement as to funding was made, there was danger that JHIL would face legal action, its reputation would suffer and there would be a market reaction to its listed securities; the announcement was in easily understandable language, to be understood by an unsophisticated reader as saying that it was certain that the Foundation had sufficient funds to pay all legitimate asbestos claims; the non-executive directors must have known that such an unqualified statement could not be made, in light of (amongst other things) the frequent statements of unreliability of the estimates of asbestos liabilities (including in the January 2001 board papers) and Mr Morley's evidence of his presentation according to the slides in which the directors, as intelligent people, must have recognised sensitivity to the investment earnings rate of 11.7 per cent; reliance on management or advisers was not reasonable because (at LJ [325]) - " … it is the emphatic nature of the Draft ASX Announcement that is at fault. And that is not a matter for reliance upon management or outside experts. The shortcomings of the Cash flow Model must have been obvious to the non-executive directors, or at least they ought to have been and they should have realised that they were prevented from approving the unequivocal and unqualified statements as to certainty of sufficient funding in the Draft ASX Announcement"; and Mr Brown, Ms Hellicar and Mr Willcox each said that he or she would not have approved the Draft ASX Announcement, or would have made comments seeking to modify its terms. 807 We have earlier set out s 180(1), and have summarised the respective submissions as to the position of a non-executive director. It is an objective inquiry. The court is to consider what an ordinary person, with the knowledge and experience of the defendant, must be expected to have done in the circumstances if he or she was acting on his or her own behalf (Australian Securities and Investments Commission v Adler (2002) 168 FLR 253 at [372]). Beyond that the circumstances include that a non-executive director may be reliant on management and other officers to a greater extent than an executive director, no general statement can be made. 808 In the present case, it is not necessary to attempt a greater exposition of the position of a non-executive director. The proceedings were concerned with the positions of these non-executive directors. Not every ASX announcement should or will go before the board. But, on the assumption we have made, the draft news release did go before the board, and - it did so in the course of a decision of high importance to JHIL, intended to bring separation of the group's liability to asbestos claims; the separation and the attendant communication strategy had been considered at board level over a long period; and important to the decision was sufficiency of the Foundation's funding and communication of sufficiency to stakeholders. 809 These were not circumstances in which a non-executive director, exercising due care and diligence, could accept without application of his or her mind to the draft news release before the board for its approval. 810 In our opinion, on the assumption abovementioned there would have been failure by each of Mr Brown, Ms Hellicar, Mr O'Brien, Mr Terry and Mr Willcox to exercise care and diligence as required by s 180(1). 811 These appellants submitted the circumstances included procedures for management and advisers to review draft announcements. More specifically, they submitted that – JHIL had a Corporate Affairs department which was responsible for the preparation of market announcements and news releases; JHIL had a disclosure policy throughout the relevant period, which was designed to "enable James Hardie to fulfil its statutory reporting obligations and its obligations for continuous disclosure"; The usual practice at JHIL was for draft announcements that had been prepared by Corporate Affairs to be sent to management, including Mr Macdonald, Mr Shafron (as far as legal matters were concerned) and Allens (as far as legal matters were concerned); the drafts had to be signed off internally and externally before they could be brought before the board in accordance with the established procedure; The purpose of vetting by Allens was so that the board could be confident of external legal advice ensuring that the announcement was accurate (as evidenced by Allens providing advice on the draft news release); UBS had been specifically retained to provide JHIL with "assistance with preparation of required announcements" in relation to Project Green, and to provide it with advice "on the likely reaction of the stock market and the Company's shareholders and interested third parties"; JHIL had also engaged Anderson to assist with the communications documents regarding the establishment of the Foundation; and JHIL had engaged Hawker Britton to "assist with the development of [JHIL's] government relations strategy" (we have not earlier referred to this; elaboration is not necessary). 812 The appellants submitted that they were entitled to proceed on the basis that management and advisers had reviewed the Draft ASX Announcement, and that it was correct and not misleading. They submitted that there was no indication from management that the usual procedures had not been followed, and that directors with doubts concerning the unqualified statements were entitled to proceed on the assumption that experts in the fields of communications, public relations and corporations law had determined that no further qualification was necessary. 813 Mr Terry further submitted that - Consistently with the judge's finding at PJ [115] that the Final ASX Announcement "would not have been understood to convey representations of certainty to a sophisticated reader", he as a sophisticated director reasonably would not have thought the Draft ASX Announcement misleading; and The board had been provided with the advice of Mr Allsop SC that the directors could pass "each of the resolutions" to be put before the board, and the directors were not told that Mr Allsop had not been provided with a copy of the Draft ASX Announcement when writing the advice. 814 Mr Willcox put further submissions of some complexity. He challenged that the Draft ASX Announcement conveyed or was capable of conveying the "representations" in the contravention as found, and that Mr Willcox knew that the Draft ASX Announcement conveyed the representations. It was said as well that the judge had misunderstood Mr Willcox's evidence so far as he (the judge) said that Mr Willcox would not have approved the announcement had he been asked to. Strands in the submissions included - No copy of the announcement was provided (or foreshadowed) prior to the meeting, and there was nothing in the material provided to the board that indicated it would be asked to vote in favour of the resolution; Messrs Baxter, Macdonald and Robb regarded themselves as at liberty to amend the document without seeking further permission from the board (the basis for this being known to the directors at the time is not clear to us, and it may be difficult to reconcile with the assumed passing of the Draft ASX Announcement Resolution); The board was not informed of the fact that the "standard practice" was not followed; The slides conveyed that the communication strategy was sound, but not "certainty"; and The ASX announcement, as distinct from the public announcement of the Foundation, "was not, and was not presented to the board as, an important tool in communicating [the decision to establish the Foundation]". 815 ASIC submitted, in brief, that the circumstances also included that – JHIL was a major public company, listed on the ASX and known to have exposure to asbestos claims; if it published misleading statements on a topic such as asbestos claims funding, it risked legal action, its reputation would suffer and there would be a market reaction to its listed securities; The Draft ASX Announcement was a key statement in relation to a highly significant restructure of the group; The establishment of the Foundation and the separation of Coy and Jsekarb from JHIL were "potentially explosive steps" (so described by the judge at LJ [333]); The nature of the Draft ASX Announcement was such as to make it appropriate for management to ask the board to approve its contents; and The board had been advised as part of the asbestos separation that JHIL had to convince the public that there were sufficient funds to meet all legitimate asbestos claims. 816 There are a number of responses to the appellants' submissions concerning the usual procedures. They include that the "last minute affair" was likely to have been apparent to the directors, and it is not easy to accept that they were led to understand that Allens had signed off on the draft news release when Mr Peter Cameron and Mr Robb, present at the meeting, had not previously seen it and had that morning been struck with doubt over Trowbridge's data. 817 We do not think this was an occasion of reasonable reliance on management or others. 818 The non-executive directors were "intelligent people" (LJ [305]). The judge said - "305 … In 2000 Mr Brown was a group finance director of Brambles Industries Limited and a councillor of the Royal Blind Society of New South Wales. In 2001 he was a director of Energy Developments Limited and a councillor of the Royal Blind Society of New South Wales. Prior to 2000, Mr Brown had held a number of executive and non-executive roles including executive director, finance, chief financial officer of Renison Goldfields Consolidated Limited from 1991 to 1994 and executive director and chief financial officer of Goodman Fielder Limited from 1994 to 1995. … 307 Ms Hellicar is a BA LLM (Hons). In 2000 and 2001 she was a director of Goldfields Limited, the chair of the Sydney Institute, a director of Musica Viva and the chief executive officer of Corrs Chambers Westgarth. Prior to that she worked in the corporate affairs divisions of Esso Australia Pty Limited from 1984 to 1988, Chase Corporation from 1988 to 1989 and then briefly Bond Brewing. She also held a number of management roles including executive director of New South Wales Coal Association from 1989 to 1994 and managing director of TNT Logistics Asia from 1994 to 1997. She was a director and chief executive officer of New South Wales Environment Protection Authority from 1992 to 1997 and New South Wales Water Resources Council. … 309 From 1999 Mr O'Brien was a director of Brierley International and in 2000 and 2001 he was a director of BIL Australia. 310 Mr Terry is an LLB MA. In 2000 he was managing director and chief executive officer of Brierley International, a director of Air New Zealand Limited and Thistle Hotels Plc and a member of the board of overseers of the Fletcher School of Law and Diplomacy. His previous positions included vice-chairman, Pacific region, of Credit Suisse First Boston and director and group general counsel of Jardine Matheson Limited. 311 Mr Willcox is a BA (Hons) MA. In 2000 he was a director of Lend Lease Corporation Limited, Energy Developments Limited and FH Faulding & Co Limited. As at 2001, he was a director of Energy Developments Limited. Previously he acted as chief executive officer of BHP Petroleum from 1986 to 1994 and was a director of Woodside Petroleum from 1986 to 1993, BHP Limited from 1988 to 1994, North Ltd from 1994 to 1999 and Schroders Holdings Ltd from 1994 to 1999." 819 The postulated reasonable person in s 180(1) embraces any special skill or expertise the director or officer possesses, and the non-executive directors were expected to bring their knowledge and experience to performance of their duties. 820 The board had long been considering separation, and the directors were well aware of the importance of sufficiency of funding and its communication to stakeholders in relation to the separation proposal. The proposals and their consideration show a keen appreciation of those matters, with stakeholder reaction in mind but also JHIL's corporate responsibilities. Stakeholders included but were not limited to shareholders and prospective shareholders, and the directors' awareness must have included that the market must not be misled in relation to sufficiency of funding and the risk of an announcement being misleading in that respect. The risk went further, and included risks of misleading what we will globally call those concerned with satisfaction of asbestos claims. 821 As seen in our description of the events leading up to the February meeting, it was recognised that Trowbridge's estimates of asbestos liabilities were uncertain. The board papers expressed the "central communications conundrum". The sensitivity of the JHIL modelling would have been known to the directors, and the expectation of sufficiency in the slides called for inquiry – particularly given the assumed 11.7 per cent investment return – and not blind acceptance. The non-executive directors, with their familiarity with the importance of sufficiency of funding and whether an assurance of sufficiency could be given, could not properly accept the say-so of management. The attention given to the key messages and sufficiency of funding in the slides confirmed, if confirmation be needed, that it was a matter for application of the directors' minds, and not just assurance from management or advisers. The standard practice, if followed, would not relieve the directors from applying their own minds to whether such an important announcement was misleading. 822 It was submitted, perhaps rather faintly, that the assurance given by Mr Macdonald to Mr Brown that there were going to be sufficient funds in the trust (see [393] above) was like the assurance given by the auditors in Daniels v Anderson at 508. We do not find assistance in comparing these very different factual circumstances. 823 We would have come to the same view in any event, but it is of significance that in contending that they would not have approved the draft news release, Mr Brown, Ms Hellicar and Mr Willcox said that they would have objected to the Draft ASX Announcement and required qualifications if they were asked to approve it at the February meeting. Their concerns included the words "certainty" and "fully funded". A reasonable director with those concerns would not have been exercising due diligence if he or she voted for a resolution to approve the draft news release as an ASX announcement. 824 These appellants' submissions included that they would have expected that any news release they approved would have been subject to later vetting and, if inaccurate, correction. They said also that the ASX announcement would contain the disclaimer concerning forward-looking statements (see [218] above). The Draft ASX Announcement Resolution is not consistent with expectation of later vetting, and we do not accept that the disclaimer removed the vice of a misleading ASX announcement. 825 Mr Terry's additional submissions are not of substance. The Final ASX Announcement was in changed terms, but in any event due care and diligence on his part required attention to what the Draft ASX Announcement would convey to a range of readers, including the relatively unsophisticated. Taking the concept from the associated field of misleading conduct contrary to s 52 of the Trade Practices Act 1974 (C'th), the readers were ordinary or reasonable members of a class of prospective investors, but also of those concerned with satisfaction of asbestos claims (cf Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; (2000) 202 CLR 45 at [105]). In our opinion, the potential for misleading the market and the wider class of readers was plain from the attention given to the communications documents. Mr Allsop's advice was concerned with vesting shares and money in the Foundation consistently with director's duties. It was referred to in that connection in a slide, see at [173] above. It had nothing to do with whether funding was sufficient. We do not accept that it could reasonably have been seen as endorsing the draft news release, and none of the non-executive directors who gave evidence said that it was. 826 Mr Willcox's submissions also are not persuasive. We endeavour to summarise. 827 As to the Draft ASX Announcement conveying full funding, it was said that clear misstatement was necessary before finding that a prediction about the future was made with certainty (citing in particular National Exchange Pty Ltd v Australian Securities and Investments Commission [2004] FCAFC 90; (2004) 49 ASCR 369); that lack of qualification did not mean certainty; and that the proper audience was sophisticated readers (for an ASX announcement, shareholders or prospective shareholders). It was said that there was inherent uncertainty in any prediction as to the future, and that no reasonable reader would understand the Draft ASX Announcement as conveying certainty and particularly not the class of persons to whom it was directed. It was said that this was supported by the evidence of Mr Humphris, and by some analysts reports said to show that investors' reaction to the Final ASX Announcement was that the Foundation would not necessarily have sufficient funds under all conceivable circumstances. 828 Whether the Draft ASX Announcement conveyed full funding is not determined by analysis of the nature of certainty, but by reading it as a whole; and, as we have earlier accepted, with regard not only to investors. In our view, the announcement conveyed or was capable of conveying full funding and that would not be removed by taking it to include the disclaimer. 829 As to Mr Willcox's knowledge of what the announcement conveyed, on the assumption on which we are proceeding the draft news release was distributed to him and was discussed, and the discussion included concern about conveying sufficiency of funding. Mr Willcox denied that he received or read the draft news release, but his evidence of what it would have meant to him went beyond the passage his submissions sought to explain. It included that he now (in 2009) recognised that it could convey that it was certain that all future asbestos claimants would be provided for. The judge's finding of knowledge came from his consideration of the terms of the draft news release and its distribution, discussion and approval, and was well open. 830 Mr Willcox's evidence, given on the basis that he had not read the draft news release, included that at the time he expected (without being certain) that the Foundation would have sufficient funds to meet all legitimate compensation claims, but that he believed "that my instincts would have been to require that qualifications should be added to paragraphs 3 and 11 and to query paragraph 4". This amply founded the judge's conclusion that Mr Willcox would not have approved the announcement had he been asked to. Contrary to Mr Willcox's submission, what he would have done could be taken into account in determining what the reasonable person would have done, and we do not accept that the judge simply reasoned from what Mr Willcox's instincts would have required to a finding of breach of a standard of reasonable care and diligence. 831 We have taken account of the whole range of submissions. In our opinion, assuming approval of the draft news release as an ASX announcement, the judge correctly found that it conveyed or was capable of conveying the matters the subject of the declarations of contravention; that each of Mr Brown, Ms Hellicar, Mr O'Brien, Mr Terry and Mr Willcox knew that it was misleading in those respects; and that by voting in favour of the Draft ASX Announcement Resolution they would have contravened s 180(1). 5.4 The defensive cross-appeals 832 ASIC submitted that the judge should have found that Mr Brown, Ms Hellicar, Mr O'Brien, Mr Terry and Mr Willcox contravened s 180(1) in the respects put in bold type in paras 112-116 and 119 set out at [800] and [802] above. 833 We have not displaced the judge's finding that the non-executive directors knew that the Draft ASX Announcement conveyed or was capable of conveying the matters the subject of the declarations of in the contravention. It is not necessary to go, and there is no point in going, to the alternative that they ought to have known. 834 The allegation of breach in failing to query the terms of the Draft ASX Announcement "before voting in favour of the Draft ASX Announcement Resolution", found in para 119(b)(ii) of the FFASC, falls with failure to prove voting in favour of the resolution. So also do the allegations of breach in failing to inquire, found in para 119(b)(v), (vi) and (vii) of the FFASC. These allegations were governed by the preamble "In the premises … " in para 119, referring to the allegations in the preceding paragraphs each of which involved voting in favour of the Draft ASX Announcement Resolution. 835 ASIC accepted this position. Its written submissions included - "ASIC did not submit before the trial judge and does not submit now that any of the particulars of contravention included in FFASOC (119(b)) arise independently of a finding that each of these non executive directors voted in favour of the Draft ASX Announcement. However, ASIC did submit below that, in the event that it was found they did vote to approve the Draft ASX Announcement, then each of the particulars in subparagraph 119(b)(i) to (vii) were made out. … Thus this aspect of the cross appeal only arises if the finding that each of these non executive directors approved the Draft ASX Announcement is not disturbed on appeal but, for some reason, it is found that it was not a contravention to have voted in favour of the resolution approving it." (footnote omitted) 836 Accordingly, the cross-appeals do not arise. 837 We have considered whether we should deal with the fall-back contraventions on the assumption that these appellants voted in favour of the Draft ASX Announcement Resolution, as we have done in relation to the contraventions found: Kuru v State of New South Wales. The judge did not deal with them. We do not think it appropriate to address them in the first instance, and hypothetically. 6. CONTRAVENTION BY MESSRS GILLFILLAN AND KOFFEL 6.1 The pleaded contraventions 838 We have set out at [800]-[802] the pleading referable to the contraventions found as against the other non-executive directors, together with the allegation the subject of the defensive cross-appeals. That pleading was also of contraventions alleged against Messrs Gillfillan and Koffel, with para 119(b)(viii) of the FFASC solely referable to contraventions by them. The contraventions found took up para 119(b)(viii). 6.2 The contraventions found 839 Save for their identification, the declarations made as against each of Mr Gillfillan and Mr Koffel were in the same terms. We use the declaration made against Mr Gillfillan - "(1) The Fifth Defendant contravened s 180(1) of the Corporations Law as carried over into the Corporations Act 2001 (Cth) ( Section 180(1) ) in relation to ABN 60 Pty Ltd (formerly known as James Hardie Industries Ltd) ( JHIL ) in that, as a director of that company, at a meeting of the board of directors of that company on 15 February 2001 during which it resolved to approve a draft ASX announcement ( Draft ASX Announcement ) and authorised its execution and sending to the Australian Stock Exchange ( ASX ) he failed to take any of the following steps: (a) request that he be provided with a copy of the Draft ASX Announcement; (b) familiarise himself with its terms; or (c) abstain from voting in favour of the resolution to approve the Draft ASX Announcement and authorise its execution and sending to the ASX." 840 There was some debate over the judge's finding as to voting in para (c) of the declared contravention. Messrs Gillfillan and Koffel submitted that it was left unclear whether they voted as distinct from abstained. It was said that a finding that they voted was outside the pleaded case, and also that whether they voted or abstained was relevant to penalty. 841 The pleading in para 119(b)(viii) of the FFASC was in terms of failure to "abstain from voting on the Draft ASX Announcement". This could accommodate voting in favour of the resolution or voting against the resolution. As a matter of pleading, the failure to abstain could be a breach of s 180(1) whether the vote was in favour of the resolution or against the resolution, because whichever way Messrs Gillfillan and Koffel voted they did so without knowing or familiarising themselves with the terms of the announcement. That is how we understand the allegation. The vice alleged in the discharge by Messrs Gillfillan and Koffel of their duties was that they did not exercise care and diligence in understanding what was being voted on. 842 We have referred to the informality of voting as found by the judge in LJ [234]. It included that indication of approval or remaining silent, in response to a summary of the position by Mr McGregor, was regarded as the passing of a resolution. 843 In this and the surrounding paragraphs the judge said - "232 Nor am I prepared to find that by their lack of voiced objection to the document, they are taken to have participated in the approval by the other directors of the Draft ASX Announcement. Nor for that matter am I prepared to find that by silence either should be taken to have abstained from approving the release of the document. 233 What remains is that neither Mr Gillfillan nor Mr Koffel raised an objection that he did not have a copy of the Draft ASX Announcement at the 15 February 2001 Meeting. Nor did they ask that a copy be provided to them. Nor did they abstain from approving the Draft ASX Announcement. 234 The practice of the board of JHIL was not formally to put a matter to a meeting as a resolution. No one recalled a formal vote ever being taken. Mr McGregor summarised the position and directors indicated their approval or remained silent. In either case the directors regarded that procedure as the passing of a resolution by the board. Neither Mr Gillfillan nor Mr Koffel voiced an objection to the expression of approval of the release of the Draft ASX Announcement at the 15 February 2001 Meeting." 844 There is some equivocation in LJ [232], but the conclusion of LJ [234] suggests that, by their silence, Messrs Gillfillan and Koffel joined in what was regarded as the passing of a resolution, and voted in favour of it. 845 Later in the liability judgment, the judge expressed his findings - "337 Mr Gillfillan and Mr Koffel were likewise in breach of Section 180(1) in failing to request that they be provided with a copy of the Draft ASX Announcement, in failing to familiarise themselves with its terms, or in failing to abstain from voting in favour of the above resolutions as a reasonable person in their shoes with their responsibilities would have done. 338 Mr Gillfillan did not agree that he had approved the Draft ASX Announcement. Mr Koffel denied that he had. Notwithstanding that they did not have a copy of the Draft ASX Announcement before them, they also regarded it as appropriate to have considered the content of the document had they recalled it being before the 15 February 2001 Meeting. Like their co-directors who gave evidence they said they would not have approved it. 339 Once the finding is made, contrary to their testimony, that the Draft ASX Announcement was considered at the meeting their failure to call for a copy to familiarise themselves with its terms or to abstain from voting constituted a breach of duty." (emphasis added) 846 The first emphasised words expressed voting in favour of the resolution. The second emphasised words may have elided voting on the resolution and voting in favour of the resolution. However, they did not depart from the pleading. Voting in favour of the resolution was one way of "failing to abstain from voting on" the resolution. 847 Paragraph (c) of the declared contravention could perhaps have been better framed, but its substance was failing to abstain from voting on the resolution in that Mr Gillfillan or Mr Koffel voted in favour of it. 848 In the penalty judgment his Honour repeated at PJ [61] that neither of Messrs Gillfillan nor Koffel "voiced an objection to the expression of approval of the release of the Draft ASX Announcement at the meeting". He said at PJ [64] that he was not persuaded that either of them acted honestly when they failed to request a copy of the Draft ASX Announcement, failed to familiarise themselves with its terms, or "failed to abstain from voting in favour of the resolution to approve its publication". In relation to the exercise of his discretion had it been found that they acted honestly, the judge responded to a submission that if they had abstained from voting, the Draft ASX Announcement would still have been approved by the directors present at the meeting - "125 In the manner in which Mr McGregor conducted board meetings, the silence of Mr Gillfillan and Mr Koffel was, in effect, a vote approving the Draft ASX Announcement." 849 His Honour referred at PJ [127] to the failure of Messrs Gillfillan and Koffel to ask for a copy of the Draft ASX Announcement "and their silence knowing that it would be taken as a vote in favour of the approval … ". 850 This is consistent with our understanding of his finding in the liability judgment. 851 In our opinion, the judge found that by their silence Messrs Gillfillan and Koffel voted in favour of the Draft ASX Announcement Resolution. However, that did not translate into the same declared contravention as was found against the other non-executive directors. The other contraventions involved knowledge of what the Draft ASX Announcement conveyed or was capable of conveying, and that it ought to have been known to be misleading. Messrs Gillfillan and Koffel did not know the terms of the Draft ASX Announcement, and so the different contravention. 852 Messrs Gillfillan and Koffel submitted that a finding that they voted in favour of the Draft ASX Announcement Resolution was erroneous. In summary, they submitted that whether or not they voted was to be determined objectively by a consideration of whether their conduct manifested an intention to exercise a vote (Whitlam v Australian Securities and Investments Commission at [144]-[145]), and that on an objective determination it did not because - the board papers did not contain a draft resolution; they were not otherwise provided with a draft resolution; the approval came from discussion at the meeting; they participated by telephone; they were not provided with a copy of the draft news release, nor was it read out at the meeting (LJ [231]); the judge said at LJ [232] that he was not prepared to find that they participated in the approval by the other directors; they were silent as to approval; and it was not put to other non-executive directors that they understood the silence as a vote. 853 The submissions referred to LJ [226] where the judge recorded Mr Brown's evidence that it was - " … likely that the board's approval of that message was summarised by Mr McGregor in the usual fashion saying 'is the board happy with that?' and everybody nodded or otherwise indicated their agreement." 854 However, at LJ [234] remaining silent was also regarded as passing a resolution. Both Mr Gillfillan and Mr Koffel accepted in their evidence that silence would amount to approval of a resolution. 855 We do not accept the submission. Messrs Gillfillan and Koffel participated in the meeting, albeit by telephone, and the principal business of the meeting was the establishment of the Foundation and all it entailed. On the assumption that the Draft ASX Announcement Resolution was passed, it cannot sensibly be concluded that they did not vote, even if by silence, in favour of establishment of the Foundation, for which also there were no draft resolutions. On the same assumption, there is no sound reason to regard announcement of the establishment of the Foundation as outside their concurrence by silence. 856 On the assumption of consideration and approval of the draft news release, Messrs Gillfillan and Koffel understood that JHIL proposed to issue an announcement, including on the contentious matter of funding, if the separation was approved. On the same assumption, the discussion would have disclosed that the other directors had a document they did not have. At the least they would have heard an extensive discussion, and a time would have come when, according to the practice, Mr McGregor summarised the position. By remaining silent, they joined in the informal resolution. 857 It may be added that, still on the assumption we have made, the minutes of the February meeting were relevantly a correct record, adopted by Messrs Gillfillan and Koffel amongst others. The minutes did not record abstention from the Draft ASX Announcement Resolution. 6.3 Consideration of contravention 858 As with the other elements of para 119(b) of the FFASC, the contravention in para 119(b)(viii) rested upon the allegation of voting in favour of the Draft ASX Announcement Resolution. By the preamble in the contravention found against Messrs Gillfillan and Koffel, the failures in paras (a), (b) and (c) were at a meeting during which the Draft ASX Announcement Resolution was passed, and the failure in para (c) required the passing of the resolution. As a matter of pleading, the contraventions found did not require a finding that Messrs Gillfillan and Koffel voted in favour of the Draft ASX Announcement Resolution. But the declarations of contravention can not stand when we have found that ASIC failed to prove that the Draft ASX Announcement was approved at the February meeting. 859 Again, we think that we should address whether Messrs Gillfillan and Koffel exercised the care and diligence required by s 180(1) on the assumption that the Draft ASX Announcement Resolution was passed. 860 The contraventions found lay in failure to request a copy of the Draft ASX Announcement, failure to familiarise themselves with it and, on the judge's finding of voting in favour of the resolution, failure to abstain from voting. 861 The judge's reasons were brief. Omitting the analogy he found with what was said in a copyright case, Milwell Pty Ltd v Olympic Amusements Pty Ltd [1999] FCA 63; (1999) 85 FLR 436 at [53], he said in the liability judgment - "337 Mr Gillfillan and Mr Koffel were likewise in breach of Section 180(1) in failing to request that they be provided with a copy of the Draft ASX Announcement, in failing to familiarise themselves with its terms, or in failing to abstain from voting in favour of the above resolutions as a reasonable person in their shoes with their responsibilities would have done. 338 Mr Gillfillan did not agree that he had approved the Draft ASX Announcement. Mr Koffel denied that he had. Notwithstanding that they did not have a copy of the Draft ASX Announcement before them, they also regarded it as appropriate to have considered the content of the document had they recalled it being before the 15 February 2001 Meeting. Like their co-directors who gave evidence they said they would not have approved it. 339 Once the finding is made, contrary to their testimony, that the Draft ASX Announcement was considered at the meeting their failure to call for a copy to familiarise themselves with its terms or to abstain from voting constituted a breach of duty." 862 Messrs Gillfillan and Koffel submitted that they were entitled not to participate in the decision to approve the Draft ASX Announcement in the circumstances which existed on 15 February 2001, and instead to rely on those in attendance at the board meeting. They contended that there was no reason for them to suspect that those who were in attendance could not be relied upon to produce an accurate announcement. The reasonableness of their conduct was said to be supported by the circumstances that they had been appointed to the board for their United States background and experience, and that - they participated in the board meeting by telephone; they were not provided with a copy of the Draft ASX Announcement prior to or during the meeting; the Draft ASX Announcement was not read out at the meeting; and they remained silent. 863 In our opinion, on the assumption abovementioned their conduct amounted to a failure to exercise due care and diligence. 864 As with the other non-executive directors, Messrs Gillfillan and Koffel were "intelligent people" (LJ [304]), with extensive experience in both executive and non-executive roles – "306 Prior to 2000, Mr Gillfillan had held a number of senior positions in Wells Fargo Bank including vice-chairman and chief credit officer from 1991 to 1994 and from 1996 to 1998. In 2000 Mr Gillfillan joined an investment bank, Neveric LLC, as a partner. He also held a number of non-executive roles including being a director of Electrolux Corporation and Wells Fargo HSBC Trade Bank. … 308 From 1989 Mr Koffel held the position of chairman and chief executive officer of URS Corporation. In 2000 and 2001 he was also a director of McKesson HBOC Inc." 865 Accepting that their appointments were due to their United States background and experience, they were not excused from understanding the need not to issue misleading statements to the market and other interested stakeholders. The circumstances of JHIL equally applied to them, as a major public company engaged in a significant restructure to which announcing the establishment of the Foundation and its funding was highly important, including the sufficiency of funding as a matter going to the reaction of stakeholders. Separation had been under consideration for some time, with their participation, and they were well aware of these matters. 866 On the assumption we have made, the Draft ASX Announcement was distributed and discussed at the February meeting. Messrs Gillfillan and Koffel would have heard the discussion. It is difficult to accept that they would not have participated in the discussion, as they had at the January meeting, but even if they did not they would have been aware that a significant announcement was to be made and, as the exchange between Mr Brown and Mr Macdonald indicates, that it was a live question whether sufficiency of funding could be assured. 867 A reasonable director with their expertise would understand the need to familiarise themselves with what was being proposed, even when his or her participation was over the telephone. Moreover, in submitting that the Draft ASX Announcement Resolution had not been passed, both Mr Gillfillan and Mr Koffel said to the effect that they would not have approved such an announcement because of its unequivocal and unqualified nature. Mr Koffel said that he "would never provide forward-looking statements to a securities exchange or to media outlets in such absolute terms and without significant qualifications". In cross-examination both Messrs Koffel and Gillfillan indicated that they would have problems with "forward-looking statements" because of their United States experiences. In the circumstances, a director with their experience would be expected to be all the more cautious of approving statements concerning separation and funding without familiarising himself or herself with its terms. 868 It is erroneous, in our view, to postulate that Messrs Gillfillan and Koffel could rely on the other directors to "craft an announcement" (the words of the submission). Repeating our assumption, they joined in approval of an announcement which they had not seen, although told of the "central communications conundrum". Even if the discussion eased the conundrum, a basic necessity was to ascertain and have familiarity with the terms of the announcement. It may be noted that their evidence to the effect that they would not have approved such an announcement is at odds with leaving it to their fellow directors. If they did not have familiarity with the terms of the announcement, they should have abstained from voting. 6.4 The defensive cross-appeals 869 ASIC maintained the same defensive cross appeals as in the cases of Mr Brown and others, and added that the judge should have found that Messrs Gillfillan and Koffel breached s 180(1) by voting in favour of the Draft ASX Announcement Resolution: FFASC, para 119(b)(i). 870 As with the cross-appeals in the cases of Mr Brown and others, these cross-appeals are not maintained if we find, as we do, that the non-executive directors did not vote in favour of the Draft ASX Announcement Resolution. ASIC explained that the para 119(b)(i) cross-appeal was added because it was uncertain whether the judge had found that Messrs Gillfillan and Koffel voted in favour of the resolution. It is difficult to divorce voting from knowledge of what one is voting for, and breach by voting may add nothing. For like reasons to those earlier given, we do not think it appropriate to address the cross-appeals in the first instance, and hypothetically. 7. CONTRAVENTION BY MR SHAFRON 7.1 The pleaded contraventions 871 The contraventions found against Mr Shafron involved the cash flow analysis and the DOCI as well as the Draft ASX Announcement. The pleading of the contraventions and for convenience also, in bold type, of the allegations the subject of ASIC's cross-appeal, was relevantly as follows. 872 As to the Draft ASX Announcement and the cash flow analysis, first came the allegation Mr Shafron knew or ought to have known "when he attended the February 2001 Board Meeting" that the Draft ASX Announcement was false and misleading in various respects: paras 98-102 of the FFASC - "98. On 15 February 2001, when he attended the February 2001 Board Meeting Shafron: (a) knew, or ought to have known, that the Draft ASX Announcement: (i) conveyed, or was capable of conveying, that the material available to JHIL provided a reasonable basis for the assertion that it was certain that the amount of funds made available to MRCF would be sufficient to meet all legitimate present and future Asbestos Claims brought against Amaca and Amaba; or (ii) would be misleading if there were not reasonable grounds for the statement that it was certain that the amount of funds made available to MRCF, either in its own right, or via Amaca and Amaba, would be sufficient to meet all legitimate present and future Asbestos Claims brought against Amaca and Amaba; and (b) knew, of ought to have known, that it was in those respects false or misleading. 99. On 15 February 2001, when he attended the February 2001 Board Meeting, Shafron: (a) knew, or ought to have known, that the Draft ASX Announcement conveyed, or was capable of conveying, that Macdonald believed that it was certain that the amount of funds made available to MRCF would be sufficient to meet all legitimate present and future Asbestos Claims brought against Amaca and Amaba; (b) knew, or ought to have known, that the Draft ASX Announcement was in that respect false or misleading in that: (i) he knew, or ought to have known, that Macdonald was not of that belief; and (ii) Macdonald had not advised him that he was of that belief. 100. On 15 February 2001, when he attended the February 2001 Board Meeting, Shafron: (a) knew, or ought to have known, that the Draft ASX Announcement conveyed, or was capable of conveying, that all of the directors of JHIL or, in the alternative, a majority of the directors, believed that it was certain that the amount of funds made available to MRCF would be sufficient to meet all legitimate present and future Asbestos Claims brought against Amaca and Amaba; (b) knew, or ought to have known, that the Draft ASX Announcement was in that respect false or misleading, in that he knew, or ought to have known, and it was the fact that: (i) each of the directors did not hold that belief; (ii) no director had informed him that he or she held that belief; and (iii) the directors had not been presented with any material which justified the holding of such a belief. 101. On 15 February 2001, when he attended the February 2001 Board Meeting, Shafron: (a) knew, or ought to have known, that the Draft ASX Announcement conveyed, or was capable of conveying, that JHIL had received expert advice from PWC, that supported the statement that the amount of funds made available to MRCF would be sufficient to meet all legitimate present and future Asbestos Claims brought against Amaca and Amaba; (b) knew, or ought to have known, that the Draft ASX Announcement was in that respect false or misleading, in that he knew, or ought to have known, and it was the fact that: (i) PWC's review of a version of the Cash flow Models was limited to reporting on the logical soundness and technical correctness of that version of the Cash flow Models; (ii) PWC did not verify, and was specifically instructed not to consider, the key assumptions adopted by that version of the Cash flow Models, being: (A) fixed investment earnings rates (B) litigation and management costs; (C) future claim costs; and (D) inflation on rental income and asset values. 102. On 15 February 2001, when he attended the February 2001 Board Meeting, Shafron: (a) knew, or ought to have known, that the Draft ASX Announcement conveyed, or was capable of conveying, that JHIL had received expert advice from Access Economics, that supported the statement that the amount of funds made, available to MRCF would be sufficient to meet all legitimate present and future Asbestos Claims brought against Amaca and Amaba; (b) knew, or ought to have known that the Draft ASX Announcement was in that respect false or misleading, in that he knew, or ought to have known, and it was the fact that: (i) the review undertaken by Access Economics of aversion of the Cash flow Models was limited to reporting on the logical soundness and technical correctness of that version of the Cash flow Models; (ii) Access Economics did not verify, and was specifically instructed not to consider, the key assumptions adopted by that version of the Cash flow Models, being: (A) fixed investment earnings rates; (B) litigation and management costs; (C) future claim costs; and (D) inflation on rental income and asset values." 873 After allegations that Mr Shafron knew or ought to have known that the Draft ASX Announcement was false or misleading in other respects not presently material (paras 103, 104), it was alleged - "105. On 15 February 2001, when he attended the February 2001 Board Meeting [Shafron]: (a) knew, or ought to have known, and it was the case that: (i) PWC's review of a version of the Cash flow Models: (A) was limited to reporting on the logical soundness and technical correctness of that version of the Cash flow Models; (B) had not verified, and PWC had been specifically instructed not to consider, the key assumptions adopted by that version of the Cash flow Models, being: (1) fixed investment earnings rates; (2) litigation and management costs; (3) future claim costs; (4) inflation on rental income and asset values; (ii) Access Economics' review of a version of the Cash flow Models: (A) was limited to reporting on the logical soundness and technical correctness of that version of the Cash flow Models; (B) had not verified, and Access Economics had been specifically instructed not to consider, the key assumptions adopted by that version of the Cash flow Models, being: (I) fixed investment earnings rates; (2) litigation and management costs; (3) future claim costs; (4) inflation on rental income and asset values; (iii) the best estimate contained in the February 2001 Trowbridge Report and the Trowbridge 50 Year Estimate: (A) was not based on the most recent data; (B) was otherwise too uncertain to be used as a basis to assess the adequacy of Amaca and Amaba's funding; (C) had not taken into account superimposed inflation, and a prudent estimate would have; (D) only had a 50% probability of being achieved; (b) knew or ought to have known, and it was the case that, Brown, Gillfillan, Hellicar, Koffel, McGregor, O'Brien, Terry and Willcox, had not been advised of (a)(i), (a)(ii) and (a)(iii)(B), (C) and (D); (c) knew, or ought to have known, and it was the case that, each of (a)(i), (a)(ii) and (a)(iii) were: (i) relevant to any assessment of the adequacy or otherwise, of the funding available to Amaca and Amaba, to meet their respective Asbestos Liabilities; (ii) relevant to any assessment of the accuracy of the Draft ASX Announcement; and (d) failed to either advise each of Brown, Gillfillan, Hellicar, Koffel, McGregor, O'Brien, Terry and Willcox of the matters referred to in each of (a)(iii)(B) (C) and (D), or take steps to ensure that they were informed of those matters." 874 The contraventions were then alleged - 106. In the premises, by each of the following aspects of his conduct, on 15 February 2001, Shafron: (a) failed to discharge his duties to JHIL with the degree of care and diligence that a reasonable person would exercise, if they were an officer of a corporation in JHIL's circumstances and occupied the office held by Shafron, and had the same responsibilities within the corporation, as pleaded herein, and (b) thereby breached s 180(1) of the Corporations Law, as carried over into the Corporations Act, in relation to each such aspect, namely: (i) … (ii) failing to advise the board that the Draft ASX Announcement was expressed in too emphatic terms concerning the adequacy of Amaca and Amaba's funding to meet all legitimate present and future Asbestos Claims; (iii) failing to advise the board that the Draft ASX Announcement was false or misleading in each of the respects pleaded above; (iv) failing to advise the board that PWC's review of a version of the Cash flow Models: (A) was limited to reporting on the logical soundness and technical correctness of that version of the Cash flow Models; (B) had not verified, and PWC had been specifically instructed not to consider, the key assumptions adopted by that version of the Cash flow Models, being: (1) fixed investment earnings rates; (2) litigation and management costs; (3) future claim costs; (4) inflation on rental income and asset values; (v) failing to advise the board that Access Economics' review of a version of the Cash flow Models: (A) was limited to reporting on the logical soundness and technical correctness of that version of the Cash flow Models; (B) had not verified, and Access Economics had been specifically instructed not to consider, the key assumptions adopted by that version of the Cash flow Models, being: (1) fixed investment earnings rates; (2) litigation and management costs; (3) future claim costs; (4) inflation on rental income and asset values; (vi) failing to advise the board that the best estimate contained in the February 2001 Trowbridge Report and the Trowbridge 50 Year Estimate: (A) was too uncertain to be used as a basis to assess the adequacy of Amaca and Amaba's funding; (B) had not taken into account superimposed inflation, and a prudent estimate would have; and (C) only had a 50% probability of being achieved ." 875 Going to the DOCI, the central general allegations in the FFASC were – "149. On 15 February 2001 and at all material times JHIL was: (a) a listed disclosing entity for the purposes of s 1001A of the Corporations Law, and (b) required by ASX Listing Rule 3.1 to notify the ASX of information about specified events or matters as they arise, for the purpose of the ASX making that information available to the market, namely any information concerning JHIL that a reasonable person would expect to have a material effect on the price or value of JHIL's securities, other than material exempted by reason of rule 3.1A. 150. On and from 15 February 2001, JHIL was in possession of information ("the DOCI Information"), namely: (a) that under the DOCI, Amaca and Amaba provided the Covenants and Indemnities to JHIL for its potential Asbestos Liabilities, as pleaded in paragraph 54 (j)(i) and (ii) above; (b) that under the DOCI there were certain amounts paid and payable by JHIL in exchange for those Covenants and Indemnities, as pleaded in paragraph 54 (j)(iii) above; and (c) the existence of the Put Option as pleaded in paragraph 54(j)(iv) above. 151. The DOCI Information was not generally available, in that: (a) it was not readily observable; and (b) it had not been made known in a manner that would bring it to the attention of persons who would commonly invest in shares of JHIL or a similar body corporate of a kind whose price or value might be affected by the DOCI Information. Particulars of 151 i The DOCI Information was not provided to the United States Securities Exchange Commission until about 1 October 2001. ii The DOCI Information was not provided to the ASX. iii The DOCI Information was not otherwise made available to the market or the public until 30 June 2003. 152. The DOCI Information was of a kind which a reasonable person would expect, if it were generally available, to have a material effect on the price or value of JHIL's shares. Particulars of 152 i The that JHIL was required to make to Amaca and Amaba, in accordance with the DOCI, had, at 15 February 2001, a net present value of approximately $70 million. ii As at 31 March 2001, $70 million represented approximately 12% of the James Hardie Group's assets. iii There was market interest regarding and the James Hardie Group's potential liability for Asbestos Claims, post the separation of Amaca and Amaba. iv There was market interest regarding the sufficiency of the assets of. Amaca and Amaba, and any matter which might impact upon those assets, including any liability of Amaca and Amaba to indemnify JHIL for its own Asbestos Liabilities. v The terms of the Put Option were significant to any assessment of the ongoing potential Asbestos Liabilities of the James Hardie Group." 876 In relation to the DOCI, the pleading of knowledge and of the contravention found against Mr Shafron was - "157. Prior to and on 15 February 2001, when he attended the February 2001 Board Meeting, Shafron knew, or ought to have known, and it was the fact that: (a) if the board authorised the execution of the DOCI without disclosing the DOCI Information to the ASX, then it would be harmful or potentially harmful to JHIL, in that: (i) in failing to disclose the DOCI Information, JHIL would contravene, or risked contravening, s 1001A(2) of the Corporations Law, as carried over into the Corporations Act; (ii) if the failure to disclose the DOCI Information was revealed, it would be harmful to JHIL's reputation, and could jeopardize market perceptions of JHIL and the Revised Separation Proposal; (b) it was necessary for the proper discharge of his duties to JHIL for Shafron: (i) to consider and satisfy himself as to whether or not the DOCI Information was required to be disclosed to the ASX; and (ii) to raise with the CEO or the board of JHIL, whether they needed to determine whether or not the DOCI Information was required to be disclosed to the ASX. 158. On 15 February 2001, when he attended the February 2001 Board Meeting, Shafron knew, or ought to have known, that: (a) The DOCI Information was not generally available; and (b) The DOCI Information was of a kind which a reasonable person would expect, if it were generally available, to have a material effect on the price or value of shares of JHIL. Particulars of 158 The particulars of paragraphs 151 and 152 are repeated. 159. In the premises, by failing to: (a) advise, the CEO or the board of JHIL that it needed to consider whether JHIL was required to disclose the DOCI Information to the ASX; (b) obtain advice for the CEO or the board or provide his own advice to the board as to whether they were required to disclose the DOCI Information to the ASX; (c) advise the CEO or the board to resolve or determine that JHIL would disclose the DOCI Information to the ASX; and [sic] Shafron: (d) failed to discharge his duties to JHlL with the degree of care and diligence that a reasonable person would exercise, if they were an officer of a corporation in JHIL's circumstances and occupied the office held by Shafron, and had the same responsibilities within the corporation, as pleaded herein; and (e) thereby breached s 180(1) of the Corporations Law, as carried over into the Corporations Act." 877 Section 1001A of the Law referred to in these paragraphs of the FFASC provided – " 1001A Continuous disclosure – listed disclosing entities (1) This section applies to a listed disclosing entity if provisions of the listing rules of a securities exchange: (a) apply to the entity; and (b) require the entity to notify the securities exchange of information about specified events or matters as they arise for the purpose of the securities exchange making that information available to a stock market conducted by the securities exchange. (2) The disclosing entity must not contravene those provisions by intentionally, recklessly or negligently failing to notify the securities exchange of information: (a) that is not generally available; and (b) that a reasonable person would expect, if it were generally available, to have a material effect on the price or value of ED securities of the entity. (3) A contravention of subsection (2) is only an offence if the failure concerned is intentional or reckless. (4) For the purposes of the application of this section to a listed disclosing entity that is an undertaking to which interests in a registered scheme relate, the obligation of the entity not to contravene provisions as mentioned in subsection (2) is an obligation of the responsible entity." 878 The relevant listing rule was ASX Listing Rule 3.1, which provided - "Once an entity is or becomes aware of any information concerning it that a reasonable person would expect to have a material effect on the price or value of the entity's securities, the entity must immediately tell ASX that information." 7.2 The contraventions found 879 The declarations of contravention against Mr Shafron were – "(1) The Second Defendant contravened s 180(1) of the Corporations Law as carried over into the Corporations Act 2001 (Cth) ( Section 180(1) ) in relation to ABN 60 Pty Ltd (formerly known as James Hardie Industries Ltd) ( JHIL ) by his conduct, as an officer of that corporation, on or about 15 February 2001 when its board of directors voted in favour of a resolution to approve a draft ASX announcement ( Draft ASX Announcement ) and authorise its execution and sending to the Australian Stock Exchange ( ASX ), in failing to advise the board that: (a) the Draft ASX Announcement was expressed in too emphatic terms concerning the adequacy of the funding made available to meet all legitimate present and future asbestos claims brought against two of JHIL's former subsidiaries Amaca Pty Ltd ( Amaca ) and Amaba Pty Ltd ( Amaba ); and (b) in that respect the Draft ASX Announcement was misleading. (2) The Second Defendant contravened Section 180(1) in relation to JHIL by his conduct, as an officer of that corporation, on or about 15 February 2001 in failing to advise its board of directors that reviews of a cash flow model ( Cash flow Model ) of the funding being made available to meet asbestos claims brought against Amaca and Amaba that had been undertaken by PricewaterhouseCoopers ( PwC ) and Access Economics: (a) were limited to reporting on the logical soundness and technical correctness of the Cash flow Model; (b) had not verified, and PwC and Access Economics had been specifically instructed not to consider, the key assumptions adopted by the Cash flow Model, being: (i) fixed investment earnings rates; (ii) litigation and management costs; and (iii) future claim costs. (3) The Second Defendant contravened Section 180(1) in relation to JHIL by his conduct, as an officer of that corporation, before and at the board meeting of 15 February 2001 in failing either to: (a) advise the Chief Executive Officer or the board of JHIL that it needed to consider whether or not JHIL was required to disclose the following information ( DOCI Information ) to the ASX, namely, that JHIL had entered into a Deed of Covenant and Indemnity pursuant to which: (i) Amaca and Amaba provided certain covenants and indemnities to JHIL in respect to its potential asbestos liabilities; (ii) JHIL agreed to pay certain amounts in exchange for those covenants and indemnities; (iii) Amaca agreed that it would acquire all the shares in JHIL if it was put to it by a sole registered shareholder of the entirety of JHIL shares; or (b) obtain advice for the Chief Executive Officer or the board, or provide his own advice to the board as to whether or not they were required to disclose the DOCI Information to the ASX; or (c) advise the Chief Executive Officer or the board to resolve or determine that JHIL would disclose the DOCI Information to the ASX; in circumstances where the second defendant knew or ought to have known that: (d) if JHIL failed to disclose the DOCI Information to the ASX it risked contravening s 1001A(2) of the Corporations Law as carried over into the Corporations Act ; and (e) if the DOCI Information was not disclosed to the ASX and JHIL had an obligation under the ASX Listing Rules to do so and that failure was revealed, it would be harmful to JHIL's interests and harm market perceptions of JHIL." 7.3 Mr Shafron as an officer 880 Section 180(1) of the Law applies to "directors or other officers" of a corporation. Mr Shafron was not a director of JHIL, and thus breach of s 180(1) could only be found if in exercising his powers and discharging his duties he was an officer of JHIL. 881 The definition of "officer" in s 9 of the Law was relevantly - " officer of a corporation means: (a) a director or secretary of the corporation; or (b) a person: (i) who makes, or participates in making, decisions that affect the whole, or a substantial part of the business of a corporation; or (ii) who has the capacity to affect significantly the corporation's financial standing; … " 882 Mr Shafron was joint company secretary of JHIL. The judge appears to have held that he was an officer both for that reason (LJ [390]-[392]) and because he participated in making decisions affecting the whole or a substantial part of JHIL's business (LJ [386]-[389], [393]), although in the reasons we next set out there appears to be some conflation. 883 The judge said, after setting out at LJ [377]-[385] a number of things Mr Shafron had done towards and in putting Project Green before the board - "386 In Commissioner for Corporate Affairs v Bracht [1989] VR 821, Ormiston J considered a provision that operated upon a person who was concerned in, or took part in, the management of a corporation. In Vines [ Australian Securities and Investments Commission v Vines (2006) ACSR 617; [2005] NSWSC 738] at first instance the relevant definition was of an ' executive officer' defined similarly as: 'a person, by whatever name called and whether or not a director of the body or entity, who is concerned, or takes part, in the management of the body or entity'. The current definition of an "officer" of a corporation in s 9 of the Corporations Act includes a director or secretary of the corporation and, relevantly for present purposes: 'a person who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the corporation.' 387 It was submitted that the current definition is vastly different from the definitions considered in Bracht and Vines . It was submitted that to be concerned in the management of a company is a much wider concept than making, or participating in the making, of a far-reaching decision. I doubt this is so. As Jacobson J said in Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Limited [2007] FCA 963 at [490]: 'The language of subparas (b)(i) and (b)(ii) of the definition of "officer" corresponds, in large measure, with Ormiston J's description of the concept of management. What emerges from this is that an officer is involved in policy making and decisions that affect the whole or a substantial part of the business of the corporation.' 388 To participate in making decisions that affect the whole or a substantial part of the business of a company is, to my mind, the same as taking part in the relevant process. Ormiston J considered the degree of participation required by the section with which he was concerned and said at 831: 'Taking first the expression "take part in", it is unnecessary to say more, in construing such simple words, than that it both connotes and proscribes the active participation of a prohibited person in the management of a corporation: cf Marshall v British Broadcasting Corporation [1979] 1 WLR 1071 at 1073-4. Such participation would have to be real and direct, but not necessarily in a role in which ultimate control is exercised, although it would have to be more than the administrative carrying out of the orders of others responsible for a company's management.' 389 In my view that approach is apposite with respect to the current definition for, if the making, or participation in the making, of decisions affecting the whole or a substantial part of the business of the corporation was restricted to those in ultimate control, there would be no point in extending the definition beyond a director. 390 It was submitted that the words 'and have the same responsibilities within the corporation' in Section 180(1) were limited to the responsibilities of the particular office and not every responsibility that officer had within the company. 391 I reject that construction. As was pointed out, the functions performed by a company secretary of one company may differ considerably from those performed by company secretary in another as Barrett J said in Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2008] NSWSC 657 at [10]: 'The corporations legislation envisages certain functions for company secretaries. One would readily infer that any company secretary had authority commensurate with those functions. Beyond that, however, one cannot make any assumptions about the authority of a particular company secretary in a particular context.' 392 The words 'and have the same responsibilities within the corporation' in Section 180(1) ensures that all the responsibilities of a person occupying the office of director or secretary or other person are within the scope of the duty of care and diligence. 393 The functions performed by Mr Shafron involved him in participating in the making of decisions that affected the whole or substantial part of the business of JHIL. The Separation Proposal considered by the board of directors of JHIL at the 15 February 2001 Meeting was such a decision. And Mr Shafron played a vital role in the board's deliberations thereby participating in the making of that decision." 884 Mr Shafron was also general counsel, and in substance submitted that he was relevantly acting as such rather than as company secretary. ASIC submitted that he was an officer on two bases; that he was company secretary, with the additional role of general counsel being part of his "responsibilities within the corporation" as referred to in s 180(1)(b) of the Law and thus within his powers and duties; and, that he was a person who made or participated in making decisions that affected the whole or a substantial part of the business of JHIL. Mr Shafron challenged both bases. 7.3.1 Participation in decisions 885 It is convenient to deal with this basis first. Mr Shafron accepted that the separation proposal before the board at the February meeting was a matter that "affected the whole or a substantial part of the business of JHIL". He submitted that he did not make or participate in making any relevant decision. 886 We have difficulty with the judge's apparent equation of participating in making decisions which affect the whole or a substantial part of the business of a company, with being concerned or taking part in the management of a company; and thus with his reliance on Commissioner for Corporate Affairs v Bracht (1989) VR 821. The statutory formulation considered in that case was quite different from that presently in question. Being concerned or taking part in management may not reach the heights of decisions affecting the whole or a substantial part of the company's business. 887 It is necessary to focus on the statutory text and cases on differently expressed predecessor provisions must be approached with care. The problem has arisen because of the way the legislature adopted the terminology from the reasoning of Ormiston J in Commissioner for Corporate Affairs v Bracht and incorporated it in the new definition. In Commissioner for Corporate Affairs v Bracht his Honour was concerned with s 227(1) of the Companies (Victoria) Code which prohibited an insolvent person from acting as a director or promoter from being concerned in "the management of a corporation". His Honour defined "management" as "activities which involve policy and decision-making … affecting the corporation as a whole or a substantial part of that corporation". He went on to include in that conception reference to the "financial standing of the corporation", which is adopted as a separate criteria in the legislative scheme presently under consideration. Notwithstanding the provenance of the current statutory formulation, it is necessary to focus on the words in the definition of "officer" rather than deploying the terminology of "management". 888 However, the judge's reliance came down to the proposition in LJ [389], that the participation need not be as one of "those in ultimate control". That is correct. In re HIH Insurance Ltd (in prov liq.); Australian Securities and Investments Commission v Adler, for example, Mr Adler's participation in making investment decisions as a member of the investment committee sufficed, although the committee was subject to the direction and control of the board (see at [73]). The reasoning of Santow J was accepted by Jacobson J in Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Ltd (No 4) [2007] FCA 963. 889 Mr Shafron was the second or third most senior executive of JHIL, reporting directly to Mr Macdonald. The judge said, in the liability judgment, and there were more detailed particulars revealed in the evidence - "379 Mr Shafron reviewed extensive material concerning Project Green. In February 2000 he presented and spoke to a paper entitled " Asbestos Board Paper ". He spoke to the " Big Picture Options " and addressed strategic options for addressing the James Hardie group asbestos exposure as part of Project Green. In April 2000, Mr Shafron presented a paper entitled " Asbestos Resolution including Stakeholder Issues ". He presented that part of the slide presentation concerning asbestos resolution and Project Green. 380 Mr Shafron provided a legal memorandum to the board as part of the June 2000 between meetings board papers advising on confidentiality in relation to Project Green. The memorandum enclosed a standard memorandum to directors and officers on corporate information and statutory rights updated to take account of recent amendments. The document summarised the provisions of the Corporations Law concerning improper use of information, market manipulation and the publishing of false or misleading statements including a reference to Section 999. 381 At the August 2000 board meeting Mr Shafron made a detailed presentation in relation to asbestos related issues concerning Project Green. In the October 2000 between meetings board papers there was a memorandum from Mr Shafron to Mr Macdonald in which Mr Shafron provided legal advice as to whether or not JHIL was obliged by the continuous disclosure rules to inform the ASX of Trowbridge's estimate of total asbestos liabilities. 382 At the board meeting of November 2000, Mr Peter Cameron and Mr Shafron outlined legal issues surrounding the proposed restructure as part of the discussion on Project Green. At the November 2000 board meeting a slide presentation concerning the latest proposals in relation to Project Green was shown. Part of the presentation addressed the question whether any explanatory statement would need to be lodged in relation to the proposed restructure. Mr Morley said that Mr Shafron together with persons from Allens and possibly UBS addressed this matter. 383 At the January 2001 board meeting, Mr Shafron reported on a meeting with potential trust directors and together with Mr Peter Cameron and Mr Robb discussed legal issues and risks associated with the trust concept. Mr Shafron presented part of the slide presentation at that meeting that addressed the proposed trust structure. Mr Morley's handwritten notes indicated that Mr Shafron addressed a number of slides dealing with the ability of JHIL directors to provide more funds to Coy and Jsekarb, the ongoing asbestos risk to JHIL, the post-trust post-Green options for JHIL and the key risks from the Separation Proposal part of which addressed stakeholder reaction. 384 Mr Shafron presented the slide presentation at the 15 February 2001 Meeting, in so far as it addressed Trowbridge analysis. 385 It was Mr Shafron who retained the actuaries engaged by JHIL. He assisted Mr Macdonald in drafting board papers and he assisted Mr Macdonald in the planning and implementation of Separation Proposals." 890 We refer below to Mr Shafron's involvement with the cash flow modelling. 891 Mr Shafron submitted that the judge was in error in equating participation in making a decision with "taking part in the relevant process" (LJ [388]). He submitted that he had not taken part, or participated, in making a decision. He said that he had no power to make a decision, and did not purport to do so; rather he gave advice and assistance, upon request from those who made the decision. Even accepting that he did not have to exercise "ultimate control", it was said, what was absent was any part in making a decision, as distinct from the process of making a decision. The touchstone was said to be whether the putative officer did more than provide material for the consideration of the decision-makers. 892 As ASIC submitted, a limited view of participation in making decisions would be at odds with the Act's identification of participation in making decisions as a basis for officership, a basis additional to being a director or secretary and in particular additional to making decisions. Once decision-making as an ultimate controller is put aside, it is a question of fact and degree. It would also be odd if directors could escape liability for negligent decisions because of reliance on senior management, but senior management could escape liability because they did not make or participate in making the decisions. The correct position, ASIC submitted, was that decision-making was a deliberative process in which management developed, presented and promoted proposals for board decision, as participants in the decision-making. 893 We do not think it useful to inject language of process into the statutory language. The definition refers to participation in making decisions of a particular character. It does not prescribe that the decisions are made by the board, and it may be that a management decision to present a highly significant proposal will suffice; but wherever the decisions be found, the test is participation in their making. Participation is more than administrative arrangement, and there must be a real contribution from the postulated participation to the making of the decisions, but beyond that it is a question of fact. 894 Even by the touchstone suggested by Mr Shafron, we think he participated in decisions of the requisite character. He was part of the Project Green team, and of its promotion of the separation proposal to the board. Participation in decisions may involve some frequency or repetition, which there was. The evidence particularly addressed the separation proposal, and Mr Shafron's participation as seen in the lead-up to the February meeting and as noted by the judge at LJ [379]-[385] set out above extended over a long period and was significant in the consideration of that highly important matter. He had more general participation, an incident of which can be seen in Mr Baxter's evidence that significant announcements required his approval, which would not have been a matter of form. Apart from his role in connection with actuarial information provided to the board, perusal of the minutes of board meetings from mid-1998 shows frequent reporting on asbestos litigation and risk management, and occasions such as authority to finalise the terms of an agreement with JHNV and (together with others) authority to negotiate and execute and underwriting agreement in connection with Project Chelsea. 895 In our opinion, what Mr Shafron did went well beyond administrative arrangement, and well beyond providing advice or information as required, and is correctly described as participation in decisions affecting the whole or a substantial part of JHIL's business. 896 We do not accept the suggestion, in Mr Shafron's submissions, that such a conclusion would unduly open the floodgates to management or advisers being officers within the definition. And it should not be forgotten that satisfaction of the definition only gives statutory status. It may be that a person participates in making decisions even if counselling against them; but if so, the participation will only satisfy the status of an officer as defined, and the person's dissent is likely to mean that he or she is not in breach of s 180(1). 897 It is a reality of corporate life that board and other important decisions involve many persons other than the ultimate decision-makers. Just as s 9(b)(ii) of the Law recognised the reality that a person may have "the capacity to affect significantly the corporation's financial standing", that being sufficient for the status of an officer as defined, so s 9(b)(i) recognised the reality of participation in decision-making. But it required participation in making decisions affecting the whole or a substantial part of company's business. 898 In our opinion, on this basis Mr Shafron was an officer of JHIL in relation to his conduct at the February meeting. 7.3.2 Company secretary 899 The scope of the office of company secretary in any particular corporation is a question of fact: Tim Barr Pty Ltd v Nauri Gold Coast Pty Ltd [2008] NSWSC 657 at [10]-[12]; Dr Andrew Roberts-Szudzinski Pty Ltd v .au Domain Administration Ltd [2006] NSWSC 950 at [29]). The days when a company secretary was "a mere servant [whose] position is that he is to do what he is told" (Barnett, Hoares & Co v South London Tramways Co (1887) 18 QBD 815 at 817 per Lord Esher MR) are long gone, and in Minlabs Pty Ltd v Assaycorp Pty Ltd [2001] WASC 88; (2001) 37 ACSR 509 at [55] a company secretary was described, on the facts of that case, as "a senior executive officer". Company secretaries have frequently been held to occupy positions of management seniority carrying fiduciary duties to the company. 900 ASIC relied on Australian Securities and Investments Commission v Rich [2003] NSWSC 85, (2003) 44 ACSR 341 at [49]-[50]. Austin J said, referring to use of the words "had the same responsibilities within the corporation" in s 180(1)(b) - "49 This suggests that the word "responsibilities" was intended to direct attention to the factual arrangements operating within the company and affecting the director in question - as opposed to the legal duty of care, implying specific legal duties in particular circumstances. The content of those specific duties would be affected by the factual matters specified by the section, relating to the corporation's circumstances, the nature of the director's office, and the director's responsibilities. The director's responsibilities would include arrangements flowing from the experience and skills that the director brought to his or her office, and also any arrangements within the board or between the director and executive management affecting the work that the director would be expected to carry out. The precise duty of care flowing from these arrangements would be subject, of course, to a minimum standard of care and diligence set by the statute in reflection of the common law position. 50 Therefore, it is in my opinion incorrect to say, as counsel for Mr Greaves did, that the word "responsibilities" refers only to specific tasks delegated to the relevant director, through the articles or by resolution or otherwise. It is a wider concept, referring to the acquisition of responsibilities not only through specific delegation but also through the way in which work is distributed within the corporation in fact, and the expectations placed by those arrangements on the shoulders of the individual director. In my opinion the Commission's pleading is consistent with and reflects this concept. Mr Greaves' qualifications, experience and expertise, and his occupation of the position of "foundation" director, chairman and chairman of the Finance and Audit Committee, are all matters that may make up or contribute to the responsibilities within the corporation that Mr Greaves had (regardless of whether the chairmanship and committee chairmanship were "offices" for the purposes of the first part of s 180(1)(b))." 901 Austin J was there dealing with a submission to the effect that the word "responsibilities" in s 180(1)(b) referred to specific tasks delegated to the relevant director. His Honour subsequently applied the same reasoning in a general review of the statutory elements of the s 180(1) duty (see Australian Securities Investments Commission v Rich at [7201]-[7202]). 902 The part of the reasoning upon which ASIC relied was his Honour's characterisation of the relevant "responsibilities" within s 180(1)(b) as extending to responsibilities acquired: "through the way in which work is distributed within the corporation in fact and the expectations placed by those arrangements on the shoulders of the individual director". 903 Writing after his retirement from the bench, the Honourable Robert Austin and his co-author Mr Ashley Black said - "As to s 180(1)(b), the wording of s 180(1) does not set the statutory standard of care and diligence by reference to a reasonable person occupying an office that is merely of the same kind as was occupied by the defendant (for example, a person occupying the position of chief financial officer if the defendant was the company's chief financial officer). Instead, the section refers to a reasonable person occupying the very office held by the defendant. The responsibilities of the defendant's office therefore include any particular arrangements that might alter the usual responsibilities attaching to an office of that kind … For example, the evidence might show that the defendant, though appointed chief financial officer, did not have some of the usual responsibilities of a CFO and had some additional responsibilities not usually possessed by the holder of that office – say, for responsibility for corporate tax planning – but no responsibility for the company's treasury operations because of the appointment of a corporate treasury accountable to the CEO. The personal, subjective characteristics of the defendant, relating to such things as qualifications, expertise and experience, are not relevant, per se, to a statutory standard of care and diligence. But it appears, from the language and history of the provision, that those personal characteristics may come to be relevant to the determination of that defendant's responsibilities, and hence the statutory standard, if the evidence shows that they have been taken into account by the company in allocating responsibilities to the defendant. For example, a person appointed to an expert position as a non-director executive officer (say, an actuary or mining engineer appointed to an executive position) may, pursuant to his or her contract of service, have special responsibilities related to the professional expertise that led to that appointment." ( Austin & Black's Annotations to the Corporations Act LexisNexis, Butterworths, Australia, 2010, vol 1, [2D.180] at p 25,103.)" 904 Save in one respect, we agree with this analysis. It requires qualification because a person appointed to an executive position may or may not satisfy the statutory concept of an "officer" as defined in s 9 of the Act. However, that qualification is not pertinent to the present case because a "secretary" is separately identified as an officer in that definition. 905 Two issues arise. First, whether the statutory duty extends, as a matter of statutory interpretation, to any matter which falls within the scope of the responsibilities given to a company secretary, as a matter of fact, in the particular corporation. Secondly, even if the answer to the first question is "No", whether the act or omissions which could be said to flow from Mr Shafron's additional title as "general counsel" are not such as to fall within the scope of responsibilities of the person holding an office of secretary. 906 From the time Mr Shafron moved to the United States, and a co-secretary was appointed, it appears that a number of the administrative duties of the company secretary were, as a matter of fact in the circumstances of this corporation, removed from his responsibilities. However, he retained responsibilities additional to those which may traditionally have been undertaken by a company secretary and which could, in a different corporate context, be undertaken by a person who was denoted as "general counsel" without being appointed a secretary. 907 The words in s 180(1)(b) which fall for interpretation are part of the terminology inserted into the Act for purposes of clarifying the fact that what is involved is an objective test: see the discussion of the history of the legislation by Austin J in Australian Securities and Investments Commission v Rich esp at [34], [40]-[48], which immediately precede pars [49]-[50] that we have quoted at [900] above. 908 In our opinion, in the context of identifying the relevant incidents of an objective standard of care and diligence, the reference to "in the corporation's circumstances" in para (a) and the reference to "the same responsibilities" in para (b) are directed to the scope and range of responsibilities actually carried out by the director or officer whose conduct is in issue. That may involve fewer, as well as additional, responsibilities to those that may traditionally have been exercised by a person holding the relevant office. 909 Our conclusion that the focus is on the responsibilities in fact conferred on a particular officer is reinforced by the very words imposing the duty which are, to repeat with emphasis - "A director or other officer of a corporation must exercise their powers and discharge their duties …". 910 The use of the word "their" on two occasions directs attention to the particular officer's role in the corporation. 911 Parliament did not, in our opinion, intend to apply the statutory duty to the powers and duties of the office in any abstract way. Parliament did not, in our opinion, intend the scope of the statutory provision to be determined in accordance with what will often be an artificial process of separating tasks performed in the capacity of an office as such, from tasks performed in fact by a person who holds a particular office. 912 Pursuant to s 185 of the Act, the statutory duty under s 180(1) operates in parallel with any common law duty. Although the common law and statutory duties may not be precisely equivalent, nevertheless the fact that a person may be liable for contravention of the common law duty of care and diligence suggests that a narrow reading of the concept of "responsibilities within the corporation" is not appropriate. Indeed, the very overlap, even if not precise, confirms the proposition that the statutory provision is similarly directed to the actual responsibilities carried out by the relevant person. 913 Common law duties are not subject to any process of attributing a particular function to a particular office. The identification of what functions are within the scope of a specific office, whether a director or secretary, is inherently difficult. It is unlikely that the legislature intended such a task to be required where the very same Act affirmed the existence of parallel duties at common law. 914 Section 180(1) applies to a person who is appointed a director and should apply in the same way as it does to a person appointed as a secretary. The scope and range of responsibilities undertaken by a director are more wide-ranging than those usually associated with the office of company secretary. 915 The management of the company is conferred upon the directors acting collectively (see s 198A of the Act). However, it will often be the case that an individual director gets involved in particular matters outside the context of a board meeting and outside any formal delegation. The same is true of a company secretary. 916 Any of the powers of the directors collectively can be conferred on a managing director (s 198C). Furthermore, subject to the formulation, ex ante, of the beliefs as to the manner in which a delegate would exercise any such powers (see s 190), the directors can delegate any of their powers to a committee of directors, to a single director or even to an employee or any other person, pursuant to s 198B. These provisions confirm, in our opinion, the conclusion that a person occupying the office of a "director" can have both fewer and greater responsibilities than may usually be the case. We can see no reason why a person occupying the office of a "secretary" should be in a different position for purposes of s 180(1). 917 Even if the above analysis is wrong, those aspects of the duties said to be those of a general counsel, which are in issue in the present proceedings, are well within the kind of duties that are encompassed within the duties of a company secretary. We refer to the draft ASX announcement, the cash flow analysis and the DOCI Information. 918 The position is clearest with respect to the draft ASX announcement and the DOCI Information. Notices to be filed on behalf of a company are within the traditional range of responsibilities of a company secretary. The fact that the relevant notices arise pursuant to the Listing Rules, enforced by the Act, rather than by direct obligations imposed directly by the Act, is not a material difference. 919 The kinds of notices which a secretary is required to ensure are made included, at the relevant time - Notice of the address of the company's registered office (s 142) Notice of the opening hours at the company's registered office (s 145) Lodgement of annual reports (s 345) Notice of a director or secretary's personal details and notice when a person ceases being a director (s 205B). 920 A contravention by the company of these sections was deemed to be a contravention by the secretary by s 188 of the Act. However, beyond express statutory requirements, the filing of notices by the company would properly fall within a secretary's role, including: Notifying ASIC of the retirement or resignation of a director or secretary (s 205A) Lodgement of material that is to be put for approval by the members (s 218) Notice of variations in the rights of members (s 246F) Notice of issue of shares (s 254X) Lodgement of financial reports (s 319(1)). 921 The filing of a notice pursuant to the continuous disclosure obligations under Listing Rule 3.1, as enforced by s 1001A of the Act, together with enforcement of the accuracy of the contents of any such document by s 999 of the Act, is well within the scope of a secretary's responsibilities. The position of the information concerning the cash flow model is different. 922 Mr Shafron was a qualified legal practitioner with a Bachelor of Arts degree from the Australian National University and Bachelor and Master of Law degrees from the University of Sydney. He was admitted to practice in Australia and in California, and was an associate with Allens prior to joining JHIL. 923 The first employment contract to which we were taken was dated 2 August 1998. The employment was with JHIL. Mr Shafron was "employed … in the position of General Counsel and Company Secretary" (cl 3.1). His duties were to "include those typically associated with the position which You fill or the duties You perform including those duties set out in your delegation agreement" (cl 3.2). We were not taken to any delegation agreement, and there does not appear to be one in evidence. 924 A second employment contract dated 28 August 1998 provided for the secondment of Mr Shafron to James Hardie (USA) Inc for approximately three years, to work in the management team where "the main focus will be on its US operations" (cl 4.1). He was "[i]nitially [to] serve as General Counsel and Company Secretary in Mission Viejo, California" (ibid). The contract provided that Mr Shafron's duties "will be as set out in an appropriate Delegation Agreement" (cl 4.3). Again, there does not appear to be such an agreement in evidence. It was not suggested that, because of the secondment, Mr Shafron ceased to be company secretary and general counsel of JHIL. 925 The employment agreements are not particularly illuminating, although they suggest that the duties of company secretary and general counsel were close and that it may be artificial to separate out from one role another discrete role. 926 It was submitted, although we were not referred to evidence in this regard, that Mr Shafron's responsibilities as company secretary were, like Mr Donald Cameron's, purely administrative, and did not extend to protecting JHIL from legal risk. We do not think that restriction can be accepted. A company secretary with legal background would be expected to raise issues such as potential misleading statements (in relation to the Draft ASX Announcement) and disclosure obligations (in relation to the DOCI) with the board. Ordinarily it might not be the same with respect to a matter such as the JHIL cash flow modelling, which required particular expertise. But Mr Shafron had a quite close involvement with the cash flow modelling, and raising the limitations of the cash flow model is by no means a legal matter for the attention of general counsel; the involvement, and raising the limitations, in our view fell within Mr Shafron's responsibilities as company secretary. 927 To illustrate the lastmentioned involvement – Mr Harman said that he was requested to undertake the cash flow modelling by "the Project Green team", of which Mr Shafron was a member; Mr Morley gave evidence that he did not ask Mr Harman to do this (of course, Mr Morley was later deeply involved) and that he proceeded on the basis that Mr Harman constructed the model on his own initiative to assist those working on Project Green; Mr Shafron was responsible for obtaining the Trowbridge estimates used for the model (although no doubt one reason was concern for client legal privilege), and had given presentations on the estimates and initiated the updating after the Watson and Hurst study; Mr Shafron was at the meeting with Mr Loosley and Mr Pigott of PwC on 9 February 2001; Mr Shafron e-mailed Mr Harman in relation to review by PwC and Access Economics, saying, "Get these guys to bless your model"; Mr Shafron was a recipient of Mr Ashe's "suggested report wording"; On 14 February 2001 Mr Shafron attended a meeting with the proposed directors of the Foundation, where there was mention of the reviews by PwC and Access Economics; Also on 14 February 2001, Mr Shafron attended a meeting of JHIL's audit committee, at which according to the minutes - "The Committee noted the papers relating to the Foundation contained in the Board papers, Messrs PG Morley and SE Harman explained the financial model underpinning the funding of the Foundation. Directors asked questions in relation to the assumptions used in the model. Mr SJ McClintock [of PwC] confirmed that PricewaterhouseCoopers was satisfied that, following establishment of the Foundation, it was necessary to de-consolidate James Hardie & Coy Pty Limited and Jsekarb Pty Limited." 928 Mr Shafron may not have had familiarity with and expertise in the mathematical detail, but should and must have given attention to what the modelling showed for sufficiency of funding, and to the outcomes according to the data and assumptions and their uncertainty. This was not obviously something for a person holding the position of general counsel, but was in fact within Mr Shafron's responsibilities. 929 In our opinion, in doing what according to the contraventions found by the judge he failed to do, Mr Shafron was acting within his responsibilities as company secretary. His role as general counsel does not detract from this. In relation to the contraventions found against him, he was exercising powers and discharging duties as company secretary, and so was an officer, and the reasonable person would have Mr Shafron's responsibilities in those respects. 7.4 Consideration of contravention 930 We deal separately with the Draft ASX Announcement, the cash flow analysis and the DOCI. 7.4.1 The Draft ASX Announcement 931 The contravention found depended on the board having considered the Draft ASX Announcement for approval as an ASX announcement. This was not as a matter of pleading, but from the way the proceedings were conducted, it seems reflected in the preamble to the declaration. At trial ASIC's submissions included that the contravention in para 106(b)(iii) of the FFASC was "predicated on the draft ASX announcement being considered by the board". In Mr Shafron's submissions on appeal it was said that a ground of appeal challenging his failure to advise that the Draft ASX Announcement was in too emphatic terms was relevant only if this Court was satisfied that the announcement was tabled and approved at the February meeting. ASIC's submissions on appeal said nothing to the contrary. A declaration of contravention dependent on that consideration of the draft news release also can not stand, and must be set aside. 932 As before, we think we should address whether Mr Shafron exercised the care and diligence required by s 180(1) on the assumption that the Draft ASX Announcement Resolution was passed. 933 In the liability judgment the judge said of Mr Shafron's position, his observations being applicable to his position quite apart from being general counsel - "394 As general counsel protecting JHIL from infringement of statutory obligations, it must have been obvious to Mr Shafron on 15 February 2001, or at least it ought to have been, that if JHIL authorised the release of a public statement concerning separation that was false and misleading that would be harmful, or potentially harmful, to JHIL in that it might contravene or risk contravening Section 995(2) and Section 999. Guarding against legal risks to JHIL was at the core of Mr Shafron's responsibilities as general counsel. 395 Mr Shafron must also have realised on 15 February 2001 that if JHIL published a false or misleading statement and its falsity or misleading aspect was exposed, that would be harmful to JHIL's reputation and jeopardise market perceptions of it. 396 There had been a continuous flow of communications strategies papers in the board packs that highlighted the importance of market and stakeholder perception. Communications strategies were contained in the April 2000 Project Green board paper; in the presentation at the April 2000 board meeting; in the presentation at the August 2000 board meeting; in the presentation at the November 2000 board meeting; in an announcement "strategy and tactics" document sent to Mr Shafron amongst others by Mr Baxter in January 2001; in the January 2001 board papers; in the presentation at the January 2001 board meeting; in Mr Macdonald's review of communications strategy for the February 2001 board papers; in discussion with Mr Loosley on 9 February 2001; in the communications strategy for the 15 February 2001 Meeting; and in the presentation at that meeting. 397 Mr Shafron knew or ought to have known that there was significant public and market interest, especially from asbestos sufferers and those who represented them, in any communications concerning the adequacy of funding made available for Asbestos Claims. The material advised that a successful communications strategy was essential to the achievement of any separation and central to that was the need to convince stakeholders that there were sufficient assets available to meet Asbestos Claims." 934 As to the Draft ASX Announcement, the judge said – "399 The second allegation against Mr Shafron is that he failed to advise the board that the Draft ASX Announcement was expressed in too emphatic terms concerning the adequacy of Coy and Jsekarb's funding to meet all legitimate present and future Asbestos Claims. 400 As with Mr Macdonald, it must have been obvious to Mr Shafron on 15 February 2001, or at least it ought to have been, that in using unequivocal and unqualified statements in the Draft ASX Announcement it was too emphatic and was false and misleading. 401 It was said in Mr Shafron' behalf [sic] that he owed no duty to warn the board because any reasonable director who considered the draft ASX announcement would have appreciated that it was expressed in too emphatic terms and that it was false and misleading. 402 But Mr Shafron had a duty to protect JHIL from legal risk and if the directors were minded to approve the release of the Draft ASX Announcement in its false and misleading form, there was the danger that JHIL would be in breach of Section 995(2) and Section 999. Against that harm it was his duty to warn the directors that the Draft ASX Announcement should not be released in its too emphatic form. The factors of the cash flow model that should have alerted the non-executive directors and Mr Macdonald that the excessive statements in the draft ASX announcement should not be made should have alerted Mr Shafron also. 403 It was submitted that the directors had been informed repeatedly that the Trowbridge estimates were subject to qualifications, limitations and uncertainty and it was unnecessary for Mr Shafron to warn them about the too emphatic language in the draft ASX announcement. 404 But that did not relieve Mr Shafron from his duty to protect JHIL from legal risk. The directors approved the release of the Draft ASX Announcement. Mr Shafron should have warned them that by doing so they put JHIL in jeopardy. He did not do so. 405 A reasonable person, if an officer of a corporation in JHIL's circumstances who occupied the office of secretary and general counsel and had the same responsibilities within the corporation [sic], would have advised the board that the Draft ASX Announcement was expressed in too emphatic terms concerning the adequacy of Coy and Jsekarb's funding to meet all legitimate present and future Asbestos Claims and in that respect it was false or misleading. 406 Mr Shafron failed to discharge his duties to JHIL with the degree of care and diligence that a reasonable person would exercise, if he or she were an officer of a corporation in JHIL's circumstances and occupied the office of secretary and general counsel, and had the same responsibilities within the corporation, by failing to advise the board that the draft ASX announcement was expressed in too emphatic terms concerning the adequacy of Coy and Jsekarb's funding to meet all legitimate present and future Asbestos Claims and in that respect it was false or misleading. Those failures constituted breaches of Section 180(1) . " 935 These paragraphs reflected the judge's attachment of Mr Shafron's responsibilities as general counsel to his responsibilities as secretary. We prefer not to speak of his "duty to warn the board". The test is that of the reasonable person as described in paras (a) and (b) of s 9, exercising care and diligence in exercising the powers and discharging the duties of the officer. 936 Mr Shafron submitted that the proper discharge of his duties in the circumstances did not require him to tell directors "what they already knew"; particularly when he had already provided information and advice sufficient to enable a reasonable director to understand the relevant issues. He said that any reasonable director who had considered the Draft ASX Announcement would have appreciated that it was expressed in too emphatic terms and that it was false and misleading, and that the board had been informed repeatedly that the Trowbridge estimates were subject to qualifications, limitations and uncertainty. He had said at the meeting in his Trowbridge presentation that the same "basic assumptions" remained, so that it would have been obvious that any representation as to funding had to be "appropriately qualified". 937 The judge did find (at LJ [303]) that the non-exeuctive directors must have realised that unqualified statements that there were sufficient funds in the Foundation to cover all legitimate asbestos claims could not be made, see [951] below. 938 Mr Shafron relied on what was said to be evidence of Mr Brown and Mr Gillfillan that it would have been "impudent and inappropriate" for him to have "stated the obvious" during the February meeting. That was not their evidence. They agreed in cross-examination that it would have been unusual, and not required of a reasonable person in Mr Shafron's position, to quiz whether they were "sufficiently sure of the material before them to make the decision in favour of the Foundation and the top-up" (Mr Brown); and that they would not expect and would regard it as inappropriate for Mr Shafron to ask if they were sure they had "read all the papers" and did not expect Mr Shafron as part of his job to ask whether they had had "formed the opinion of the adequacy of the Foundation", and it would have been "socially inappropriate" for him to have done so (Mr Gillfillan). The submission omitted reference to the immediately following evidence of Mr Gillfillan - "Q. You didn't need Mr Shafron to advise you during that meeting to be careful about announcements being in too emphatic terms, did you? A. I would have relied on Mr Shafron to make sure that any press releases that went out had the proper checking either by management or by outside advisers." 939 Mr Shafron also relied on evidence of Messrs Gillfillan, Koffel and Willcox to which we have already referred, to the effect that they would not have approved the Draft ASX Announcement or would have required qualifications to it because of its unqualified terms. If the announcement was approved, as is our present assumption, that goes nowhere. 940 We agree with the conclusion to which the judge came. 941 In the judge's words, Mr Shafron had "assisted Mr Macdonald in drafting board papers and … in the planning and implementation of the Separation Proposals" (LJ [385]), and he gave the slide presentation on Trowbridge matters at the February meeting. He had the acquaintance with the cash flow modelling earlier described. 942 Putting aside whether Mr Baxter had sent the 7.28 pm draft news release to him (see [200]-[201] above), Mr Shafron was well aware of a draft news release, and on 14 February 2001 had e-mailed Mr Baxter that "we really should get express permission from our experts before mentioning them publicly" and said that if Trowbridge was to be mentioned he wanted to know what was to be said and he would "try to clear it with" Trowbridge. 943 Mr Baxter had replied - "you will get to see all the documents to be released and this will be the final form of approval we need – if we can find out in advance what they are prepared for us to say that might save time later broadly we expect to refer to people like Trowbridge, Access etc as having reviewed and verified the legitimacy of our modelling/projections on which we determined the quantum of assets transferred to the foundation. this was an important point for the govt yesterday so I would be potentially very uncomfortable if we were not able to reference the experts in a reasonably unequivocal fashion". 944 Mr Shafron had responded that he understood, but questioning the proposed language; he said that Mr Ashe "should talk to you about Access or PwC". Thus his interest included the terms of the draft news release, at least in its explanation of the basis for determining the level of funding. 945 The February meeting was not a general consideration of restructuring. It was the occasion for a decision upon establishing the Foundation. On the assumption we have made, that included approval of an ASX announcement, prominent in which was sufficiency of funding. On our assumption, the draft news release was distributed and discussed, including as an announcement to be sent to the ASX. 946 Sending the announcement was administratively a matter for Mr Shafron, perhaps by instruction to others. But with long involvement in Project Green, and with at least the interest abovementioned in the draft news release, he was in a position to engage with and in the discussion. He was privy, and spoke to, the revised Trowbridge material, and had an acquaintance with the cash flow modelling, both new to the board. We do not think the reasonable person with his responsibilities would have stood by if it appeared that the directors were minded to approve a misleading ASX announcement. 947 Mr Shafron's submissions, in our view, are off the point. If the directors should have appreciated, because it was obvious, that the Draft ASX Announcement was expressed in too emphatic terms, by approving it they either failed nonetheless to appreciate that position or proceeded regardless of their appreciation. In either case, the circumstances of JHIL included, in brief, that making such an obviously misleading announcement was likely to be highly detrimental to it. The reasonable person with Mr Shafron's responsibilities, in our view, would have raised with the board that which on Mr Shafron's submissions was so obvious, but was either not appreciated or was being ignored by the board. He or she would have done so because it appeared that such an important matter was not appreciated, or was being ignored. 948 Mr Shafron also submitted that Allens was retained to advise "on all aspects of establishment of the Foundation", and that representatives of Allens and UBS were at the meeting and "had the opportunity to advise and respond to any questions the directors had in relation to the establishment of the Foundation and any public announcements". Similar submissions were made in relation to disclosure of the DOCI. We there observe that there is no basis on which we can properly infer that he relied on the silence of Allens, and the same goes for the silence of UBS. In any event, the silence of Allens or UBS did not relieve the reasonable person with Mr Shafron's responsibilities from himself or herself raising the over-emphasis in the announcement. 7.4.2 The cash flow analysis 949 Neither as a matter of pleading nor in the declaration of contravention was the contravention dependent on the board having passed the Draft ASX Announcement Resolution. Mr Shafron's written submissions did not assert dependency on tabling and approval of the Draft ASX Announcement, as they had in relation to the contravention concerning too emphatic terms. A passing reference in oral submissions may have suggested dependency, but ASIC expressly said that the contravention would remain if the Draft ASX Announcement was not approved and this was not controverted. If it was suggested, we do not agree, because the limited nature of the reviews by PwC and Access Economics was relevant to the decision to establish the Foundation, and there could be contravention even if the board did not consider the draft news release for approval as an ASX announcement. However, if the draft news release was before the board for approval, occasion for making known the limited nature of the reviews could be increased, and so the occasion for Mr Shafron to speak would be material to breach of s 180(1). 950 We have referred to the slide on "JH Modelling", see [173] above. The judge described at LJ [277], [285]-[302] Mr Morley's evidence of taking the board through the cash flow model in the course of addressing the slide. In relation to the final bullet point in the slide, "Analysis reviewed by PwC and Access Economics", Mr Morley referred to the reviews by PwC and Access Economics. There were differing recollections, but the judge accepted that Mr Morley said, "The Model has been reviewed by PwC and Access Economics and they have found it to be logically sound and technically correct". He did not elaborate on the reviews, and Mr Morley said that he "did not say that PwC and/or Access Economics had reviewed or signed off on the assumptions used in the model". 951 The judge found that, notwithstanding that Mr Macdonald had said that the model showed that a surplus was the most likely outcome (see the second bullet point in the slide) and Mr Morley had said that it had been found to be logically sound and technically correct, the non-executive directors must have realised that unqualified statements that there were sufficient funds in the Foundation to cover all legitimate asbestos claims could not be made: LJ [303]. He said - "303 … The likely outcome was dependent upon an average investment earning of 11.7%. If the earning rate dropped by but 1% the money ran out before year 25. If the high scenario of Trowbridge was used instead of the best estimate, the money ran out before year 20 at the 11.7% rate used in the model. 304 Every two years that Trowbridge had provided a report, its estimate of the total liability under Asbestos Claims had risen. There was no guarantee that in 2002 a further Trowbridge report might not reveal yet another increase. Mesothelioma costs had risen by 45% in five years and non-mesothelioma costs had nearly doubled in a two year period." 952 The present contravention, however, was not failure to warn that the unqualified statements could not be made. It was failure to advise of the limitation in the reviews of the cash flow modelling; limitations which bore significantly on such comfort as was being conveyed to the board by the information that PwC and Access Economics had reviewed the model and had found it to be logically sound and technically correct. The contravention stood apart from what the directors must have realised for themselves, and went to the decision to establish the Foundation whatever statement was made in an announcement that it had been established. 953 The judge said in the liability judgment – "407 Similar allegations to those made against Mr Macdonald with respect to the limitation in the review by PwC and Access Economics of the cash flow model were made against Mr Shafron. In his behalf it was submitted that this fell within Mr Morley's area of responsibility. It was submitted that Mr Shafron did not know of the limitation and there was no good reason why he should know. Addressing the cash flow model was the responsibility of Mr Morley as chief financial officer. 408 But the email from Mr Ashe with the suggested report wording was sent to Mr Shafron as well and he must have understood from it, as Mr Macdonald must have understood from it, that the scope of the review by PwC and Access Economics was limited to its logical soundness and technical correctness and key variables were not considered. 409 Mr Morley said he told the meeting that the cash flow model had been reviewed by PwC and Access Economics and they had found it to be logically sound and technically correct. He did not say that the reviews were limited to this analysis. He did not say that key variables had not been considered. 410 Mr Shafron knew, or ought to have known, that the unqualified statements that PwC and Access Economics had advised JHIL and that advice supplemented the company's long experience in the area of asbestos and formed the basis of determining the level of funding required to meet all future claims was false or misleading and potentially damaging to JHIL. 411 In the absence of explanation by Mr Morley, it was Mr Shafron's duty in protecting JHIL from legal risk to have advised the board of the limitations. 412 A reasonable person, if an officer of a corporation in JHIL's circumstances who occupied the office of secretary and general counsel and had the same responsibilities within the corporation, would have advised the board that the reviews of the cash flow 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 cash flow model, being fixed investment earnings rates, litigation and management costs and future claim costs. 413 Mr Shafron failed to discharge his duties to JHIL with the degree of care and diligence that a reasonable person would exercise, if he or she were an officer of a corporation in JHIL's circumstances and occupied the office of secretary and general counsel, and had the same responsibilities within the corporation, by failing to advise the board that the reviews of the cash flow 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 cash flow model, being fixed investment earnings rates, litigation and management costs and future claim costs. That failure constituted a breach of section 180(1) . " 954 Apropos of LJ [407], the judge described the relevant "allegations … made against Mr Macdonald" at LJ [359] - "359 It is alleged against Mr Macdonald that he failed to advise the board that the reviews of the cash flow model by PwC and Access Economics were limited to reporting on the logical soundness and technical correctness of the cash flow model and had not verified, and they had been specifically instructed not to consider, the key assumptions adopted by the cash flow model, being fixed investment earnings rate, litigation and management costs, future claim costs and inflation on rental income and asset values." 955 He dealt with the allegations against Mr Macdonald at LJ [360]-[363]. In summary, he said that Mr Macdonald had received Mr Ashe's e-mail with a suggested report wording (see [154-]-[156] above); that this brought or ought to have brought to his attention the limited nature of the work done by PwC and Access Economics; that PwC and Access Economics were not asked to check the "vital assumptions" listed in the e-mail, which meant that "the inherent uncertainty of the Trowbridge reports remained"; and that as chief executive officer and "driver of this separation proposal" he should have brought to the board's attention that the work to be done by the firms was limited to determining whether the cash flow model was logically sound and technically correct, and that they had been instructed not to express an opinion on the key variables identified in the e-mail. 956 Mr Shafron accepted that he did not say anything to the board to the effect that the PwC and Access Economics reviews of the cash flow model were limited to reporting on its logical soundness and technical correctness, or they had not verified or considered the key assumptions adopted in the model. He submitted that there was no breach in his failure to do so because he did not know of the limitation, and in any event because addressing the board in relation to the cash flow model was Mr Morley's responsibility. 957 The judge found knowledge in Mr Shafron from Mr Ashe's e-mail of a suggested report wording (see LJ [408]). Mr Shafron accepted that, if instructions were given as contemplated in the e-mail, the reviews would be limited accordingly. He submitted, however, that it should be inferred that at that time he understood that the nature of the review would be a matter for further internal and external consideration, by Mr Morley. He submitted that he had received conflicting indications about the nature of the review to be undertaken because no such limitations were suggested from the outset, and that the scope of the review as agreed with PwC and Access Economics had yet to emerge. 958 Other than by the e-mail dated 12 February 2001 from his computer, see [157] above, there was no response from Mr Shafron in relation to the suggested report wording. Although from Mr Shafron's computer, it appears to have been sent by Mr Macdonald. There was no other evidence that Mr Shafron knew of the limitation in the reviews. 959 There was other evidence material to Mr Shafron's knowledge of the limitation than Mr Ashe's suggested report wording. He was at the meeting with proposed directors of the Foundation on 13 February 2001, at which Mr Morley presented a cash flow model for the Foundation. Although the judge did not refer to it, some of the evidence of what was said was material to his knowledge of the nature of the PwC and Access Economics reviews. 960 According to Mr Morley, he said at the meeting words to the effect, "The model is still being reviewed by PwC and Access Economics. They are checking the logical soundness and technical correctness of the model." He did not recall going into any greater detail. 961 However, this was not the only evidence. The judge said in the liability judgment - "437 On 13 February 2001 Mr Morley attended a meeting with the proposed directors of the Foundation. Mr Attrill took a note during the meeting recording Mr Morley saying: 'PwC are to confirm the model. Access Economics will consider future earnings rates'. His evidence was not challenged. 438 Dennis John Cooper was one of the proposed directors of the Foundation. He said that in Mr Morley's presentation of the Cashflow Model he made a handwritten note that Mr Morley said 'PwC have been instructed to confirm the model as well as Access Economics. Surveys from Mercer and Towers Perrin have been utilised in relation to levels of investment returns'. This evidence was not challenged. 439 Peter Edward John Jollie was also a proposed director of the Foundation who attended the meeting. He recalled Mr Morley saying words to the effect: 'PricewaterhouseCoopers are to confirm the model – they will do the technical modelling and Access Economics will comment on the reasonableness of the assumptions. We are also going to produce some Mercer statistics for fifteen years in support of their assumptions.' 440 Mr Jollie made a note at the time that states: PwC to confirm model Access Economics – assumptions Reasonable'. Mr Jollie was not challenged on this evidence. Mr Morley denied making the statements. He was not challenged on the denial." 962 Mr Morley's denial was of each of the statements recorded or recalled by Mr Attrill, Mr Cooper, and Mr Jollie. The judge found it unnecessary to make a finding, but said in the liability judgment - "457 Had it been necessary for me to resolve the conflict in the evidence of Mr Attrill, Mr Cooper, Mr Jollie on the one hand and Mr Morley on the other as to what he said at the meeting of prospective directors of the Foundation, I would have preferred the evidence of Mr Attrill, Mr Cooper and Mr Jollie. Their contemporaneous diary notes refer to a review by PwC and Access Economics that it was not limited by instructions not to consider the assumptions underlying the cash flow model." 963 Although this was a conditional finding, in our opinion we can and should act upon it. The diary notes were entitled to be given substantial weight. Accordingly, at the meeting Mr Morley said to the effect that PwC was to confirm the model and that Access Economics was, as Mr Jollie said he recalled, to "comment on the reasonableness of the assumptions". Thus we accept Mr Shafron's submission that, at the conclusion of the meeting, he had reason to believe that the review by PwC was intended to confirm the cash flow model and that Access Economics would review and comment on the reasonableness of the assumptions. 964 No other evidence brought home to Mr Shafron that the PwC and Access Economics reviews were in fact limited to the logical soundness and technical correctness of the cash flow model, and that they did not consider the key variables. 965 ASIC submitted that the inference invited by Mr Shafron was "heroic" in his absence from the witness box. It submitted that the inference from Mr Ashe's e-mail was that the reviews would be limited as there foreshadowed, and that what was said at the meeting on 13 February 2001 only warranted Mr Shafron ascertaining precisely the nature of the reviews being undertaken. 966 However, it was for ASIC to establish by evidence that Mr Shafron contravened s 180(1). It had to establish that he failed to advise the board that the reviews were limited and did not include verifying the key assumptions adopted by the cash flow model, and that PwC and Access Economics had been specifically instructed not to consider the key assumptions, and so far as knowledge of those matters was necessary that he knew them. That Mr Shafron did not give evidence is of no consequence unless there is otherwise a basis for finding that he knew them. 967 Whatever the position had Mr Ashe's e-mail stood alone, when what was said at the meeting on 13 February 2001 is taken with it we do not think it can properly be found that Mr Shafron knew those matters. At least at the point of obtaining the verification suggested by Mr Loosley, so far as Mr Shafron was concerned that was within Mr Morley's responsibilities, and we do not think that what was said at the meeting on 13 February 2001 should have sparked further inquiry. 968 In the absence of knowledge of what, on ASIC's case, Mr Shafron should have advised to the board, we do not think that the contravention found by the judge on the basis of knowledge can stand. The contravention found was failure to advise of the limitations, not failure to question at the meeting whether the reviews were in fact limited in accordance with Mr Ashe's e-mail. 969 It is not necessary to consider the submission that addressing the board in relation to the cash flow model was Mr Morley's responsibility and so it was not a matter for Mr Shafron to advise of the limitations in the PwC and Access Economics reviews. We should say, however, that when Mr Morley said only that the model had been reviewed by PwC and Access Economics and they had found it to be logically sound and technically correct, a reasonable person with Mr Shafron's responsibilities, knowing the limitations, would have seen the deficiency in what Mr Morley said and would have corrected it by advising the board of the limitations. 970 Although ASIC did plead, in the alternative, that Mr Shafron "ought to have known" of the limitations in the reviews by PwC and Access Economics of the cash flow analysis, it did not agitate this alternative case by way of notice of contention or cross-appeal in this Court. 7.4.3 DOCI disclosure 971 We have referred to the DOCI, an acronym for the Deed of Covenant and Indemnity, in the overview at the commencement of the reasons. At the February meeting it was decided to enter into the DOCI, in the context of the rejection at the January meeting of the net assets model, on the basis that separation of the asbestos liabilities would require JHIL to make available additional funds to the former operating subsidiaries to meet their asbestos liabilities. That was to occur even through the board had been advised that the holding company had no legal liability to provide such funds. The DOCI identified certain benefits for JHIL which, it appears, were regarded as of sufficient advantage to JHIL to satisfy the directors that they were acting in the best interests of the company when agreeing to make the additional funds available. 972 The FFASC identified in para 54(j) four aspects of the DOCI, in summary - (a) that Coy and Jsekarb covenanted that they would not make any asbestos related claim against JHIL; (b) that Coy and Jsekarb would indemnify JHIL against asbestos related claims; (c) that JHIL would, in consideration of the covenants and indemnities identified in (a) and (b), make certain payments to each company over the period 2001 to 2042, which payments could be accelerated; and (d) that if the ownership of the shares in JHIL changed then JHIL would have a put option to require Coy to acquire the shares in JHIL. 973 These aspects were taken up in para 150 of the FFASC, and were described as the DOCI Information. We have set out the central general allegations and the pleading of knowledge and contravention by Mr Shafron at [875]-[876]. 974 The judge found that - the DOCI Information was not generally available (LJ [485]); disclosure of the DOCI Information would have had a material positive effect on JHIL's share price (LJ [507]); a reasonable person would have expected such disclosure to have that effect because JHIL's perceived asbestos exposure would have been seen to have been removed (LJ [507]); accordingly, JHIL was obliged to disclose the DOCI Information under Listing Rule 3.1 (LJ [508], [516]); JHIL's failure to disclose was negligent (LJ [537]); and Mr Shafron was aware of the requirements of continuous disclosure and of the fact that if JHIL failed to comply with Listing Rule 3.1 it would be harmful to JHIL, both as a contravention of s 1001A(2) and as damaging to its reputation (LJ [556], [558]). 975 There was no appeal from these findings. 976 The judge held that Mr Shafron had breached s 180(1), relevantly for the following reasons - "555 It was submitted that since the need to consider whether JHIL was required to disclose the DOCI Information was a need that would have been well known to Mr Macdonald and the board, any neglect to bring the matter specifically to their attention did not constitute a failure by Mr Shafron in his obligations to the company. 556 Mr Shafron was aware of the requirements for continuous disclosure. He had provided his advice to Mr Macdonald on the continuous disclosure implications of the Trowbridge reports in August 2000. Mr Muscat said that the continuous disclosure obligation was part and parcel of the role and responsibility, not only of a chief executive officer, but also of the chief financial officer and the company secretary and general counsel. 557 Peter Athanas Bobeff was senior vice president commercial affairs at Foster's Group Limited for 13 years until retirement. The title involved the positions of company secretary and general counsel as well as other responsibilities. His opinion was that a listed company would expect its general counsel to provide advice about the operation and application of the continuous disclosure rules and that a company secretary and general counsel would ensure that directors were aware of issues that arose in relation to continuous disclosure. 558 Mr Shafron was aware that if JHIL failed to comply with Listing Rule 3.1 but was required to do so, that would be harmful to JHIL because it would contravene section 1001A(2). Further, if JHIL failed to disclose when required to do so and that failure was exposed, JHIL would suffer harm to its reputation with the prospect of an adverse market reaction. 559 Even if the continuous disclosure obligation should have been obvious to Mr Macdonald and the other directors of JHIL, the absence of any reference to it with respect to the DOCI Information in the February 2001 board papers should have led Mr Shafron either to advise Mr Macdonald or the board that it needed to consider whether JHIL was required to disclose the DOCI Information; or to obtain advice for Mr Macdonald or the board or provide his own advice to the board as to whether they were required to disclose the DOCI information to the ASX; or to advise Mr Macdonald or the board to resolve or determine that JHIL would disclose the DOCI Information to the ASX. A reasonable person, if an officer of a corporation in JHIL's circumstances, occupying the office of secretary and general counsel, with the same responsibilities as Mr Shafron, would have taken one or other of those courses. The board papers indicated that the board would be asked to approve execution of the DOCI. No mention was made of the continuous disclosure obligation and whether it might apply when the DOCI was executed. In order to protect JHIL from the risk that it might infringe Section 1001A(2), a reasonable person in Mr Shafron's shoes would have taken one or other of the above courses. 560 Having not taken one of those courses, and having attended the 15 February 2001 Meeting when no mention was made of whether or not there was an obligation to disclose the DOCI Information, Mr Shafron should then have taken one or other of those courses. The core of his responsibility was to protect JHIL from legal risk. The board had approved the execution of the DOCI and no one had mentioned whether the DOCI Information was required to be disclosed to the ASX. To prevent harm to JHIL, Mr Shafron was duty bound to take one or other of those courses. The reasonable person to whom reference is made in Section 180(1) would have done so. 561 It was submitted in Mr Shafron's behalf that it should be inferred that Mr Macdonald appreciated from the receipt from Mr Shafron of two emails that it was necessary to consider disclosing the DOCI Information to the ASX. The first is the email of 1 February 2001. The second is the email of 5 February 2001. I have already found that the disclosure discussed in those documents was not disclosure under Listing Rule 3.1. 562 In any event, even if Mr Shafron had raised the question of disclosure under Listing Rule 3.1 with Mr Macdonald and Mr Macdonald did nothing about it either before or during the 15 February 2001 Meeting, Mr Shafron ought to have remedied that situation in discharging his duty to protect JHIL from a legal risk, by taking one or the other of the courses set out above. 563 It was submitted that Mr Shafron took reasonable and sufficient steps to ensure that the question of disclosure of the DOCI Information was one of the questions on which Allens was required by him and JHIL to give advice. I have already rejected the argument that Allens was retained to advise on this topic. … 566 It was submitted that Mr Shafron's duty was not necessarily to have the continuous disclosure issue determined at board level. There were other mechanisms in place to deal with the topic under the company's disclosure policy. But in the circumstances of this case, where the board papers did not raise the continuous disclosure issue, it was Mr Shafron's duty to take one or other of the actions specified in para 157. And in the absence of that course, when no mention was made at the 15 February 2001 Meeting as to whether the DOCI Information was required to be disclosed to the ASX, Mr Macdonald was duty bound to take one or other of the courses of actions specified in para 159. 567 ASIC has made out its claim against Mr Shafron that by failing to advise Mr Macdonald or the board of JHIL that it needed to consider whether JHIL was required to disclose the DOCI Information to the ASX; in failing to obtain advice for Mr Macdonald or the board or provide his own advice to the board as to whether they were required to disclose the DOCI Information to the ASX; or in failing to advise Mr Macdonald or the board to resolve or determine that JHIL would disclose the DOCI Information to the ASX; Mr Shafron failed to discharge his duties to JHIL with the degree of care and diligence that a reasonable person would exercise, if they were an officer of a corporation in JHIL's circumstances and occupied the office held by Mr Shafron and had the same responsibilities within the corporation as Mr Shafron had. The failure constituted a breach of Section 180(1)." 977 The earlier rejection that Allens was retained to advise on disclosure of the DOCI Information, referred to at LJ [563], had been in the context of concluding that JHIL had contravened its obligations under Listing Rule 3.1. It was dealt with at LJ [519]-[534], concluding at LJ [535] - "535 I reject the notion that JHIL discharged its duty to disclose by seeking advise [sic] from Allens as to whether Listing Rule 3.1 applied to the DOCI Information." 978 We do not set these paragraphs out. Much of their content is considered at [995]-[1030] below. 979 The judge made the declaration of contravention accordingly, with the three limbs of - failing to advise Mr Macdonald or the board that they needed to consider whether disclosure of the DOCI Information to the ASX was required; failing to obtain advice for Mr Macdonald or the board or provide his own advice to the board as to whether they were required to disclose the DOCI Information to the ASX; or failing to advise Mr Macdonald or the board to resolve or determine that JHIL would disclose the DOCI Information to the ASX. 980 It was common ground in this Court that if Mr Shafron had taken any one of those steps there would have been no breach. 981 The focus of Mr Shafron's appeal was threefold: first, whether he was an "officer" within the meaning of s 180(1); secondly, whether he was required to bring the issue of disclosure of the DOCI Information to the attention of Mr Macdonald or the board; and thirdly, whether he acted with due care and diligence by raising with and/or relying upon Allens to advise on the issue of disclosure of the DOCI Information. 982 We have held that Mr Shafron was an officer. The judge referred to his responsibilities to protect JHIL from legal risk, and to him being "company secretary and general counsel". We do not think that his role as general counsel was itself the basis for the responsibility to protect JHIL from legal risk. For reasons given at [899]-[929], a matter such as disclosure in accordance with ASX listing requirements is well within the scope of a company secretary's responsibilities. 983 The evidence of Mr Bobeff, referred to at LJ [557], went further than as stated by the judge, and included that it was the role of company secretaries to support directors in complying with continuous disclosure rules and that it had been the practice of the ASX "to look to the company secretary whenever issues arise in respect of a listed disclosing entity, particularly in relation to continuous disclosure matters". Indeed, the thrust of his evidence was that all senior executives had a responsibility in that regard. We do not think that, as was submitted by Mr Shafron, Mr Bobeff's evidence was diminished by disregard of Mr Shafron's position as general counsel or his secondment to the United States. 984 We go first to bringing the issue of disclosure to the attention of Mr Macdonald or the board. The submissions were put in general terms, and did not relate specifically to each of the limbs of the contravention. 985 Mr Shafron first submited that he was under no duty to point out the obvious. He submitted that it must have been obvious to Mr Macdonald and the board that it was necessary to consider disclosure of the DOCI Information. As the submissions pointed out, the judge had found (at LJ [548]) that Mr Macdonald was aware that one of his duties as chief executive officer was to ensure that the continuous disclosure requirements were met by JHIL: indeed, the judge found (at LJ [552]) that Mr Macdonald did not exercise due care and diligence by failing to draw this matter to the attention of the chairman or of the board. 986 The submission asserting obviousness of the need to disclose the DOCI Information is particularly unattractive. Mr Shafron contended at trial that in some respects there was no obligation to make any disclosure, particularly in relation to the put option aspect of the DOCI. This was rejected by the judge, and there is no appeal from that decision. Furthermore, there is a stark inconsistency between this proposition and Mr Shafron's primary submission at trial and in this Court, that he was entitled to rely on the silence of the Allens solicitors in this respect for the proposition that they implicitly advised that no disclosure was necessary. 987 We are not satisfied that the requirements of Listing Rule 3.1 would, in their application to the DOCI Information, be so obvious as to make it unnecessary to advise of the need to consider disclosure of the DOCI Information. Particularly is that so for a non-executive member of the board, and where Mr Shafron had on earlier occasions provided written advice to the board on compliance with regulatory obligations. Those are the very kinds of matters upon which a non-executive director could well have been entitled to rely on the silence of both Allens and the company secretary and general counsel, even though the latter may not be entitled to rely on the silence of former. 988 Non-executive directors could reasonably expect that the issue as to whether or not disclosure of particular documentation is required, in the context of intended disclosure of an overall arrangement, would be specifically raised for the consideration of the board. Where, as here, a series of interrelated transactions are implemented constituting a fundamental alteration to the structure of the company's activities, it would by no means be obvious whether any particular agreement forming part of the whole was such as to call for disclosure under Listing Rule 3.1, because a reasonable person would expect a disclosure of that information to have a material effect on the price of the company's securities. Nor would it be obvious that that arose for consideration. 989 It may be added that obviousness would not be an answer to the contravention found against Mr Shafron. If disclosure was obvious, nonetheless it was not raised for the board's consideration by Mr Macdonald (or anyone else), or considered by the board. That of itself meant that, acting reasonably, Mr Shafron should have raised disclosure for the board's consideration, lest it be overlooked despite obviousness. 990 Mr Shafron's second submission arose from the judge's finding that the relevant failure was a failure to advise or obtain advice for either Mr Macdonald or the board. Mr Shafron submitted that the relevant duty, if any, did not extend to a duty to give advice to the board, because issues of disclosure could be determined at a management level and it was not necessary that they be taken to the board. The submission drew attention to the published disclosure policy of JHIL, which indicated that the chief executive officer and the head of Corporate Affairs had authority to release information independently of any authority conferred by decision of the board. 991 The submission rested on the judge's reference to disclosure to either Mr Macdonald or the board. The contention was that it was not necessary for matters of this character to be determined at board level. 992 That does not appear to us to be a relevant submission in terms of the judge's findings. The judge concluded that Mr Shafron should have given or obtained advice for one or the other, but not necessarily for both. Mr Shafron did neither. It does not matter if disclosure issues did not need to be determined at board level. 993 As we understand the judge's reasons, it would have been sufficient exercise of due care and diligence if Mr Shafron had drawn the attention of this requirement to Mr Macdonald alone. It would then have been up to Mr Macdonald to raise the matter with the board; Mr Shafron would have discharged his own obligation. The judge did not determine that it was necessary for Mr Shafron to raise the matter with the board itself, although such an argument could have been advanced if Mr Macdonald had refused or failed to do so after Mr Shafron's advice. That was not how the judge determined this issue. There is no submission that he erred in any relevant respect in this regard. 994 Mr Shafron's submission that it is not necessary for such a matter of disclosure to be determined at board level can be accepted, although with respect to a transaction of the fundamental character of the separation proposal a case could be advanced that it should have been. Nevertheless, the finding of contravention should not be overturned. The judge held that the breach arose by reason of failure to take either of two alternative courses. 995 We go then to advice from Allens. Mr Shafron's principal submission was to the effect that Allens was retained to provide advice on JHIL's obligation to disclose the DOCI Information, either expressly or generally as part of that firm's general retainer. We will discuss each of these alternatives. 996 In this, Mr Shafron challenged the judge's rejection of a like submission recorded at LJ [563]. He did not challenge the existence of a duty to protect JHIL from legal risks, or challenge the threefold particularisation of breach of that duty in the pleadings and accepted by his Honour. His submissions were to the effect that there was no breach of the duty because he ensured that skilled legal advisers were retained to advise. 997 There was no challenge to the judge's finding that Allens did not provide express advice that disclosure of the DOCI Information was not required. It is only if such advice is to be inferred from Allens' silence that it could be said that Mr Shafron did not "fail to obtain advice" within the second limb of the contravention. That proposition was put on appeal, albeit faintly. The thrust of the submissions was that Mr Shafron was entitled to rely on Allens to provide advice and, as that was not forthcoming, he was entitled to assume that disclosure was not required. 998 ASIC submitted that, even if Allens was retained for advice on disclosure of the DOCI Information, that was not sufficient to discharge Mr Shafron's duty. It is convenient to deal first with the factual issue of whether Allens was retained for advice, either expressly or pursuant to a general retainer. 999 Mr Shafron did not give evidence. He submited that an inference was available that he did seek advice from Allens specifically with respect to disclosure of the DOCI Information. The inference was said to be available from a number of documents, reinforced by a Jones v Dunkel inference arising from the failure of ASIC to call any witnesses from Allens. The documents were - (i) An e-mail of 1 February 2001 from Mr Shafron to Allens. (ii) An e-mail of 4 or 5 February 2001 (there is more than one copy in evidence) on legal issues involved in the establishment of the Foundation. (iii) Notes of a telephone conference on 5 February 2001 between Mr Shafron and several solicitors from Allens. (iv) An e-mail of 7 February 2001 from Mr Shafron to Allens. (v) Allens' role in reviewing the Draft ASX Announcement. 1000 It is more appropriate to consider item (v) in the context of the submissions with respect to Allens' general retainer. There is no suggestion that Allens' role with respect to the Draft ASX Announcement was specifically concerned with disclosure of the DOCI Information. 1001 As we indicate below, the judge rejected Mr Shafron's submissions on the basis that any references to disclosure in the documents relied upon did not concern or encompass the possible disclosure of the DOCI Information. 1002 The first document was an e-mail from Mr Shafron to Mr Peter Cameron and Mr Robb, amongst others, dated on 1 February 2001, headed "Indemnity/release from Coy and Jsekarb". The e-mail stated - "I want to revisit this. If we are being generous with Coy (and arguably we are, particularly if we hand across the 57) then that should support a waiver/indemnity in respect of Coy manufacture. If its ( sic ) a private document, then I wonder about disclosure – initially any way ( sic ). I ( sic ) could be that we ask the existing Coy directors to sign the docs (I guess with the benefit of some Allens/Allsop advice, if needed) and present it to the prospective directors as a fait accompli. With more cash than they thought they had, they shouldn't complain (I doubt Bancroft would). Obtaining the indemnity overcomes possibly the biggest question mark I have over this transaction (risk to JHIL). I would very much like to make it work." 1003 The judge observed that the DOCI provided that each party should keep confidential its existence and any terms and any discussions between the parties or their representatives and advisers in relation to it (at LJ [520]). He rejected the submission that disclosure of the DOCI Information in accordance with Listing Rule 3.1 was being considered by Mr Shafron and Allens, saying - "522 … The question Mr Shafron was addressing was whether the proposed DOCI needed to be disclosed to the incoming directors of the Foundation and whether, since its terms were not to be disclosed, it could be executed and presented to the incoming board of the Foundation as a fait accompli. That is what happened." 1004 In our opinion, the judge was correct. The "disclosure" referred to did not involve public disclosure, but disclosure to the incoming directors of the Foundation. This appears in the references to "a private document" in the first paragraph of the e-mail and to "the prospective directors" in the second paragraph. Mr Shafron submitted that the words "private document" were a reference to a confidentiality exception for the release of market sensitive information. However, the context – including the sentences immediately preceding and succeeding – relate to the position of the Foundation. 1005 The judge considered the second and third documents identified above together. On appeal, Mr Shafron submitted that he erred in concluding that the request for advice was limited to the issue of disclosure of the put option aspect of the DOCI Information for purposes of the substantial shareholder provisions. An analogous submission was put with respect to the fourth document, which was not considered by the judge. 1006 The second document was an e-mail of 4 or 5 February 2001, from Mr Shafron to Mr Peter Cameron and Mr Robb, with a copy to Mr Macdonald amongst others . We have set it out at [101] above, but repeat it - "There has been one major structural change since the January Board discussion. In return for a substantial capital injection ($57M), JHIL will now obtain a waiver and indemnity from Coy and Jsekarb. These elements address in large part concerns about JHIL vulnerability post separation. [Coy will also commit to acquire the JHIL shares should JHIL become a non operating subsidiary at some time in the future; query whether this can be structured as a non discloseable commitment in relation to JHIL shares – Allens to advise]." 1007 ASIC submitted at trial that this e-mail referred to the need to disclose the existence of a substantial shareholder under s 671B of the Law. The judge said in the liability judgment - "528 I do not think I am in a position based solely on the face of the document to determine whether the disclosure being discussed was in relation to Listing Rule 3.1 or in relation to s 671B of the Corporations Law . What the document does show is a preference by Mr Shafron for non-disclosure. I refer later to the inference to be drawn in relation to this document when viewed in conjunction with all the documentary evidence on this issue." 1008 Accordingly, the judge considered this e-mail together with the third document, notes of a conference call appointed with respect to Project Green on 5 February 2001. There are three Allens file notes of this call, as follows: "To do – Query disclosure + relevant interest on the Put. Put shares to Coy." (By Mr Robb.) "- Option granted for benefit of NL1 - will be disclosing creation of # - if JHIL grants an option/give right over shares – ASX disclosure?" (By Mr Frangeskides.) "Option – granted for benefit of future benefit of JHINV Will disclose creation of Trust If JHIL grants option over its shares no consideration Not absolutely essential Does it need disclosure By deed poll. If it gets shares, will Put them." (By Mr Blanchard.) 1009 The judge concluded with respect to this evidence - "532 Because the question of disclosure in each of these file notes and in the emails already mentioned related only to the put option and did not raise an issue of disclosure with respect to the other portions of the DOCI, I accept the submission on behalf of ASIC that the disclosure to which reference is made in them is a disclosure with respect to the substantial shareholder provision and not a disclosure under Listing Rule 3.1." 1010 Mr Shafron submitted that the e-mail of 4 or 5 February set out the essential features of DOCI, including the covenants, indemnity and the put option. The e-mail initiated the telephone conference to which the three file notes related. 1011 In our opinion, the judge's conclusion was correct. This appears most clearly in the last sentence of the e-mail which is encased in square brackets and makes reference to disclosure. It is concerned only with the put option. The advice sought from Allens was whether the commitment to acquire shares in JHIL "can be structured as a non-discloseable commitment". Indeed, the very focus on non-disclosure, rather than disclosure, affirms that something more specific than a duty of continuous disclosure was under consideration. As the judge correctly saw it, the file notes of the conference, which are understandably less clear, are consistent with this specific focus. 1012 Mr Shafron's written submissions quoted from Mr Robb's note, but only the words "Query disclosure". The actual focus is, however, apparent from the whole note, which points to the substantial shareholder provisions. To repeat the sentence: "To do – Query disclosure of relevant interest on the Put. Put shares to Coy." 1013 The reference to "relevant interest" is a textual indicator about what kind of disclosure was being considered. The other two notes are consistent with this interpretation and do not suggest anything in the nature of the continuous disclosure obligation under Listing Rule 3.1. 1014 Mr Shafron also submitted that even if the request for advice on disclosure was limited to the substantial shareholder provisions, a "reasonable" solicitor should have understood that a request for advice about disclosure on one matter raised the need to consider disclosure more generally. It was submitted that it was reasonable for Mr Shafron to assume that Allens would advise if any other disclosure was required. 1015 We do not agree that more general disclosure should have been considered in response to the specific request. In any event, in our opinion, there is no basis for concluding that what a "reasonable" solicitor should have understood affected the care and diligence required of Mr Shafron. From the perspective of Mr Shafron's discharge of his duties, he cannot rely on a request for specific, focused advice as if it discharged the necessity according to the reasonable person test to seek or proffer general advice on so multifaceted a subject as is encompassed by the use of general terminology as "disclosure". 1016 The fourth document was an e-mail from Mr Shafron to Mr Robb dated 7 February 2001. This e-mail was not considered by the judge. It was headed, "Coy committing to take JHIL shares", and the body of the e-mail stated, "Any roadblocks in having this feature? I need to know quick." 1017 Mr Shafron accepted that the e-mail plainly referred to the put option, but submitted that a "reasonable solicitor" would have understood that one of the areas of advice requested was whether this "feature" required disclosure. ASIC submitted that disclosure under Listing Rule 3.1 would not be a "roadblock" in the sense of a barrier to implementing the feature. 1018 ASIC's submission should be accepted. Further, the e-mail does not, on any reasonable reading, constitute a request for advice with respect to JHIL's continuous disclosure obligation. And again it is not enough, for purposes of determining whether Mr Shafron failed to exercise due care and diligence, to infer that a "reasonable solicitor" should have understood it as such. The e-mail does, however, serve to reinforce the proposition that Mr Shafron was particularly focussed on this aspect of the DOCI Information, as the judge found when considering the e-mail of 4 or 5 February 2001 and the telephone conference of 5 February 2001. 1019 It was submitted that we should draw a Jones v Dunkel inference that evidence from Messrs Robb, Blanchard and Frangeskides from Allens could not have assisted ASIC's case, in aid of finding that Allens was advising Mr Shafron in relation to whether the DOCI Information should have been disclosed. The judge refused to draw any inference under Jones v Dunkel, saying at LJ [533] that "a proper interpretation of the documents relied upon to support the submission does not support it". 1020 We have referred the force of a Jones v Dunkel inference at [634] and [731] above. With respect to the issue presently under consideration, it is of little force. An inference that none of the Allens witnesses, particularly Mr Robb, would have assisted ASIC's case does not go very far in the absence of any evidence of a request for advice. Similarly, in order to draw an inference with greater confidence there must be some basis for drawing the inference at all. For the above reasons, none of the documents referred to constitute evidence, or provide the basis for an inference, that Mr Shafron asked for advice on the issue of the disclosure of the DOCI Information. We were not referred to other evidence which could form the basis of any such inference. 1021 Each of documents (i) to (iv), together with such inference as is available under Jones v Dunkel, was also called in aid of Mr Shafron's general submission that advice on disclosure of the DOCI Information fell within Allens' general retainer. 1022 There is no doubt that Allens advised extensively in relation to Project Green, but there was no direct evidence that Allens had a "general retainer" to advise on all legal matters arising with respect to Project Green. No defendant gave any such evidence. Nor was there any document establishing a "general retainer". 1023 We were asked to infer the existence of such a retainer from a range of matters, being those already discussed together with - Mr Shafron's letter of instructions to Allens dated 15 March 2000; Allens' initial advice of April 2000 entitled "Project Green: Advice on Structure and Separation Issues", containing references to continuous disclosure requirements; after a question by Mr Brown at a board meeting, Mr Shafron requested and gave advice on the continuous disclosure obligation with respect to the Trowbridge reports; the attendance by solicitors from Allens at JHIL board meetings and at what was described in the submissions as "JHIL adviser meetings"; Allens' role in reviewing the Draft ASX Announcement; and the fact that in the period 28 August 2000 to 25 October 2001 Allens billed JHIL for over $3 million in legal services. 1024 The letter of instructions of 15 March 2000 sought advice on Project Green and identified a long list of specific matters. There was no reference to disclosure issues, but Mr Shafron relied on the concluding sentence - "You should comment on … any other matter you think may be relevant or appropriate. Please cover the issues raised but do not confine yourself to them." 1025 Allens provided a detailed advice on 5 April 2000. It contained references to continuous disclosure obligations, but none were pertinent to the matters that arose much later under the new scheme, involving the DOCI. Each reference was to whether the proposed new separated company, then called Ausco, would be listed and therefore made subject to the continuous disclosure obligations. Nothing in the letter of instructions, or in the advice given, suggested that there was a general retainer applicable in the future when a different scheme emerged. 1026 The matter identified in the third dot point referred to a response to a specific request made by Mr Brown for advice on the disclosure implications of the Trowbridge reports. In his memorandum to Mr Macdonald, which referred to Listing Rule 3.1, Mr Shafron said - "I have raised the issue with Peter Cameron, of Allen, Allen and Hemsley. In his view (and mine) the draft Trowbridge work does not compel us to make additional disclosure to the market in relation to asbestos liability of the Group." After setting out the reasons, Mr Shafron concluded the memorandum - "If you would like me to provide a more detailed advice, or would like me to ask Allens to do so, please let me know." 1027 Far from suggesting that Allens had a general retainer, this indicated that they were asked to advise on disclosure issues on an ad hoc basis. The same is indicated with respect to each of the occasions on which specific advice was sought, as discussed above, as to disclosure to incoming directors of the Foundation and disclosure of the put option under the substantial shareholder provisions. 1028 The conclusion that advice on issues of disclosure was sought, and received, only with respect to specific matters is reinforced by a further matter relied upon before the judge but not on appeal. Mr Robb made a file note of a meeting on 2 February 2001 with, amongst others, Mr Shafron and the auditor of JHIL. Mr Shafron submitted at trial that a reference in that note to "query disclosure of indemnity" was a reference to Allens being asked to advise on the liability to disclose the DOCI Information. The judge considered that, in its context, it was a reference only to disclosure in the accounts. This was not challenged on appeal, and is of some significance because of the consistency with the judge's other findings. 1029 Allens' bill was impressive, but we derive no assistance from its size. It does not suggest a general retainer of the kind alleged. 1030 There is no evidence of a "general retainer" to advise, relevantly, on continuous disclosure obligations. Allens' attendance at meetings and what occurred in relation to the Draft ASX Announcement takes matters no further towards such a retainer. Senior solicitors from Allens drafted all the relevant documents and were present at board meetings, notably the meeting at which DOCI was agreed. They were also involved in settling the Draft ASX Announcement. Whether or not they should have raised the issue of disclosure of the DOCI Information is not before the Court. The issue before us is not Allens' duty, but what the exercise of due care and diligence required of Mr Shafron. Insofar as he relied on an express or inferred retainer to Allens to advise on disclosure of the DOCI Information, in our opinion he failed to establish the factual basis for his contention. 1031 We return to ASIC's submission that, even if Allens was retained for advice, that was not sufficient to discharged Mr Shafron's duty. No advice was given, and it was submitted that Mr Shafron was not entitled to rely on silence as if it constituted advice that no disclosure was required. 1032 Mr Shafron was a senior executive with undoubted responsibilities to ensure compliance with regulatory requirements, such as Listing Rule 3.1. He did in fact give advice on such issues from time to time, including, for example, adding his own agreement to the advice of Allens on disclosing the Trowbridge reports, and asking whether "more detailed advice" in this respect was requirement from him or from Allens, as set out at [1026] above. As ASIC submitted, he was not a mere conduit for the advice of external solicitors. 1033 Mr Shafron did not give evidence. There is no basis upon which we can properly infer that he relied on the silence of Allens. Indeed, the only relevant evidence in this regard is his desire that the put option aspect of the DOCI should not be disclosed to others. The appropriate inference, although it is not necessary to draw it, is that he turned his mind to the disclosure of the DOCI Information and, lest it led to the disclosure of the put option, preferred that none of it be disclosed. 1034 It is sufficient to conclude that Mr Shafron did not ensure that external solicitors would give relevant advice. We would, in the alternative to that factual basis for rejecting his appeal in relation to the DOCI, accept ASIC's submission that the breach of duty identified in the threefold manner set out above would not be ameliorated by the fact, contrary to our conclusion, that Allens was required or could reasonably be expected to advise on disclosure of the DOCI Information. 1035 The threefold cumulative requirement which constituted the finding of contravention in the present case is not an exacting standard. Satisfaction of any of the three limbs would have sufficed, and there would have been no finding of breach if Mr Shafron had raised the issue of disclosure for consideration. There is no evidence that he did. We do not suggest that, using language from another legal context, the duty of a person in Mr Shafron's position to protect the company from legal risk is a non-delegable duty. However, there had to be some evidence that consideration was given to the need for advice, and there was none. 1036 In the circumstances of this case, the possible impact on the market for JHIL shares of the DOCI Information was, as Mr Shafron submitted in another respect, obvious. The judge made an express finding to this effect, at LJ [550] with respect to Mr Macdonald. It is somewhat ironic that, as the judge found, JHIL management "crafted" the ASX announcement and the materials at the press conference "to induce a positive effect on the price or value of its shares" (LJ [494]), and yet withheld the DOCI Information which he found "would have had a material positive effect" on the price of those shares. This was not a disclosure issue that could reasonably have been overlooked. 7.5 The cross-appeal 1037 The grounds of cross-appeal were – "5. The trial judge erred in failing to find that as at 15 February 2001 the cross-respondent, Peter James Shafron (Mr Shafron), was aware that the best estimate contained in a report dated 13 February 2001 prepared by Trowbridge Deloitte Limited ('Trowbridge') ('February 2001 Trowbridge Report') and in an undated schedule containing an update of Trowbridge's discounted and undiscounted estimate of the existing and contingent liabilities of James Hardie Industries Ltd (JHIL) to compensate persons who suffered injury, including latent injury, from exposure to asbestos liabilities as at March 2000 for a period of up to 50 years ('Trowbridge 50 year estimate') was a 'central estimate' being one that had a 50% chance of equalling or exceeding the actual liability ( ASIC v Macdonald (No 11) [2009] NSWSC 287 ('liability judgment') [415] to [418]). 6. The trial judge erred in failing separately to address that part of the cross-appellant's case that alleged that even if the cross-respondent, Mr Shafron, was not aware of the limitations upon the Trowbridge material identified in sub paragraph 105(a)(iii)(D) of the FFASOC he ought to have been aware of those limitations and advised the Board of Directors of JHIL of them. 7. The trial judge erred in failing to find that as at 15 February 2001 the cross-respondent, Mr Shafron, was aware that the February 2001 Trowbridge Report and the Trowbridge 50 year estimate had not taken into account superimposed inflation (liability judgment [422]). 8. The trial judge erred in failing separately to address that part of the cross-appellant's case that alleged that even if the cross-respondent, Mr Shafron, was not aware of the limitations upon the Trowbridge material identified in sub paragraph 105(a)(iii)(C) of the FFASOC he ought to have been aware of those limitations and advised the Board of Directors of JHIL of them. 9. The trial judge erred in failing to find, and should have found, that the cross-respondent, Mr Shafron, contravened s 180(1) of the Corporations Act 2001 (C'th) by failing to advise the Board of Directors of JHIL on 15 February 2001 that the 'best estimate' contained in the Trowbridge material and used as a basis for a cash flow model of the funding being made available to meet asbestos claims against two of JHIL's former subsidiaries, Amaca Pty Limited ('Amaca") and Amaba Pty Limited ('Amaba'), had not taken into account superimposed inflation, and a prudent best estimate would have (FFASOC [106(b)(vi)(B)]). 10. The trial judge erred in failing to find, and should have found, that the cross-respondent, Mr Shafron, contravened s 180(1) of the Corporations Act 2001 (C'th) by failing to advise the Board of Directors of JHIL on 15 February 2001 that the 'best estimate' contained in the Trowbridge material and used as a basis for a cash flow model of the funding being made available to meet asbestos claims against two of JHIL's former subsidiaries, Amaca and Amaba, had only a 50 per cent probability of being achieved (FFASOC [106(b)(vi)(C)])." 1038 The grounds invited finding the contraventions alleged in paras 106(b)(vi)(B) and 106(b)(vi)(C) of the FFASC, on the basis that Mr Shafron knew, or alternatively ought to have known, that the best estimate in the February 2001 Trowbridge Report and the Trowbridge 50 Year Estimate had not taken into account superimposed inflation and a prudent estimate would have (the para 106(b)(vi)(B) contravention) and that the best estimate had only 50 per cent probability of being achieved (the para 106(b)(vi)(C) contravention). 1039 The judge declined to find the contravention alleged in para 106(b)(vi)(B) because it was not established that Mr Shafron knew that the two Trowbridge reports had not taken into account superimposed inflation: LJ [422]. He did not consider whether Mr Shafron ought to have known of that matter. 1040 The judge did not expressly consider the contravention alleged in para 106(b)(vi)(C), but declined to find the contravention alleged in para 106(b)(vi)(A) involving that the reports were too uncertain to be used as a basis to assess the adequacy of funding, because that matter had not been proved: LJ [423]. This may have encompassed that knowledge of only 50 per cent probability had not been proved, but did not deal with the allegation that Mr Shafron ought to have known. 1041 The judge described or referred to Mr Shafron's involvement with Trowbridge's estimates at a number of places in the liability judgment; for example, his presentation to the board at the August 2000 meeting; a memorandum to the board in October 2000 about disclosure of the June 2000 draft report; his notice of the Watson and Hurst study and its implications; the conversation with Messrs Peter Cameron and Robb on the morning of 15 February 2001; and presentations at the November 2000, the January 2001 and the February 2001 board meetings in which the estimates of asbestos liabilities underlay the separation proposals. His Honour's reasons on these contraventions in the liability judgement were against that background - "415 Verne Selwyn Baker was an actuary and senior consultant with Towers Perrin. He made a diary note of a meeting he had in August 2000 with Mr Shafron amongst others. It included the following: 'We said that a range of estimates was probably more appropriate in this type of assignment. Trowbridge perhaps gave a central estimate due to this being normal practice for Australian accounting purposes.' 416 I do not regard that statement as establishing that Mr Shafron was made aware of the nature of a central estimate. 417 Mr Shafron was present during a discussion with the incoming directors of the Foundation on 13 February 2001 when Mr Minty said: '"Best estimate" is the amount which we think is most likely to be the outcome on the basis that it is intended to be neither optimistic nor conservative … .' 418 Again, I do not regard that statement as conveying to Mr Shafron that the best estimate in the February 2001 Trowbridge Report and in the Trowbridge 50 Year Estimate was a central estimate. 419 Roy Williams of Allens wrote to Mr Attrill in June 2000. Mr Attrill sent a copy of the letter to Mr Shafron in July 2000. Mr Williams commented on the Draft 2000 Trowbridge Report. He said: 'Trowbridge assume that "average claim costs" will increase with general wage inflation in Australia, at a rate of 4% per annum. Trowbridge assume no "superimposed inflation" (pp 20-21). It seems to me this may well be an excessively optimistic assumption. Indeed, it runs contrary to the "current legal environment". As we know, at least over the last five years, damages payouts have increased at a rate substantially higher than inflation.' 420 Mr Shafron made extensive handwritten alterations to the Draft 2000 Trowbridge Report which he sent to Mr Attrill. Under the heading "Sensitivity of the Results" he had altered many of the figures including those in assumption 5 which read: 'High Claim Inflation – claim costs escalate at 8% per annum (4% in excess of assumed wage inflation) rather than 4% per annum.' 421 Mr Shafron altered the 8% to 7% and the first 4% to 3%. 422 Mr Williams' complaint had been that there was no superimposed inflation. Mr Shafron's alteration of the Draft 2000 Trowbridge Report was of a rate for superimposed inflation. These documents do not establish that Mr Shafron was aware that the February 2001 Trowbridge Report and the Trowbridge 50 Year Estimate had not taken into account superimposed inflation. 423 As with Mr Macdonald, so with Mr Shafron, in the absence of proof of knowledge of these issues by Mr Shafron I am not prepared to find that he owed a duty to advise the board that the best estimate was too uncertain to be used in an assessment of the funds needed to meet all present and future Asbestos Claims." 1042 We go first to best estimate. We have referred at [137] above to Trowbridge's "best estimate", used in the later cash flow models, and should say some more of it. 1043 The February 2001 Trowbridge Report presented cash flows over the period to 2020 on "current", "best estimate" and "high" scenarios, according to the level of asbestos claims. The two latter bases were new, and were described. 1044 For the best estimate basis it was said - "For mesothelioma claims we have assumed that claim numbers will follow the Berry Medium pattern proposed by the draft Trowbridge paper. This assumes that claim numbers will increase slightly over the next two years and then fall away gradually until 2040. For non-mesothelioma claims we have assumed that claims will continue to be reported until 2035. We have allowed for the fact that the bulk (about 75%) of the non-mesothelioma claims reported to Hardies each year relate to asbestosis and that asbestosis claim numbers are expected to reduce quite rapidly. This projection gives claim numbers less than our original projection up to 2018 and greater thereafter." 1045 For the other bases, different assumptions as to claims were made. 1046 The Trowbridge 50 Year Estimate spreadsheets were not part of a report. They projected cash flows on "best estimate", "high" and "current" bases, without further elucidation. 1047 Neither the report nor the spreadsheets included that the best estimate was one that only had a 50 per cent probability of being achieved. Nor looking ahead for a moment, did they expressly say anything about taking into account superimposed inflation. Trowbridge's June 2000 draft report, which did not have the three alternative bases, had said - "The estimate of exposure we have produced in this review can be described as our 'most likely' estimate of the ultimate cost to Hardies. In principle, all our assumptions have been selected to yield estimates which are not intentionally above or below the ultimate cost of Hardies' asbestos-related exposure within the scope defined, although as noted earlier there is considerable potential for future experience to differ from our assumptions." 1048 The liability judgment included - "366 … Mr Minty [of Trowbridge] said that in the Trowbridge reports he used the phrases 'best estimate' and 'most likely estimate' as central estimates. A central estimate is an estimate of a range of possible estimates that have a 50% chance of equalling or exceeding the actual liability. There is an equal likelihood that the amount will prove to be sufficient and an equal likelihood that it will prove to be insufficient to meet the actual liability. In cross-examination Mr Minty said that neither phrase had an acknowledged actuarial meaning and in 2001 there was no standard with respect to their use and the profession spoke of 'central estimate', 'best estimate' and 'most likely estimate' with relative abandon and without any clarity of definition." 1049 We understand the second and third sentences in this passage to express Mr Minty's usage. What followed was in fact not in the cross-examination of Mr Minty, but in the cross-examination of an actuary called by ASIC, Dr Taylor. 1050 ASIC submitted Mr Shafron knew that the best estimate had only a 50 per cent probability of being achieved for three reasons. First, he was heavily involved in the commissioning and preparation of the 2000 and 2001 Trowbridge reports. He received and commented upon drafts of the June 2000 draft report, which stated that the "most likely" estimate involved "assumptions [that were] selected to yield estimates which are not intentionally above or below the ultimate cost of Hardies' asbestos-related exposure". Secondly, Mr Baker from Towers Perrin had indicated to him in August 2000 that a "range of estimates was probably more appropriate … Trowbridge perhaps gave a central estimate"; see LJ [415] in the longer extract set out above. Thirdly, he was present with Mr Morley during Mr Minty's presentation to the incoming directors of the Foundation during which Mr Minty discussed the nature of his "best estimate"; see LJ [417] in the same extract. 1051 The judge was not satisfied that these matters established knowledge of the nature of a "best estimate", as to the first matter at LJ [368] in relation to Mr Macdonald but inferentially translated to Mr Shafron and as to the other matters at LJ [415]-[418]. In our opinion, no error has been shown in this conclusion. There was no more direct evidence of knowledge that a best estimate or a central estimate only had a 50 per cent probability of being achieved, and the evidence on which ASIC relied did not do so. 1052 No doubt these matters would have conveyed to Mr Shafron that a best estimate was uncertain, and that the reality was likely to be under or over the estimate, but that is not the same as the particular meaning alleged by ASIC. Mr Shafron's responsibilities included engagement and dealing with the actuaries, and he reported to the board on Trowbridge's estimates, but he was not actuarially trained and the evidence did not show such acquired expertise that the particular knowledge can be inferred from him being told that an estimate was "most likely" or "not intentionally above or below" or "intended to be neither optimistic nor conservative", or even "perhaps … a central estimate". 1053 ASIC relied on the same matters for a finding that Mr Shafron ought to have known that the best estimate had only a 50 per cent probability of being achieved. It submitted that he should have ascertained, no later than February 2001, what the various descriptions of a best estimate meant, particularly when he must have appreciated the sensitivity of the estimate to many factors and the importance of the cash flow modelling using the best estimate figures to sufficiency of funding. 1054 We should say something of breach of s 180(1) on the basis of what Mr Shafron ought to have known. What we say applies also to breach by Mr Morley on the basis of what he ought to have known. 1055 The contraventions pleaded in para 106 of the FFASC were breach by failing to advise the board of various things. What Mr Shafron knew or ought to have known underlay the failures to advise, through the preceding para 105 alleging what he knew or ought to have known. That was picked up by "in the premises" at the commencement of para 106. 1056 But the contraventions on the alternative bases of knowledge and of what ought to have been known are of a different character. If Mr Shafron knew something but did not advise the board of it, the question is whether a reasonable person occupying his office and having his responsibilities, and exercising care and diligence, would have advised the board of what he or she knew. If Mr Shafron did not know something but ought to have known it, and (necessarily) did not advise the board of it, there are really two questions: whether the reasonable person would have gained the knowledge, and if so, whether the reasonable person would have advised the board of what he or she knew. 1057 The two questions may be factually linked, but the answer to the second does not follow from the answer to the first. When considering breach of s 180(1) on the basis of what Mr Shafron ought to have known, then, the reasonable person test in s 180(1) should be applied to whether he ought to have known of the relevant matter. 1058 We do not accept ASIC's submission. Trowbridge had given three scenarios, one as a best estimate. It had explained the best estimate basis in the February 2001 Trowbridge Report. Plainly the best estimate was only an estimate, subject to uncertainty, and that would have been well understood. The description had no acknowledged actuarial meaning, nor did "central estimate", and Mr Minty did not disclose his own usage. On the contrary, Mr Minty had given his meaning on 13 February 2001, not that given as his usage in his evidence as found in LJ [366]. It was that a best estimate was "the amount which we think is most likely to be the outcome on the basis that it is intended to be neither optimistic nor conservative". We do not think that a reasonable person in Mr Shafron's position would have pressed him further, or otherwise enquired into the numerical probability of the estimate being achieved. 1059 We add that it is not clear that inquiry would have brought the response that the Trowbridge best estimate was one having only a 50 per cent probability of being achieved. That it would have done so was necessary for ASIC's submissions. Had Mr Shafron enquired of Mr Taylor, and perhaps of any other actuary, he probably would not have received the necessary response. The probability is that he would have enquired of Mr Minty, but Mr Minty had given an explanation at the 13 February 2001 meeting and he may not, unless pressed, have gone on to explain his usage to mean a central estimate and what according to his usage that meant. 1060 We go then to superimposed inflation. It is an actuarial concept referring to the potential for the cost of claims to increase at a level above the general rate of inflation. 1061 The Trowbridge June 2000 draft report stated that Trowbridge was assuming that there was no superimposed inflation for asbestos claims, and adopted a future inflation rate of 4 per cent per annum in line with forecasts for wage inflation over the medium term. The sensitivity analysis included that the adoption of a rate of superimposed inflation of 4 per cent per annum would increase the estimate cost of claims from $294 million to $424 million (see at [129] above, "Higher Claim Inflation"). 1062 The February 2001 Trowbridge Report said that it was "re-visit[ing] the claim number assumptions" adopted for the June 2000 draft estimates in view of the Watson and Hurst studies. It made no reference to superimposed inflation one way or the other, but the projected cash flows in fact did not allow for superimposed inflation. Nor did the Trowbridge 50 Year Estimate. 1063 ASIC submitted that Mr Shafron knew that the February 2001 Trowbridge Report and the Trowbridge 50 Year Estimate had not taken superimposed inflation into account for four reasons. 1064 First, he had knowledge of drafts of the June 2000 draft report, which did not account for superimposed inflation, and understood the Trowbridge February 2001 Report to be an update of that draft report. He had suggested a number of changes to Mr Attrill, showing an understanding of the sensitivity to assumptions, and had specifically requested that the superimposed inflation rate in the sensitivity analysis of a draft 2000 report be reduced from 4% to 3% (see LJ [420]-[421]). He was therefore familiar with the concept of superimposed inflation. 1065 Secondly, a letter from Mr Ray Williams of Allens to Mr Shafron stated that the Trowbridge assumption of a 4% rate of inflation in the June 2000 draft report was too low (see LJ [419]). This was said to show that he knew of superimposed inflation and should have advised the board of the need for it to be included in the modelling. 1066 Thirdly, at the August 2000 board meeting Mr Shafron's presentation had included that JHIL's costs were increasing at rates much greater than Trowbridge's assumed "Claim payout inflation of 4% compound PA". This again was said to show that he knew that it was necessary that there be an allowance for superimposed inflation. 1067 Fourthly, a slide part of the presentation Mr Shafron made at the February meeting contained the note, "Trowbridge analysis revisited … same basic assumptions as previously". This was said to take up the "major assumption" in one of Mr Shafron's earlier slides of "Claim payout inflation of 4% compound p.a." (The reference to the assumption was also said to support that Mr Shafron had considered superimposed inflation when involved with drafts of the June 2000 draft report.) 1068 In our view, it is clear that Mr Shafron was acquainted with the concept of superimposed inflation, and aware of its importance in estimating asbestos liabilities. It should be found that he knew that the cash flow projections in the February 2001 Trowbridge Report did not allow for superimposed inflation. That report was an updating, on alternative scenarios of claim numbers, in the light of the Watson and Hurst study. The assumptions otherwise made for the June 2000 draft report remained. If this is not something properly to be inferred, then we consider that a reasonable person in Mr Shafron's position would have inquired in order to ascertain whether or not the cash flow projections allowed for superimposed inflation. 1069 As we have earlier accepted, Mr Shafron was not actuarially trained. But in this instance he had familiarity with the concept such that he had suggested a different figure for superimposed inflation for the sensitivity analysis at the time of the June 2000 draft report. The potential impact of superimposed inflation was obvious, and must have been known to Mr Shafron from that draft report if not otherwise. At the least, inquiry was called for. 1070 Mr Shafron submitted that the fact that the February 2001 Trowbridge Report was an updating did not mean that Trowbridge had failed to take superimposed inflation into account. He submitted that in any event he was not an actuary, and was not on notice of a flaw in Trowbridge's methodology in failing to allow for superimposed inflation. He submitted that he was entitled to rely on the competence of the actuaries on such a matter, and that there was no occasion for him to raise the matter. He said also that the evidence did not establish that superimposed inflation should have been taken into account, and that Dr Taylor accepted that the appropriate rate of superimposed inflation "could conceivably have been zero". 1071 The reasons we have given dispose of all but the last of these submissions. The reliance on Dr Taylor was misplaced. An actuary called by Mr Morley, Mr Wilkinson, gave evidence to the effect that an allowance should have been made. Dr Taylor said that, while the appropriate rate of superimposed inflation could conceivably have been zero, he agreed with Mr Wilkinson's comment "that that would have represented the lower bound of what was reasonable". The point is not what rate of superimposed inflation should have been taken into account, or that there was a lowest limit. It is whether Mr Shafron should have advised the board that, in the "best estimate" used as a basis for the cash flow model, it had not been taken into account and a prudent best estimate would have taken it into account. The evidence made it clear, in our view, that prudence dictated that it be taken into account. 1072 It remains to consider whether Mr Shafron breached s 180(1) in failing to advise the board in relation to superimposed inflation, using that as shorthand for the contravention alleged in para 106(b)(vi)(B) of the FFASC. Mr Shafron submitted that he did not fail in the exercise of due care and diligence, because in the circumstances of JHIL at the time any advice to the board from management on that topic was a financial matter within the area of expertise and responsibility of Mr Morley. He submitted that it was not within his area. He submitted that ASIC's case was really that he had been negligent in failing to pick up Trowbridge's negligence in not allowing for superimposed inflation, and that such a case should be rejected. 1073 We do not agree. Without undue repetition, Mr Shafron had a primary involvement with Trowbridge's estimates, including knowledge of the significance of superimposed inflation. He made the slide presentation concerning Trowbridge's estimates at the February meeting. In the June 2001 draft report Trowbridge had pointed out that their estimates of asbestos liabilities did not allow for superimposed inflation, and the significant difference which such an allowance could make. It was not a matter of Mr Shafron second-guessing Trowbridge. He knew that JHIL's experience was that the cost of claims was increasing at a much higher rate than the general inflation rate. A reasonable person with his responsibilities would have made sure that the board knew of those matters, and in our opinion, would have drawn to the board's attention, as a matter highly significant to the reliance to be placed on the cash flow modelling, that no allowance had been made for superimposed inflation and that prudence warranted that an allowance should be made. 1074 On the cross-appeal, therefore, we consider that the contravention alleged in para 106(b)(vi)(C) was not made out, but the contravention in para 106(b)(vi)(B) was made out. 8. CONTRAVENTION BY MR MORLEY 8.1 The pleaded contravention 1075 The pleading of the contravention found, and again for convenience, in bold type, the pleading of the allegations the subject of ASIC's cross-appeal, were relevantly as follows. 1076 First came allegations of knowledge "when he attended the February 2001 Board Meeting" - "108. On 15 February 2001, when he attended the February 2001 Board Meeting, Morley knew, or ought to have known, and it was the fact that: (a) as CFO, it was his responsibility to either advise the members of the board, or take steps to ensure that they were informed of all matters of which he was aware, or ought to have been aware, which related to the adequacy or otherwise, of the funding available to Amaca and Amaba, to meet their respective Asbestos Liabilities and amounts payable in respect of legitimate, present and future Asbestos Claims, including any matter which related to the reliability of the Trowbridge Reports or the 12th Cash flow Model; (b) persons with legitimate existing or future Asbestos Claims against Amaca or Amaba were likely to endure significant injury, suffering and hardship and were likeIy to be highly concerned to know that their claims could be met; (c) the capacity of Amaca or Amaba to meet all of their Asbestos Liabilities and all of the legitimate existing or future Asbestos Claims made against them was likely to be a matter of significant public and market interest; (d) any perceived shortfall in the capacity of Amaca or Amaba or the MRCF to meet any such liabilities or claims following implementation of the Revised Separation Proposal had the potential to attract legislative intervention at a Commonwealth or State level to attempt to ensure one or more companies in the James Hardie Group was rendered liable to meet any such shortfall; (e) any public statement by JHIL about the capacity of Amaca or Amaba or the MRCF to meet such liabilities and claims following implementation of the Revised Separation Proposal, and in particular any such statement asserting the certainty of such capacity, was likely to be a matter of significant public and market interest; (f) it was proposed to make a public statement concerning the adequacy of the funding available to Amaca and Amaba; and (g) there were matters within his knowledge which related to the adequacy or otherwise, of the funding available to Amaca and Amaba, to meet their respective Asbestos Liabilities and amounts payable in respect of legitimate present and future Asbestos Claims. 109. On 15 February 2001, when he attended the February 2001 Board Meeting, Morley: (a) addressed the meeting on the operation of the 12th Cash flow Model, as a basis for determining the adequacy of the funding available to Amaca and Amaba to meet their respective Asbestos Liabilities; (b) knew, or ought to have known , and it was the fact that: (i) PwC's review of a version of the Cash flow Models: (A) was limited to reporting on the logical soundness and technical correctness of that version of the Cash flow Models; (B) did not verify, and PwC was specifically instructed not to consider, the key assumptions adopted by that version of the Cash flow Models, being: (1) fixed investment earnings rates; (2) litigation and management costs; (3) future claim costs; (4) inflation on rental income and asset values; (ii) Access Economics' review of a version of the Cash flow Models: (A) was limited to reporting on the logical soundness and technical correctness of that version of the Cash flow Models; (B) did not verify, and Access Economics was specifically instructed not to consider, the key assumptions adopted by that version of the Cash flow Models, being: (1) fixed investment earnings rates; (2) litigation and management costs; (3) future claim costs; (4) inflation on rental income and asset values; (iii) the best estimate contained in the February 2001 Trowbridge Report and the Trowbridge 50 Year Estimate: (A) was not based on the most recent data; (B) was otherwise too uncertain to be used as a basis to assess the adequacy of Amaca and Amaba's funding; (C) had not taken into account superimposed inflation, and a prudent estimate would have; (D) only had a 50% probability of being achieved; (c) knew, or ought to have known, and it was the case that, Brown, Gillfillan, Hellicar, Koffel, McGregor, O'Brien, Terry and Willcox, had not been advised of (b)(i), b(ii) and (b)(iii)(B) (C) and (D); (d) knew, or ought to have known, and it was the case that, each of (b)(i), (b)(ii) and (b)(iii) were relevant to any assessment of the adequacy or otherwise, of the funding available to Amaca and Amaba, to meet their respective Asbestos Liabilities; and (e) faiIed to either advise each of Brown, Gillfillan, Hellicar, Koffel, McGregor, O'Brien, Terry and Willcox of (b)(i), (b)(ii) and (b)(iii)(B), (C) and (D), or take steps to ensure that they were informed of those matters." 1077 It was then alleged - "110. In the premises, by each of the following aspects of his conduct, on 15 February 2001, Morley: (a) failed to discharge his duties to JHIL with the degree of care and diligence that a reasonable person would exercise, if they were a CFO of a corporation in JHIL's circumstances and occupied the office held by Morley, and had the same responsibilities within the corporation, as pleaded herein, (b) thereby breached s 180(1) of the Corporations Law, as carried over into the Corporations Act, in relation to each such aspect namely: (i) failing to advise the board that PwC's review of a version of the Cash flow Models: (A) was limited to reporting on the logical soundness and technical correctness of that version of the Cash flow Models; (B) had not verified, and PwC had been specifically instructed not to consider, the key assumptions adopted by that version of the Cash flow Models, being: (1) fixed investment earnings rates; (2) litigation and management costs; (3) future claim costs; (4) inflation on rental income and asset values; (ii) failing to advise the board that Access Economics' review of a version of the Cash flow Models: (A) was limited to reporting on the logical soundness and technical correctness of that version of the Cash flow Models; (B) had not verified, and Access Economics had been specifically instructed not to consider, the key assumptions adopted by that version of the Cash flow Models, being: (1) fixed investment earnings rates; (2) litigation and management costs; (3) future claim costs; (4) inflation on rental income and asset values; (iii) failing to advise the board that the best estimate contained in the February 2001 Trowbridge Report and the Trowbridge 50 Year Estimate: (A) was too uncertain to be used as a basis to assess the adequacy of Amaca and Amaba's funding; (B) had not taken into account superimposed inflation, and a prudent estimate would have; and (C) only had a 50% probability of being achieved. " 8.2 The contravention found 1078 The declaration of contravention made against Mr Morley was in the terms – "The Court declares that: 1. The Third Defendant contravened s 180(1) of the Corporations Law as carried over into the Corporations Act 2001 (Cth) ( Section 180(1) ) in relation to ABN 60 Pty Ltd (formerly known as James Hardie Industries Ltd) ( JHIL ) by his conduct, as an officer of that corporation, on or about 15 February 2001 in failing to advise its board of directors that reviews of a cash flow model ( Cash flow Model ) of the funding being made available to meet asbestos claims brought against two of JHIL's former subsidiaries Amaca Pty Ltd and Amaba Pty Ltd that had been undertaken by PricewaterhouseCoopers ( PwC ) and Access Economics: (a) were limited to reporting on the logical soundness and technical correctness of the Cash flow Model; (b) had not verified, and PwC and Access Economics had been specifically instructed not to consider, the key assumptions adopted by the Cash flow Model, being: (i) fixed investment earnings rates; (ii) litigation and management costs; and (iii) future claim costs." 8.3 Mr Morley as an officer 1079 We have earlier set out the relevant part of the definition of "officer" in s 9 of the Law. Mr Morley was not a director of JHIL. He came under the obligations of s 180(1) of the Law if he was a person "who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of [JHIL]" (para (b)(i)), or a person "who has the capacity to affect significantly [JHIL's] financial standing" (para (b)(ii)). 1080 The judge said in the liability judgment - "430 As chief financial officer of JHIL, Mr Morley attended all meetings of the board of JHIL in 2000 and 2001. As a person who participated in making decisions that affected the whole or a substantial part of the business of JHIL, Mr Morley satisfied the definition of 'officer' in the Corporations Law as carried over into the Corporations Act . 431 I did not think it was suggested that Mr Morley was not an officer. I thought he agreed that he participated in major decisions affecting the work of the company. But, at least in oral submissions, Mr Morley adopted the submissions advanced on behalf of Mr Shafron. I have rejected those submissions. The participation of Mr Morley in far-reaching decisions of the board of directors of JHIL makes him, like Mr Shafron, an officer within the current definition." 1081 The submissions advanced on behalf of Mr Shafron were dealt with by his Honour at LJ [386]-[393], which we have set out. Only those concerning participation in making decisions are presently material. If Mr Morley was an officer because he participated in making decisions that affected the whole or a substantial part of the business of JHIL, his "responsibilities within the corporation" in s 180(1) were those of a person who so participated. 1082 ASIC submitted that Mr Morley was an officer of JHIL first, because he was a person who participated in making decisions that affected the whole or a substantial part of JHIL's business; and secondly (through a notice of contention) that he was a person who had the capacity to affect significantly JHIL's financial standing. 8.3.1 Participation in decisions 1083 Mr Morley accepted that he was discharging the function of an officer in some aspects of his role as chief financial officer. He agreed in cross-examination that he "participated in major decisions affecting the worth of the company". He gave as his "principal responsibilities" JHIL's financial reporting using information provided within JHIL and in consultation with the external auditors; determining taxation matters in conjunction with external accountants and sometimes external lawyers; and "treasury operations worldwide". He submitted, however, that the function he was performing in presenting the cash flow model was "markedly different", because the board was making or participating in making the decision to approve the separation, and the board was not acting in accordance with his instructions or wishes. His role, it was said, was limited to presenting the cash flow model in order that the board could make a decision as to whether to approve the separation. Similarly, he submitted he was not involved in drafting any announcement or in a decision to approve the Draft ASX Announcement. 1084 These submissions tended to sweep under the carpet his participation in making decisions of the stated character. If the board as a body participated in making decisions, someone else must have participated. If Mr Morley meant that the board members participated in making the board's decisions, that did not adequately recognise participation in making decisions within the definition: see our discussion of participation when considering Mr Shafron as an officer. Nor is it correct to determine Mr Morley's status as an officer only by reference to the decision to establish the Foundation, and still less by reference to a decision to approve the Draft ASX Announcement. We do not accept Mr Morley's submission that s 180(1) required the court to "determine whether the impugned conduct is conduct that would render the defendant an officer such that s 180(1) applies to it". What is to be determined is whether a person has the statutory status of an officer, from the person's participation in making decisions of the stated character. Section 180(1) is then applied to the particular exercise of power or performance of duties of the officer, according to the test of the reasonable person and having regard to the circumstances of the corporation and the responsibilities of the officer. 1085 In our opinion, Mr Morley was an officer of JHIL within this limb of the definition. Apart from the principal responsibilities which he recognised, in his role as chief financial officer he was closely involved in the restructuring proposals from which came the separation proposal. Financial considerations within his role significantly came within the proposals. Mr Morley's December 1999 paper entitled "Potential Separation Structure Outline" had initiated Project Green, and at board meetings in 2000 and 2001 (all of which he attended) he had presented other papers and reports on the evolving separation proposal. The potential impact of ED88, a matter thoroughly within Mr Morley's responsibilities, was a significant driver in the proposal. The shift from the net assets model gave prominence to his role as chief financial officer. While he may not have initiated the cash flow modelling, he became involved in it, and he gave the presentation on the cash flow model at the February meeting; it was important to sufficiency of funding and to the decision to establish the Foundation. As the judge recorded at LJ [434] and [437]-[440], he was involved in recruiting the directors for the Foundation. 1086 More could be said, but we do not think it necessary. In our opinion, Mr Morley participated in decisions of the requisite character, including the decision to establish the Foundation. He did so within his responsibilities as an officer. 8.3.2 Capacity to affect JHIL's financial standing 1087 The judge did not deal with this basis for officership. The submissions on appeal were quite brief. 1088 ASIC relied on the judge's findings at LJ [432] - "432 As the chief financial officer, Mr Morley was the second or third most senior executive in JHIL. He was responsible for all of the finance, audit, tax and treasury aspects of the James Hardie group's affairs. He was responsible for the management of the annual, half yearly and quarterly financial reports of the James Hardie group, the review of audit reports, the fund raising and debt of the James Hardie group, the group's taxation liabilities and tax planning, the group's worldwide treasury operations, internal audit and special projects with a financial focus." 1089 It referred to Australian Securities and Investments Commission v Adler, in which capacity to affect financial standing was found in Mr Adler's involvement in investment decisions and his "participation in the control and direction of the affairs of the group" (at [74]), and to Dwyer v Lippiatt (2004) 50 ACSR 333; [2004] QSC 281 in which it was found in Mr Kirk's "ultimate involvement in all the important decisions affecting Backpackers" (at [68]). 1090 Mr Morley accepted that it was likely that he acted as an officer in the performance of some of his functions "such as his taxation planning function", although he did not relate this specifically to any limb of the definition. He relied on the submissions earlier described for the proposition that it was the board, not himself, which "made or participated in making the decision to approve the separation and which had the capacity to affect James Hardie's financial standing in this particular respect". As well as wrongly confining attention to the particular decision-making, this ran together the particular decision and capacity to affect JHIL's financial standing. The statutory question is whether Mr Morley had the capacity to affect JHIL's financial standing. The answer depends on Mr Morley's capacity, not on the capacity of an abstract chief financial officer. As chief financial officer, Mr Morley was a senior executive with a critical function in JHIL's operations. How he fulfilled his responsibilities, including the principal responsibilities stated above, was likely to affect JHIL's financial standing. In our view, he had the requisite capacity. For this reason also, his involvement in the board's decision to establish the Foundation was within his responsibilities as an officer. 8.4 Consideration of contravention 1091 The contravention found was not, as a matter of pleading or in the declaration of contravention, dependent on the board having passed the Draft ASX Announcement Resolution. Mr Morley submitted, however, that if ASIC failed to prove that the Draft ASX Announcement was at the February meeting the finding of contravention was "undermined". As with Mr Shafron (see [949]) above, we accept that whether the draft news release was before the board for approval as an ASX announcement could bear upon the occasion for making known the limited nature of the reviews by PwC and Access Economics. But in the development of the submission, it included a pleading point. 1092 We have accepted that the 7.42 am draft news release was taken to the meeting by Mr Baxter, although we are not satisfied that it was distributed and considered for approval as an announcement, to be executed and sent to the ASX. 1093 Mr Morley submitted that the finding of contravention was flawed and beyond the pleaded case, because it rested in part upon the Draft ASX Announcement being before the February meeting which was not a matter pleaded against him. He pointed to the finding at LJ [424] that he received a copy of the Draft ASX Announcement at the February meeting. He pointed to the statement at LJ [453] that he "knew, or ought to have known, that the unqualified statements that PwC and Access Economics had advised JHIL and that advice supplemented the company's long experience in the area of asbestos and formed the basis of determining the level of funding required to meet all future claims, was false or misleading and potentially damaging to JHIL". He said that this could have come only from the Draft ASX Announcement, since it was not suggested that he knew the terms of any preceding draft news release. He said that the allegations against him in the FFASC had not included receipt of the Draft ASX Announcement or knowledge of what was in it, as part of his failure to exercise due care and diligence. 1094 So far as it was a pleading point, we do not accept the submission. The contraventions alleged against Mr Morley were not tied to passing of the Draft ASX Announcement Resolution. Nor were they tied to the Draft ASX Announcement being at the February meeting. But the allegation of passing the Draft ASX Announcement Resolution in para 57 of the FFASC was amongst the allegations made against all the defendants, prior to the pleading of contraventions directed to particular defendants or groups of defendants. A draft ASX announcement was picked up by para 108(f), in the pleading directed to Mr Morley. It was clear that the allegations concerning Mr Morley's conduct at the February meeting were in the context of a draft ASX announcement being at the meeting. 1095 We do not think it necessary to have pleaded more specifically receipt of the Draft ASX Announcement, or knowledge of what it said about advice from PwC and Access Economics. If Mr Morley received a copy of the Draft ASX Announcement, that was amongst the circumstances in which discharge of his duties was to be assessed against the standard of the care and diligence of a reasonable person with his responsibilities within JHIL. 1096 Mr Morley made a similar submissions directed to LJ [448] - "448 The assumptions upon which the Cashflow Model was based were essential to its integrity. If the directors had been told that they had not been reviewed, they might had taken different attitude to the Draft ASX Announcement. It attributed to those reviews and the Trowbridge reports a supplementation of the company's experience and the basis for determining the level of funding required to meet all future Asbestos Claims." 1097 It was submitted that the finding of contravention was based on a finding that, if the directors had been told that the cash flow model "had not been reviewed", they might have taken a different attitude to the Draft ASX Announcement; and so the finding turned on the presence of the Draft ASX Announcement at the meeting. Our response is to the same effect. 1098 Although it came into the judge's reasoning, we do not think that the finding of contravention materially rested upon the Draft ASX Announcement being at the February meeting. The contravention was not that Mr Morley should have protested about the statement in the tenth paragraph of the 7.24 am draft news release. It was that he had failed to advise the board of the limited nature of the reviews of the cash flow model by PwC and Access Economics, a failure which went to the decision to establish the Foundation (on the basis of sufficient funding) quite apart from any announcement concerning the establishment of the Foundation. 1099 Apart from any Draft ASX Announcement, the board was taken through the cash flow model by Mr Morley, and was told by a slide that JHIL's analysis had been "reviewed by PWC and Access Economics". As to this, Mr Macdonald said that the model showed that a surplus was the most likely outcome, and Mr Morley said that the model had been reviewed by PwC and Access Economics and they had found it to be logically sound and technically correct. If in the circumstances a reasonable person with Mr Morley's responsibilities would have spoken further to advise the board of the limited nature of the reviews, that would be so without material contribution from contemplation of an ASX announcement with the tenth paragraph. 1100 Mr Morley put another pleading submission to the judge, who did not accept it. The judge said in the liability judgment – "451 It was submitted on Mr Morley's behalf that ASIC did not plead that Mr Morley said anything that induced a belief on the part of the board that PwC or Access Economics had been asked to do anything more than report on the logical soundness and technical correctness of the Cash flow Model. It was submitted that it was incumbent upon ASIC, if it wished to mount a case that Mr Morley did something to engender an erroneous belief on the part of the board that required correction, to have pleaded what Mr Morley said or did that engendered the erroneous belief and to plead what was the erroneous belief that was engendered. 452 I do not accept that submission. This is a case of an erroneous belief engendered by a failure to do something as distinct from a case of an erroneous belief engendered by doing something. The gravamen of ASIC's case is that Mr Morley failed to say anything to dispel an erroneous belief of the directors that the reviews by PwC and Access Economics were more significant than they were in fact by the limited statement he had made and his failure to do more. The pleading identifies the alleged words he used and identifies what more he should have said. It is sufficient." 1101 Mr Morley again submitted on appeal that the pleaded case did not raise an issue as to whether he had engendered an erroneous belief in the minds of the directors. He said that ASIC did not advance that proposition in its evidence and did not cross-examine him on the point. 1102 We do not accept the submission. It was not necessary to plead that, by what he did or failed to do, Mr Morley caused the directors to believe that the reviews by PwC and Access Economics comprehensively endorsed the cash flow model. That they had that belief, or even that they might have had that belief unless the limited nature of the reviews was made known to them, was part of the context in which the reasonable person's care and diligence was to be assessed. Any belief did not have to be engendered by Mr Morley. The allegation against Mr Morley was that, in the context, he had failed to act when the reasonable person would have done so. 1103 The judge said in the liability judgment – "445 Mr Morley did not give the instruction to PwC or to Access Economics to limit their reviews and not to consider the assumptions in the cash flow model. 446 Whether he dictated Mr Ashe's email of 11 February 2001 or merely received it, Mr Morley was aware that the reviews by PwC and Access Economics were limited to logical soundness and technical correctness. Whether or not Mr Morley said to the 15 February 2001 Meeting that the cash flow model had been reviewed by PwC and Access Economics and they had found it to be logically sound and technically correct, it must have been obvious to Mr Morley, or at least it ought to have been, that if nothing more was said and, in particular, if the directors were not told that PwC and Access Economics were instructed not to comment on the assumptions and had not done so, the directors might act under the misapprehension that the reviews were more significant than they were." 1104 Unlike Mr Shafron, Mr Morley did not challenge the finding in the first section of LJ [446] that he knew the limited nature of the reviews by PwC and Access Economics. We take the judge's finding to extend to knowledge that PwC and Access Economics had been instructed not to consider the key assumptions – Mr Morley did not contend otherwise. 1105 Mr Morley's principal submission was that the effect of his presentation at the February meeting, concluding with the reference to the cash flow model having been found logically sound and technically correct, was to make it clear that the review by PwC and Access Economics had not extended to a review of the assumptions underlying the model. It was said in his written submissions - "It was not necessary for Mr Morley to state the tasks which PwC and Access Economics had not undertaken because his statement that they had reviewed the Model and found it to be logically sound and technically correct, did not convey a more comprehensive review, encompassing a review of all of the assumptions. The disclosure made by Mr Morley, when viewed in the totality of the Cashflow Model and accompanying tables, sensitivity analysis, and Mr Morley's oral presentation, objectively conveyed to intelligent and commercially experienced directors, that PwC and Access Economics had reviewed the reasoning and arithmetical operation of the Cashflow Model so as to test, and form a conclusion, as to the Model's 'logical soundness' and 'technical correctness'." 1106 What appears to have been a similar submission was rejected by the judge at LJ [449]; giving it some context, he said - "447 The bland statement that the cash flow model had been reviewed by PwC and Access Economics and they had found it to be logically sound and technically correct did not describe the reviews as being limited and gave the impression, or were capable of giving the impression, that an unlimited review had been concluded with a finding of logical soundness and technical correctness. ... 449 It was submitted that Mr Morley had explained properly the items that made up the cash flow model and its sensitivity to changes in the investment earnings rates. But that is not the gravamen of the allegation against Mr Morley. The allegation is that he failed to explain the limited nature of the reviews that found the cash flow model to be logically sound and technically correct. It was the basis of upon which the reviews were made that was not explained to the 15 February 2001 Meeting and Mr Morley is alleged to have been negligent in failing to do so." 1107 We have referred at [950] above to the judge's description of Mr Morley's evidence of taking the board through the cash flow model. We do not set out the lengthy description. In summary, Mr Morley submitted that - By his references to the key assumptions, a sensitivity table and a sensitivity analysis part of the model, which included that Trowbridge was the source of the asbestos claims data, and by other identification of contents of the model, he made clear that adequacy of funding was dependent on the major assumptions of the Trowbridge cash flows and the assets and earnings of the funds, and that there was high sensitivity to changes in the assumptions; and Intelligent directors made aware of those matters would not have taken the references to the PwC and Access Economics reviews having found the model to be logically sound and technically correct as going beyond confirmation of its reasoning and arithmetical structure, and it was not necessary for him to say so. 1108 We do not accept the submission. 1109 It may readily be recognised that it was understood that the cash flow model took assumptions to which certainty could not be given, and that the modelled sufficiency of funding was sensitive to changes in the assumptions. The conclusion that a surplus was the most likely outcome (as was said in the slides) necessarily involved such an understanding. But it would be expected that the assumptions, with their uncertainty would be reasonably selected from a range of available assumptions. Many, such as the investment earnings rate, would be found in commercial life, and would be well open to reasonable selection. Selection of the assumptions was part of the modelling, and would also be expected to be part of a review of the modelling. It could not be excluded from the comfort sought from external verification as suggested by Mr Loosley. 1110 It is pertinent to follow through the earnings rate. 1111 We have referred to the origin of the 11.7 per cent. It was the earnings rate which would leave a surplus after 50 years. Mr Morley gave evidence that he was satisfied with it because it was in the lower part of a range of historical earnings rates he had obtained from towers Perrin, Mercer and InTech; it was in line with historical equities indices he had obtained from those firms; and "the sensitivity table attached to the Model clearly sets out the results produced by the Model for various other earnings rates". We do not see how the last matter provides support for the reasonableness of the rate. 1112 According to Mr Morley, when going through the cash flow model at the February meeting he said of the interest on average investment column - "We have used 3 external asset consultants and the long-term historical figures provided by them. We have used performance figures from superannuation funds because they are analogous to the fund which is to be set up as dealt with in the model. The figures we have used have been provided by Towers Perrin, Mercers and InTech. We have used a blended rate of 11.7% and applied it through the period of the model on the surplus investment funds. This rate is at the lower end of the historical earnings rates we've looked at. Surplus funds are referred to in column 'a1' of the model." 1113 Still according to Mr Morley, Mr McGregor turned to Mr Wilson and asked if he (Mr Wilson) had checked or confirmed the earnings rate of 11.7 per cent, and Mr Wilson said, "No. The bank does not provide those figures. But we have given Phil [Mr Morley] the historical indices for stock exchange results". Mr Terry then intervened asking that they "get on with this", Mr McGregor asked that Mr Morley speed it up, and he moved on to a sensitivity table. 1114 The judge appears to have accepted that Mr Morley said as stated in the first part of this evidence, at LJ [298], noting that there was some conflict in the evidence about the second part. His Honour did not resolve the conflict. The non-executive directors variously submitted – Mr Brown said to the effect that neither Mr Wilson nor anyone else from management or the advisers suggest that the rate of return was unreasonable or unlikely to be achieved; Mr Gillfillan said to the effect that someone from management said that the 11.7 per cent was achievable having regard to comparables provided by UBS, and neither Mr Wilson nor Mr Sweetman voiced disagreement; Ms Hellicar said to the effect that there was lengthy discussion of the 11.7 per cent, in the course of which Mr Morley and Mr Wilson said that a number of sources had been relied on and each had indicated that the rate was a reasonable one; also Mr McGregor, Mr Brown and Mr Gillfillan said it was reasonable, and no one said it was unreasonable; Mr Willcox said to the effect that he thought the 11.7 per cent was a reasonable assumed earnings rate and no board member or adviser spoke against that proposition. 1115 We are not in a position to resolve a not inconsiderable conflict in the evidence, but the point which emerges is that attention was given to whether the 11.7 per cent earnings rate was a reasonable assumption; and it was therefore all the more important that the board be told that PwC and Access Economics had not been asked to, indeed had been instructed not to, verify that or any other assumption. Whatever comfort was gained by the directors from otherwise being told that it was an achievable earnings rate, as to which there was conflict, failure to make known the limitation to the PwC and Access Economics reviews was all the more likely to mislead. 1116 Nothing in Mr Morley's presentation detracted from the expectation that the reviews would extend to the assumptions. Intelligent appreciation of sensitivity to uncertain assumptions would have increased, not removed, the significance of a statement that the model had been reviewed and had been found logically sound and technically correct, if there were no reference to the limited nature of the review. 1117 Mr Morley submitted that the expression "logically sound and technically correct" itself conveyed that the review was limited to the reasoning in the model or its arithmetical rules, and did not extend to the underlying assumptions. He said that the judge's conclusion that the words were capable of giving an impression that an unlimited review had taken place was contrary to the usual meaning of the words: first, because the directors were intelligent and commercially experienced people; and secondly, because management had used the words to describe the scope of the reviews prior to the February meeting. 1118 Mr Morley's statement was not that the cash flow model had been reviewed for logical soundness and technical correctness, and had been found to be logically sound and technically correct. It was that it had been reviewed, and had been found to be logically sound and technically correct. It may be, as a matter of strict grammar, that someone who listened to these words would not necessarily have confined the nature of the review by the latter words. However, in the context of a detailed presentation of a complex series of interrelated aspects of the proposal under consideration, it is not appropriate to parse and analyse the terminology too closely. If it were appropriate to do so then emphasis could be placed on the fact that Mr Morley did not say that the Model had been found only to be logically sound and technically correct. In their context the words were not clearly restrictive of the nature of the review. 1119 That is not altered by management's use of the words, by which the submission meant Mr Ashe's e-mail and what Mr Harman said to Mr Morley. Mr Ashe used the words specifically as words of limitation, in a different context. 1120 What is not said is often as important as what is said, and the issue is not what might be conveyed by "logically sound and technically correct" in isolation, or in another context. The issue is whether Mr Morley acted unreasonably, using that as shorthand for the s 180(1) test, in not advising the board of the limited nature of the PwC and Access Economics reviews, including that PwC and Access Economics had been instructed not to consider key assumptions. In our opinion the presentation by Mr Morley, as he himself described it in his evidence, gave the impression, or was capable of giving the impression, that an unlimited review had been conducted. In this context ahe ought to have advised the board of the limited nature of the review. 1121 Mr Morley also submitted that, even if what he said gave the impression or was capable of giving the impression that an unlimited review had been conducted, he was not in breach for failing to appreciate at the time that such an impression may have been given. There is no substance in the submission. The reviews of the cash flow model were in fact expressly limited. The model was an important part of the important matter of sufficiency of funding. Knowing the limitation, Mr Morley should reasonably (again as shorthand) have appreciated, at the least, that the directors might gain the wrong impression, and should have spoken out to ensure that they did not. 1122 We add that Mr Brown said that, while he did not expect a verification process on every assumption, he understood that PwC and Access Economics considered the "inputs" appropriate and "would have expected Mr Morley … to inform the board of any material concerns or caveats which they had expressed on any assumption or other aspect of the model"; that Ms Hellicar said she understood that "they had confirmed the way the assumptions had been utilised", and would have brought to attention "any concerns with the assumptions used as inputs"; that Mr Koffel said he understood that "both the expense and revenue side … have been verified"; and that Mr Willcox said that "the word reviewed … best encapsulates [his] … understanding [from what was said at the meeting] of what PWC and Access had done". Mr Gillfillan said that he did not take what Mr Morley said to mean "that they had audited the assumptions and the inputs in the model", but that they had verified "the soundness of the methodology of the model". These directors had differing recollections of what Mr Morley had said about the PwC and Access Economics review. The judge did not refer to this evidence, and it is neither possible nor necessary to express acceptance or rely on it, but it is predominantly consistent with the directors in fact gaining the wrong impression. 8.5 The cross-appeal 1123 The grounds of cross-appeal were - "5. The trial judge erred in failing separately to address that part of the cross-appellant's case that alleged that even if the cross-respondent, Phillip Graham Morley (Mr Morley), was not aware that the best estimate contained in a report dated 13 February 2001 prepared by Trowbridge Deloitte Limited ('Trowbridge Report') and an undated schedule containing an update of Trowbridge's discounted and undiscounted estimate of the existing and contingent liabilities of James Hardie Industries Ltd ('JHIL') to compensate persons who suffered injury, including latent injury, from exposure to asbestos liabilities as at March 2000 for a period of up to 50 years (Trowbridge 50 year estimate) was a 'central estimate' being one that had a 50% chance of equalling or exceeding the actual liability, identified in sub paragraph 109(b)(iii)(D) of the FFASOC, he ought to have been aware of those limitations and advised the Board of Directors of JHIL of them. 6. The trial judge erred in failing separately to address that part of the cross-appellant's case that alleged that even if the cross-respondent, Mr Morley, was not aware of the limitations upon the Trowbridge Report and the Trowbridge 50 year estimate identified in sub paragraph 109(b)(iii)(C) of the FFASOC he ought to have been aware of those limitations and advised the Board of Directors of JHIL of them. 7. The trial judge erred in failing to find, and should have found, that the cross-respondent, Mr Morley, contravened s 180(1) of the Corporations Act 2001 (C'th) by failing to advise the Board of Directors of JHIL, on 15 February 2001 that the 'best estimate' contained in the Trowbridge Report and the Trowbridge 50 year estimate and used as a basis for a cash flow model of the funding being made available to meet asbestos claims against two of JHIL's former subsidiaries, Amaca Pty Limited (Amaca) and Amaba Pty Limited (Amaba), had not taken into account superimposed inflation, and a prudent best estimate would have (FFASOC [110(b)(iii)(B)]). 8. the trial judge erred in failing to find, and should have found that the cross-respondent, Mr Morley, contravened s 180(1) of the Corporations Act 2001 (C'th) by failing to advise the Board of Directors of JHIL on 15 February 2001 that the 'best estimate' contained in the Trowbridge Report and the Trowbridge 50 year estimate and used as a basis for a cash flow model of the funding being made available to met asbestos claims against two of JHIL's former subsidiaries, Amaca and Amaba, had only a 50 per cent probability of being achieved (FFASOC [110(b)(iii)(C)])." 1124 Similarly to Mr Shafron, the grounds invited finding the contraventions alleged in paras 109(b)(iii)(C) and 109(b)(iii)(D) of the FFASC, on the basis that Mr Morley ought to have known that the best estimate in the February 2001 Trowbridge Report and the Trowbridge 50 Year Estimate had not taken into account superimposed inflation and a prudent estimate would have (the para 109(b)(iii)(C) contravention) and that the best estimate had only a 50 per cent probability of being achieved (the para 109(b)(iii)(D) contravention). 1125 The judge declined to find the contravention alleged in para 109(b)(iii)(C) because he was "not persuaded that Mr Morley understood on 15 February 2001 that the best estimate in the February 2001 Trowbridge report and the Trowbridge 50 Year Estimate had not taken into account superimposed inflation as a prudent estimate would": LJ [476]. He did not consider whether Mr Morley ought to have known of that matter. 1126 ASIC did not challenge the finding as to lack of knowledge, but cross-appealed on the basis that Mr Morley ought to have had the knowledge. The judge's reasons in the liability judgment for the finding as to lack of knowledge are nonetheless material. They were - "471 In relation to the charge that Mr Morley failed to advise the board at the 15 February 2001 Meeting that the Trowbridge reports had not taken into account superimposed inflation, ASIC pointed to material available to Mr Morley that would have informed him of the concept of superimposed inflation and the need to warn the board that in establishing a fund based upon the Trowbridge best estimate, the board needed clearly to understand that it did not take into account superimposed inflation. 472 But in order to found the charge, ASIC had to establish that Mr Morley read this material or in some other way had become aware of the need for superimposed inflation. 473 Mr Morley agreed in cross-examination that in the February 2001 Trowbridge Report, Asbestos Claim payouts were increased by an inflation rate of 4%. Mr Morley agreed that this would be just slightly higher than the general inflation rate at the time. That was followed by this exchange: 'Q. You would accept, wouldn't you, if you were a person wanting to the ( sic ) prudent about the amount you might set aside to be entirely comfortable with its likelihood of covering projected asbestos liabilities, it would be a good idea to assume that claims would be higher, would increase higher than the ordinary inflation rate? A. Yes, that's what - that was what was done in February 2001, because Trowbridge incorporated the Watson and Hurst data.' 474 ASIC submits that Mr Morley was wrong about this because the Watson & Hurst data involved different assumptions as to the number and distribution of claims and not the adoption of any differing assumption as to inflation. The Watson & Hurst material of November 2000 that made this clear was sent to Mr Morley in December 2000. 475 Mr Morley may have forgotten this when he said that the adoption of the Watson & Hurst material involved the adoption of a higher inflation rate. But that was the answer he gave and it was not further explored in cross-examination. 476 I am not persuaded … ." 1127 The judge declined to find the contravention alleged in para 109(b)(iii)(D) because "ASIC … failed to persuade me that Mr Morley was aware of the nature of the Trowbridge best estimate as having only a 50% probability of being achieved": LJ [470]. He did not consider whether Mr Morley ought to have known of that matter. 1128 Again, ASIC did not challenge the finding as to lack of knowledge, but cross-appealed on the basis that Mr Morley ought to have had the knowledge. The judge's reasons for the finding as to lack of knowledge in the liability judgment were - "460 As to the allegation that Mr Morley failed to advise the board at the 15 February 2001 Meeting that Trowbridge's best estimate only had a 50% probability of being achieved, is concerned, ASIC submitted that Mr Morley should have realised that an obvious issue was the degree of uncertainty surrounding the Trowbridge best estimate. 461 ASIC relied upon the references in the annual reports to the valuation being so uncertain that a provision for future liabilities could not be raised; the discussion in the August 2000 presentation concerning the 2000 Draft Trowbridge Report noting that it had 'heavily qualified findings', 'numerous disclaimers' and 'actuaries have favoured "low side" numbers'. ASIC relied upon Mr Shafron's continuous disclosure memorandum of October 2000 where it said the Trowbridge work did not produce any definite outcomes. Reliance was placed upon Mr Macdonald's memorandum of 13 December 2000 referring to proposed changes in accounting standards. Reliance was also placed upon the references in the January 2001 board papers to the fact that James Hardie group's asbestos liability could not be reliably measured and reliance was placed on the letter from Mr Minty to Allens referring to two further projections of claim numbers on a best estimate basis and a high basis. 462 None of this material, however, establishes that Mr Morley was aware of the nature of a central estimate. 463 ASIC also relies on Mr Minty's statement to the meeting of proposed Foundation directors on 13 February 2001 set out above. As with Mr Shafron, I would not regard that statement, on its face, to convey the notion that the best estimate had only a 50% chance of being accurate. But ASIC submitted that Mr Morley agreed to this proposition in cross-examination on what Mr Minty had said: 'Q. What I am suggesting to you is you understood that an estimate which lay between an optimistic and a conservative one, precisely in the middle, had an equal chance of covering the actual liabilities; that was obvious, wasn't it? A. Yes.' 464 I do not accept that by that answer Mr Morley conceded that Trowbridge's best estimate had only a 50% chance of being accurate. 465 It had been put to Mr Morley that he understood that a conservative estimate had a greater chance of covering the actual liabilities than an optimistic estimate. He answered by saying that was why Mr Minty gave them the Berry high so they had two curves to look at. 466 Geoffrey Berry had made projections called 'Berry high' and 'Berry low'. They were plotted on a graph. A third set of projections, 'Berry medium', were also plotted on the graph. 467 Mr Morley agreed that an optimistic estimate had a lesser chance of covering the actual liabilities. Then this was put: 'Q. You understood that an estimate in between the two would have an equal chance of covering the actual liabilities; that's right, isn't it? A. No. My understanding at the time was Berry medium was their best estimate which was the most likely. They also supplied a Berry high – Q. But I - A. So I took that to be Berry medium had a better than 50 per cent chance and Berry high was a projection for a higher claims experience.' 468 It was in that context that the hypothetical question was put to him assuming a position precisely between an optimistic and a conservative approach. He agreed to that. But that did not mean he departed from his view that Berry medium, as the most likely, had a better than 50% chance of covering actual liabilities. 469 Mr Morley did not put to the 15 February 2001 Meeting that the best estimate in the Trowbridge reports had only a 50% probability of being achieved. Mr Morley had thrown up the contrast between Berry high and Berry medium by including the Berry high figures in the sensitivity analysis as the high scenario. That in itself suggests that Mr Morley was ignorant of the nature of the Trowbridge best estimate. If he had been aware that it had a 50% probability of being accurate, one would have expected him to have said so. 470 ASIC has failed to persuade me ... ". 1129 We go first to best estimate. ASIC submitted that Mr Morley ought to have been aware of the nature of a best estimate for three reasons. 1130 The first was that he should have familiarised himself with the 1996, 1998, 2000 and 2001 Trowbridge reports, which were said to contain a number of references said to warrant inquiry into the certainty associated with the "best estimate" in the last of the reports. The references were not specific to a "best estimate", which did not appear until 2001, but to Trowbridge's warnings that their estimates were subject to considerable uncertainty and significant deviations could be expected. It was said that Mr Morley should have inquired because he was the chief financial officer of the group, and as well a director of Coy and Jsekarb, the two entities bearing asbestos liabilities, and was responsible for the preparation of group accounts which contained contingent liability notes addressing asbestos exposure, and because he was responsible for supervising the cash flow modelling. It was pointed out that he attended a meeting with Trowbridge in relation to the preparation of the February 2001 Trowbridge Report. 1131 The second was that in other ways he had been "alerted to an obvious issue concerning the level of certainty associated with" Trowbridge's estimates, so as to warrant him ascertaining what that level was. ASIC relied on the matters recorded at LJ [461], part of the extract from the judge's reasons set out above, other than the letter from Mr Minty, and also on the references in the cash flow model itself to the three different best estimate, most likely and high bases. 1132 The third was that Mr Morley was at the meeting of proposed directors of the Foundation on 13 February 2001, when Mr Minty stated that the "best estimate" was the amount Trowbridge thought to be the most likely on the basis that it was intended to be "neither optimistic nor conservative" (see LJ [463] and at [1058] above), as to which Mr Morley gave the evidence set out by the judge at LJ [463]. ASIC submitted that, even if Mr Morley did not in his answer concede that he was aware of the nature of a best estimate, his appreciation of an estimate "precisely in the middle" (counsel's words, not Mr Minty's) or "neither optimistic nor conservative" should have led to an appreciation, or at least to inquiry which would have brought knowledge, that the estimate only had a 50 per cent probability of being achieved. 1133 It may be accepted that Mr Morley was aware or should have been aware that Trowbridge's estimates of asbestos liabilities were not certain, and were subject to many variables and to deviation from the estimated figures. As chief financial officer, he could be expected to be particularly conscious of the consequential uncertainties for financial reporting – as no doubt was part of his concern over the introduction of ED88. However, it is difficult to see that he should have enquired into "best estimate" when that phrase was not used until 2001, and Trowbridge had otherwise explained the nature of the estimates in the earlier reports. 1134 The substance of ASIC's submissions, and they did not go much further, was that he should therefore have asked what was meant by "best estimate" in the February 2001 Trowbridge Report, when an estimate so described was put forward and the best estimate was used in the cash flow modelling. The unstated corollary was that Mr Morley would have been told that it was an estimate with only a 50 per cent chance probability of being achieved. 1135 As with Mr Shafron, in the light of what Mr Minty said on 13 February 2001 it may be doubted whether inquiry would have brought the response that the Trowbridge best estimate was one having only a 50 per cent probability of being achieved. However, we do not think that ASIC established that Mr Morley ought to have known that that was its nature. 1136 As chief financial officer, Mr Morley was concerned to work with the information provided to him by the actuaries. The irreducible fact was that Trowbridge's estimates were but estimates. Only in February 2001 did "best estimate" emerge, meaning an estimate on the assumed claim numbers so described in the February 2001 Trowbridge Report. Mr Shafron rather than Mr Morley dealt with Trowbridge, and Mr Morley could reasonably take the figures as an estimate, come to on the best estimate basis described in the report, without further enquiry. He worked with what the actuaries, who were the experts, had provided. 1137 Mr Morley heard Mr Minty's explanation on 13 February 2001. We do not think that, any more than Mr Shafron, a reasonable person with his responsibilities would have enquired further into the best estimate than Mr Minty had then explained: to repeat, that a best estimate was "the amount which we think is most likely to be the outcome on the basis that it is intended to be neither optimistic nor conservative". This did not invite or call for inquiry into the numerical probability of the estimate being achieved. 1138 We go then to superimposed inflation. ASIC submitted that Mr Morley ought to have known that the Trowbridge best estimate did not take into account superimposed inflation, as a prudent estimate would have, because, in summary - the June 2000 draft report had assumed claim payment inflation at 4 per cent; Mr Shafron's presentation at the August 2000 board meeting (see [130] above), which was attended by Mr Morley, had included that JHIL's "settlement costs" had increased for "meso" by 45% over 5 years and "non-meso" by nearly double over 2 years; Mr Morley agreed in his evidence that he understood that there was a discrepancy between the 4 per cent inflation assumption and JHIL's experience of an increasing cost of claims; from the slides for the February meeting, referring to the same assumptions and specifically to 4 per cent, the cash flow modelling used a best estimate which did not take account of superimposed inflation; and Mr Morley ought to have appreciated this; and because of his understanding from the August 2000 meeting, Mr Morley ought to have appreciated that superimposed inflation should be taken into account. 1139 ASIC relied also on Mr Morley's evidence set out at LJ [473], which is part of the extract from the judge's reasons earlier set out. It said that although Mr Morley may have had the understanding that the Watson and Hurst data assumed that claims would increase higher than the ordinary inflation rate, his answer showed an appreciation that they would so increase, and thus that prudence required that superimposed inflation be taken into account. 1140 Mr Morley submitted that it would be unreasonable to hold that a person in his position should have known of the need to take account of superimposed inflation unless he was directly told. He said that Mr Shafron had responsibility within JHIL for dealing with Trowbridge and asbestos liabilities, and spoke to the Trowbridge assumptions in the cashflow model at the February meeting. Mr Morley did not see a Trowbridge report until the February 2001 material (this appears to have been due to maintaining their status as legally privileged). He first had contact with Trowbridge on 19 January 2001, and the only other direct contact was at the meeting of proposed Foundation directors on 13 February 2001. Mr Morley submitted that he had no actuarial training or experience, and could not have been expected to understand the term "superimposed inflation", which he heard for the first time at the meeting of proposed directors on 13 February 2001 where it was not explained. He assumed it meant nothing more than a rate of inflation greater than the CPI. His understanding was that the Watson and Hurst data dealt sufficiently with claims inflation. 1141 We are not persuaded that Mr Morley ought to have known, in short, that superimposed inflation had not been taken into account and should have been. The contravention alleged by ASIC was in specific terms, that Mr Morley ought to have known, and failed to advise the board that, the best estimate "had not taken into account superimposed inflation, and a prudent estimate would have". We do not think Mr Morley ought to have known of the actuarial concept prior to its mention on 13 February 2001; again, he took the information provided by the actuaries. (Mr Shafron was in a different position; he did know of it, and had the involvement in Trowbridge's reports.) No doubt there should not be undue insistence on knowledge of the precise concept, and it could be sufficient to understand that the cost of claims would or might increase at a rate greater than allowed for by Trowbridge. But in our opinion a reasonable person with Mr Morley's responsibilities would not have entered into Mr Shafron's involvement with Trowbridge's estimates and enquired into the account taken in the February 2001 Trowbridge report, or the Trowbridge 50 Year Estimate, of the rate at which claims might increase in the future. 1142 In his evidence preceding the evidence set out at LJ [473] Mr Morley accepted that Trowbridge assumed claims increasing by about the inflation rate of 4 per cent but that JHIL's experience had been that claims were increasing at more than the inflation rate. But he was not challenged on his understanding that the Watson and Hurst data dealt sufficiently with claims inflation. His understanding was incorrect, but it was not put to him that he had unreasonably gained that understanding or that he should have gone further notwithstanding that understanding. The detail of any additional allowance by the actuaries was reasonably left as a matter for Mr Shafron. 1143 In the case of Mr Morley, we do not uphold the cross-appeal. 9. WHERE TO FROM HERE? 1144 The contraventions upheld or found on cross-appeal are - Contraventions by Mr Shafron in relation to the DOCI and in relation to superimposed inflation; and Contravention by Mr Morley in relation to the cash flow analysis. 1145 The contravention by Mr Shafron in relation to superimposed inflation was not amongst the contraventions found by the judge. When his Honour addressed relief from liability and pecuniary penalty and disqualification, therefore, Mr Shafron did not have occasion to consider calling evidence, or to make submissions, directed to that contravention. He should have the opportunity to do so. He should also have the opportunity to make submissions in the light of his successful appeal against the finding of contravention in relation to the cash flow model. 1146 Further, although the contraventions now in play are not dependent on the passing of the Draft ASX Announcement Resolution, the context for the judge's conclusions in the penalty judgment was that the draft news release had been before the February meeting for approval as an ASX announcement, and had been approved. Mr Shafron and Mr Morley, and ASIC, may wish to make submissions arising from the now different context. 1147 In our opinion, we should not at present proceed to relief from liability or to pecuniary penalty and disqualification. Whether those matters, or at least pecuniary penalty and disqualification, should be remitted to the judge may depend on whether Mr Shafron wishes to call evidence now that a further contravention has been found. If he does not, this Court may be able to dispose of the remainder of these appeals and cross-appeals on written submissions. 1148 There should be a directions hearing at which Mr Shafron makes that known and the parties (ASIC, Mr Shafron and Mr Morley) briefly state how each submits we should proceed. 1149 There is no reason why we should not make orders finally disposing of the appeals by and cross-appeals against Mr Brown, Mr Gillfillan, Ms Hellicar, Mr Koffel, Mr O'Brien and Mr Willcox, including as to costs; or in the appeals by and cross-claims against Mr Shafron and Mr Morley orders giving effect to our conclusions as to contraventions, although costs in those appeals and cross-appeals should be left for later disposal. 10. THE COSTS APPEAL AND CROSS-APPEAL 1150 The costs orders distinguished between issues in the proceedings: the Draft ASX Announcement issue, the DOCI Execution issue, the Roadshow Presentations issue, the Scheme of Arrangement issue and so on. 1151 The costs order against which Mr Morley appeals was that the judge "[made] no order to costs of the DOCI Execution issue such that Mr Morley and ASIC will bear their own costs of that issue". 1152 The costs ordered against which ASIC appealed, but only as against Messrs O'Brien and Terry, was that the judge "[made] no order as to costs of the group of issues comprising the allegations with respect to the Draft ASX Announcement, the Final ASX Announcement, the Press Conference Statements, the 23 February ASX Announcement and the 21 March 2001 ASX Announcement". 10.1 Mr Morley's appeal 1153 Mr Morley contended that ASIC should have been ordered to pay his costs referable to the DOCI Execution issue, because he had been wholly successful in defending ASIC's claims against him on that issue. 1154 It is not necessary now to describe the DOCI Execution issue. Costs as between ASIC and Mr Morley should be decided once the overall result in the proceedings is known. The same dispute may remain, but Mr Morley's costs appeal should be stood over for consideration together with, or following, the further consideration of relief from liability, and pecuniary penalty and disqualification. 10.2 ASIC's cross-appeal 1155 ASIC contended that the judge should have ordered that Mr O'Brien and Mr Terry pay its costs of the Draft ASX Announcement issue, because the only contravention alleged against them concerned that issue and with limited exceptions it was successful in its case. The cross-appeal falls away with the success of the appeals of Mr Terry and Mr O'Brien. ASIC must pay all their costs. 11. ORDERS 1156 We make the following orders - 1. In each of 2009/298425 (Mr Terry), 2009/298427 (Ms Hellicar), 2009/298428 (Mr Brown), 2009/298440 (Mr Gillfillan), 2009/298441 (Mr Koffel), 2009/298442 (Mr O'Brien) and 2009/298524 (Mr Willcox) – (a) Appeal allowed. (b) Set aside the declaration and orders made against the appellant on 27 August 2009; (c) Order that the proceedings against the appellant be dismissed with costs. (d) Cross-appeal dismissed. (e) Order that ASIC pay the appellant's costs of the appeal and cross-appeal. 2. In 2009/298408 (Mr Morley) – (a) Appeal against the declaration made on 27 August 2009 dismissed. (b) Cross-appeal dismissed. (c) Stand over the appeal and cross-appeal to 9.30 am on 4 February 2011 before Giles JA for directions for their further conduct. 3. In 2009/298416 (Mr Shafron) – (a) Appeal allowed in part. (b) Set aside declarations 1 and 2 made on 27 August 2009. (c) Appeal against declaration 3 made on 27 August 2009 dismissed. (d) Cross-appeal allowed in part. (e) Declare that the appellant contravened s 180(1) in relation to JHIL by his conduct, as an officer of that corporation, on or about 15 February 2001 in failing to advise its board of directors that the best estimate contained in a schedule attached to an e-mail dated 9 February 2001 and in a report dated 13 February 2001 being estimates by Trowbridge Deloitte Ltd of JHIL's liabilities for exposure to asbestos products for up to 50 years and for 20 years respectively had not taken into account superimposed inflation, and a prudent estimate would have. (f) Liberty to apply within 14 days in relation to the terms of the declaration in (e). (g) Cross-appeal otherwise dismissed. (h) Stand over the appeal and cross-appeal to 9.30 am on 4 February 2011 before Giles JA for directions for their further conduct. ********** 17/12/2010 - Order 4 deleted - incorrect - Paragraph(s) 1156 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.