Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Gillfillan & Ors v Australian Securities & Investments Commission [2012] NSWCA 370 Hearing dates: 20, 21, 22 August 2012 Decision date: 12 November 2012 Before: Beazley JA at [1] Barrett JA at [3] Sackville AJA at [18] Decision: See orders at [363] - [365] [Note: 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 - contraventions of s 180(1) of the Corporations Act by seven non-executive directors of a listed corporation - contraventions relate to approval at a Board meeting of an Announcement by the corporation - declarations of contravention not in dispute following an appeal to the High Court - primary Judge disqualified each director for five years and imposed a pecuniary penalty of $30,000 - whether penalties involved error - whether primary Judge correctly applied the parity principle - assessment of penalties - factors to take into account - significance of "de facto" period of disqualification pending High Court appeal - significance of absence of finding of dishonesty - materiality of testimonial evidence. CORPORATIONS - two non-executive directors attend meeting by telephone from the United States - they neither see the Draft Announcement nor ask to see it - whether the US Directors should be relieved from liability under ss 1317S(2) or 1318(1) of the Corporations Act - whether circumstances justify different penalties being imposed on the US Directors. CORPORATIONS - agreed penalties - whether court should accept joint submissions concerning penalties to be imposed on an officer of the corporation. Legislation Cited: Civil Procedure Act 2005 Criminal Appeal Act 1912 Supreme Court Act 1970 Suitors' Fund Act 1951 Acts Interpretation Act 1901 (Cth) Corporations Act 2001 (Cth) Corporations Law (Cth) Cases Cited: Australian Coal and Shale Employees' Federation v Commonwealth [1953] HCA 25; 94 CLR 621 Australian Securities and Investments Commission v Beekink [2007] FCAFC 7; 238 ALR 595 Australian Securities and Investments Commission v Elm Financial Services Pty Ltd [2005] NSWSC 1020; 55 ACSR 411 Australian Securities and Investments Commission v Healey (No 2) [2011] FCA 1003; 85 ACSR 654 Australian Securities and Investments Commission v Hellicar [2012] HCA 17; 286 ALR 501 Australian Securities and Investments Commission v Macdonald (No 11) [2009] NSWSC 287; 256 ALR 199 Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714; 259 ALR 116 Australian Securities and Investments Commission v Vizard [2005] FCA 1037; 145 FCR 57 Australian Securities and Investments Commission v Whitlam (No 2) [2002] NSWSC; 42 ACSR 515 Commonwealth v McCormack [1984] HCA 57; 155 CLR 273 Elliott v Australian Securities and Investments Commission [2004] VSCA 54; 10 VR 369 Forrest v Australian Securities and Investments Commission [2012] HCA 39 Gill v The Queen [2010] NSWCCA 236 Green v The Queen [2011] HCA 49; 244 CLR 462 Hall v Poolman [2007] NSWSC 1330; 65 ACSR 123 House v The King [1936] HCA 40; 55 CLR 499 Lovell v Lovell [1950] HCA 52; 81 CLR 513 Lowe v The Queen [1984] HCA 46; 154 CLR 606 Mill v The Queen [1988] HCA 70; 166 CLR 59 Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72; [2004] ATPR 41-993 Morley v Australian Securities and Investments Commission [2010] NSWCA 331; 81 ACSR 285 Morley v Australian Securities and Investments Commission (No 2) [2011] NSWCA 110; 83 ACSR 620 NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 O'Brien v Australian Securities and Investments Commission [2009] NSWCA 312; 74 ACSR 324 Pearce v The Queen [1998] HCA 57; 194 CLR 610 Postiglione v The Queen [1997] HCA 26; 189 CLR 295 R v Kollas and Mitchell [2002] NSWCCA 491 Re HIH Insurance Ltd (In prov liq); Australian Securities and Investments Commission v Adler [2002] NSWSC 483; 42 ACSR 80 Re GIGA Investments Pty Ltd (1995) 17 ACSR 472 Re One.Tel Ltd (in liq); Australian Securities and Investments Commission v Rich [2003] NSWSC 186; 44 ACSR 682 Rich v Australian Securities and Investments Commission [2004] HCA 42; 220 CLR 129 Shafron v Australian Securities and Investments Commission [2012] HCA 18; 286 ALR 612 Vines v Australian Securities and Investments Commission [2007] NSWCA 126; 63 ACSR 505 Warren v Coombes [1979] HCA 9; 142 CLR 531 Category: Principal judgment Parties: CA 2012/194766 Michael John Gillfillan (Appellant) Australian Securities and Investments Commission (Respondent) CA 2012/194824 Michael Robert Brown (Appellant) Australian Securities and Investments Commission (Respondent) CA 2012/194856 Meredith Hellicar (Appellant) Australian Securities and Investments Commission (Respondent) CA 2012/194902 Gregory James Terry (Appellant) Australian Securities and Investments Commission (Respondent) CA 2012/194958 Geoffrey Frederick O'Brien (Appellant) Australian Securities and Investments Commission (Respondent) CA 2012/195054 Martin Koffel (Appellant) Australian Securities and Investments Commission (Respondent) CA 2012/195065 Peter Willcox (Appellant) Australian Securities and Investments Commission (Respondent) CA 2012/195077 Peter James Shafron (Appellant) Australian Securities and Investments Commission (Respondent) Representation: Counsel: J T Gleeson SC and R Hardcastle (Mr Brown and Ms Hellicar) D M J Bennett QC and R Hollo SC (Mr Gillfillan and Mr Koffel) R G McHugh SC, S M Nixon and S A C Patterson (Mr Terry) P M Wood and M S Henry (Mr O'Brien) T Jucovic QC and R Scruby (Mr Willcox) A Bannon SC and S Pritchard SC (Australian Securities and Investments Commission) Solicitors: Atanaskovic Hartnell (Mr Gillfillan, Mr Brown, Ms Hellicar and Mr Koffel) Arnold Bloch Leibler (Mr O'Brien) Ashurst (Mr Terry) Kemp Strang (Mr Willcox) Middletons Lawyers (Mr Shafron) Clayton Utz (Australian Securities and Investments Commission) File Number(s): Decision under appeal Citation: Australian Securities and Investments Commission v Peter Donald Macdonald and Others Date of Decision: 2009-08-27 00:00:00 Before: Gzell J File Number(s): SC 1490 of 2007 Judgment INDEX Basic Facts[24] Legislation[26] Course of Proceedings[33] Proceedings at First Instance[33] Stay Orders[47] Proceedings in the Court of Appeal[50] The High Court Appeals[61] Conduct of the Remitted Appeals[64] The Facts[77] Material Before the Board Prior to the Meeting[78] Papers Provided to the Meeting[88] Project Green Presentation[91] The Exchange Between Mr Brown and Mr Macdonald[99] The Draft ASX Announcement[103] Penalty Judgment[113] High Court Judgment[146] Submissions[148] Appellants' Submissions[148] Mr Brown and Ms Hellicar[148] Mr Terry[155] Mr O'Brien[159] Mr Willcox[163] The US Directors[165] Reasoning on Penalties[173] Principles Relating to Disqualification Orders[173] Did the Primary Judge Err?[191] Reconsideration of Disqualification Orders Imposed on the Australian Directors[209] Mr Brown and Ms Hellicar[216] Mr Terry[266] Mr O'Brien[270] Mr Willcox[284] The US Directors[292] Relief from Liability[292] Disqualification[317] Pecuniary Penalties[321] Mr Shafron[333] Costs[345] ASIC's Cross Appeal[345] Costs of the Liability Appeal[354] Remaining Costs Issues[360] Orders[363] 1BEAZLEY JA: I have had the opportunity to read in draft the reasons of Sackville AJA and the additional comments of Barrett JA. The matter which I have found particularly vexing is whether the directors located in the United States ought to be visited with the same penalties as the directors who were physically present at the meeting on 15 February 2001. 2Not without some hesitation, I have concluded that a lesser penalty is warranted in the particular circumstances of this case. Accordingly, I agree with the orders proposed by Sackville AJA and with his reasons. I also agree with the comments of Barrett JA. 3BARRETT JA: I am of the opinion that the orders proposed by Sackville AJA should be made for the reasons his Honour gives. 4I wish to make some observations about two matters of company procedure emphasised by the circumstances of this case. 5The first concerns the way in which decision-making by a board of directors should be undertaken. 6Section 248G of the Corporations Act 2001 (Cth) enacts replaceable rules that a resolution of the directors of a company must be passed by a majority of the votes cast by directors entitled to vote on the resolution and that the chair has a casting vote, if necessary, in addition to any deliberative vote to which he or she is entitled as a director. Experience suggests that, where articles within the company's constitution operate to the exclusion of these replaceable rules, the constitution will very likely make substantially similar provision. 7Under a regime of this kind, the required method of decision-making is the passing of a resolution of the body of persons; and the passing of a resolution depends on the casting of individual votes. It follows that procedures actually adopted must be such that each member of the body who is entitled to vote and wishes to do so may communicate his or her vote and have it taken into account. 8Value is often attached to collegiate conduct leading to consensual decision-making, with a chair saying, after discussion of a particular proposal, "I think we are all agreed on that", intending thereby to indicate that the proposal has been approved by the votes of all present. 9Such practices are dangerous unless supplemented by appropriate formality. 10The aim is not to consult together with a view to reaching some consensus, although it may well be, as a practical matter, that such consultation facilitates the making of the decision that is ultimately required. The aim is rather that the members of the board should consult together so that individual views may be formed and the individual will of each member may be made known in a clearly communicated way. 11The culmination of the process must be such that it possible to see (and to record) that each member, by a process of voting, actively supports the proposition before the meeting or actively opposes that proposition; or that the member refrains from both support and opposition. And it is the responsibility of an individual member to take steps to ensure that his or her will is expressed in one of those ways. 12This leads to the second matter. It concerns participation in board meetings by telephone, audio-visual link or other like means of communication. 13Specific provision in that connection is made by s 248D of the Corporations Act, a section that applies to all companies and is not a replaceable rule: "A directors' meeting may be called or held using any technology consented to by all the directors. The consent may be a standing one. A director may only withdraw their consent within a reasonable period before the meeting." 14This provision presents, in general terms, two main possibilities: first, that some participating directors are physically together at one location while the other participating directors (or director) are at one or more other locations; and, second, that every participating director is physically separated from every other participating director. 15The statutory permission for a meeting of directors to be "held" by means of agreed technology entails, as a bare minimum, a requirement that each participating director can, for the duration of the meeting, hear and be heard by every other participating director - or, as it was put by Branson J in Re GIGA Investments Pty Ltd (1995) 17 ACSR 472, is "able to be aware of the contributions to the meeting made by each other director and to contribute himself or herself to the meeting without significant impediment". But more may be required in a given case. For example, where the directors discuss the content of a particular document in the course of the meeting and that document is not already in the possession of every director entitled to participate, the agreed technology by means of which the meeting is "held" must enable each participating director to see the document's content at the relevant point during the meeting. In the same way, if a document is to be "tabled" at a meeting of directors (see, for example, s 192(3) of the Corporations Act), the agreed technology must be such as to allow the full content of the document to be placed before every participating director. Other aspects of a particular meeting's agenda may, in the same way, dictate attributes of permissible technology. 16Under s 248D, particular technology may be employed for the holding of a meeting only if that technology is "consented to by all the directors". It must therefore be seen that every one of the directors in office when the meeting is held has separately and individually consented to the holding of the meeting by means of the technology in fact to be used. The section states that the consent "may be a standing one", but this does not mean that technology consented to on a "standing" basis by each of A, B and C (being all the directors in office at the time of the consent) is available after the board comes to consist of A, B and D. 17The decision whether or not to consent to a particular mode of technology for the purposes of s 248D is a personal decision for each director. Any director giving conscientious consideration to that question is bound to assess whether the proposed technology will satisfy the requirements outlined at [15] above. 18SACKVILLE AJA: The High Court has remitted to this Court so much of the appeals by seven former non-executive directors of James Hardie Industries Ltd ("JHIL") as relate to relief from liability for breaches of s 180(1) of the Corporations Act 2001 (Cth) ("Corporations Act") and to penalties: Australian Securities and Investments Commission v Hellicar [2012] HCA 17; 286 ALR 501 ("HC Judgment"). I refer to the seven former non-executive directors collectively (Mr Brown, Mr Gillfillan, Ms Hellicar, Mr Koffel, Mr O'Brien, Mr Terry and Mr Willcox) as "the appellants". I refer to Mr Gillfillan and Mr Koffel as "the US Directors". For convenience, I refer to the remaining five appellants as "the Australian Directors", although in fact they were not the only Australian-based directors of JHIL. I refer to the respondent to each of the appeals, the Australian Securities and Investments Commission as "ASIC". 19The High Court has also remitted to this Court so much of the appeal by the former secretary and general counsel of JHIL, Mr Peter Shafron, as relates to penalty, together with ASIC's cross-appeal against Mr Shafron on penalty: Shafron v Australian Securities and Investments Commission [2012] HCA 18; 286 ALR 612 ("HC Shafron Judgment"). Mr Shafron and ASIC have reached agreement on the appropriate penalties to impose on Mr Shafron and have asked the Court to impose the agreed penalties. I shall deal with their joint application later. 20The remitted appeals are the latest stage of proceedings commenced on 14 February 2007 in which ASIC sought, among other relief, pecuniary penalties and disqualification orders against the appellants. ASIC alleged that each of the appellants had approved the release by JHIL to the Australian Stock Exchange ("ASX") of a draft announcement that was misleading in a number of respects. The approval was said to have been given at a meeting of the Board of directors of JHIL held on 15 February 2001 ("the Meeting"). I refer to the draft announcement approved at the Meeting as the "Draft ASX Announcement", although I sometimes abbreviate this to "Announcement". 21The primary Judge made a declaration that each appellant had contravened s 180(1) of the Corporations Act 2001 ("Corporations Act"), which in substance provides that directors of a corporation must exercise their powers and discharge their duties with a reasonable degree of diligence. His Honour made orders disqualifying each appellant from managing corporations for a period of five years and imposing on each a pecuniary penalty of $30,000: Australian Securities and Investments Commission v Macdonald (No 11) [2009] NSWSC 287; 256 ALR 199 ("Liability Judgment"); Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714; 259 ALR 116 ("Penalty Judgment"). 22The Court of Appeal allowed appeals by the appellants against the declarations of contravention made against them. In consequence, the disqualification and pecuniary penalty orders were set aside: Morley v Australian Securities and Investments Commission [2010] NSWCA 331; 81 ACSR 285 ("CA Liability Judgment"). 23ASIC sought and was granted leave to appeal to the High Court, which allowed the appeal. The High Court restored the declaration of contravention and the disqualification and pecuniary penalty orders made by the primary Judge against the appellants. By reason of the High Court's decision, the primary Judge's declarations of contravention are no longer in dispute. The appeals by the appellants against the disqualification and pecuniary penalty orders remain to be resolved. Basic Facts 24The "basic facts" of the case were recounted in the HC Judgment, (at [12]-[18]), as follows: "12. Until October 2001 JHIL was the ultimate holding company of the James Hardie group of companies. JHIL was a listed public company; its shares were listed on the ASX. Two wholly owned subsidiaries of JHIL, James Hardie & Coy Pty Ltd ('Coy') and Jsekarb Pty Ltd ('Jsekarb'), had manufactured and sold products containing asbestos. Each of Coy and Jsekarb was subject to claims for damages for personal injury suffered by those who had come in contact with its asbestos products. 13. In 2001 the board of JHIL expected that there would be further claims made against Coy and Jsekarb. The board of JHIL decided to restructure the James Hardie group by 'separating' Coy and Jsekarb from the rest of the group. This was to be done by JHIL establishing a foundation (the Medical Research and Compensation Foundation ...) to manage and pay out asbestos claims made against Coy and Jsekarb and to conduct medical research into the causes of, and treatments for, asbestos-related diseases. Jsekarb and Coy would make a Deed of Covenant and Indemnity with JHIL under which Jsekarb and Coy would make no claim against and indemnify JHIL in respect of all asbestos-related liabilities and, in return, JHIL would, over time, pay Jsekarb and Coy an amount of money. New shares would be issued by Coy and Jsekarb to be held by or for the ultimate benefit of the [Foundation]; JHIL's shares in both Coy and Jsekarb would be cancelled. A new company, James Hardie Industries NV ("JHINV"), would be incorporated in the Netherlands and that company would become the immediate holding company of JHIL and ultimate holding company of the James Hardie group. 14. On 15 February 2001, the board of JHIL met to consider the separation proposal. What happened at that board meeting is the focus of these proceedings. 15. Minutes of the meeting of the directors of JHIL held on 15 February 2001 were confirmed by the board, at a meeting held on 3-4 April 2001, as a correct record and subsequently '[s]igned as a correct record' by the chairman of the board at or after that April meeting. All of the directors of JHIL had received the minutes of the February meeting with their board papers for the April meeting. One of the respondents in this Court, Mr Willcox, did not attend the April meeting; all other respondents did. 16. The minutes of the meeting of 15 February 2001 recorded a number of matters relating to the separation proposal. They included the board's resolution that 'it is in the best interests of [JHIL] to effect the Coy and Jsekarb Separation' and a number of other resolutions relating to the separation. Critical to the present matters, the minutes recorded: '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.' 17. On 16 February 2001, JHIL sent to the ASX a media release entitled 'James Hardie Resolves its Asbestos Liability Favourably for Claimants and Shareholders' ('the final ASX announcement'). The document referred to the establishment of the [Foundation]. It said, among other things: '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 [Coy and Jsekarb]. JHIL CEO Mr Peter Macdonald said that the establishment of a fully-funded Foundation provided certainty for both claimants and shareholders. ... 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. (Emphasis added) 18. The [Foundation] did not have sufficient funds to meet all legitimate compensation claims which were reasonably anticipated in February 2001 from people injured by asbestos products that were manufactured in the past by Coy and Jsekarb." 25The media release of 16 February 2001 was not in precisely the same terms as the Announcement approved by the Board at the Meeting. The differences between the two versions are set out by the High Court (HC Judgment, at [82]), in a form which reproduces the text, strikes out deletions and underlines insertions. The plurality found (at [88]) that the amendments subsequently made to the draft Announcement approved by the Board were "textual rather than substantive" and that both versions contained the same misrepresentations (see also at [290], per Heydon J). Legislation 26Section 180(1) of the Corporations Act provides as follows: "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 or officers 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." 27If the Court is satisfied that a person has contravened a civil penalty provision, including s 180(1), it must make a declaration of contravention: s 1317E(1). Section 1317(2) provides that the declaration 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; [and] (d)the conduct that constituted the contravention ...". A declaration of contravention is conclusive evidence of the matters referred to in s 1317E(2): s1317F. 28Section 206C confers a power to make a disqualification order in the following terms: "(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: (i)section 1317E (civil penalty provision) that the person has contravened a corporation/scheme civil penalty provision; or (ii)...; 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." 29A person who is disqualified from managing a corporation under Part 2D.6 (including s 206C), commits an offence if, among other things, he or she makes decisions that affect a substantial part of the business of a corporation or exercises the capacity to affect significantly the corporation's financial standing: s 206A(1). 30A court may order a person to pay the Commonwealth a pecuniary penalty of up to $200,000 if a declaration of contravention has been made of a civil penalty provision and the contravention is "serious": s 1317G(1). 31Section 1317S provides for relief from liability for the contravention of a civil penalty provision. Section 1317S(2) is as follows: "If: (a)eligible proceedings [including proceedings for a contravention of s 180(1)] 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 ... the person ought fairly to be excused from 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." 32Section 1318(1) of the Corporations Act provides a further power to grant relief: "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." Course of Proceedings Proceedings at First Instance 33The hearing before the primary Judge occupied 46 days. All the appellants gave evidence, except Mr O'Brien and Mr Terry. 34In the Liability Judgment delivered on 23 April 2009, the primary Judge found that each appellant had breached his or her duties under s 180(1) of the Corporations Act. In the subsequent Penalty Judgment delivered on 20 August 2009, his Honour dismissed claims by the appellants, pursuant to ss 1317S(2) and 1318(1) of the Corporations Act, to be relieved from liability for their contraventions. His Honour indicated in the Penalty Judgment that he proposed to make declarations of contraventions and to make disqualification and pecuniary penalty orders against each appellant. The orders were formally made on 27 August 2009. Thus, subject to the stay orders to which I refer later (at [47]-[49]), the periods of disqualification become operative from that date. 35The declarations of contravention made in respect of the Australian Directors were in the same form. The declaration relating to Mr Brown was as follows: "[Mr Brown] contravened s 180(1) of the Corporations Law as carried over into the Corporations Act 2001 (Cth) ... in relation to [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 [PricewaterhouseCoopers] 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." 36The declarations made in respect of the US Directors reflected the fact that they had participated at the Meeting by telephone from the United States and were not provided with a copy of the Draft ASX Announcement at the Meeting. The declarations stated that each of Mr Gillfillan and Mr Koffel: "contravened s 180(1) ... 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." 37The primary Judge made orders pursuant to s 206C of the Corporations Act that each of the appellants be disqualified from managing a corporation for five years. His Honour also ordered, pursuant to s 1317G(1) of the Corporations Act, that each of the appellants pay a pecuniary penalty of $30,000. 38The primary Judge made declarations of contravention against three other officers of JHIL and imposed penalties on each of them. The three officers were: * Mr Peter Macdonald, formerly the chief executive officer and a director of JHIL; * Mr Phillip Morley, formerly JHIL's chief financial officer; and * Mr Shafron, formerly JHIL's secretary and general counsel. 39Neither Mr Macdonald nor Mr Morley is a party to the present appeal. However, the appellants referred extensively to the contraventions by Mr Macdonald and Mr Morley and the penalties imposed on them in support of the appellants' contention that the primary Judge had failed properly to give effect to the principle of parity when determining the appropriate penalties. It is therefore necessary to refer to the contraventions found against Mr Macdonald and Mr Morley and the penalties they received. It is also necessary to refer to Mr Shafron's position. 40Mr Macdonald voted at the Meeting to approve the draft Announcement. The declaration against him was in identical terms to the declarations of contravention made against the appellants, except that subparagraph (b) contained the additional words marked in bold: "he knew or ought to have known that the draft ASX Announcement was misleading in these respects" (Declaration 1). 41In addition, declarations of contravention of s 180(1) of the Corporations Act were made against Mr Macdonald in that he failed to advise the board that: * the Draft ASX Announcement was expressed in too emphatic terms concerning the adequacy of the funding to meet all present and future legitimate asbestos claims against JHIL's subsidiaries (Declaration 2); * the reviews undertaken by PwC and Access Economics of a Cashflow Model of the funding being made available to meet asbestos claims: "(a)were limited to reporting on the logical soundness and technical correctness of the Cashflow Model; (b)had not verified, and PwC and Access Economics had been specifically instructed not to consider, the key assumptions adopted by the Cashflow Model, being: (i)fixed investment earnings rates; (ii)litigation and management costs; and (iii)future claim costs" (Declaration 3); and * the Draft ASX Announcement should not be released or should be amended before release to remove the respects in which it was misleading (Declaration 4). 42Further declarations of contravention were made against Mr Macdonald in that he made misleading statements to the same effect as the Draft ASX Announcement at a press conference on 16 February 2001 (Declaration 5); approved the release on 23 February 2001 and 21 March 2001 of misleading announcements to the ASX (Declarations 6 and 7); failed to advise the Board on and after 15 February 2001 as to whether certain information concerning a deed of covenant and indemnity ("DOCI") was required to be disclosed to the ASX (Declaration 8); and in 2002 approved the release of certain slides to the ASX and made presentations in London and Edinburgh that he knew contained false or misleading statements (Declarations 9-11). 43The primary Judge made an order disqualifying Mr Macdonald from managing a corporation for a period of 15 years and ordered him to pay a pecuniary penalty of $350,000 (Penalty Judgment, at [482], [487]). 44The primary Judge made a declaration of contravention against Mr Morley for his failure to advise the Board of the limited nature of the review of the Cashflow Model prepared by PwC and Access Economics (Penalty Judgment, at [474]). The declaration was in substantially identical terms to that made against Mr Macdonald for a similar contravention. His Honour disqualified Mr Morley from managing a corporation for five years and imposed a pecuniary penalty of $35,000 (at [484], [489]). 45The primary Judge declined to make a finding that Mr Shafron had contravened s 180(1) of the Corporations Act by failing to advise the Board at the Meeting that the estimates contained in actuarial reports prepared by Trowbridge had not taken into account superimposed inflation (at [422]-[423]). (Superimposed inflation is an actuarial concept referring to the potential for the cost of claims to increase at a level above the general rate of inflation: CA Liability Judgment, at [1060]). 46However, his Honour made a declaration of contravention against Mr Shafron in the same terms as Declaration 2 made against Mr Macdonald (that is, that Mr Shafron had failed to advise that the Draft ASX Announcement was expressed in too emphatic terms concerning the adequacy of funding and in that respect was misleading). A declaration of contravention was also made against Mr Shafron in respect of his failure to advise the board that the reviews of the Cashflow Model undertaken by PwC and Access Economics were limited to reporting on the logical soundness and technical correctness of the Model and that neither PwC nor Access Economics had been asked to consider the key assumptions. Finally, a declaration of contravention was made against Mr Shafron in similar terms to Declaration 8 made against Mr Macdonald (relating to the DOCI information). (Penalty Judgment at [473].) The primary Judge disqualified Mr Shafron from managing a corporation for a period of seven years and ordered him to pay a pecuniary penalty of $75,000 (at [483], [488]). Stay Orders 47On 27 August 2009, the date the declarations of contravention and penalty orders were made against the appellants, the primary Judge stayed the penalty orders against Mr Brown, Ms Hellicar, Mr Gillfillan, Mr Koffel, Mr O'Brien and Mr Terry until 24 September 2009. Mr Willcox did not seek a stay of the orders made against him. 48Messrs Gillfillan, Koffel and O'Brien subsequently filed motions in this Court seeking an extension of the stay of the penalty orders made against them. Tobias JA dismissed their applications on 1 October 2009 (although his Honour had previously granted a short extension of the stay of orders against the US Directors, which extension had expired on 1 October 2009): O'Brien v Australian Securities and Investments Commission [2009] NSWCA 312; 74 ACSR 324. 49From the date the Court of Appeal made its orders (17 December 2010) until the High Court allowed ASIC's appeal (3 May 2012) the disqualification and pecuniary penalty orders against the appellants were not in force. The orders were reinstated when the High Court pronounced judgment. Proceedings in the Court of Appeal 50Mr Macdonald did not appeal against the primary Judge's decision. However, the seven appellants, Mr Shafron and Mr Morley appealed to this Court against the findings of contravention. They contended, in the alternative, that they should be excused from liability and that, in any event, the penalties imposed by the primary Judge were too severe. ASIC filed cross-appeals, but the cross-appeals against the appellants were essentially defensive in nature. 51On 17 December 2010, the Court of Appeal allowed the appeal on the ground that ASIC had not established that the Draft ASX Announcement had been tabled at the Meeting or that the appellants had approved the Announcement: CA Liability Judgment. The Court set aside the declarations and orders made against each of the appellants and ordered that ASIC's proceedings against them be dismissed. Since the findings of contravention were set aside, the Court had no occasion to consider the appeals against the primary Judge's refusal to relieve the appellants from their liability and against the penalties his Honour imposed on them. 52The Court of Appeal went on to consider the position if, contrary to the Court's finding, the Draft ASX Announcement had been tabled at the Meeting and the Australian Directors had voted in favour of it. On this assumption, the Court found (at [821]) that the Australian Directors were not entitled to rely on assurances from management and had failed to exercise reasonable care by not applying their own minds to whether such an important Announcement was misleading. Moreover a reasonable director with the concerns expressed in their evidence by Mr Brown, Ms Hellicar and Mr Willcox, particularly in relation to the words "certainty" and "fully funded", would not have been exercising due diligence by voting to release the Draft ASX Announcement (at [823]). Accordingly, on the assumption the Draft ASX Announcement had been considered and voted upon at the Meeting, the Australian Directors would have contravened s 180(1) of the Corporations Act (at [831]). On the same assumption, the US Directors had also failed to exercise due care and diligence (at [863]). 53Since the Court of Appeal found that the board had not voted on or approved the Draft ASX Announcement at the Meeting, it set aside the first declaration made against Mr Shafron (relating to the failure to advise that the Announcement was too emphatic) (at [931]). For different reasons, the Court set aside the second declaration (relating to the failure to advise as to the limitations of the reviews of the Cashflow Model) (at [968]). However, Declaration 3 (relating to the DOCI contravention) was left in place (at [1036]). 54The Court of Appeal allowed in part ASIC's cross-appeal against Mr Shafron. The Court found in relation to the alleged superimposed inflation contravention (at [1073]) that: "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." Accordingly, the Court made a declaration (at [1156]) that Mr Shafron contravened s 180(1) of the Corporations Act, in that he failed to advise the directors that the 20 and 50 year estimates of asbestos liabilities made by Trowbridge in their report of February 2001 had not taken into account superimposed inflation and that a prudent estimate would have done so. 55The Court of Appeal dismissed Mr Morley's appeal against the finding of contravention against him, but also dismissed ASIC's cross-appeal (at [1120], [1143]). 56The Court of Appeal delivered a separate judgment on 6 May 2011 dealing with: * Mr Morley's appeal against the primary Judge's refusal to relieve him from liability for his contravention and his appeal against penalty; and * Mr Shafron's appeal against penalty (Mr Shafron did not pursue his claim to be relieved from liability). Morley v Australian Securities and Investments Commission (No 2) [2011] NSWCA 110; 83 ACSR 620 ("CA Penalty Judgment"). 57The Court of Appeal dismissed Mr Morley's appeal against the refusal to relieve him from liability for his contravention, but allowed his appeal against penalty. It set aside the disqualification and pecuniary penalty orders made by the primary Judge and substituted orders disqualifying Mr Morley from managing a corporation for a period of two years (instead of five years) and imposing a pecuniary penalty of $20,000 (instead of $30,000). 58In relation to Mr Shafron, the Court noted (at [55]-[56]) that it had set aside two of the three contraventions found against him by the primary Judge. However, in consequence of the success of ASIC's cross-appeal, Mr Shafron's superimposed inflation contravention had been upheld. The Court upheld the order disqualifying Mr Shafron for a period of seven years as the penalty for his DOCI contravention. The Court considered (at [116]) that the superimposed inflation contravention warranted a period of disqualification for three years, but concluded (at [117]) that the two periods of disqualification should be made concurrent. In the result, the Court of Appeal did not disturb the primary Judge's order that Mr Shafron be disqualified from managing a corporation for a period of seven years. 59The Court considered that the pecuniary penalty of $40,000 assessed by the primary Judge for the DOCI contravention was appropriate in view of the seriousness of Mr Shafron's failure to exercise due care and diligence (at [135], [138]). The Court of Appeal thought that a penalty of $25,000 was appropriate for the superimposed inflation contravention, taking into account the need for personal deterrence and protection of the public (at [139]). Having regard to the principle of totality, the Court ordered Mr Shafron to pay a pecuniary penalty of $50,000 (at [140]). 60As a consequence of the Court of Appeal's decision, ASIC repaid to the appellants the pecuniary penalties they had paid pursuant to the orders made by the primary Judge on 27 August 2009, together with interest: see Commonwealth v McCormack [1984] HCA 57; 155 CLR 273, at 276. ASIC seeks an order from this Court, in the event that the appeals against the pecuniary penalty orders fail, that the appellants pay the penalties and refund the interest paid to them by ASIC. The High Court Appeals 61As I have noted, ASIC sought and was granted leave to appeal to the High Court against the orders made by the Court of Appeal setting aside the findings of contravention against the appellants. The High Court allowed ASIC's appeal in the HC Judgment, which was delivered on 3 May 2012. 62The High Court found that the Court of Appeal had been wrong to overturn the primary Judge's finding that the draft Announcement had been tabled and approved at the Meeting by the directors: at [171], per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ; at [216], [280], [303], per Heydon J. The High Court set aside the orders made by the Court of Appeal (other than the order dismissing ASIC's defensive cross-appeals) and remitted the matter to this Court on the terms previously recounted. In allowing the appeal, the High Court also reinstated the declaration of contravention against Mr Shafron relating to his failure to advise the board that the Draft ASX Announcement was expressed too emphatically: HC Judgment, at [315]. In addition, the Court remitted a cross-appeal by ASIC relating to costs, to which I refer later. 63In a separate judgment, the High Court dismissed Mr Shafron's appeal against the declarations of contravention against him. In doing so, the Court upheld the findings of contravention in relation to the DOCI information and to Mr Shafron's failure to advise about the superimposed inflation: HC Shafron Judgment, at [32]-[36], per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ. Conduct of the Remitted Appeals 64On the hearing of the remitted appeals, each appellant was separately represented, except that Mr Gleeson SC appeared with Mr Hardcastle for both Mr Brown and Ms Hellicar, and Mr Bennett QC appeared with Mr Hollo SC for both US Directors. Mr Bannon SC appeared with Ms Pritchard SC for ASIC. In all, therefore, there were six separate sets of written submissions and six separate sets of oral submissions. 65Five of the appellants applied for leave to adduce further evidence at the hearing pursuant to s 75A(7) of the Supreme Court Act 1970. In substance, the further evidence was intended to update testimonial evidence adduced at trial. The applications were made on the basis that the evidence would be relied upon only if this Court found error in the Penalty Judgment. ASIC did not object to the Court receiving the further evidence on this basis. 66Although there was considerable overlap in the appellants' written submissions, Mr Gleeson dealt with most issues common to all appellants in his oral argument. For the most part, counsel for the remaining appellants confined their oral submissions to matters specific to their clients. 67Not all the issues remitted by the High Court to this Court remain in dispute. Only the US Directors now seek to be relieved from liability for their contraventions. The Australian Directors no longer challenge the primary Judge's findings that they should not be relieved from liability for their contraventions of s 180(1) of the Corporations Act. 68All appellants accept, as they must, that the findings made by the High Court are conclusive. It follows, among other things, that none of the Australian Directors dispute the findings, embodied in the declarations of contravention, that each of them knew that the Draft ASX Announcement conveyed or was capable of conveying the four representations identified in the declarations (see at [35] above). In other words, it is not open to the Australian Directors to contend that they did not appreciate or understand the contents of the Draft ASX Announcement when they approved its release at the Meeting. 69The Australian Directors emphasise in their submissions that the declarations of contravention state only that they ought to have known at the Meeting that the Draft ASX Announcement was misleading in the four respects identified, not that they knew that the Draft ASX Announcement was misleading. They also point out that ASIC, in its submissions to the primary Judge on penalty, disavowed a case of dishonesty. ASIC's disavowals included the following statements made by senior counsel on its behalf to the primary Judge: "[ASIC] has not pleaded and does not now allege that any of the non-executive directors acted dishonestly in approving the Draft ASX Announcement. [ASIC] does not contend that the Court found in the [Liability Judgment] that any of the non-executive directors was aware 'at the time they approved the [D]raft ASX [A]nnouncement' that it was false and misleading .... However, [ASIC] also submits that the concession by the non-executive directors who gave evidence that the Draft ASX [A]nnouncement was false and misleading (which was part of their chain of reasoning to assert that they did not approve it) carries with it the necessary consequence that their negligence in approving it was that much more serious; ie it was so obviously false or misleading or deceptive that their negligence was that much more culpable for approving the statement. That process of reasoning applies equally to those non-executive directions who did not give evidence as to those who did." It follows from these matters, so the appellants argue, that the primary Judge's reasoning and findings must be approached on the basis that the contraventions found against the Australian Directors involved negligence in the discharge of their duties, not dishonesty. 70Mr Bannon's submissions in this Court directed attention to findings made by the primary Judge and the Court of Appeal (when considering the position if, contrary to its view, the board had approved the Draft ASX Announcement). Some of these suggested that the Australian Directors knew that the representations in the Draft ASX Announcement were false. In particular, the CA Liability Judgment, at [831], when considering whether ASIC had made out its case on the assumption (contrary to the Court of Appeal's finding) that the Meeting had approved the Draft ASX Announcement, said this: "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)." 71Mr Bannon referred to this paragraph, apparently in support of a submission that this Court could assess the seriousness of the Australian Directors' contraventions for penalty purposes on the basis that they knew the contents of the Draft ASX Announcement were misleading. 72In the face of protests that ASIC had not conducted the trial on the basis that the Australian Directors knew the Draft ASX Announcement was misleading when approved, Mr Bannon clarified ASIC's position. He accepted that in view of the allegations made by ASIC against the appellants, the approach taken by ASIC at trial and the limited form of the declarations, the contraventions by the Australian Directors could not be characterised as involving dishonesty. He also seemed to accept that the references by the primary Judge to the appellants' knowledge of the falsity of the Draft ASX Announcement related only to their understanding at the time they gave their evidence, rather than at the time the Meeting took place. 73While not persisting with his original submission as to the appellants' knowledge of the falsity of the Draft ASX Announcement, Mr Bannon submitted that findings concerning the conduct of the appellants, to the extent they support and are consistent with the declarations of contravention, may be taken into account in determining the seriousness of the contraventions. This appears to be in accord with the position adopted by ASIC at trial. The appellants did not dispute that this was an appropriate course for the Court to follow. 74I add this comment. The disagreement as to the nature of ASIC's case and of the precise significance of the contraventions found against the appellants is perhaps not entirely surprising in view of ASIC's pleadings. The Fourth Further Amended Statement of Claim ("FASC 4") pleaded (at [112]-[116]) that when each of the appellants voted to approve release of the Draft ASX Announcement, he or she knew or ought to have known that the Announcement conveyed certain representations. ASIC also pleaded that each appellant ought to have known that the Draft ASX Announcement was misleading in a number of respects because the appellants knew or ought to have known certain matters. For example, FASC 4 pleaded (at [112]) that the appellants ought to have known that the Draft ASX Announcement was false or misleading insofar as it represented that the material available to JHIL provided a reasonable basis for the assertion that the funding available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims. The further particular of this allegation alleged that each appellant knew or ought to have known that any assessment of asbestos liabilities was inherently uncertain and that the amounts payable in respect of present and future claims could not be reliably estimated. 75In Forrest v Australian Securities and Investments Commission [2012] HCA 39, judgment in which was delivered after argument in the present case had concluded, the High Court pointed out the difficulties that can arise if a regulator simply pleads that an alleged contravenor knew or ought to have known of certain matters. The plurality observed (at [22]) that: "On their face, these allegations mixed two radically different and distinct ideas: that Fortescue [the alleged contravenor] knew that the statements were false (it had no genuine basis for making them) and that Fortescue should have known that the statements were false (it had no reasonable basis for making them)". (Emphasis in original.) Their Honours went on to say (at [25]) that a fair trial requires the party alleging the contraventions to identify the case it seeks to make and to do so "clearly and distinctly". 76Except to the extent I have indicated, no issue was raised on the appeal as to the fairness of the proceedings and no point was taken in the High Court concerning any lack of clarity in the pleadings. However, the uncertainty as to the scope of ASIC's case on the hearing of the remitted appeals seems to illustrate the point made by the High Court in Forrest v ASIC. The Facts 77The circumstances leading up to the Meeting and its aftermath have been canvassed at length in two judgments of the primary Judge, two judgments of the Court of Appeal and in the judgment of the High Court. With some relatively minor exceptions, the factual findings of the primary Judge are no longer in contest (although the appellants dispute his Honour's characterisation of their conduct). Nonetheless, it is necessary to recount the facts in some detail as they are material to the seriousness of the appellants' contraventions and thus to questions of penalty. The following account is largely based on the findings in the Liability Judgment, but includes references to some uncontentious documents and findings made by the Court of Appeal and High Court. Material Before the Board Prior to the Meeting 78JHIL had given consideration to the restructure of the James Hardie group well before the Meeting (at [80]). Throughout 2000, the papers distributed to Board members contained papers relating to a separation proposal known as "Project Green" (at [82]-[83]). 79The appellants, other than Mr O'Brien (who became an alternate director in August 2000 and was appointed to the board later) were alerted in a paper prepared in June 2000 to the potential legal liability of any company which made statements that were false in a material particular or were misleading (at [258], [259]). 80The papers for the May 2000 board meeting included draft accounts for the year ended 31 March 2000. These included a contingent liability note stating that JHIL could not measure reliably its exposure to future asbestos-related claims (at [263]). 81In June 2000, Trowbridge prepared a draft actuarial report relating to present and future asbestos claims. The draft report assumed that there was no superimposed inflation and adopted a future inflation rate of four per cent per annum, in line with forecasts for wage inflation in the medium term. A sensitivity analysis showed that if a "high rate" of claims inflation was assumed, the estimated cost of claims would increase from $294 million to $424 million (see CA Liability Judgment, at [129], [1061]). 82At the August 2000 meeting of the Board, a slide presentation explained the draft actuarial report prepared by Trowbridge. The draft report stated in a number of places that the estimates were uncertain and that significant deviations were to be expected (at [265]). The presentation reported that average settlement costs of mesothelioma claims had risen by 45 per cent over five years (at [267]). 83In October 2000, a memorandum from Mr Shafron to the Board advised that the draft Trowbridge report did not need to be disclosed to the market, partly because it did not disclose definite outcomes (at [268]). In a memorandum of 13 December 2000 relating to accounting matters, Mr Macdonald said that the data were not precise enough for the estimates to be otherwise than misleading (at [269]). 84The Board meeting of JHIL held on 17 January 2001 discussed a version of Project Green. A feature of the proposal was that only the net assets of Coy and Jsekarb (the subsidiaries of JHIL liable to compensate asbestos victims) would be available to meet present and future asbestos claims against them (at [88]). The material before the Board included a draft news release. It referred to the establishment of an independent trust to compensate asbestos victims, but made no claim that the "significant assets" made available for the purpose would be adequate to compensate all asbestos victims. 85The papers for the January 2001 Board meeting included the following statement: "there is no reliable basis for determining what amount any ... 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". 86Handwritten notes of the discussion at the January board meeting summarised a contribution by Mr Willcox as follows: "PR questions are important - potential for [Government] legislation - JHIL cannot say all debts are covered ...becomes a practical issue". 87The Board rejected the net assets model presented to it at the January board meeting. Management was asked to do more work on the separation proposal to ensure that sufficient funds were available to meet all present and future asbestos claims (at [89]). Papers Provided to the Meeting 88The board papers for the Meeting (15 February 2001) included a paper prepared by Mr Macdonald (at [90]). It recommended that the shares in Coy and Jsekarb be vested in the Foundation to manage the assets in the interests of current and future creditors. An additional indemnity was to be paid over time (having a net present value of $70 million), in return for an indemnity and covenant by the subsidiaries not to sue JHIL. JHIL would contribute a further $3 million for research and establishment costs. In all, JHIL would write off around $256 million. The creation of the Foundation would "largely remove asbestos related issues from JHIL and the ongoing James Hardie Group". 89Unlike the January meeting, the papers for the Meeting did not include a draft press release and the agenda contained no reference to any such release (at [91]). However, a communications strategy was distributed to board members with the papers. It included the following passages: "COMMUNICATION STRATEGY ... 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. ... 2.1.2Media Media coverage of asbestos issues has increased markedly in the past year in most states. In the past several months, all major metropolitan newspapers and many radio and television networks have carried stories with increasing frequency about: court cases resulting in large settlements defendants, including JH, hiding behind confidentiality clauses potentially large new sources of claims (e.g. wharf cases, South Australia) the increase in the number of claims and settlement amounts (e.g. Trowbridge) ... particularly tragic cases (e.g. [A], who died of mesothelioma shortly after giving birth) We assume the general media environment in which we announce will be hostile. 2.1.3Government/Political ... [A]s most of James Hardie's Australian assets reside in NSW registered companies, so too does the major government risk. For this reason, our government stakeholder management strategy is principally focused on the NSW Government. ... The government is likely to be concerned with: the risk of financial exposure should the Foundation have insufficient assets to meet future liabilities any perception of a hidden agenda behind the establishment of the Foundation negative union sentiment, adverse media and public opinion etc which leads to a loss of political support among specific, influential constituencies, such as unions, or among voters generally. ... 2.1.4Other Stakeholders Strong relationships exist between unions, plaintiff law firms and asbestos disease representative groups. While these stakeholders will probably recognise the positives, it is expected they will: claim that the Foundation will have insufficient funds to compensate all future victims use various 'experts' or adopt the position of 'experts' to claim that the incidence of asbestos diseases is rising sharply and that history is not a good guide to assess future incidence and costs ... We have a strong case against the arguments which are likely to be put forward and we will prosecute our case aggressively with these stakeholders and with the people they would seek to influence. ... 3.THE COMMUNICATIONS STRATEGY ... 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. 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. ... 3.1Timing The announcement will be made on Friday 16 February to coincide with the announcement of JHL's Q3 results and the related management presentations to analysts and business media. This will: provide a ready made business forum for the announcement which provides unfiltered access to market analysts, one of the most important influencers in how the story is interpreted help us position the Foundation as a 'business' story enable us to announce separation in a pure business context and set the agenda for public debate in this context focus attention on the financial outcomes We will announce the Q3 results and separation simultaneously at 10am, ahead of an 11am management presentation. We normally announce at 8.30am and conduct results presentations at 11am. By limiting the time between the announcement and the presentation, we would aim to minimise the risk that non-business media and perhaps other stakeholders would attend and 'hijack' the briefing. ... 3.2 Shareholders and the Investment Community ... A positive reaction from the market is ... the highest priority and we will use the management presentation to analysts, and subsequent dialogue with them, as our most important communication task. ... 5.0DRAFT QUESTIONS AND ANSWERS ... 1.How can James Hardie be confident that the Foundation has sufficient assets to meet all future claims? The Foundation will start with assets of $284 million - all of which has been set aside for the sole purpose of compensating people injured by asbestos. This is almost three times the amount that the company has expended in the past 20 years to meet compensation claims. ... 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... ... 3.What does your actuarial advice say in relation to the ongoing exposure to claims? We have learned that actuarial advice is not a reliable basis for assessing these kinds of liabilities. Within these limitations it can, however, provide a reference point which should be considered along with many other factors ... 7.Have you conducted any analysis on anticipated claims and what was the range of possible liability? Will you release it, if not why not? We have taken advice from independent [sic] of JH and we have reviewed independent studies. It is apparent that there are many variables which, depending on the view you take, will result in a wide range of answers. Even using the worst case scenarios the funds available for claimants will last for many, many years. Using more realistic forecasts, the Foundation would be able to meet all claims and have a surplus." (Emphasis in text added.) 90The evening before the Meeting, material including a slide presentation entitled "Project Green Board Presentation" and documents constituting a "Cashflow Model" were sent to the US Directors, who were to attend the Meeting by telephone. The documents did not include the Draft ASX Announcement (at [108]). The Australian Directors did not receive any of this material prior to the Meeting, but the material was distributed to them at the Meeting. Project Green Presentation 91The slides comprising the Project Green Board Presentation were presented at the Meeting and management discussed a number of them (at [140], [147], [273], [274], [276]). In particular, Mr Baxter, JHIL's Senior Vice President of Corporate Affairs, recalled (at [140]) presenting slides 23-40 relating to the communications strategy. Those slides did not suggest that an announcement would be made that the Foundation would be fully funded to meet all future asbestos claims. 92Among the slides were the following: Slide 11 identified "Key issues for consideration" including "Quantum of funds ... expectancy" and "Positioning key stakeholder messages". Slide 14, under the heading "Fund life expectancy/sensitivity" set out the following: "♦Trowbridge analysis revised: -same basic assumptions as previously -higher claim numbers predicted -predicted future cashflows ♦Future funds availability depends on: -Trowbridge cashflows ('most likely') -asset classes (land, debt, and invested cash) -assets earnings (some known and some predicted)" ●Slide 15, under the same heading, set out the following: "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, though $1m p.a. sinking fund -properties disposed of in 2025 at carrying value ♦Surplus most likely outcome ♦Analysis reviewed by PWC and Access Economics" (Some of these assumptions were explained further in the Cashflow Model: see at [94]-[95] below.) ●Slide 29, under the heading "Key messages" set out the following: "♦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 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" ●Slide 30, under the heading "Communication strategy" set out the following: "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" 93The Board was also taken through the Cashflow Model by Mr Morley (at [277]). This document was provided to the US Directors before the Meeting (at [280], [284]), but was apparently distributed to the Australian Directors at the Meeting itself. 94The first page of the Cashflow Model set out a series of assumptions used to prepare the Model (at [287]): "●Litigation costs, net of insurance recovery, are from Most Likely Trowbridge model, updated 9 February. The Trowbridge model assumes 4% inflation on claims amounts. ●Rental income assumes 3% CPI increases but ignores any Market Rate increases. A sinking fund of $1.0m pa (inflated at 3% annually) has been deducted from rental income, to allow for major capital renovations to the properties. ●Buildings maintain their nominal value, i.e. are not inflated or depreciated. Land increases in value at 3% pa. Properties are sold at March 2025, for their book value, and the cash proceeds invested. ●Management costs (legal services, Directors fees etc) have been assumed at $2.4m pa (inflated at 3% pa), but limited in later years an amount equal to the litigation outgoings, plus present day $100k pa. ... ●It is not necessary to include any cashflows in relation to tax payments because separate detailed modelling has shown that: -during the early years, where there are significant cash inflows through a combination of loan principal receipts and indemnity receipts, there will be no need to realise investment earnings and thereby create a tax liability -in subsequent years, when the deferred investment earnings are realised, there will be sufficient accumulated losses from litigation and other outgoings to shelter the taxable investment earnings. ●Investment earnings of 11.70% are assumed, before tax. ●Sensitivity analyses at various pre-tax earnings rates are attached. ●Cashflows occur evenly through year, except for repayment of JHIL [sic] principal, external investment earnings and property proceeds which are received on 31 March." 95The second page (so identified by the primary Judge, although it appears as the fourth page in the Appeal Books) contained a series of columns based on "the most likely scenario and earnings rate of 11.70%" (at [288]). The columns identified cash inflows and outflows with projected figures extending over a period of 51 years. The figures presented assumed an earnings rate of 11.7 per cent applied to surplus investment funds (which funds rose to a maximum of $188.7 million by Year 11). The chart showed that in the "best estimate" of asbestos liabilities over the 50 year period, the Foundation would have net assets of $31.7 million in year 51. However, on the "high scenario" for claims, it would be necessary to provide for an additional $237 million in claims over the 50 year period. 96The remaining page of the Cashflow Model contained sensitivity analyses, reproduced below: 97Mr Morley gave a detailed explanation of the assumptions embodied in the Cashflow Model and of the figures in the columns of the detailed 50 year table (at [285]-[302]). Among other things, Mr Morley pointed out that the sensitivity analysis showed that even on the assumed earnings rate of 11.7 per cent per annum over the entire period, the fund would be depleted by year 20 on the "high scenario" for claims (at [301]). As the primary Judge noted (at [300]), on the "most likely scenario" for claims, the fund would be depleted before year 25 if investment earnings averaged 10.7 per cent per annum, rather than 11.7 per cent per annum. Of course on a "high scenario" for claims and if investment earnings were even slightly less than 11.7 per cent per annum, the fund would be exhausted much earlier than year 20. 98Mr Morley also told the Meeting that the Cashflow Model had been reviewed by PwC and Access Economics and they had found it to be "logically sound and technically correct (at [302]). Mr Macdonald said that the Model showed a surplus was the "most likely outcome". The Exchange Between Mr Brown and Mr Macdonald 99The primary Judge found (at [148]-[150]), on the basis of Mr Brown's evidence, that the following exchange occurred between Mr Brown and Mr Macdonald at the Meeting: "Mr Brown:'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: '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.' Mr Brown:'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: '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'". Mr Brown accepted in evidence that Mr Macdonald's first response in the exchange was a statement about the content of the Draft ASX Announcement. 100The Court of Appeal found (CA Liability Judgment, at [409]) that recollection did not lie behind Mr Brown's evidence and that a basis had not been laid for reconstruction by him of the relevant exchange. The Court considered that Mr Brown was merely accepting that it was possible that a number of matters had been put by arrangement as key messages. 101The plurality in the High Court twice quoted Mr Brown's evidence at length (HC Judgment, at [61], [125]). Their Honours said (at [130]) that it was doubtful whether the Court of Appeal had given sufficient weight to the advantages the primary Judge had in assessing the effect of Mr Brown's evidence, but they did not consider it necessary to decide the question. Heydon J endorsed without qualification (at [282], [284]) the primary Judge's findings in relation to acceptance of Mr Brown's evidence. 102Once it is accepted (contrary to the Court of Appeal's finding) that the Meeting approved the Draft ASX Announcement, there is no sound basis for overturning the finding that Mr Macdonald said the words attributed to him by Mr Brown. A conversation to this effect was consistent with other presentations made at the Meeting. I therefore proceed on the basis that the primary Judge's finding on this issue should not be disturbed. The Draft ASX Announcement 103Mr Baxter took with him to the Meeting copies of the Draft ASX Announcement and he provided copies to those present (CA Liability Judgment, at [220]). The appellants who gave evidence that the Announcement was not before the Meeting were "mistaken" (at [222]). 104Mr Baxter or Mr Macdonald spoke at the Meeting to the Draft ASX Announcement and discussed "the key message to be communicated to the market" (at [223]). The statements made by Mr Macdonald or Mr Baxter to the Meeting correlated to portions of the Draft ASX Announcement (at [153]-[161]). 105The purpose of the distribution of the Draft ASX Announcement to those present and the discussion of its contents was to approve its release (at [224]). This contradicted the standard practice of obtaining the approval of a draft press release by senior executives before its submission to the Board, but the approval in this instance was "a last minute affair". None of the Board or management had seen the document before the Meeting, but its distribution to the directors provided all the more reason for a detailed consideration of its contents by each director (at [225]). 106The Draft ASX Announcement was approved at the Meeting: "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." 107Mr McGregor, the chairman of the Meeting (who had died before these proceedings) summarised the Board's approval of the Announcement by asking, in the usual fashion, "is the board happy with that?" Everybody present nodded or otherwise indicated their agreement (at [226]). 108The US Directors were not provided with a copy of the Draft ASX Announcement and the text was not read out at the Meeting (at [231]). Neither raised an objection that they did not have a copy, nor did they ask for a copy or abstain from voting (at [233]). The practice of the Board was not formally to put a matter to a vote. Directors either 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 expressions of approval by Board members of the release of the Draft ASX Announcement (at [234]). 109The primary Judge found (at [259]) that all of the non-executive directors knew or ought to have known that if JHIL made statements in the Draft ASX Announcement as to the sufficiency of the Foundation's funding, there was the danger that JHIL could face legal action for publishing misleading statements, its reputation would suffer and the market would react adversely. The Announcement was a "key statement in relation to a highly significant restructure of the ... group" and none of the directors was entitled to delegate his or her duty to a fellow director (at [260]). Elsewhere (at [1161]), his Honour said that it was: "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." 110His Honour found (at [303]) that notwithstanding the comments made to the Meeting by Mr Morley and Mr Macdonald: "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". 111The primary Judge made (at [321]) the findings recorded in sub-paragraph (a) of the declarations of contravention made against the Australian Directors. He also made the following findings (at [320]): "The unsophisticated notional class representative would labour under the misapprehension having read the Draft ASX Announcement that it was certain that the Foundation had sufficient funds to meet all future Asbestos Claims. The sophisticated notional class representative would ... labour under the misapprehension that JHIL had adopted highly conservative assumptions in determining the funding level of the Foundation." 112His Honour rejected (at [325]) a submission that it was reasonable for the appellants to have approved the Draft ASX Announcement, bearing in mind that Trowbridge was a highly respected actuarial firm and that they were entitled to rely on management: "[I]t 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 Cashflow Model must have been obvious to the non-executive directions, 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". Penalty Judgment 113The primary Judge first considered whether the appellants should be relieved from liability for their contraventions, pursuant to s 1317S(2) of the Corporations Act. This required his Honour to consider whether the appellants had established that they had acted honestly (Penalty Judgment, at [11]). He stated (at [22]) the relevant principle as follows: "a person acts honestly for the purposes of Section 1317S(2) and Section 1318(1), in the ordinary meaning of that term, if that person's conduct is without moral turpitude in the sense that it is without deceit or conscious impropriety, without intent to gain improper benefit or advantage and without carelessness or imprudence at a level that negates the performance of the duty in question. That conclusion may be drawn from evidence of the person's subjective intent. But a lack of such subjective intent will not lead the Court to conclude that a person has acted honestly if a reasonable person in that position would regard the conduct as exhibiting moral turpitude." (Emphasis added.) 114His Honour acknowledged (at [28]) that ASIC had not alleged dishonesty on the part of any of the appellants, although it had alleged dishonesty by Mr Macdonald. However, a finding of acting honestly for the purposes of s 1317S(2) did not follow automatically from the absence of an allegation of dishonesty (at [30]). 115The primary Judge rejected the submissions by Mr Brown, Ms Hellicar and Mr Willcox that they should be found to have acted honestly. He did so for these reasons (at [44]-[47]): "44.Mr Brown, Ms Hellicar and Mr Willcox said they had no recollection of the Draft ASX Announcement being tabled, considered or approved at the 15 February 2001 Meeting. I found to the contrary [that is, that the Announcement was tabled, considered and approved]. 45.They said they would not have approved the Draft ASX Announcement had it been considered at the meeting as it made forward-looking statements with which they disagreed as being over emphatic. 46.Those acknowledgments are inconsistent with a finding that those persons acting honestly in approving the content of the Draft ASX Announcement in terms of Section 1317S(2) or Section 1318(1). They voted in favour of the Draft ASX Announcement when they said they disagreed with its assertions of sufficient funding. 47.This is not a finding of dishonesty. It is a finding that because of the belief of Mr Brown, Ms Hellicar and Mr Willcox that the content of the Draft ASX Announcement was unsupportable, the Court cannot be satisfied that in voting in favour of its presentation to the ASX they acted honestly." 116Neither Mr O'Brien nor Mr Terry had given evidence (at [48]). However, they received copies of the Draft ASX Announcement at the Meeting (at [51]). They were aware of its contents and its approval at the Meeting (at [52]). The position was therefore that they attended the Meeting, had copies of the Announcement and did not dissent from the resolution approving its contents (at [55]). The primary Judge said (at [56]) that there was nothing in the evidence to enable him to be positively satisfied that Mr O'Brien or Mr Terry acted honestly. 117Both Mr Gillfillan and Mr Koffel had given evidence that if they had been provided with a copy of the Draft ASX Announcement at the Meeting they would not have approved it (at [60]). Contrary to their recollection, however, the Draft ASX Announcement had been considered at the Meeting (at [61]). His Honour found (at [61]-[63]) as follows: "61. They should have been alerted at the stage of its discussion that an announcement was to be made to the ASX and the meeting was being asked to consider and approve a document, a copy of which they did not have. At the latest, they should have realised this when Mr McGregor summarised a resolution to approve the Draft ASX Announcement. Neither asked for a copy of the Draft ASX Announcement. Neither voiced an objection to the expression of approval of the release of the Draft ASX Announcement at the meeting. 62. This was the culmination of the project to create the Foundation and transfer Coy and Jsekarb to it. It was a mater that had been discussed at previous board meetings and a draft announcement with respect to it had been included in the board papers for the previous meeting. 63. It was not just mere inadvertence, imprudence or carelessness on the part of Mr Gillfillan and Mr Koffel not to have asked for a copy of the Draft ASX Announcement. The board was being asked to consider a matter additional to the circulated board papers relating to the formation of the Foundation, a most significant event in the life of JHIL. 118The evidence did not persuade his Honour (at [64]) that Mr Gillfillan or Mr Koffel 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." 119The primary Judge repeated (at [65]) observations that he had made in the Liability Judgment (at [326]) concerning the motives of the appellants: "they may well have believed they were acting in the best interests of the James Hardie group in divorcing asbestos claims against Coy and Jsekarb from the group. To quell any opposition to the formation of the Foundation and the transfer of Coy and Jsekarb to it they were prepared to allow JHIL to make unequivocal and unqualified statements as to the sufficiency of funding." His Honour considered (at [66]) that: "... neither of those comments sways the balance in favour of a conclusion that the non-executive directors acted honestly. It is the nature of the mistake and the circumstance in which it occurs that is significant. And belief by a director that he or she is acting in the best interests of a company does not require a Court to be satisfied that the person acted honestly, as witness the case of the director who causes a company to trade when insolvent in the belief that it might trade itself back into liquidity." 120The primary Judge therefore concluded (at [67]) the appellants had failed to satisfy him that in contravening s 180(1) of the Corporations Act they had acted honestly. They were therefore not entitled to relief under ss 1317S(2) or 1318(1). 121His Honour then gave reasons for concluding that if he was wrong on the question of honesty, he would have exercised one or other of the discretions under ss 1317S(2) and 1318(1) against granting relief to the appellants. His Honour made the following points: * the fact that the Meeting was busy did not excuse the breaches of duty by the appellants (at [77]); * this was not a case for reliance on management, since management had sought the Board's approval for the Draft ASX Announcement and the task involved no more than an understanding of the language used in the document (at [77]); * the fact that management raised no problem about approval did not advance the appellants' case since it was incumbent upon them to ensure that the statements in the Draft ASX Announcement were accurate (at [78]); * the procedure adopted contravened standard practice which required senior executives to approve a draft press release before submission to the Board, thus providing all the more reason for detailed scrutiny by each director (at [79]); and * the Board had material advising that a successful communications strategy was essential to the achievement of the separation and that central to that objective was the need to convince stakeholders that sufficient assets were available to meet all present and future legitimate asbestos claims (at [82]). 122The primary Judge accepted (at [85]) that the contraventions were isolated incidents in lengthy careers of service on boards and in positions of high management performed with competence, diligence and honesty. Moreover, each of the appellants had read impressive testimonial affidavits (at [86]). But (at [87]): "the fact remains that the conduct of the non-executive directors in approving the Draft ASX Announcement was different from the conduct described in the testimonial affidavits and it is the characterisation of that conduct that is in issue". 123His Honour accepted that Mr Macdonald, Mr Shafron and Mr Morley had failed to advise the board of the limitations of the PwC and Access Economics reviews of the Cashflow Model. However, this could not exonerate the non-executive directors from their breach of duty when they accepted the task of approving the Draft ASX Announcement on the information available to them (at [91]). Furthermore, while the approval of the Draft ASX Announcement may have been an isolated event, non-executive directors were required to exercise reasonable care, whether the matter calling for their attention was isolated or not (at [88]). 124The primary Judge noted (at [95]) that none of the appellants had offered evidence of contrition. He did not place great weight on this, particularly as the findings of contravention were the subject of appeals (at [96]-[97]). 125In assessing the seriousness of the breaches, his Honour said (at [98]) that he had to consider the public policy importance of the provision that had been contravened. The purpose of s 180(1) of the Corporations Act is to ensure that boards of directors of companies are composed of individuals with suitable skills to monitor the actions of management and to perform any special tasks for which they are appointed (at [99]). 126The primary Judge rejected a submission that the contravention was at the lower end of seriousness because the misleading aspects of the Draft ASX Announcement were errors of emphasis in a single aspect of a much wider communications strategy in which the directors were not involved. His Honour gave these reasons (at [103]-[107]): "103. ... This event, while isolated, was highly significant. The board had decided to form the Foundation, to settle Coy and Jsekarb upon it and to provide a level of funding to meet future asbestos claims. The non-executive directors knew from the board papers they had received at this and earlier meetings that JHIL had to convince the public that there were sufficient funds to meet all legitimate asbestos claims. They had rejected an earlier proposal that did not provide sufficient funding. They were aware of the significance of what was to be said in the Draft ASX Announcement about the level of funding. The information at their disposal did not support the emphatic terms of the Draft ASX Announcement. 104. This was a serious breach of duty and a flagrant one. The non-executive directors were endorsing JHIL's announcement to the market in emphatic terms that the Foundation had sufficient funds to pay all legitimate present and future asbestos claims, when they had no sufficient support for that statement and they knew, or ought to have known, that the announcement would influence the market. 105. Here the negligently made misleading statement was serious as it was a deliberate attempt to influence the market to an acceptance of the separation of Coy and Jsekarb, with their attendant asbestos claims, from the James Hardie group. 106. Included in the material made available to them at the 15 February 2001 Meeting was a sensitivity analysis forming part of the Cashflow Model. It demonstrated that a drop of 1% in the investment rate adopted in the Cashflow Model halved the fund. In other words, on a 51 year analysis, the fund would be exhausted somewhere between year 20 and year 25. The shortcomings of the Cashflow Model must have been obvious to the non-executive directors, or at least they ought to have been, and they should have realized that they were prevented from approving the unequivocal and unqualified statements as to the certainty of sufficient funding in the Draft ASX Announcement. 107. The meeting was not informed that PwC and Access Economics had been instructed not to analyse the assumptions underlying the Cashflow Model. All the non-executive directors were told was that PwC and Access Economics had found the Cashflow Model to be logically sound and technically correct. But that did not justify the emphatic statements made in the Draft ASX Announcement. That statement simply drew attention back to the Cashflow Model and its sensitivity analysis denied the accuracy of the statements as to sufficiency of funding in the Draft ASX Announcement." 127The primary Judge accepted (at [118]) that one element in assessing the seriousness of a contravention is the likelihood of loss. He made the following findings (at [119]-[120]): "119. The publication of the Final ASX Announcement had the effect of maintaining the market price of JHIL shares. Thus, the market operated on a false basis and by reason of the misleading announcement the price of JHIL shares was artificially maintained. That increased the potential harm to JHIL if the misleading statements were revealed. 120. It was submitted that this effect lasted for only 41 minutes before the Press Conference Statements were made. But those statements did not supplant the effect of those contained in the Final ASX Announcement. They enforced [sic] them." 128His Honour rejected the submission of the US Directors that the gravity of their contravention was of a lower scale than that of the other non-executive directors who were present at the Meeting. He gave these reasons (at [125]-[127]): "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. 126. The fact that the Draft ASX Announcement would have been approved in any event does not excuse the conduct of the US Directors. 127. Nor do I consider their breach of duty to be of a lower flagrancy to the conduct of those who attended the 15 February 2001 Meeting in person. There was discussion at the meeting of the Draft ASX Announcement. The statements as to the key message to be communicated to the market made at the meeting bore a correlation to the paragraphs of the Draft ASX Announcement. That in itself may have been sufficient for Mr Gillfillan and Mr Koffel to be taken to have approved the release of the Draft ASX Announcement. But there was clearly enough discussion to have alerted Mr Gillfillan and Mr Koffel to the fact that the board was considering a document that they did not have. Their failure to ask for a copy and their silence knowing that it would be taken as a vote in favour of approval was, in my view, just as flagrant as the approval of the Draft ASX Announcement by those who attended the meeting in person." 129After stating his intention to make declarations of contravention, the primary Judge considered the question of penalty. In accordance with the authorities, he first directed attention to whether disqualification orders should be made. 130His Honour pointed out (at [279]) that Mr Macdonald was the driving force behind Project Green. Mr Macdonald knew or ought to have known that the Draft ASX Announcement and other statements and announcements he made were misleading (at [280]). ASIC had sought further findings that Mr Macdonald knew that the various statements were false or misleading or, alternatively that he was reckless as to whether they were or not. But his Honour did "not propose to make additional findings at this stage of the proceedings" (at [281]). 131Mr Macdonald's conduct carried a degree of negligence beyond that needed to establish tortious liability. The alternative to his knowledge of the misleading nature of the statements he made was gross negligence (at [283]). 132Bearing in mind Mr Macdonald's responsibility of leadership on the separation proposal, his vote in favour of approving the Draft ASX Announcement (at [286]): "was a gross departure from the requisite standard of care and diligence that applied in the circumstances. The perceived need to convince the public of the benefits of the proposal led him to condone the use of over emphatic language in the Draft ASX Announcement. And he knew that if the Draft ASX Announcement was released to the public it was likely to have an effect on the JHIL share price. The purpose of the Draft ASX Announcement was to have the public approve the separation of Coy and Jsekarb from the James Hardie group." 133The extent of Mr Macdonald's departure from the expected standard of a reasonable director was less when he failed to warn the board of the over-emphatic terms of the Draft ASX Announcement. The failure was an "internal step" in the chain that led to the potential announcement in the Draft ASX Announcement and the actual terms of the Final ASX Announcement released by JHIL on 16 February 2001 (at [287]). 134The failure to advise the board of the limitations in the PwC and Access Economics reviews of the Cashflow Model was in a similar position (at [288]): "Mr Macdonald knew of the limitations and must have been aware that if the other directors were aware of these limitations they might have taken a different view of the Draft ASX Announcement. To allow the bland statement by Mr Morley that PwC and Access Economics had found the Cashflow Model to be logically sound and technically correct to stand without reservation was an internal failure that led to the actual representations in the Final ASX Announcement." 135The primary Judge went on to find that Mr Macdonald: * had been grossly negligent in approving the Final ASX Announcement since he had had the chance to advise that it not be released or should be amended, yet deliberately chose to release it knowing it conveyed the matters set out in the declaration of contravention (at [289]); * had made other statements that he knew or ought to have known were misleading and involved him in serious breaches of the duty of care and diligence (at [290]); and * had subsequently committed deliberate breaches of duty by continuing to use the language of full funding at a time when he knew that the Foundation was seriously under funded (at [293]). 136The primary Judge rejected a submission by ASIC that Mr Macdonald should be found to have breached s 181(1) of the Corporations Act by not acting in good faith in the interests of JHIL or for a proper purpose. His Honour gave the following reasons for rejecting ASIC's submission (at [295]-[296]): "295. I said that Mr Macdonald may have been misguided in the extent to which he sought to sell the separation proposal. But in doing so there was no conflict between his personal interest and that of JHIL. He did not take advantage of his position to make a secret profit. He did not misappropriate the company's assets for himself. Like the non-executive directors in approving the Draft ASX Announcement, Mr Macdonald may have believed it was in the best interests of JHIL to be as emphatic as he could in selling the separation proposal. The evidence did not establish that Mr Macdonald acted for an improper or collateral purpose. Objectively judged, Mr Macdonald was overzealous, but he was overzealous in the interests of JHIL. 296. In the absence of an improper purpose, Section 181(1) was not engaged." 137His Honour made it clear that these findings did not exclude a finding of dishonesty in relation to some of Mr Macdonald's contraventions (at [300]): "Mr Macdonald may have thought he was acting in the best interests of JHINV [the new company] when he dishonestly made the representations and hence he may not have acted for an improper purpose." 138Since Mr Macdonald had committed multiple contraventions of s 180(1) of the Corporations Act, it was necessary (at [303]) to apply the sentencing principle that a court should: "fix an appropriate sentence for each offence and then consider questions of cumulation or concurrence, as well as questions of totality". 139Some of Mr Macdonald's contraventions exhibited serious incompetence and irresponsibility. In some he had engaged in a deliberate course of conduct, albeit not to enrich himself at someone else's expense. His Honour acknowledged that Mr Macdonald and his family had suffered greatly as the result of adverse publicity and that his testimonials suggested that he was a fit and proper person to manage a company (at [308]-[309]). However, the testimonials did not exclude the need for personal deterrence, particularly as he had persisted in making false representations that the Foundation was fully funded (at [309]). 140The primary Judge explained (at [310]-[317]) his decision to disqualify Mr Macdonald for 15 years this way: "310. The degree of seriousness of Mr Macdonald's contraventions is high although his propensity to engage in similar conduct in the future is low. They all involved denying the market accurate information either by publishing misleading information or by withholding material information. Since a properly informed market depends on accurate and timely information, Mr Macdonald's failures were serious. When a market is misled, the share price of the misinformant is affected by a false assumption. Depending on the effect on the share price, a vendor may sell at too low a price: a purchaser may pay too much. Misinformation causes potential harm to the public. 311. Against the need to protect the public it is necessary to balance personal hardship and in this case I accept that the personal hurt that the attendant publicity has caused is significant. 312. The breaches are serious and general deterrence must also be taken into account. In my view a period of disqualification is in order. 313. Before taking the totality principle into account, ASIC seeks a disqualification in the range from 4 - 7 years for each of the contraventions in declarations 2 and 3, the internal failures to advise of the over emphatic language and the failure to advise of the limitations of the PwC and Access Economics reviews. ASIC seeks a disqualification in the range from 5 - 8 years for the contraventions in declarations 1 and 4 - 7, the misleading announcements to the public. In respect of the contravention in declaration 8, the failure to consider whether the DOCI Information should be disclosed, ASIC seeks a disqualification in the range from 4 - 7 years. With respect to the deliberate representations in declarations 9 - 11, ASIC seeks a disqualification in the range from 8 - 12 years. Applying the totality principle, ASIC submitted that a disqualification in the range from 12 - 16 years was appropriate. 314. Mr Macdonald submitted that a disqualification period of 5 - 7 years was appropriate. If there were 9 contraventions (Mr Macdonald submitted that duplication arose with respect to some further declarations) there should be imposed a 9 month disqualification with respect to each leading to a 6.75 year disqualification brought back to the range he submitted was appropriate under the totality principle. 315. I reject that approach. 9 months is too short and the submission attributes equal delinquency to each contravention. 316. I also reject ASIC's submission that the failure to consider whether the DOCI Information needed to be disclosed should be treated as of the same seriousness as the internal failures to advise on over emphatic language and limited expert reviews. In my view the failure to consider disclosure of the DOCI Information was at least as reprehensible as the misleading disclosures to the ASX and the public. 317. With respect to the contraventions in declarations 2 and 3 I would impose a disqualification of 5 years. With respect to the contraventions in declarations 1 and 4 - 8 I would impose a disqualification of 7 years. With respect to the contraventions in declarations 9 - 11 I would impose a disqualification of 10 years. With some of these impositions I would regard it as appropriate that they be served concurrently. Applying the totality principle, I will make a disqualification order against Mr Macdonald for 15 years." 141The primary Judge noted that ASIC had sought disqualification orders of five years for each appellant (at [342]). His Honour accepted the submission (at [343]-[354]): "343. ... [E]ach of the non-executive directors is highly qualified. They have had impressive careers as directors of public companies. Their testimonials speak glowingly of their ability. They establish the care, skill and competence they have displayed in roles at the executive or non-executive level. 344. The need for personal deterrence is low. The testimonial evidence is strongly in favour of their general honesty and probity. The testimonials also establish the fitness of each of the non-executive directors to manage a company. 345. But considerations of general deterrence and retribution remain and I do not regard these factors as differentiating the contravention by Mr Macdonald to such an extent that a discriminatory order should be made with respect to any of the non-executive directors. 346. Like the other individual defendants each has been affected adversely by the publicity associated with the Special Commission and with these proceedings. And the personal hurt to them and their families must be weighed in the balance. And so it was in relation to Mr Macdonald, Mr Shafron and Mr Morley. 347. The adverse publicity of the proceedings caused the subsequent resignations of Ms Hellicar and Mr Willcox from their board positions. I do not regard those facts, however, as sufficiently differentiating their position from that of Mr Macdonald to warrant discriminatory orders. 348. It was submitted on behalf of Mr O'Brien that his delinquency was less than the other non-executive directors because he had only attended three board meetings prior to the 15 February 2001 Meeting. 349. I do not regard that as demonstrating a need for a discriminatory order in his case. The task of approving the Draft ASX Announcement did not require the benefit of background material made available to other directors. It was a question of determining whether the language used in the Draft ASX Announcement was inappropriate. 350. It was submitted that if the Court concluded that a non-executive director was a fit and proper person to manage a corporation then, having regard to the matters set out in Section 206C, the Court should conclude that a disqualification order would not be justified. 351. I reject that submission. It does not automatically follow that a finding of fitness to manage a corporation means that the Court cannot be satisfied that disqualification is justified. In this case each of the non-executive directors breached Section 180(1). That fact might call for disqualification for personal deterrence, after all the contravention occurred, for general deterrence or for retribution notwithstanding the fitness of the person to manage a corporation. 352. It was submitted that the Court might backdate a disqualification order. Austin J did so in Vines 58 ACSR at 336 [125] on the basis that it had taken a very long time to reach the point when orders could be made. Those considerations do not apply in the present case. With the full cooperation of all concerned, the penalty hearing was completed in 45 days and the hearing on exoneration, penalties and costs was heard in one day. 353. I imposed a disqualification period of 7 years on Mr Macdonald's contravention in approving the Draft ASX Announcement. But I discounted that and the other disqualification periods imposed upon him under the totality principle. 354. In the case of the non-executive directors, I will discount the 7 year period and make a disqualification order against each of Mr Brown, Mr Gillfillan, Ms Hellicar, Mr Koffel, Mr O'Brien, Mr Terry and Mr Willcox of 5 years." 142The primary Judge considered (at [367]) that: "punishment and general deterrence and, with respect to the contraventions in the last three declarations against Mr Macdonald, personal deterrence demand the imposition of a pecuniary penalty in addition to the period of disqualification of Mr Macdonald." 143ASIC had sought a pecuniary penalty against Mr Macdonald in the range of $1.47 million to $1.81 million (at [368]). His Honour thought (at [374]) that a penalty of this amount was excessive, bearing in mind that the maximum penalty for the worst case was $200,000 per contravention. Moreover, ASIC's approach did not take adequate account of the other sanctions, in particular the declarations of contravention and the disqualification order. 144The primary Judge approached (at [376]) Mr Macdonald's penalty as follows: "The seriousness of the contraventions calls for the imposition of a significant penalty with respect to each contravention. I attribute a penalty of $35,000 to each of the contraventions in declarations 2 and 3. For each of the contraventions in declaration 1 and declarations 4 - 7, I attribute a penalty of $40,000. For the contravention in declaration 8, for the same reasons expressed with respect to disqualification, I attribute a penalty of $40,000. And for the contraventions in declarations 9 - 11, I attribute a penalty of $50,000. In total this amounts to $460,000, which I discount to $350,000." 145The primary Judge said (at [388]) that he had treated the single contravention of each of the appellants equally. He continued (at [389]-[390]) as follows: "389. In determining a period of disqualification for the non-executive directors I took the period of 7 years that I attributed to Mr Macdonald for his contravention in approving the Draft ASX Announcement and discounted it to 5 years as the appropriate disqualification period for the non-executive directors. 390. I adopt a similar course with respect to pecuniary penalty. I have attributed a penalty of $40,000 to Mr Macdonald's breach that, together with the amounts attributed to other contraventions, was discounted. I discount the $40,000 to $30,000 in the case of each of the non-executive directors." High Court Judgment 146The High Court, as I have noted (at [47]-[48]), delivered two judgments in relation to this mater, one allowing ASIC's appeal and the other dismissing Mr Shafron's appeal. In the judgment allowing ASIC's appeal, the plurality pointed out (HC Judgment, at [19]) that the respondents to the appeal (the present appellants) did not put in issue that they ought to have known that the statements in the Draft ASX Announcement were misleading in the four respects identified by the primary Judge. The central issue in the High Court was whether the Court of Appeal should have found, as it did, that ASIC had not proved that the Draft ASX Announcement was tabled at the Meeting and had not proved that the directors approved the Announcement. On that issue, the plurality concluded (at [171]) that the Court of Appeal was wrong to set aside the primary Judge's finding that the Draft ASX Announcement was tabled at and approved by the directors of JHIL at the Meeting. 147The plurality made or approved a number of findings, including the following: * the making of the separation decision and the terms on which the separation was to be effected were matters that had to be disclosed to the ASX (at [37]); * Mr Macdonald said in a paper on the separation proposal prepared for the Meeting that approval of the proposal was urgent because a new accounting standard (ED 88) was likely to be promulgated before JHIL's financial year ended on 31 March 2001 and that standard would adversely affect the company's accounts by requiring provision not only for present but future asbestos liabilities (at [50]); * after a process of consideration and development that had continued for over a year, the Board approved the separation proposal at the Meeting (at [55]): "having refused to approve a different separation proposal at the immediately preceding board meeting (in January 2001) and having required management to continue to develop the concept 'particularly in relation to funding'. It is thus evident that the directors regarded the funding of the [Foundation] as a centrally important issue and it could not be assumed that the directors approved the separation proposal not having any view about whether the [Foundation] would have sufficient funds"; and * by adopting at the April meeting the draft minutes of the Meeting (at [59]): "the board members indicated that they had assented to the several steps recorded in those minutes as having been taken at the February board meeting to approve and effect the separation of Coy and Jsekarb, including the step of approving a draft announcement to the ASX". Submissions Appellants' Submissions Mr Brown and Ms Hellicar 148The written submissions filed on behalf of Mr Brown and Ms Hellicar "candidly" recognised three matters: * The findings of fact by the High Court are conclusive. Thus they accept that they each participated in the Meeting, where it was part of their responsibility to approve or not approve the release of the Draft ASX Announcement and they fell down in that responsibility. * Their failings were significant and cannot be considered trivial or minor. They have learned important lessons from the High Court's findings, as has the commercial community generally. * They understand the HC Judgment to stand for important principles to which they will conform in the future, if given the opportunity. The principles so understood by Mr Brown and Ms Hellicar are said to be the following: "9.1 it is an important part of a director's duty to ensure clarity on the dividing line between those matters which are within the province of the directors to decide at a meeting and those matters which can safely be left to management to carry forward after the meeting; 9.2 where it does fall within the province of the directors at a meeting to resolve upon the terms of a release of important information to the market, each director should conscientiously apply himself or herself to the terms of the proposed document and ensure that it is accurate in the light of all of the information known to the directors; 9.3 (arising not out of the contraventions as such, but from the High Court's approach to the evidence) while the primary responsibility for the preparation of accurate, timely minutes falls on the company, individual directors must give due attention to how this is done, particularly where they formally approve them." 149Mr Gleeson submitted that the primary Judge committed four errors in imposing a five year period of disqualification. In substance, his submissions were adopted by the other appellants. 150First, his Honour had not commenced his analysis by considering, as required by s 206C(2) of the Corporations Act, whether disqualification was justified having regard to: * the individual director's conduct in relation to the management, business or property of any corporation; and * other appropriate matters. Instead, his Honour had started with the period of disqualification attributed to Mr Macdonald for his contravention in approving the Draft ASX Announcement and simply discounted it to five years for each of the appellants. 151In the case of Mr Brown and Ms Hellicar, this had led his Honour to overlook or give insufficient attention to a number of matters pointing, at worst, to a short period of disqualification, certainly no longer than the time already served by them. The matters identified by Mr Gleeson on behalf of Mr Brown and Ms Hellicar were the following: * the contravention was an isolated incident in an otherwise distinguished period of service as a director of JHIL; * the contravention occurred in the course of a lengthy meeting considering many issues which management had said required urgent attention; * both were non-executive directors; and * the testimonial evidence which demonstrated that both Mr Brown and Ms Hellicar performed with a high degree of skill, care and integrity in a variety of positions since 2001. 152Secondly, the primary Judge gave the parity principle primacy, rather than using it as a check on the appropriate penalty arrived at by other reasoning. Moreover, his Honour treated the conduct of the appellants as equivalent or virtually equivalent to that of Mr Macdonald, the very person who had "so grievously misled" the appellants. The findings of contravention against the appellants were quite different from the finding against Mr Macdonald in relation to the Draft ASX Announcement contravention. On the findings of the primary Judge, Mr Macdonald must have known that the Draft ASX Announcement was overly emphatic, yet in effect he "sold" the erroneous Announcement to the Board. His responsibility, particularly taking into account the finding in the Penalty Judgment that he had engaged in a deliberate course of conduct in wilful contravention of the law, was far graver than that of the appellants. It was therefore a significant legal error for the primary Judge to use Mr Macdonald as the reference point for any penalty to be imposed on the appellants. 153Thirdly, the primary Judge had given insufficient weight to the impressive testimonial evidence adduced on behalf of Mr Brown and Ms Hellicar. Their evidence was important because s 206C(2) makes it clear that a person's fitness to manage a company is critical to determining whether a period of disqualification is justified. Although his Honour referred to the testimonial evidence, he had effectively discarded it when considering penalty. One explanation for this approach was that his Honour had attributed overwhelming weight to the need for general deterrence, leading him to "bur[y] the positive findings of honesty, probity, fitness and competence". 154Fourthly, the penalty was manifestly excessive. Mr Terry 155Mr Terry's written submissions accepted that the Draft ASX Announcement was important; that it was necessary for him to turn his mind to whether the announcement was misleading; and that he was not entitled to rely on the "say-so" of management in approving release of the Announcement. He also acknowledged that the contravention found against him was serious. However, Mr Terry emphasised that the finding against him was one of negligence, not deceit, conscious impropriety or a desire to mislead the market. In these circumstances, Mr Terry disputed the primary Judge's characterisation of his conduct as "flagrant". 156Mr McHugh SC, who appeared with Mr Nixon and Ms Patterson for Mr Terry, characterised Mr Terry's contravention as: "a single incident of negligence, more than eleven years ago, in the course of an otherwise unblemished career of over 40 years in which Mr Terry has made a considerable contribution to [foreign affairs, government, academia, regulatory bodies, charity, law and business]." Mr McHugh emphasised the primary Judge's finding that Mr Terry was a fit and proper person to manage corporations and submitted that weight should be given to the impressive testimonials adduced on his behalf. 157Mr McHugh contended that the additional evidence adduced on Mr Terry's behalf demonstrated that the High Court's decision had received very extensive publicity. The publicity ensured that the objective of general deterrence had already been well served and that there was no need for any continuing period of disqualification. Mr Terry had already been disqualified for a period of 18 months, which was effectively two years and eleven months if the period between the CA Penalty Judgment and the HC Judgment (when Mr Terry was not on any boards) was taken into account. 158Accordingly, so Mr McHugh argued, the period of disqualification should be no greater than the period of disqualification already served. Further, the pecuniary penalty of $30,000 was manifestly excessive and should be reduced. Mr O'Brien 159Mr O'Brien accepted that, having regard to the HC Judgment, his appeal against the disqualification and pecuniary penalty orders must be assessed against the primary Judge's reasons. 160Mr Wood, who appeared with Mr Henry for Mr O'Brien, adopted in substance the submission made by Mr Brown and Ms Hellicar that the primary Judge had misapplied the parity principle. On the assumption that this Court had to consider the question of penalty afresh, Mr Wood contended that no disqualification order should be made against Mr O'Brien. In any event, any order should not be for a period longer than Mr O'Brien had already served. 161Mr Wood submitted that Mr O'Brien's position was similar to that of the non-executive directors in Australian Securities and Investments Commission v Healey (No 2) [2011] FCA 1003; 85 ACSR 654, whose serious contraventions did not incur any disqualification or pecuniary penalty orders. Like the directors in Healey (No 2), Mr O'Brien had an unblemished record as a director of listed companies prior to this contravention and his testimonial evidence established that he had demonstrated care, diligence and honesty in carrying out his responsibilities. Also like the directors in Healey (No 2), Mr O'Brien was unlikely to offend again; obtained no personal benefit from his contravening conduct; and had been the subject of widespread adverse publicity which reduced the need for general deterrence. 162In his oral submissions, Mr Wood advanced a challenge to the primary Judge's findings that had only been hinted at in the written submissions filed on behalf of Mr O'Brien. Mr Wood, in reliance on the observations of Ipp JA in Vines v Australian Securities and Investments Commission [2007] NSWCA 126; 63 ACSR 505, at [229], contended that the question of seriousness had to be judged, in part, by the consequences, actual or potential, of the contraventions. He submitted that the primary Judge had been wrong to find in the Penalty Judgment (at [119]-[120]) that the market had operated on a false basis in consequence of the release of the Final ASX Announcement. Mr Wood submitted that in making this finding his Honour had misinterpreted the expert evidence of Mr Humphris, a merchant banker, and had overstated the seriousness of Mr O'Brien's contravention. Mr Willcox 163Mr Willcox's written submissions largely traversed the ground covered by the other Australian Directors. However, the submissions particularly relied on the following: * Mr Willcox had acknowledged in his evidence that the terms of the Draft ASX Announcement were indefensible; * the testimonial evidence adduced on Mr Willcox's behalf was powerful and attested to his commitment to openness and transparency in his role as director of various corporations; * Mr Willcox's conduct could be characterised as a: "one-off mistake or lapse of judgment not warranting any, or any significant disqualification"; and * Mr Willcox had not sought or obtained any directorships during the period between the CA Liability Judgment and the HC Judgment. 164In his oral submissions, Mr Jucovic QC, who appeared with Mr Scruby for Mr Willcox, sought to differentiate Mr Willcox's position from that of the other Australian Directors. Apart from the matters in the written submissions, Mr Jucovic pointed to a number of other considerations: * Mr Willcox had not sought a stay of the disqualification order against him; * Mr Willcox intended to retire from JHIL's Board in August 2000 for medical reasons, but was persuaded to stay on because important strategic decisions had to be made; * Mr Willcox's age (approximately 67 years old) meant that his career as a director was effectively finished once the disqualification order against him took effect; * Mr Willcox's evidence that he believed at the time of the Meeting that actuarial estimates of future asbestos liabilities, such as those prepared by Trowbridge, while not certain were sufficiently reliable to form a basis for making decisions; and * his evidence that, on the basis of the material presented at the Meeting, particularly Mr Morley's presentation of the Cashflow Model, he was satisfied that the Foundation was adequately funded, but did not think that any reasonable person could believe that future predictions of this kind could be made with certainty. The US Directors 165The US Directors, in their written submissions, accepted personal responsibility for contravening the law by failing to seek further information on the Draft ASX Announcement or expressly abstaining from the vote. They made essentially the same acknowledgement in relation to the HC Judgment as did Mr Brown and Ms Hellicar (see [148] above). However, the US Directors also pointed out that no finding had been made that they knew of the terms of the Draft ASX Announcement or that the Announcement was capable of misleading people or the market. 166The written submissions summarised the US Directors' "central contention" as follows: "their conduct reflected in the contraventions found against each of them did not involve a substantial departure from the standard expected of non-executive directors in their particular circumstances and was an isolated failing in otherwise unblemished careers such that: (a) they ought properly to have been exonerated and excused from liability; or (b) alternatively, if the Court does not accept that submission, no disqualification order or pecuniary penalty was necessary or appropriate to be made against them; or (c) alternatively, if the Court accepts neither of those submissions and considers that some penalty (such as a pecuniary penalty) is appropriate, any such penalty should be of lesser magnitude than any penalties which are imposed on other non-executive directors." 167In his oral submissions, Mr Bennett QC, who appeared with Mr Hollo SC for the US Directors, contended that their contraventions were different from those of the other non-executive directors. Not only were Mr Gillfillan and Mr Koffel not at the Meeting, but they never saw the Draft ASX Announcement. Furthermore, their contraventions involved "non-feasance" rather than "misfeasance". 168Mr Bennett placed considerable emphasis on the information presented to the Meeting, including the slides (which the US Directors had received before the Meeting). He submitted that the US Directors could not be expected to have realised that management planned to make absolute statements in any announcement to the ASX. No reasonable director, so he argued, would have anticipated that the ASX Announcement would include an unqualified prediction that there would be sufficient funds to pay all future claims. While there was a "correlation" between the topics discussed at the Meeting and the topics addressed in the Draft ASX Announcement and while the US Directors had an obligation to ensure that the Announcement was accurate, there was a "huge difference" between the messages conveyed by the material presented to the Meeting and the Draft ASX Announcement approved at the Meeting. In these circumstances, the US Directors' contravention was "very light". 169Mr Bennett further submitted that the contravention merely involved a failure to abstain from the critical vote. This in essence was a failure to perform a "ritual", particularly because the Board members must have known that the US Directors could not have endorsed a document they had not seen and because the vote itself was conducted informally. In these circumstances, the US Directors' positive role to approve the Draft ASX Announcement was a "highly technical, artificial construct, not in accordance with reality." 170The primary Judge erred, so Mr Bennett argued, in not finding that the US Directors had acted honestly and in declining to relieve them under ss 1317S(2) or 1318 of the Corporations Act from liability for their contraventions. They were genuinely seeking at the Meeting to come to the best decision in the interests of JHIL on the question of separation and the terms of that separation. Their failure to interrupt the Meeting to call for a copy of the Draft ASX Announcement was merely inadvertence or an honest mistake. It was an "isolated error of judgment falling well short of a failure to act honestly". 171Taking into account these matters and that the gravity of the contraventions found against the US Directors was "of a lower scale" than those committed by the Australian Directors, the primary Judge was in error in refusing to relieve the US Directors from liability. The Board had not been provided with complete and accurate information by management. While this affected all directors: "[t]here is a real qualitative difference between the conduct of those who have been found to have participated in the substantive approval of a misleading announcement, and the conduct of others who did not participate in that approval but left it to others, including trusted management and advisers." 172Even if the US Directors were not relieved from liability for their contraventions, the penalties imposed on them demonstrated error. In the circumstances, any penalty beyond the making of the declaration of contravention was excessive. Reasoning on Penalties Principles Relating to Disqualification Orders 173Section 206C(1) of the Corporations Act provides that the Court may disqualify a person from managing corporations for a period that the Court considers appropriate if (as in the present case) a declaration of contravention of a civil penalty provision is made and "the Court is satisfied that the disqualification is justified". 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." 174Section 206C differs from its predecessor, s 1317EA of the Corporations Law, in that s 206C has no equivalent to s 1317EA(4), which provided that a disqualification order was not to be made if the Court was satisfied that, despite the contraventions, the contravenor was a fit and proper person to manage a corporation: see Vines v ASIC, at [6], [24]ff, per Spigelman CJ (with whom Ipp JA agreed). It follows that under s 206C, a disqualification order may be made even against a person who, by reason of experience, qualifications, contrition or other factors, may be regarded as fit and proper to manage a corporation notwithstanding the particular contravention found against him or her in the proceedings. 175In determining whether the trial Judge is satisfied that a period of disqualification is justified, the court makes a "broad evaluative judgment". An appellate court exercises the same degree of restraint in relation to such a judgment as it does in relation to a discretionary decision of a trial judge: Vines v ASIC, at [8]. Thus an appellate court does not interfere merely because it would have decided the matter differently; it has to be satisfied that the trial judge was in error. 176The principles to be applied in deciding whether there has been error are those identified by the High Court in House v The King [1936] HCA 40; 55 CLR 499, at 505, per Dixon, Evatt and McTiernan JJ; Vines v ASIC, at [9]. Accordingly, an appellate court may intervene where the court imposing a penalty has acted on a wrong principle, given weight to extraneous or irrelevant matters or has failed to give weight or sufficient weight to relevant considerations. Spigelman CJ in Vines v ASIC, at [11]-[13], relied on observations by Kitto J in Lovell v Lovell [1950] HCA 52; 81 CLR 513, at 532, and Australian Coal and Shale Employees' Federation v Commonwealth [1953] HCA 25; 94 CLR 621, at 627, to support the bolded words in the previous sentence. However, the passages quoted by his Honour indicate that the failure to give sufficient weight to relevant considerations must be such as to satisfy the appellate court that the exercise of judgment by the trial judge was wrong. 177The appellants do not submit that the primary Judge erred in stating the principles relevant to the making of disqualification orders. Their complaints relate to the application of those principles to the particular circumstances of the case. Nonetheless, it is useful to restate the principles, particularly as this Court will be required to determine the appropriate penalties itself should the primary Judge's orders be set aside. 178The primary Judge noted (Penalty Judgment, at [268]) that McHugh J in Rich v Australian Securities and Investments Commission [2004] HCA 42; 220 CLR 129, at [48]-[49], endorsed the propositions stated by Santow J in Re HIH Insurance Ltd (In prov liq); Australian Securities and Investments Commission v Adler [2002] NSWSC 483; 42 ACSR 80, at [56]. The propositions are as follows (most citations omitted): "(i)Disqualification orders are designed to protect the public from the harmful use of the corporate structure or from use that is contrary to proper commercial standards. (ii)The banning order is designed to protect the public by seeking to safeguard the public interest in the transparency and accountability of companies and in the suitability of directors to hold office. (iii)Protection of the public also envisages protection of individuals that deal with companies, including consumers, creditors, shareholders and investors. (iv)The banning order is protective against present and future misuse of the corporate structure. (v)The order has a motive of personal deterrence, though it is not punitive. (vi)The objects of general deterrence are also sought to be achieved. (vii)In assessing the fitness of an individual to manage a company, it is necessary that they have an understanding of the proper role of the company director and the duty of due diligence that is owed to the company. (viii)Longer periods of disqualification are reserved for cases where contraventions have been of a serious nature such as those involving dishonesty. (ix)In assessing an appropriate length of prohibition, consideration has been given to the degree of seriousness of the contraventions, the propensity that the defendant may engage in similar conduct in the future and the likely harm that may be caused to the public. (x)It is necessary to balance the personal hardship to the defendant against the public interest and the need for protection of the public from any repeat of the conduct. (xi)A mitigating factor in considering a period of disqualification is the likelihood of the defendant reforming. (xii)The eight criteria to govern the exercise of the court's powers of disqualification set out in Commissioner for Corporate Affairs (WA) v Ekamper (1987) 12 ACLR 519 have been influential. It was held that in making such an order it is necessary to assess [the]: ●character of the offenders; ●nature of the breaches; ●structure of the companies and the nature of their business; ●interests of shareholders, creditors and employees ●risks to others from the continuation of offenders as company directors; ●honesty and competence of offenders; ●hardship to offenders and their personal and commercial interests; and ●offenders' appreciation that future breaches could result in future proceedings. (xiii)Factors which lead to the imposition of the longest periods of disqualification (that is disqualifications of 25 years or more) were: ●large financial losses; ●high propensity that defendants may engage in similar activities or conduct; ●activities undertaken in fields in which there was potential to do great financial damage such as in management and financial consultancy; ●lack of contrition or remorse; ●disregard for law and compliance with corporate regulations; ●dishonesty and intent to defraud; ●previous convictions and contraventions for similar activities. (xiv)In cases in which the period of disqualification ranged from 7 years to 12 years, the factors evident and which lead to the conclusion that these cases were serious though not 'worst cases', included: ●serious incompetence and irresponsibility; ●substantial loss; ●defendants had engaged in deliberate courses of conduct to enrich themselves at others' expense, but with lesser degrees of dishonesty; ●continued, knowing and wilful contraventions of the law and disregard for legal obligations; ●lack of contrition or acceptance of responsibility, but as against that, the prospect that the individual may reform. (xv)The factors leading to the shortest disqualifications, that is disqualifications for up to 3 years were: ●although the defendants had personally gained from the conduct, they had endeavoured to repay or partially repay the amounts misappropriated; ●the defendants had no immediate or discernible future intention to hold a position as manager of a company; ●... the [defendant] had expressed remorse and contrition, acted on advice of professionals and had not contested the proceedings." See also Elliott v Australian Securities and Investments Commission [2004] VSCA 54; 10 VR 369, at [136]-[137], per curiam. 179Santow J's ninth proposition identifies the seriousness of the contravention as an element in determining the appropriate period of disqualification. In Vines v ASIC, Ipp JA addressed how the seriousness of a contravention is to be assessed, in the context of what was then the threshold criterion stated in s 1317EA(5) of the Corporations Law, namely that the Court was satisfied that the contravention was serious. Ipp JA, with whom Spigelman CJ generally agreed on this point, said (at [229]) that: "the seriousness of the contravention is to be determined by reference to: (a)the degree by which the officer of the corporation concerned has departed from the requisite standard of care and diligence...; and (b)the consequences, potential or actual, of the contraventions." 180McHugh J in Rich v ASIC at [48] noted that Santow J's propositions assumed that a disqualification order is protective rather than punitive. However, McHugh J considered (at [44]) that the legislative history of ss 206C and 206E of the Corporations Act (the disqualification provisions) showed that the provisions are not intended to be purely protective. His Honour quoted (at [45]) from the Explanatory Paper accompanying the first draft of the Corporate Law Reform Bill 1992 in relation to the predecessors to ss 206C and 206E: "It is expected that in settling an appropriate [civil penalty] order, the Court would first give consideration to whether it should impose a civil penalty disqualification. The issue should be whether the defendant's conduct, whilst not criminal in nature, was so reprehensible and had such serious consequences as to warrant an order prohibiting the person from managing a corporation. For example, if gross negligence by a director had led directly to massive losses for shareholders, the Court may consider that a director should be disqualified for a substantial period, even where there was no question of a dishonest intent. The emphasis should be on preventing a recurrence of the contravention by the defendant, and providing a deterrent to other persons involved in the management of corporations. It is expected that the Courts would consider imposing a pecuniary penalty only if it considered that a civil penalty disqualification provided an inadequate or inappropriate remedy." 181McHugh J noted (at [50]) that some of the propositions advanced by Santow J, such as (v) and (vi), recognise that the disqualification provisions have the objectives of personal and general deterrence and thus strongly resemble sentencing principles under the criminal law. McHugh J considered (at [52]) that the factors taken into account in criminal sentencing, specifically retribution, deterrence, reformation, contrition and protection of the public, are also central to determining whether an order for disqualification should be made and, if so, for how long. In his Honour's view (at [53]-[56]), cases such as Re One.Tel Ltd (in liq); Australian Securities and Investments Commission v Rich [2003] NSWSC 186; 44 ACSR 682 (Bryson J) indicate that retribution is as much a factor in making disqualification orders as protection of the public. Other cases, such as Australian Securities and Investments Commission v Whitlam (No 2) [2002] NSWSC 718; 42 ACSR 515 (Gzell J) demonstrate that courts take into account mitigating factors when deciding on an appropriate penalty, again indicating that the jurisdiction is not purely protective (at [58]). 182The plurality of the High Court in Rich v ASIC observed (at [32]-[33]) that the supposed distinction between punitive and protective measures found "no sure footing" in the authorities and observed that the distinction, at best, was "elusive". In making these comments, their Honours rejected the notion that the objective of a disqualification order is purely protective. Such an order can be imposed not only to protect the company, its shareholders and the community, but by way of punishment and deterrence: Australian Securities and Investments Commission v Vizard [2005] FCA 1037; 145 FCR 57, at [35], per Finkelstein J. 183It follows from what has been said that general deterrence and the need to uphold proper standards of corporate behaviour may be very important factors in determining whether a disqualification should be imposed and, if so, for what period. In the CA Penalty Judgment in the present case, this Court disqualified Mr Morley, the former chief financial officer of JHIL, for a period of two years for his failure to advise the Board of the limited nature of the review of the Cashflow Model conducted by PwC and Access Economics ("the cash flow analysis contravention"). The Court said this (at [125]-[126]): "125. Accepting that the need for personal deterrence is low, nonetheless general deterrence is in our view an important consideration given the nature and significance of the cash flow analysis contravention. As well, it is necessary that relief be granted appropriate to mark significant failure in performance of the duties of a senior executive of a large public corporation and to maintain public confidence in the law's upholding of corporate standards. 126. In a picturesque phrase, in Re One.Tel (In liquidation) ... (at [26]) Bryson J observed that '[n]o-one should be sacrificed to the public interest'. ... Protection of the public, including by general deterrence, is at the heart of disqualification orders, and a delinquent officer against whom a disqualification order is made is not sacrificed. The phrase is a reminder that the public interest and the need to protect the public from repeated conduct or like conduct of others is balanced against the hardship to the officer. In our view, the balance requires a period of disqualification." 184In Australian Securities and Investments Commission v Beekink [2007] FCAFC 7; 238 ALR 595, at [92], the Full Federal Court observed, obiter, that deterrence may be of equal importance in cases of neglect or carelessness as in cases of misfeasance. The Court also emphasised (at [112]) that the propositions advanced by Santow J in ASIC v Adler are merely guidelines and that each case must turn upon its own circumstances. 185The High Court judgments in Rich v ASIC and the authorities referred to there identify common elements in sentencing criminal offenders and in making disqualification orders under the Corporations Act. It is therefore not surprising that courts in civil penalty proceedings have applied the parity and totality principles frequently used in the sentencing of criminal offenders: ASIC v Adler, at [128]-[130], per Santow J. 186The parity principle was explained by Dawson and Gaudron JJ in Postiglione v The Queen [1997] HCA 26; 189 CLR 295, at 301-302, as follows: "The parity principle ... is an aspect of equal justice. Equal justice requires that like should be treated alike but that, if there are relevant differences, due allowance should be made for them. In the case of co-offenders, different sentences may reflect different degrees of culpability or their different circumstances. If so, the notion of equal justice is not violated. On some occasions, different sentences may indicate that one or other of them is infected with error. Ordinarily, correction of the error will result in there being a due proportion between the sentences and there will then be equal justice. However, the parity principle ... recognises that equal justice requires that, as between co-offenders, there should not be a marked disparity which gives rise to 'a justifiable sense of grievance'. If there is, the sentence in issue should be reduced, notwithstanding that it is otherwise appropriate and within the permissible range of sentencing options. Discrepancy or disparity is not simply a question of the imposition of different sentences for the same offence. Rather, it is a question of due proportion between those sentences, that being a matter to be determined having regard to the different circumstances of the co-offenders in question and their different degrees of criminality." The parity principle was restated in similar terms in Green v The Queen [2011] HCA 49; 244 CLR 462, at [28], per French CJ, Crennan and Kiefel JJ. 187The application of the parity principle in appeals in criminal cases may be affected by the terms of the governing legislation, such as s 6(3) of the Criminal Appeal Act 1912: Gill v R [2012] NSWCCA 236, at [52], per McColl JA (with whom Hulme and Latham JJ agreed). However, an appellate court does not intervene merely because different penalties have been imposed on co-offenders. Appellate intervention is only justified if the disparity is sufficiently marked to engender a justifiable sense of grievance on the part of the appellant, such as to give the appearance that justice has not been done: Lowe v The Queen [1984] HCA 46; 154 CLR 606, at 610, per Gibbs CJ; at 611, 612-613 per Mason J ("manifest discrepancy"); at 623, per Dawson J (with whom Wilson J agreed) ("manifestly excessive" difference); R v Kollas and Mitchell [2002] NSWCCA 491, at [45], per Wood CJ at CL (with whom Meagher JA and Greg James J agreed). See also Postigliane v The Queen, at 309, per McHugh J; at 323, per Gummow J; at 338, per Kirby J. 188The totality principle is of little direct relevance to the appellants, since each was found to have contravened the Corporations Act on a single occasion. However, the primary Judge considered the totality principle material to the penalties to be imposed on Mr Macdonald because he had committed multiple contraventions of s 180(1) of the Corporations Act. Since the primary Judge used the penalties imposed on Mr Macdonald as comparators for the purpose of determining the appellants' penalties, the totality principle has some indirect relevance to their appeals. 189In Mill v The Queen [1988] HCA 70; 166 CLR 59, at 63, the High Court described the totality principle as a recognised principle of sentencing formulated to assist a court when sentencing an offender for a number of offences. Its effect is: "to require a sentencer who has passed a series of sentences, each properly calculated in relation to the offence for which it is imposed and each properly made consecutive ... to review the aggregate sentence and consider whether the aggregate is 'just and appropriate'" (quoting - Thomas, Principles of Sentencing (2nd ed 1979), at 56-57). 190In Pearce v The Queen [1998] HCA 57; 194 CLR 610, a majority of the Court understood Mill v The Queen to require the sentencing judge to fix an appropriate sentence for each offence and then to consider cumulation or concurrence, as well as questions of totality: at [45], per McHugh, Hayne and Callinan JJ, with whom Gummow J agreed. In Vines v ASIC, Spigelman CJ stated (at [19]) that directly analogous considerations to those identified in Pearce v The Queen apply to civil penalties in a case involving multiple contraventions. Did the Primary Judge Err? 191The appellants submit that the primary Judge's decision to disqualify each of the appellants for a period of five years involved error. The principal basis for that submission is that his Honour made inappropriate use of the period of disqualification imposed on Mr Macdonald as the starting point (or "comparator") for the purpose of deciding that five years was the appropriate period of disqualification for the appellants. It will be recalled that the primary Judge said (at [389]) that he had decided on this penalty by taking the period of seven years attributed to Mr Macdonald for his contravention in approving the Draft ASX Announcement and discounting it to five years. 192In the key paragraph of the Penalty Judgment concerning Mr Macdonald's disqualification (at [317]), the primary Judge attributed a period of disqualification of seven years to each of Mr Macdonald's contraventions identified in Declaration 1 and Declarations 4-8. Declaration 1 was Mr Macdonald's approval of the Draft ASX Announcement; Declaration 4 related to the Final ASX Announcement; Declaration 5 to statements by Mr Macdonald at a press conference held on 16 February 2001; Declaration 6 to an announcement to the ASX made on 23 February 2001; Declaration 7 to an ASX announcement of 21 March 2001; and Declaration 8 to Mr Macdonald's DOCI contravention. 193Section 206C of the Corporations Act empowers the Court to disqualify a person from managing a corporation for a period but only if it is satisfied "the disqualification is justified". This language indicates that the Court must be satisfied not only that an order for disqualification should be made against the contravenor, but that the period of disqualification is justified. The matters the Court is to take into account in making this judgment are stated in broad terms in s 206C(2). They include the contravenor's conduct in relation to the management of any corporation. 194The language of s 206C(2) of the Corporations Act gives the Court broad scope in determining the matters to take into account in deciding whether a period of disqualification is appropriate for a contravention of the legislation. As the propositions stated by Santow J in ASIC v Adler recognise, the nature of the contravention and its seriousness are critical considerations. But they are not the only relevant matters. The terms of s 206C(2) are wide enough to permit the Court to have regard to penalties imposed or to be imposed on other contravenors whose contraventions are the same or at least very similar. 195However, if the penalty imposed on one contravenor is to be regarded as the yardstick for the penalty to be imposed on another contravenor, care must be taken to identify the points of similarity and difference. If identical penalties are to be imposed, attention should be directed to whether the contravenor's circumstances warrant equal treatment. If the penalty imposed on one contravenor is taken as a comparator for the penalty to be imposed on another contravenor, but adjustments are thought to be necessary, the circumstances that justify and explain the differential treatment should be identified. 196There are several problems with the approach taken by the primary Judge. The first is that the findings of contravention made against the Australian Directors in relation to approval of the Draft ASX Announcement and the finding of contravention against Mr Macdonald differ in a very important respect. The declaration of contravention against Mr Macdonald states that he knew the Draft ASX Announcement conveyed or was capable of conveying four specified representations and that he knew or ought to have known that the Announcement was misleading in those respects. The declaration of contravention made against each of the Australian Directors states only that the contravenor ought to have known that the Announcement was misleading in the same respects. 197This is not a purely verbal difference. The primary Judge found in the Liability Judgment that: * Mr Macdonald was the driving force behind Project Green (at [345]). * As chief executive officer of JHIL, Mr Macdonald had ultimate responsibility for planning the separation proposals, making public statements on the proposals and dealing with the Board (at [346]). * Mr Macdonald was aware of actuarial matters. He had made suggestions before the Meeting as to how the Draft ASX Announcement might deal with the Cashflow Model. This showed that he understood the concept of "best estimate" used in the Trowbridge reports (at [352]-[353]). * Mr Macdonald should have been alerted by the material available to him that the Draft ASX Announcement was expressed too emphatically and should so have advised the Board (at [356]-[357]). * Mr Macdonald was aware of the actual work done by PwC and Access Economics on the Cashflow Model. It must have been clear to him that the work to be done by those firms was limited to determining whether the Model was logically sound and technically correct. He should have brought these limitations and others that must have been obvious to him to the attention of the Board (at [361]-[363]). 198In the Penalty Judgment, the primary Judge found (at [286]) that bearing in mind Mr Macdonald's leadership role on the separation proposal, his vote to approve the Draft ASX Announcement was a "gross departure" from the requisite standard of care and diligence. He had condoned the use of over-emphatic language in order to convince the public of the benefits of the proposal and knew that the Announcement was likely to have an effect on JHIL's share price. The primary Judge did not accept that Mr Macdonald had acted for an improper purpose (at [295]). But that was because his Honour found that Mr Macdonald had acted overzealously in what he (misguidedly) thought were the interests of JHIL. 199The form of the declaration of contravention against Mr Macdonald mirrors the relief sought against him in ASIC's Fourth Further Amended Statement of Claim. Having regard to the findings of the primary Judge in the Penalty Judgment, it seems somewhat curious that the finding was not simply to the effect that Mr Macdonald knew that the Draft ASX Announcement was misleading in the respects pleaded. In view of Mr Macdonald's state of knowledge of the actuarial reports and their limitations and his knowledge of the contents of the Draft ASX Announcement, it is difficult to see how he could not have appreciated the falsity of the representations in the Announcement. Be that as it may, the declaration leaves the matter open by stating that Mr Macdonald knew or ought to have known of the falsity. 200The explanation for the form of the declaration of contravention against Mr Macdonald may be that ASIC did not seek an unequivocal finding that Mr Macdonald knew that the Draft ASX Announcement was false until late in the proceedings. The primary Judge recorded in the Penalty Judgment (at [280]-[281]) that ASIC had sought findings that Mr Macdonald knew that the Draft ASX Announcement and other statements made by him or by others on behalf of JHIL were false or misleading. His Honour said (at [281]) that he did not propose to make additional findings "at this stage of the proceedings". He also noted (at [297]) that he had already made findings of dishonesty against Mr Macdonald with respect to a number of contraventions. 201While the declaration of contravention against Mr Macdonald does not unequivocally state that he knew of the falsity, the declaration in terms recognises that he may have known that the Draft ASX Announcement was misleading in the relevant respects. The declaration made against each of the Australian Directors contains no such acknowledgement. Their contraventions involved approving the Draft ASX Announcement when they ought to have known that the Announcement was misleading. No finding has been made against them that they knew of the falsity. Moreover, as the primary Judge's findings imply, Mr Macdonald's role in approving the Draft ASX Announcement was different from that of the Australian Directors. 202The second difficulty is that the primary Judge's analysis does not make clear precisely what factors he took into account in deciding that seven years disqualification was the appropriate penalty for Mr Macdonald's Draft ASX Announcement contravention. In particular, it is not clear to what extent Mr Macdonald's knowledge of matters that (at the least) cast doubt on the accuracy of the representation in the Announcement influenced his Honour's decision to select seven years as the period of disqualification. It is also not clear how far Mr Macdonald's role as the driving force behind Project Green and his responsibilities to the Board in relation to the Draft ASX Announcement (which he failed to discharge) contributed to his Honour's decision to select seven years as the appropriate period of disqualification. Without this information, it is difficult to assess whether Mr Macdonald's conduct in voting to approve the Draft ASX Announcement can be regarded as sufficiently akin to the Australian Directors' conduct to provide a useful starting point in determining the penalties to be imposed on them. 203It should be said that the primary Judge was faced with the formidable task of imposing penalties on a number of contravenors for a variety of contraventions. It is perhaps readily understandable that he did not identify separately the particular considerations that led him to select seven years disqualification as the penalty for Mr Macdonald's Draft ASX Announcement contravention (before questions of concurrence and totality), given that he found eleven contraventions in all against Mr Macdonald. The absence of detailed, separate consideration of Mr Macdonald's Draft ASX Announcement contravention may not have created any difficulty in relation to the overall period of disqualification imposed on him. But it made the seven years period of disqualification for that contravention problematic as a comparator for the Australian Directors' contraventions. 204The third difficulty is that it is not clear what role the period of seven years disqualification notionally attributed to Mr Macdonald's Draft ASX Announcement contravention played in the penalty of 15 years disqualification ultimately imposed on him. Mr Macdonald was found to have committed eleven contraventions of the Corporations Act, some of which involved serious dishonesty. No doubt the totality principle required a very substantial reduction in the cumulative total of the individual periods of disqualification that might have been imposed on Mr Macdonald. However, as Mr Gleeson pointed out, on one interpretation of the primary Judge's reasoning, his Honour reduced the penalties for Mr Macdonald's eleven individual contraventions from a total of 82 years disqualification to a period of 15 years. On another interpretation, by making concurrent the periods of disqualification for some offences he reduced the total of 82 years to 29 years, and then reduced the period further to 15 years by applying the totality principle. 205Without a clear understanding of the significance of Mr Macdonald's Draft ASX Announcement contravention in determining the period of the disqualification ultimately imposed on him, it is difficult to know what penalty he actually received for that contravention. On the face of the Penalty Judgment, it would seem that the period of disqualification imposed on Mr Macdonald would have been little different even without his Draft ASX Announcement contravention. If this is correct, there are additional problems with taking the period of seven years disqualification for Mr Macdonald's Draft ASX Announcement contravention as the comparator for the period of disqualification to be imposed on the Australian Directors for the single contraventions committed by each. 206An important element of the parity principle is that if there are relevant differences between co-offenders, due allowance should be made for these differences. In particular, the different degrees of culpability and the different circumstances of each offender should be given due recognition: Postiglione v The Queen, at 301. By taking the notional penalty attributed to Mr Macdonald's Draft ASX Announcement contravention as the comparator for the single contravention by each Australian Director, but not analysing the differences between the cases, it cannot be said that the primary Judge gave due weight to that element of the parity principle. 207For these reasons, the appellants have made good their contention that the primary Judge erred in his approach to the determination of the penalties to be imposed on the appellants. It is not necessary to consider the other challenges advanced on their behalf. 208The success of the challenge to the primary Judge's approach does not necessarily mean that the penalties he imposed were too harsh and should be set aside. However, this Court must address the question of penalties afresh, without giving inappropriate weight to Mr Macdonald's penalty as a comparator. I deal first with the position of the Australian Directors. I then deal with the position of the US Directors. Reconsideration of Disqualification Orders Imposed on the Australian Directors 209I have referred earlier to s 206C of the Corporations Act and to the guidelines that have been formulated in applying that provision. In determining whether a disqualification order against each of the Australian Directors is justified, a number of matters must be taken into account. 210First, for the reasons that have been given, the relevant contraventions are those found against the Australian Directors in the declarations of contravention. In each case, the contravention consisted of the director voting to approve the Draft ASX Announcement and its transmission to the ASX when the directors knew that the Announcement conveyed the representations identified in the declarations, and ought to have known that the Announcement was misleading in those respects. 211It may seem somewhat artificial to approach penalties on this basis. As the declarations of contravention record, the Australian Directors understood and approved release of the Draft ASX Announcement knowing of the representations it conveyed. All of the Australian Directors received a great deal of information at and before the Meeting indicating clearly that it was not certain that the funds available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims. While the material provided to the non-executive directors was incomplete, the material that was available should have made it abundantly clear to them that an announcement to the effect that the Foundation would have sufficient funds to meet all legitimate asbestos claims would be misleading. Some of that material was the subject of detailed presentations at the Meeting. In these circumstances, it might be thought to be but a small step to conclude that the Australian Directors knew the representations conveyed by the ASX Announcement were false. 212This, however, was not the basis on which the case was fought. More particularly, the contraventions found against the Australian Directors are limited to their approval of the ASX announcement when they ought to have known that it was misleading. It would be wrong to impose penalties on the basis that any of them knew that the ASX Announcement was misleading when they approved its release to the ASX. Thus, the question of penalties must be approached on the basis that although each contravention involved a failure to discharge the director's duties with the requisite care and diligence, the director concerned did not act dishonestly. 213Secondly, the matters recorded in the declarations of contravention cannot now be and are not disputed by the Australian Directors (s 1317F). None of the Australian Directors now seek to be relieved from liability pursuant to ss 1317S(2) or 1318(1) of the Corporations Act. 214Thirdly, the starting point in each case should be an examination of the nature and seriousness of the contravening conduct. This is consistent with the language of s 206C(2)(a), which directs attention to the contravenor's conduct in relation to the management or business of any corporation. The contravenor's conduct in the management or business of other corporations may also be taken into account, but the contravening conduct is of particular importance. Most of the Australian Directors did not dispute that their contraventions could be characterised as serious, although they emphasised (correctly) that the contraventions did not involve either dishonesty or knowledge that the representations conveyed by the Draft ASX Announcement were false. While acknowledging that their contraventions were serious, these directors submit that this Court, when reconsidering penalty, should take a less condign view of their actions than the primary Judge. 215Fourthly, in considering the nature and seriousness of the contraventions, I do so without being influenced by the primary Judge's description of the Australian Directors' contraventions as "flagrant". This was not a finding of primary fact but a characterisation of the nature of the contravening conduct. It is better to consider the proper characterisation of the contraventions afresh independently of the primary Judge's description. Mr Brown and Ms Hellicar 216The submissions made on behalf of Mr Brown and Ms Hellicar sought to minimise the seriousness of their contraventions. Mr Gleeson described their "failing" as giving insufficient attention to the ASX Announcement in the course of a long and complex meeting held in circumstances of considerable urgency. He said that Mr Brown and Ms Hellicar had fallen down in only one "aspect of their task", thereby allowing an Announcement to be released to the market which presented the separation in more emphatic terms than was appropriate. 217It is true that, as Heydon J observed, the Meeting was long and required the Board to consider important issues of some complexity (HC Judgment, at [206]). It is also true, as the primary Judge found (Penalty Judgment, (at [85]-[86]) that the contraventions by the Australian Directors were "isolated incidents in lengthy careers of service ... performed by each of them with competence, diligence and honesty". 218Nonetheless, in my view, Mr Gleeson's description of the contraventions significantly understates the gravity of the departure from the standards of care and diligence reasonably to be expected of Mr Brown and Ms Hellicar. The issues addressed at the Meeting were not new. On the contrary, the separation proposal had been under consideration by the Board for well over a year. The proposal was of critical importance to the future of the James Hardie group. As the plurality judgment in the High Court noted (at [55]), the directors of JHIL themselves regarded the funding of the Foundation as a "centrally important issue". The lack of adequate funding for asbestos claimants was the very reason why the Board rejected the "net assets" model proposed at the January 2001 meeting. As the plurality judgment in the High Court also found, it is not to be assumed that the directors approved the separation proposal without forming a view as to the adequacy of the funding for asbestos claimants. 219It is correct, as Mr Gleeson submitted, that Mr Brown and Ms Hellicar, and the other Australian Directors, did not see the Draft ASX Announcement until it was tabled at the Meeting. But they had the opportunity to read it and (as the declarations of contravention record) knew that the Draft ASX Announcement conveyed representations that in fact turned out to be false. As the primary Judge found, all that was required for the Australian Directors to follow what was being conveyed to the ASX by the Announcement was a capacity to read English. 220Mr Gleeson submitted that the probabilities are that the Draft ASX Announcement was not read out at the Meeting and was not the subject of any specific statement as to its contents. He also pointed to the informal manner in which the resolution approving the Announcement was made, indicating that no formal vote was taken. While these propositions can be accepted, the fact is that each of the Australian Directors was aware of the representations made in the Draft ASX Announcement when they approved its release. Their contraventions lay in voting to approve the Announcement's release without considering whether the representations could properly be made in view of the material presented to the Board at the Meeting and provided on earlier occasions. 221Mr Brown and Ms Hellicar, like the other non-executive directors, knew that the making of the separation decision and the terms on which the separation was to be effected had to be disclosed to the ASX (HC Judgment, at [37]). They appreciated that the contents of the ASX Announcement were critical to the strategy being pursued by JHIL. The central objective of the communications strategy was to convince stakeholders that sufficient assets were available to meet all legitimate present and future claims (Penalty Judgment, at [82]). The detailed communications strategy presented to the Meeting identified the need to turn uncertainty to JHIL's advantage. The strategy repeatedly stressed the importance of providing reassuring messages to the various stakeholders including the New South Wales Government, unions, law firms, asbestos victims and shareholders. The terms of the Draft ASX Announcement, as must have been obvious to anyone who read it, were calculated to and (as the primary Judge found) did influence the market. 222The failure by Mr Brown and Ms Hellicar to appreciate at the time of the vote that the Draft ASX Announcement was misleading, on the findings of the primary Judge, cannot simply be regarded as a momentary lapse at the end of a long meeting. The information presented to the Board on a number of occasions prior to the Meeting made it abundantly clear that any estimates of JHIL's future liabilities to legitimate asbestos claimants, including the estimates made by Trowbridge, were uncertain and could not provide a reliable measure of JHIL's exposure. This was so regardless of management's failure to draw the issue of super-added inflation specifically to the attention of the Board. 223The message was reinforced at the Meeting itself. The slides provided to the Meeting as part of the Green Project presentation made it clear that the performance of the fund was based on a variety of assumptions. The slides recorded that the earlier Trowbridge analysis had been revised and that higher claim numbers were now predicted. Future funds availability was said to depend on Trowbridge cashflows (described as "most likely") and assets earnings ("some known and some predicted"). Nowhere in the presentation was it suggested that the funds available to the Foundation would certainly be sufficient to meet all legitimate present and future claims. 224The Cashflow Model, explained in some detail at the Meeting, set out the assumptions on which the estimates were based. The evidence given by Mr Brown and Ms Hellicar at the trial was that if they had appreciated the contents of the Draft ASX Announcement, they would not have approved its release. They said that an assertion that funding would certainly be adequate could not be supported. Their evidence reinforces the inference that no director, acting with reasonable prudence, could have understood the Cashflow Model as presenting anything other than a series of predictions, the accuracy of which would depend on uncertain future developments. 225An example of the consequences of a departure from the stated assumptions can be seen from the projected rate of return of 11.7 per cent per annum on liquid assets in the fund. The chart entitled "Sensitivity for earnings rates", presented to the Board, indicated that if the earnings rate fell by just one per cent per annum (to 10.7 percent), the fund would be depleted in under 25 years. This would be so even if the "most likely" scenario for future claims proved to be accurate. The "Sensitivity analysis for net assets remaining" showed that even if the projected earnings rate of 11.7 per cent turned out to be accurate, on the "high scenario" for claims the fund would be exhausted in under 20 years. A director exercising reasonable care in considering such important documents could hardly fail to appreciate that a lower than projected rate of earnings coupled with a higher rate of claims would exhaust the fund very much sooner than 20 years from its establishment. Such an outcome could not possibly satisfy the claims likely to be made in the future by asbestos victims. 226I do not accept that the seriousness of the failure to appreciate the falsity of the representations in the ASX Announcement can be attributed to the urgency with which decisions had to be made at the Meeting. As the High Court found (at [50], [188], [213]), the apparent urgency was in part attributable to the desire to avoid the impact on JHIL's accounts of the new accounting standard that was about to be introduced. Another element of the urgency, as is apparent from the communications strategy provided to the Board, was to release the ASX Announcement at the same time as JHIL's third quarter results. This was designed to present the Foundation as a "business story" and, in effect, to divert attention from the broader questions of the adequacy of the funding arrangements. 227The directors of JHIL must have been aware from the documentation provided to the Meeting why approval of the separation proposal was seen as urgent. The urgency was self imposed. In any event, the fact that approval of the ASX Announcement was treated by management as urgent in no way detracted from the need for Mr Brown and Ms Hellicar and the other non-executive directors to give careful consideration to whether the language used in the Draft ASX Announcement was or was not misleading. 228Because Mr Brown and Ms Hellicar insisted in their evidence that they had not approved the Draft ASX Announcement at the Meeting, they have never given an explanation for their failure to appreciate what should have been manifest to a director discharging his or her duties with a reasonable degree of care and diligence. Except for the submissions made in this Court on their behalf, some of which rest on hypotheses rather than evidence, neither Mr Brown nor Ms Hellicar has sought to explain how such experienced and apparently capable directors could have approved the Draft ASX Announcement without appreciating that it contained obviously misleading statements of such importance to the market and the community at large. 229Mr Gleeson submitted that the Board had been let down by management. There is no doubt that the contraventions by Mr Macdonald, Mr Shafron and Mr Morley contributed to the circumstances leading to the appellants' contraventions. Management, after all, was responsible for drafting the Draft ASX Announcement. But the findings that Mr Brown and Ms Hellicar failed to discharge their responsibilities rest on the now undisputed proposition that they were not entitled simply to rely on management when voting to approve the release of a crucial document presented to the Board for its endorsement and imprimatur. 230Moreover, this is not a case where the conduct of management, however egregious, excuses or significantly mitigates the seriousness of the particular contraventions found against the Australian Directors. Mr Gleeson pointed out, correctly, that the information provided to the non-executive directors at the Meeting was incomplete, most notably in relation to the question of superimposed inflation and the limited role played by PwC and Access Economics in reviewing the Cashflow Model. But the Australian Directors had material before them at the Meeting, and had received material at earlier meetings, which should have made it abundantly clear to each of them that the Draft ASX Announcement, if released in that form, would be seriously misleading and have the potential to cause significant harm to investors and others. 231In making these observations, I have taken into account the exchange between Mr Brown and Mr Macdonald that took place at the Meeting (see at [99] above). Mr Macdonald, after giving an evasive response to Mr Brown's inquiry about the sufficiency of funds, said that on the basis of the "best actuarial modelling" there were sufficient funds to meet future claims. That response fell far short of justifying the unqualified terms of the Draft ASX Announcement. When taken in conjunction with the material before the Board, if anything it should have alerted Mr Brown and the other non-executive directors to the need to scrutinise the accuracy of the Draft ASX Announcement very closely. 232The contraventions of s 180(1) of the Corporations Act by Mr Brown and Ms Hellicar were not in the most serious category of contraventions that directors can commit. They have not been shown to have been dishonest nor to have consciously appreciated the falsity of the statements made in the Draft ASX Announcement. They have each been found to have contravened the Corporations Act on a single occasion. Their contraventions, unlike those of Mr Macdonald, do not form part of a pattern of conduct demonstrating a failure over a significant period to appreciate their responsibilities as directors of a public corporation. Nonetheless, their departure from the standards to be expected was very serious indeed, the more so because it is unexplained by evidence from Mr Brown and Ms Hellicar themselves. 233The primary Judge used the word "flagrant" to describe the contraventions. That word carries a flavour of deliberate wrongdoing, which has not been established in this case. However, "flagrant" can mean "glaring" or "blatant", as well as "scandalous". If a description other than "very serious indeed" is required, I think that the actions of Mr Brown and Ms Hellicar can aptly be said to have involved a glaring failure to discharge their responsibilities as non-executive directors of JHIL on a matter of very great significance to the company and to the wider community. 234If there were no other factors to take into account, I would conclude that the departures from the standard of care and diligence reasonably expected of directors of the contraventions justify a substantial period of disqualification, notwithstanding the absence of dishonesty. A penalty of this kind is required to mark disapproval of the conduct, to demonstrate that the law upholds appropriate standards of corporate conduct, and to act as a deterrent to other company directors who might be tempted to forego their responsibilities on critical matters. Moreover, contrary to the submissions made on behalf of Mr Brown and Ms Hellicar, these were not victimless contraventions. The market operated on a false basis and by reason of the misleading ASX Announcement, the price of JHIL shares was artificially maintained (Penalty Judgment, at [104], [119]). The Draft ASX Announcement, if released (as in substance it was), clearly had the potential to mislead asbestos victims and their families and to increase their distress when the true position emerged (as it did within a relatively short time). 235There are other factors to take into account in determining whether disqualification is justified. The primary Judge (Penalty Judgment, at [343]) found, on the basis of their testimonial evidence, that each of the appellants, including Mr Brown and Ms Hellicar, is highly qualified and has had an impressive career, demonstrating care, skill and competence. He also found (at [344]) that the need for personal deterrence of the appellants was low. Moreover, the testimonial evidence was strongly in favour of their honesty and probity and established the fitness of each of the appellants to manage a company. There is no dispute that the need for personal deterrence is very low in relation to Mr Brown and Ms Hellicar (and the other appellants). 236Mr Gleeson directed attention to the details of the testimonial evidence adduced on behalf of Mr Brown and Ms Hellicar, including the additional evidence read on the appeal. I have read that evidence. It amply bears out the primary Judge's findings. The witnesses set out in some detail the work performed by each on various boards and attest to their diligence and integrity in discharging their responsibilities and their contributions to the broader community. 237Ms Hellicar receives particular praise from one of her referees (Mr Hunt) for her willingness to take on the role of chairman of James Hardie Industries NV at a time when the company was under intense scrutiny during the Special Commission of Inquiry into the Foundation in 2004. Mr Brown also contributed to the work of James Hardie Industries NV at a difficult time. He is particularly commended by one of his referees (Mr Pritchard) for his detailed attention to the wording of any releases to the ASX issued by an unrelated company of which he was a director, although this refers to a period after 2001. 238The testimonial evidence is important and its substance is accurately summarised by the primary Judge. However, I would add two comments. The testimonial witnesses all indicated in general terms that they were aware of the findings made by the primary Judge and (in their additional affidavits) those made by the High Court. It is not clear from the affidavits that they fully appreciated the nature of the contraventions and the extent of the departures from the standards of care and diligence to be expected of directors of large public companies. Just as the submissions made on behalf of Mr Brown and Ms Hellicar understate the seriousness of the contraventions, my impression is that the testimonial witnesses may well have done the same. Some of the affidavits also note that Ms Hellicar was regarded by the primary Judge as an unsatisfactory witness but assert that this does not alter the deponents' high opinion of her. They do not explain why not. 239Secondly, some of the testimonial evidence makes it even more puzzling how Mr Brown and Ms Hellicar could have read and understood the contents of the Draft ASX Announcement, yet voted at the Meeting to approve its release to the ASX. Ms Hellicar, for example, was chairman of AMP Life and, according to a fellow director (Mr Palmer), she encouraged the provision of detailed actuarial information to the board of that company and promoted discussion of issues by the chief actuary. Her experience at AMP Life must have made her familiar with actuarial concepts and the role played by assumptions in actuarial predictions, albeit in a context other than providing for long-term liabilities to persons suffering from asbestos related conditions. Mr Brown was for some years prior to his service on the Board of JHIL the chief financial officer of Brambles Industries Ltd where, according to the managing director at the time (Mr Fletcher), Mr Brown paid close attention to the wording of ASX announcements released in compliance with the company's continuous disclosure obligations. 240Mr Brown and Ms Hellicar, in common with all the appellants, pointed to the widespread publicity attracted by the case, particularly the judgment of the High Court. The appellants had suffered severe embarrassment and reputational damage. The widespread publicity accorded to the findings of the primary Judge and, more particularly, the High Court had made perfectly clear to the commercial community the standards of diligence expected of directors and the need to exercise their own judgment on matters of importance to the corporation and the community at large. The publicity ensured that the declarations of contravention, of themselves, would have the effect of general deterrence, making further penalties unnecessary. 241Reliance was placed on the judgment of Middleton J in Australian Securities and Investments Commission v Healey (No 2) [2011] FCA 1003; 85 ACSR 654. In that case, Middleton J declined to impose disqualification orders on the directors of a corporation which had failed to disclose substantial short term liabilities in its accounts. Middleton J said (at [177]) that the publicity given to the directors' breaches of duty made the need to impose disqualification orders or pecuniary penalties for reasons of general deterrence "much less than it otherwise would be". In the result, his Honour considered (at [190]) that the declarations of contravention, the refusal to relieve the directors from liability and the reputational damage inflicted on them were sufficient to serve the objective of general deterrence. 242Several points should be made about ASIC v Healey (No 2). First, as Middleton J recognised (at [103]), the guidance to be obtained from other decisions is limited, as each is clearly related to its own facts. Secondly, Middleton J did not say that widespread publicity accorded to contraventions necessarily eliminates the need to impose penalties in the interests of general deterrence. He said that, in the circumstances of the case before him, the need for general deterrence was lessened by the publicity and reputational damage. Thirdly, the decision not to disqualify the directors involved many factors other than publicity and reputational damage. Fourthly, the facts of the case were very different to those of the present case. In particular, the directors had received assurances from the auditors and management that the accounts complied with the relevant standards (at [45]-[56]). The Australian Directors in the present case were not assured by anyone at the Meeting that the Draft ASX Announcement accurately reflected the very information with which they had been presented both at and before the Meeting. While management failed to advise the Board of some matters relevant to the terms of the Announcement, the information the Australian Directors had was more than sufficient to demonstrate that the representations in the Announcement were misleading. 243The publicity accorded to this case and the severe reputational damage suffered by the Australian Directors are factors to be taken into account in determining whether a disqualification order or other penalty is justified. I do not accept, however, that these matters eliminate the need for penalties to reflect the objective of general deterrence. To accept that submission would be to give too much weight to the vagaries of media reporting or public commentary on particular cases. Moreover, in the absence of major financial reverses or reports of corporate wrongdoing, very few directors of large public corporations do not enjoy high standing and a reputation for integrity and competence. The potential for a diminution of reputation is no doubt a powerful deterrent to carelessness and an incentive to discharge responsibilities diligently. But it should not be assumed that the prospect of disqualification, with the attendant financial consequences and public obloquy attributable to the fact of disqualification, cannot have a powerful additional deterrent effect. In addition, the publicity accorded to particular contraventions does not necessarily diminish the importance of the law maintaining appropriate standards of corporate conduct by imposing disqualification orders on contravenors. 244Mr Gleeson pointed out that by the time of the hearing of the remitted appeal in this Court, Mr Brown and Ms Hellicar had each been subject to a disqualification order for a period of approximately one year and six months. Since Ms Hellicar had resigned from a number of boards following the Liability Judgment and had not reapplied for those positions after the appellants' (temporary) success in the Court of Appeal, she had served a "de facto" period of disqualification of about two years and ten months. Mr Brown was in a similar position, in that he had not sought any board appointments between the dates of the CA Liability Judgment and the HC Judgment. 245Realistically, Mr Brown and Ms Hellicar could not have expected to regain board appointments to public companies once ASIC lodged its application for special leave to appeal to the High Court. Certainly that would not have been a realistic aspiration once the High Court granted special leave to appeal on 13 May 2011. Some recognition should be given to this, although it is also necessary to take account of the fact that for the period of about one year and four months between the CA Liability Judgment and the HC Judgment, no declaration of contravention was in force and there was no legal impediment to either acting as a director of a corporation. I shall explain later (at [261]ff) how I propose that these matters be taken into account. 246Mr Brown and Ms Hellicar relied on the acknowledgements made through their counsel as evidence of contrition that should be taken into account in determining whether a disqualification order is justified. I have set out the matters recognised by counsel on their behalf (at [148] above). 247In the light of the High Court's decision, Mr Brown and Ms Hellicar recognise, as they must, that they "fell down" in their responsibilities and that their failings on that "particular matter were significant and cannot be considered trivial or minor". They also say that they understood several "lessons about corporate governance and behaviour" to be derived from the HC Judgment. 248I do not think that contrition plays a large part in determining the appropriate period of disqualification for Mr Brown and Ms Hellicar. They have chosen not to put on any evidence themselves as to their contrition. As I have noted, they have not explained how they came to approve the ASX Announcement when they knew its contents and had material before them that should have alerted them to the falsity of the representatives. 249The statements made on their behalf by their counsel do not acknowledge that, independently of the High Court's decision, their conduct represented a serious departure from the standards to be expected of non-executive directors. The flavour of the statements is that the High Court has laid down principles that may not previously have been generally understood in the corporate community but are now understood. The High Court decision was primarily concerned with a factual question, namely whether the Board of JHIL approved the Draft ASX Announcement. It did not require a High Court decision to demonstrate that approval of the release of an Announcement on a matter of critical importance required directors to pay careful attention to the representations being conveyed. They should have carried out that task by reference to the information which had been presented to them and which should have been at the forefront of their minds at the time they approved the Announcement. 250Furthermore, as I have noted, the submissions made on behalf of Mr Brown and Ms Hellicar downplayed the seriousness of their contraventions. It is difficult to demonstrate and rely on contrition when full acknowledgement has not been made of the seriousness of the contraventions themselves. 251In determining the appropriate period of disqualification (if any) this Court deals with the matter at the present date: Vines v ASIC, at [66]. The task is not one that can be approached with mathematical precision. As I have explained, a range of competing considerations must be taken into account. Minds may differ as to the weighting to be given to each of the considerations. 252In my opinion, the contraventions by Mr Brown and Ms Hellicar were sufficiently serious to justify, without taking into account mitigating circumstances personal to each of them, a period of disqualification in the order of five years. This is undoubtedly a substantial period to deny a non-executive director the opportunity to pursue his or her career, particularly for a single contravention not involving dishonesty or an intention to mislead. But a period of disqualification of this length has appropriate regard to what I have described as the glaring failure by Mr Brown and Ms Hellicar to adhere to the standards reasonably expected of them and to the harm, actual and potential, that flowed from their actions in approval of the Draft ASX Announcement. A period of five years disqualification would place the penalty below the intermediate category of serious contravention identified by Santow J in ASIC v Adler, but above the period of disqualification he identified as appropriate for less serious cases (albeit cases warranting a disqualification order). 253The mitigating factors to be taken into account include the public opprobrium suffered by Mr Brown and Ms Hellicar, their exemplary records prior to the contraventions, their contributions to the community, the absence of a need for personal deterrence, their fitness to hold office as directors of a corporation, despite the contravention and their (qualified) contrition. In the light of these matters, I think that disqualification for a period in the order of three years is justified as a penalty for their respective contraventions. 254In my opinion, the parity principle would not be offended by a penalty of three years disqualification. Mr Macdonald's contraventions were of a different order and his period of disqualification would on this basis, be five times as long. 255The Court of Appeal reduced Mr Morley's period of disqualification from five years to two years: CA Penalty Judgment, at [128]. Mr Morley's single contravention was his failure to advise the Board of the limited nature of the reviews conducted by PwC and Trowbridge. Mr Morley told the Board that they had found the Cashflow Model to be "logically sound and technically correct". He knew that the "blessing" of PwC and Trowbridge was valuable for the purposes of the communications strategy (at [21]). The failure went to the decision to establish the Foundation on the basis of sufficient funding (at [23]). The Cashflow Model was a significant matter in any decision to proceed with the separation proposal (at [24]). 256Mr Morley's testimonial evidence showed him to be competent and the need for personal deterrence was low (at [118]). There was no finding of dishonesty and no question of personal benefit (at [29], [123]). Further, the Court of Appeal expressly found that Mr Morley had acted honestly for the purposes of ss 1317S and 1318 of the Corporations Act. However, the Court of Appeal considered (at [51]) that his conduct, even if explained as negligent and an honest mistake, involved a high degree of departure from the care and diligence required by s 180(1). It also had potentially serious consequences for JHIL. 257There are similarities between Mr Morley's contravention and those of the Australian Directors. However, he was not a member of the Board, although he held a senior position in JHIL. He had the benefit of an affirmative finding of honesty in the context of his application to be relieved from liability (an application no longer pursued by any of the Australian Directors). Mr Morley's contravention, although serious, related to internal advice, while the contraventions by the Australian Directors was to approve a misleading announcement to the ASX and, in effect, to the world at large. I do not think that a penalty of two years disqualification for Mr Morley and three years for Mr Brown and Ms Hellicar involves any significant disparity. 258The Court of Appeal considered (at [118]) a period of three years disqualification to be appropriate for Mr Shafron's Superimposed Inflation contravention. Mr Shafron was also found by the Court of Appeal to have contravened the Corporations Act by failing to advise that the DOCI needed to be disclosed to the ASX, a contravention for which seven years disqualification was considered appropriate. Issues of concurrence and totality therefore arose in Mr Shafron's case (at [117]), ultimately resulting in a total period of disqualification of seven years. 259The period of three years disqualification for the Superimposed Inflation contravention recognised that Mr Shafron's contravention was similar to that of Mr Morley, but that there was a greater need for protection of the public and for personal deterrence. Again I do not think that there is any significant disparity between the three years disqualification attributed to Mr Shafron's contravention by the Court of Appeal and a period of three years disqualification for the contraventions by Mr Brown and Ms Hellicar. 260For reasons given later (at [333]-[344]), I accept the joint submission by ASIC and Mr Shafron in relation to the penalties that should be imposed for the three contraventions that have now been found against him. As a consequence, the disqualification orders made by the Court of Appeal will remain in place and Mr Shafron will be required to pay a pecuniary penalty of $75,000. The overall penalties involve issues of concurrence and totality that do not arise in the appellants' cases. The orders made against Mr Shafron do not create any disparity between his penalties and those imposed on the appellants. 261There is, however, a further factor to consider in determining the appropriate orders to be made against Mr Brown and Ms Hellicar. The primary Judge's disqualification orders against them took effect on 24 September 2009 and remained in force until set aside on 17 December 2010 by the Court of Appeal (a period of one year, two months and 23 days). The orders were reinstated by the Hight Court on 3 May 2012. The period between the Court of Appeal's judgment and the reinstatement of the disqualification orders by the High Court was one year, four months and 16 days. 262In the ordinary course, an appeal which succeeds in reducing a period of disqualification from five years to three years would simply involve substituting the lesser period of disqualification for that imposed by the primary Judge. The complication in the present case is that although the orders made by the High Court restored the original period of disqualification imposed by the primary Judge, in fact no order for disqualification against Mr Brown or Ms Hellicar was in force between 17 December 2010 and 3 May 2012. 263If the period of three years disqualification simply runs from the date of the primary Judge's orders, the period will already have expired (on 23 September 2012). If the period of three years is calculated exclusive of the period between the CA Penalty Judgment (17 December 2010) and the HC Judgment (3 May 2012), the disqualification would not expire until 10 February 2014. In the latter event, the disqualification would expire four years four months and 17 days from the date the original order took effect and one year nine months and seven days from the date of the High Court judgment. 264In my view, the disqualification orders made against Mr Brown and Ms Hellicar should take into account the unusual circumstance that the order made by the primary Judge was set aside by the Court of Appeal but subsequently restored by the High Court. During this period of slightly longer than one year and four months no disqualification order (or indeed any other order) was in fact in force against Mr Brown and Ms Hellicar. They were therefore not subject to any legal constraints on acting as directors of corporations during this period. Nor were they subject to any other penalties. On the other hand, both were subject to practical constraints that in effect, from the time ASIC lodged its application for special leave to appeal to the High Court until that Court delivered judgment, prevented them acting as directors of public companies. 265In these circumstances, some allowance should be made in favour of Mr Brown and Ms Hellicar, but not to the extent of treating them as having been subject to disqualification orders during the entirety of the period between the two judgments. Section 206C(1) of the Corporations Act permits the Court to disqualify a person for more than one period, provided that the total period of disqualification is justified: Acts Interpretation Act 1901 (Cth), s 23(b) ("words in the singular number include the plural"). On this basis, I think that the appropriate course is to fix a period of disqualification for each of Mr Brown and Ms Hellicar that operates from 24 September 2009 to 17 December 2010 (the date of the Court of Appeal judgment) and from 3 May 2012 (the date of the High Court judgment) until 30 April 2013. This produces a total period during which they will be formally disqualified from acting as directors of approximately two years and three months. However, the period of disqualification will not expire until some three years and seven months from the date the primary Judge's orders took effect. But, as I have explained, for about one year and four months of that period, no disqualification order was in fact in force. Mr Terry 266To the extent that the submissions made on Mr Terry's behalf are relevant to the appeals by Mr Brown and Ms Hellicar, I have taken them into account in preposing that the appeals be allowed and a period of disqualification expiring on 30 April 2013 substituted. 267Mr Terry's appeal against the primary Judge's disqualification order against him succeeds, in substance for the reasons I have already given. Mr McHugh adopted the arguments advanced by Mr Gleeson as to reconsideration of the penalty, although he stressed what he submitted was the limited need for general deterrence in this case. Mr McHugh did not submit that Mr Terry's position was different from that of Mr Brown and Ms Hellicar in any material respect and I do not think it is. 268Like Mr Brown and Ms Hellicar, Mr Terry has the benefit of favourable testimonial evidence from a number of eminent persons. The comments I have made about the testimonial evidence relied on by Mr Brown and Ms Hellicar largely applies to the evidence adduced on behalf of Mr Terry. The submissions made on his behalf, while recognising that his contravention was "a serious one" tended to downplay just how serious a departure it was from the standards of care and diligence required of a director of a public corporation. 269The same disqualification orders should be made against Mr Terry as I have proposed should be made against Mr Brown and Ms Hellicar. Mr O'Brien 270Mr O'Brien's challenge to the finding that the market operated on a false basis in consequence of the release of the final ASX Announcement did not appear to be enthusiastically embraced by the other appellants. If, however, the challenge is well-founded, it would be equally significant for them. 271The foundation for the primary Judge's finding concerning the false market (Penalty Judgment, at [119]) comprised findings made in the Liability Judgment, in the context of JHIL's contravention of s 999 of the Corporations Act by publishing the Final ASX Announcement. His Honour recorded (Liability Judgment, at [633]) that at the time the Final ASX Announcement was published, JHIL shares were blighted by a market perception of uncertainty as to JHIL's ability to cope with asbestos claims and thus carried an "asbestos discount". His Honour found that the emphatic terms of the Final ASX Announcement (which, as the High Court found, were not materially different from the Draft ASX Announcement approved at the Meeting) was likely to have an effect on JHIL shares. 272The primary Judge noted (at [634]) that Mr Humphris had given evidence that, taking into account the recent market history of JHIL, the likely effect of the Final ASX Announcement would be to maintain or stabilise the market for JHIL shares. His Honour continued (at [635]-[636]): "635. In fact the price of JHIL shares rose. The closing price on 15 February 2001 was $3.63. The closing price on 16 February 2001 was $3.80. And trade numbers for the shares also increased. On 15 February 2001 there were 356,297 share sales. On 16 February 2001 there were 673,573 share sales. 636. When the Final ASX Announcement is read in the context of the circumstances at the time of its publication, the predictive exercise that Section 999 requires be done, leads to the conclusion that it would have induced the sale or purchase of JHIL shares and it would have had the effect of increasing or maintaining the market price of JHIL shares. The evidence of what happened in the market on 16 February 2001 and the expert testimony of Mr Humphris tend to support that conclusion." 273Mr Wood relied on the opinion expressed by Mr Humphris in his report that: "at 10.19 am on 16 February 2001, when the Final ASX Announcement was made, and viewed in the circumstances which existed at that time, neither the Final ASX Announcement, nor any part of it, would be likely to induce the sale or purchase of securities, namely JHIL shares, by other persons." 274A careful reading of Mr Humphris' report indicates that he was drawing a distinction between the responses of what he described as reasonable (by which he appears to have meant "sophisticated") investors and the responses of other investors. Thus in explaining the opinion set out above, Mr Humphris said it was likely that: "the Final ASX Announcement would be perceived positively by investors and that they would accept the validity of statements made by JHIL concerning the Foundation being fully funded and the resolution of James Hardie's asbestos liability. Notwithstanding this likely general acceptance, a reasonable investor may have considered that residual Foundation funding risk remained despite the statement 'fully-funded Foundation' contained in the Final ASX Announcement..." 275In a supplementary report, Mr Humphris elaborated: "While investors would likely wait in order to read what financial journalists and analysts would say the next day for an assessment of the financial implications of establishing the Foundation on JHIL, the likely immediate reaction of investors to the announcement itself would have been - 'it is a large sum but it appears to be weight off the shoulders of James Hardie'. More informed investors and analysts would have a similar perception but would consider the announcement's reference to $293 million and, being aware of what it was costing JHIL per year in settling claims, they could consider a quick equation of cost savings per year and the loss of assets valued at $293 million, but they could not make a proper assessment of the actual financial implications for JHIL without further information." 276The primary Judge clearly took into account the opinion also expressed by Mr Humphris in his report that the Final ASX Announcement "would be likely to have the effect of maintaining or stabilising the market price of JHIL shares". Mr Humphris justified this opinion on the basis that: * the Final ASX Announcement would be likely to reduce the perceived risk associated with JHIL's exposure to asbestos liabilities (although the difficulties of assessing the financial implications for JHIL would be likely to militate against a rise in the share price); and * the expected net benefit to JHIL would: "eliminate intended sales of JHIL shares by certain investors as a result of [JHIL's] anticipated poor third quarter results." 277Mr Humphris did not explain why, if some shareholders in JHIL refrained from selling their shares by reason of the Final ASX Announcement, some of those who bought JHIL shares on and after 16 February 2001 would not have been induced to do so by the misleading terms of the Final ASX Announcement. On Mr Humphris' own analysis, but for the terms of the Final ASX Announcement, JHIL shares would have fallen and purchasers of the shares would have paid a lower price. In any event, as the primary Judge pointed out, the share price on 16 February 2001 actually rose by nearly five per cent on increased turnover. 278The primary Judge was correct to make the findings he did concerning the effect of the Final ASX Announcement on the market for JHIL shares. The challenge to those findings fails. 279Mr Wood repeated a submission made to and rejected by the primary Judge, namely that the Final ASX Announcement had an impact on the market for only 41 minutes. The foundation for this submission was that Mr Macdonald conducted a press conference shortly after the Announcement was released which, so it is said, detracted from the force of the Final ASX Announcement. 280The primary Judge rejected this submission because the statements made at the press conference simply reinforced the terms of the Final ASX Announcement. The Board's approval of the substance of the Announcement plainly paved the way for the press conference and added weight to the statements made by Mr Macdonald. His Honour was right to reject the submission. 281Mr Wood did not submit that any penalty imposed on Mr O'Brien should be less than that imposed on other Australian Directors. I see no sound basis to differentiate the penalties that should be imposed on Mr Brown and Ms Hellicar from those that should be imposed on Mr O'Brien. 282I add one further comment. Mr O'Brien's written submissions point out that although he offered to resign from his directorship of a public company (Thomas & Coffey Ltd) on 28 April 2009, after the Liability Judgment, his offer was refused. The testimonial evidence explaining the decision of the board of that company suggests that the particular deponent did not fully appreciate the gravity of Mr O'Brien's contravention of s 180(1) of the Corporations Act. 283I reach the same conclusions in relation to the disqualification of Mr O'Brien as I have in relation to the disqualification of Mr Brown and Ms Hellicar. Mr Willcox 284Mr Willcox's position is different in some respects from that of the remaining Australian Directors. His evidence traced in detail his thought processes relating to the establishment of the Foundation and the adequacy of the provision for future asbestos claims. (Mr Willcox denied that the Board of JHIL was asked to approve the Draft ASX Announcement, but his denial was found by the primary Judge to be mistaken.) 285Mr Willcox explained that, in his experience, it was not necessary for members of a board to receive or request actuarial reports. He had always assumed that executives of the corporation and the actuaries engaged on its behalf would work together to ensure that the actuaries had all the information they needed. Mr Willcox also said that the communications strategy provided to JHIL's Board prior to the Meeting, in his view, was unnecessarily detailed and that he had no recollection of reading the document carefully, although he "would have reviewed it". Mr Willcox seems to have taken comfort at the Meeting from the high qualifications of the proposed directors of the Foundation and his belief that they would have satisfied themselves that the Foundation had adequate funds to satisfy future asbestos claims. 286Mr Willcox's evidence concerning his thought processes suggests a possible explanation for his failure to give proper consideration to the terms of the Draft ASX Announcement at the time the Board approved its release. That explanation may be that Mr Willcox did not consider it part of his responsibilities as a director of JHIL to give close consideration to the language used in an Announcement made on behalf of JHIL to the ASX or to the public generally. This assessment of his conduct in approving the Draft ASX Announcement is consistent with the views expressed by one of his referees. Mr Deeley, a co-director of Mr Willcox's from 1994 to 1999, described him as a "Big Picture" thinker interested in broad concepts, but "not by nature someone who enjoyed dealing with matters of detail". 287If this is the explanation for Mr Willcox's contravention of s 180(1) of the Corporations Act, I do not think it lessens the seriousness of his contravention when compared with the other Australian Directors. As Mr Jucovic acknowledged in oral argument, a failure by a director to descend to what is in his or her mind the detail of an Announcement released with the imprimatur of the Board constitutes a serious departure from the required standard of care and diligence, at least where the Announcement is as important to the corporation, investors and the wider community as the Draft ASX Announcement was in this case. 288Like the other Australian Directors, Mr Willcox knew that the Draft ASX Announcement conveyed unequivocal representations as to the adequacy of the Foundation's funding. While Mr Willcox apparently believed that the funds available to the Foundation were likely to be sufficient to meet all asbestos claims, this belief could not justify an announcement to the ASX in the terms approved by the Board. Like the other Australian Directors, Mr Willcox had the benefit of documentation and presentations at the Meeting that demonstrated that the Announcement contained insupportable statements. Like them, he could not have failed to appreciate the significance of JHIL making an Announcement to the ASX on issues crucial to the future of JHIL, as well as to market perceptions of the value of the corporation. If Mr Willcox failed to pay sufficient attention to the communications strategy relating to the question of separation and the establishment of the Foundation, that was a consequence of his incorrect view that a matter of this importance could and should be left largely, if not entirely, to management. 289With one exception, I do not think that the other matters relied on by Mr Willcox warrant a period of disqualification shorter than that imposed on the other Australian Directors. The circumstances in which Mr Willcox was persuaded in 2000 to remain on JHIL's board did not alter his duties as a director (and no submission to the contrary was made). Mr Willcox's acknowledgement of responsibility for his contravention went further than some of his colleagues, but still did not fully recognise its seriousness. Contrary to the submissions made on his behalf, his contravention cannot be characterised simply as a "one-off mistake or lapse of judgment", not warranting any significant period of disqualification. 290The testimonial evidence adduced on Mr Willcox's behalf attests to an extremely distinguished career, but is comparable in nature to the evidence adduced on behalf of other directors. While Mr Willcox's age may be a barrier to him resuming a career as a director, his referees were unanimous that his contravention (as they understood it) would not deter them from welcoming him to boards with which they were associated. Mr Willcox's refusal to resume or to seek board appointments after the CA Liability Judgment was handed down did not differ in substance from the conduct of other Australian Directors. 291The one exception to which I have referred is that Mr Willcox did not seek a stay of the disqualification order made by the primary Judge. Accordingly, his period of disqualification commenced on 27 August 2009, approximately one month before the disqualification orders against the other Australian directors took effect. I think it appropriate that Mr Willcox's period of disqualification should end one month earlier than the period of disqualification imposed on the other Australian directors. Thus Mr Willcox's disqualification should end on 31 March 2013. The US Directors Relief From Liability 292Unlike the Australian Directors, the US Directors challenge the primary Judge's refusal to relieve them from liability pursuant to s 1317S(2) of the Corporations Act. For convenience, I reproduce the provision here: "If: (a)... (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 ... 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." 293I have set out (at [113] above) the primary Judge's test for determining whether a contravenor acts honestly for the purposes of s 1317S(2). The US Directors do not submit that the primary Judge misstated the correct test. On the contrary, the test formulated by his Honour is consistent with the analysis of Palmer J in Hall v Poolman [2007] NSWSC 1330; 65 ACSR 123, at [325], quoted by the US Directors in their written submissions. Palmer J said this: "In my view, when considering whether a person has acted honestly for the purposes of a defence under ss 1317S(2)(b)(i) or 1318 of the CA, the court should be concerned only with the question whether the person has acted honestly in the ordinary meaning of that term, that is, whether the person has acted without deceit or conscious impropriety, without intent to gain improper benefit or advantage for himself, herself or for another, and without carelessness or imprudence to such a degree as to demonstrate that no genuine attempt at all has been to carry out the duties and obligations of his or her office imposed by the Corporations Act or the general law. A failure to consider the interests of the company as a whole, or more particularly the interests of creditors, may be of such a high degree as to demonstrate failure to act honestly in this sense. However, if failure to consider the interests of the company as a whole, including the interests of its creditors, does not rise to such a high degree but is the result of error of judgment, no finding of failure to act honestly should be made, but the failure must be taken into account as one of the circumstances of the case to which the court must have regard under ss 1317S(2)(b)(ii) and 1318 of the CA." (Emphasis added.) 294A decision that a contravenor has satisfied the Court that he or she acted honestly for the purposes of s 1317S(2) of the Corporations Act involves a value judgment, rather than the exercise of a discretion. Thus an appellate court may be entitled to invoke the principles stated in Warren v Coombes [1979] HCA 9; 142 CLR 531, in reviewing the value judgment: Vines v ASIC, at [558]-[559], per Spigelman CJ, and cases cited there. 295The primary Judge did not find affirmatively that either of the US Directors had acted deceitfully or with conscious impropriety. His conclusion that they had not satisfied him that they had acted "honestly" within the meaning of s 1317S(2)(b)(i) rested on a finding (Penalty Judgment, at [63]) that it was not just mere inadvertence, imprudence or carelessness on the part of the US Directors not to have asked for a copy of the Draft ASX Announcement. The Board was being asked to consider a matter additional to the circulated papers relating to the formation of the Foundation, "a most significant event in the life of JHIL". The US Directors had been mistaken in their evidence that the Announcement was not before the Meeting (at [65]). His Honour was prepared to accept (at [65]) that the non-executive directors, including the US Directors, may have believed that they were acting in the best interests of the James Hardie group by divorcing asbestos claims against Coy and Jseskarb from the rest of the group. But, in his Honour's view (at [66]), a director's belief that he or she is acting in the best interests of the company does not compel the Court to be satisfied that the person has acted honestly in the relevant sense. 296The primary Judge's inability to be satisfied that the US Directors had acted honestly took into account the finding that, in his Honour's language (Penalty Judgment, at [22]) they had not shown that they had acted "without carelessness or imprudence at a level that negates the performance of the duty in question". The primary Judge no doubt also took into account that neither Mr Gillfillan nor Mr Koffel explained why (as his Honour ultimately found) he had failed to ask for a copy of the Draft ASX Announcement, or for the document to be read out, before signifying his approval to the Board's approval of the release of the Draft ASX Announcement. 297Mr Bennett's primary submission was that the material available to the US Directors, both before and at the Meeting, was not such as to alert a reasonable director to the possibility that the Draft ASX Announcement would contain unqualified statements concerning the adequacy of the funds available to the Foundation to meet future asbestos-related claims. The principal difficulty with this submission is that the primary Judge did not find that the US Directors should have been alerted to the contents of the Draft ASX Announcement before the vote to approve it was taken. Indeed, he accepted that the terms of the Announcement had not been read out at the Meeting. Thus, his Honour's conclusion did not depend on a finding that the discussion at the Meeting was such as to alert the US Directors to the unequivocal nature of the representations contained in the Draft ASX Announcement. His finding (Penalty Judgment, at [61]) was that the US Directors should have been alerted at the Meeting that: "an announcement was to be made to the ASX and the meeting was being asked to consider and approve a document, a copy of which they did not have. At the latest they should have realised this when Mr McGregor summarised [the] resolution". 298The contravention by the US Directors did not consist of a failure to request a copy of the Draft ASX Announcement or to abstain from voting on the motion to approve the Announcement when they knew what the Announcement was likely to say. Their contravention consisted of their failure to request a copy of the Announcement or to abstain from voting when they knew (contrary to their evidence) that the meeting was being asked to approve the Draft ASX Announcement. Although they did not know the terms of the Draft ASX Announcement, they knew or should have known that it was a matter of great importance to JHIL and to investors. Yet they did nothing to ascertain its contents or to dissociate themselves from the vote to approve its release to the ASX (and to the wider community). 299The US Directors attended the Meeting by telephone and did not have the Draft ASX Announcement before them. Mr Gillfillan participated in the meeting from his home office in San Francisco. Mr Koffel was away from his office when the meeting was held, but the evidence does not establish precisely where he was. In any event, neither Mr Gillfillan nor Mr Koffel had before him the text of the Draft ASX Announcement at the time the Board approved its release. 300However, both the US Directors had received before the Meeting copies of the slides that were the subject of the presentation at the Meeting. In that respect, they were in a better position to prepare for the Meeting than the Australian Directors who saw those documents only at the Meeting itself. The US Directors, like the other non-executive directors, knew the importance of the separation proposal and the significance of being able to assert that the funding available to the Foundation was thought to be adequate to satisfy all future claims. They must have known the importance of any announcement to be made by JHIL to the ASX and, as the primary Judge found, they should have known how important the Draft ASX Announcement would be in the context of the establishment of the Foundation. In common with the other non-executive directors, they had been provided with the communications strategy which focussed on the significance of the messages to be conveyed to the ASX, the media and the public at large. 301The seriousness of the US Directors' breach of duty lay in their failure to concern themselves with the terms of a critically important document to be released, with Board approval, to the ASX, the media and the public at large. They knew that the Draft ASX Announcement was being discussed by the Board for the purposes of approval and they knew that they did not have a copy of the document. They also knew (at [127]) that their silence at the Meeting would be taken as a vote in favour of approving release of the Announcement. 302Essentially, the US Directors abdicated their responsibility at the Meeting by not asking for a copy of a critical document which the Board was asked to approve for release to the ASX, or at least abstaining from voting on the resolution (thereby dissociating themselves from the Board's decision to approve release). The US Directors' position at trial was that the Meeting had not been asked to approve the Draft ASX Announcement. That evidence was not accepted. They provided no explanation of what led them to acquiesce in the vote on such an important matter without discharging their responsibilities as directors of JHIL. 303It is true that the contraventions by the US Directors were, as his Honour found, isolated events. Nonetheless, his Honour was entitled to not be satisfied that they had acted honestly in the sense explained by his Honour (and accepted by them as the correct construction of s 1317S(2)). 304The primary Judge's alternative ground for rejecting the US Directors' application for relief from liability was that he would have exercised the discretion conferred by s 1317S(2) of the Corporations Act adversely to them. His Honour correctly observed (at [68]) that in a case where a director is found to have acted honestly, an order relieving the director from liability depends on the Court being satisfied as to two matters: * having regard to all the circumstances of the case, the person ought to be fairly excused from the contravention; and * the Court's discretion should be exercised in favour of relief. See Vines v ASIC, at [558]-[559], where Spigelman CJ noted that the first of these matters may involve a value judgment rather than the exercise of a discretion. 305I did not understand the US Directors to challenge the primary Judge's statement of the matters that should be taken into account in making the determinations required by s 1317S(2). His Honour pointed out (at [69]) that each case had to depend on its own circumstances and thus it was difficult to lay down guidelines. However, he said that it was relevant to take into account: * the degree to which the contravenor's conduct fell short of the statutory standard (at [70]); * the seriousness of the contravention (at [71]); * whether the contravention amounts to mere inadvertence (at [71]); * whether the contravention has no damaging consequences or, on the contrary, has caused substantial loss (at [71]); * whether the conduct followed competent advice or was in accordance with some established practice (at [72]); * whether the contravention involved personal gain, impropriety or deceptiveness (at [73]); and * the flagrancy of the breach (at [73]). 306The primary Judge gave detailed reasons for refusing to relieve the US Directors from liability. He considered (at [77]) that the fact that the Meeting was busy did not excuse their breach of duty. Moreover, this was not a case: "for reliance upon management, a co-director or an expert adviser." 307The task of approving the Draft ASX Announcement involved no more than an understanding of the English language (at [77]). The communications strategy, which was before the Board, had advised that a central element was the need to convince stakeholders that there were sufficient assets available to meet all legitimate present and future claims (at [82]). The impressive testimonials read on behalf of the non-executive directors could not alter the fact that their conduct in approving the Draft ASX Announcement was different from their conduct described in the testimonials (at [87]). 308His Honour rejected (at [103]) a submission that the contraventions were at the lower end of seriousness. The event, while isolated was highly significant. The breach of duty by the Australian Directors was "serious" and "flagrant" (at [104]). The negligently made statement was serious as it was a deliberate attempt to influence the market to accept the separation (at [105]). Furthermore, the publication of the Final ASX Announcement caused the market to operate on a false basis and had the effect of artificially maintaining the price of JHIL shares (at [119]). 309The primary Judge rejected the US Directors' submission that the gravity of their contravention was of a lower scale than that of the other non-executive directors physically present at the Meeting. The silence of the US Directors when the Draft ASX Announcement came before the Meeting was, in effect, a vote approving its release (at [125]). Their conduct was not excused by the fact that the Draft ASX Announcement would have been approved in any event (at [126]). Nor was it of a lower "flagrancy" than the breaches by the other directors (at [127], reproduced at [128] above). The Meeting had discussed the Draft ASX Announcement and the discussion was sufficient to alert the US Directors to the fact that the Board was considering and approving a document that they did not have. Their failure to ask for the document and their silence, which they knew would be taken as a vote in favour of approval, was just as flagrant as the approval by those who attended in person. 310Mr Bennett submitted that the primary Judge had erred in finding that the gravity of the contraventions by the US Directors was no less than those of the Australian Directors. Insofar as that submission is based on the failure of management to provide full and accurate information to the Meeting, or the US Directors' reliance (if indeed they did rely) on trusted advisers, I do not accept it. The US Directors, in those respects, were in no different position to the Australian Directors. 311Mr Bennett also sought to characterise the US Directors' contravention as a mere failure to observe a "ritual", that is to indicate formally that they abstained from the vote to approve a document that they had not seen. It is not entirely clear why the reference to abstention was included in the declaration of contravention, as the primary Judge found (at [125]) that the silence of the US Directors was, in effect, a vote approving the release of the Draft ASX Announcement. Be that as it may, the significance of the failure to abstain was that the US Directors, despite being alerted to the importance of the Draft ASX Announcement, took no steps to ascertain its contents and, in effect, approved its release without troubling to consider what representations were being conveyed to the ASX and to the financial and wider communities. Their contravention was not a mere failure to observe a "ritual". 312In my opinion, the one significant point of difference between the conduct of the US Directors and that of the Australian Directors is that the former did not have before them the text of the Draft ASX Announcement when they participated in the Board's vote to approve release of the Announcement. In a sense, reliance on this point of distinction rewards the US Directors for their failure to ask for the Draft ASX Announcement to be read out at the Meeting or to dissociate themselves from the vote. Obviously enough, if they had made this request they, like the other non-executive directors, would have known what representation the Draft ASX Announcement conveyed. On their evidence, had they realised the contents of the Announcement, they would not have approved it. Thus it is by no means obvious (notwithstanding the primary Judge's finding) that, had the US Directors not breached their duty, the resolution to approve release of the Draft ASX Announcement would have been approved. 313In my opinion, the contraventions by the US Directors, although very serious, were not quite as grave as the contraventions by the Australian Directors. The former, through no fault of their own, did not have the text of the Draft ASX Announcement before them when they attended the Meeting by telephone. Nor did they have notice that the Meeting would be asked to approve release of the Draft ASX Announcement. When the topic of the Announcement was raised at the Meeting, the onus was on them to request a copy of the Announcement or, if that was not feasible, to ask the Chairman to have the text read out. The onus was not difficult to discharge - a simple request over the telephone would have sufficed. But the fact is that, unlike the Australian Directors, they did not have the document in front of them and so apparently did not appreciate the unequivocal nature of the representations being made with the imprimatur of the Board. 314While I do not think that the gravity of the two sets of contraventions was identical, I do not think that the US Directors' contraventions were quite as serious as those of the Australian Directors. Nonetheless, the US Directors have not shown that the primary Judge erred in concluding that they ought not be fairly excused from their contraventions and that, in any event, the discretion to relieve conferred by s 1317S(2) should not be exercised in their favour. The primary Judge's finding that the contraventions by the US Directors were no less serious than those of the Australian Directors was not an essential element in his Honour's reasoning. What was important was that their contraventions were serious, fell substantially short of the required standard and caused harm to investors and others. 315If it were necessary to reconsider whether, in all the circumstances, the US Directors ought fairly to be excused, I would have concluded, for essentially the reasons given by the primary Judge (subject to the modification concerning the precise gravity of the contraventions) that they should not be excused. I also would have exercised the discretion conferred by s 1317S(2) adversely to them. As I have explained, their contraventions were serious, involved what can fairly be described as a blatant departure from their respective duties as directors of JHIL, contributed to the public release of a misleading Announcement and also contributed to the maintenance of a false market in JHIL's shares. The contraventions cannot be described as merely the product of momentary inadvertence or carelessness. On the evidence, the primary Judge was entitled to find that the breach of duty reflected a serious failure to appreciate and discharge their obligations as directors of JHIL on a matter of great importance to the company, to investors and to the public. 316The challenge to the primary Judge's refusal to relieve the US Directors from liability for their contraventions must be rejected. Disqualification 317The period of disqualification imposed by the primary Judge on each of the US Directors was affected by the errors I have identified. It is therefore necessary to reconsider whether disqualification is warranted in their cases and, if so, for what period. 318As I have explained, the position of the US Directors differs from that of the Australian Directors in one respect. Unlike the Australian Directors, they did not have the Draft ASX Announcement in front of them at the time they voted to approve its release. Given that the text of the Announcement was not read out at the Meeting, the US Directors (unlike the Australian Directors) did not appreciate the import of the representations made in the Announcement. It is true that the US Directors could and should have taken steps to ensure that they understood the terms of the Draft Announcement before they voted in favour of its release. However, their failure to take those steps can in part be attributed to the informal manner in which the matter came before the Board. It is also a fair inference that the insouciance of the US Directors was encouraged by the failure of any of the Australian Directors to comment on the Draft ASX Announcement or to draw attention to its extravagant claims. 319The contravention by each of the US Directors involved a serious departure from the standard of care and diligence that a reasonable person would have exercised in his position. Moreover, the contraventions contributed to the significant harm which flowed from the release of the misleading Announcement. The contraventions were serious enough to warrant an order for disqualification being made against each of the US Directors. Such an order is necessary to drive home the importance of a director paying attention to each significant item of business at a meeting and ensuring that he or she does not vote in favour of a motion on an important matter without having sufficient material to make an informed judgment. 320While the contraventions by the US Directors were serious, they were different in nature to the contraventions by the Australian Directors. I think that the differences are appropriately recognised by imposing a somewhat shorter period of disqualification. They should be disqualified from managing a corporation for a period expiring on 31 December 2012. The effect is that, by that date, they will have been subject to an order for disqualification for a period of about one year and eleven months. The disqualification will expire about three years and three months from the date the primary Judge's orders came into operation, bearing in mind that for about one year and four months of that period no order for disqualification was in force. Pecuniary Penalties 321Not surprisingly, the question of pecuniary penalties did not loom large in the argument. In comparison with the disqualification orders, not to mention the costs of the protracted proceedings, the pecuniary penalty of $30,000 imposed on each appellant is not a matter of major significance. 322The primary Judge selected (Penalty Judgment, at [380]) a pecuniary penalty of $30,000 as appropriate for each appellant by reference to the penalty of $40,000 attributed to Mr Macdonald's Draft ASX Announcement contravention. His Honour discounted that amount to $30,000 in each case. 323In using Mr Macdonald's notional penalty for his Draft ASX Announcement as the comparator for the appellants' pecuniary penalties, his Honour fell into error for the reasons I have already given. It is therefore necessary to reassess whether pecuniary penalties should be imposed on the appellants and, if so, the amounts. The appellants advanced a variety of submissions on this question. 324Mr Brown and Ms Hellicar submit they should each be required to pay a pecuniary penalty of no more than $15,000. They point out that this Court had attributed $20,000 to Mr Morley's Cashflow contravention and $25,000 to Mr Shafron's Superimposed Inflation contravention and that those penalties provide guidance as to the quantum of any pecuniary penalty they should be required to pay. 325Mr Terry submits that he should not be required to pay a pecuniary penalty greater than that attributed by this Court to Mr Shafron's Superimposed Inflation contravention. 326Mr O'Brien submits that in view of the absence of any need for personal deterrence and the "much diminished" requirement of general deterrence, to impose a pecuniary penalty on top of a disqualification order would be excessive. 327Mr Willcox submits that if he is subject to a disqualification order, no pecuniary penalty should be imposed. He points to the financial detriment he has incurred by reason of his inability to work as a company director. 328The US Directors submit that, if their other arguments are rejected, they should receive a pecuniary penalty less than half that imposed on the Australian Directors. 329Section 1317G(1) of the Corporations Act provides that the Court may impose a pecuniary penalty of up to $200,000 if, relevantly, a declaration of contravention has been made against a person and the contravention is serious. For the reasons I have given, the "intrinsic gravity" of the contravention by each appellant was such that the contravention was serious for the purposes of s 1317G(1): cf Vines v ASIC, at [194], per Santow JA. 330I accept that a pecuniary penalty should be imposed on the appellants only if an order for disqualification is an inadequate or inappropriate remedy: CA Penalty Judgment, at [131], per curiam. However, I think that the seriousness of each contravention warrants an additional pecuniary penalty, even if of a relatively modest amount. While the appellants have correctly submitted that a pecuniary penalty is not required in the interests of personal deterrence, it is necessary to take into account the objective of general deterrence and the need for the Court to match the disapproval of conduct involving such a marked departure from the standards to be expected of directors of public companies. 331In my view each of the Australian Directors should be required to pay a pecuniary penalty of $25,000. Because the contraventions by the US Directors were not quite as serious, they should each be required to pay a pecuniary penalty of $20,000. 332Following the Court of Appeal's decision, ASIC repaid to the appellants the pecuniary penalties paid by them in conformity with the order made by the primary Judge. Orders should be made requiring the appellants to pay appropriate interest in the amount of the pecuniary penalties. Mr Shafron 333It will be recalled that the primary Judge made three declarations of contravention of s 180(1) of the Corporations Act against Mr Shafron in that the failed to advise: (i)the Board that the Draft ASX Announcement was expressed in too emphatic terms concerning the adequacy of funding and thus was misleading ("Draft ASX Announcement contravention"); (ii)the Board that reviews of the Cashflow Model undertaken by PwC and Access Economics were limited to reporting on the logical soundness and technical correctness of the Cashflow Model and had not verified key assumptions on the Model ("Cashflow Model contravention"); and (iii)the chief Executive Officer on the Board that it needed to consider whether JHIL was required to disclose the DOCI [Deed of Covenant and Indemnity] information to the ASX, in circumstances where Mr Shafron knew or ought to have known that if JHIL failed to disclose the information it risked contravening the Corporations Act and the ASX Listing Rules ("DOCI contravention"). 334In the CA Liability Judgment, this Court set aside Declarations (i) and (ii). Declaration (iii) was left undisturbed, but the Court made a further declaration of contravention in that Mr Shafron failed to advise: (iv)the Board that estimates by Trowbridge of asbestos liabilities as at 31 March 2001 for periods of up to 20 and 50 years had not taken into account superimposed inflation, as a prudent estimate should have ("Superimposed Inflation contravention"). 335The High Court's orders restored Declaration (i) (the Draft ASX Announcement contravention), but did not disturb the Court of Appeal's decision to set aside Declaration (ii) (the Cashflow Model contravention). The result is that Mr Shafron is now subject to three declarations of contravention, namely (i) (the Draft ASX Announcement Contravention), (iii) (the DOCI Contravention) and (iv) (the Superimposed Inflation contravention). 336The primary Judge imposed penalties in respect of contraventions (i), (ii) and (iii). His Honour made an order disqualifying Mr Shafron from acting as a director for a period of seven years and ordered him to pay a pecuniary penalty of $75,000. The Court of Appeal reconsidered the question of penalties on the basis that Mr Shafron had committed contraventions (iii) and (iv), but not (i) and (ii). The Court of Appeal considered that the disqualification orders made by the primary Judge was still appropriate, but reduced Mr Shafron's pecuniary penalty from $75,000 to $50,000. 337The joint submission on penalty filed in this Court on behalf of ASIC and Mr Shafron request the Court: * to leave in place the order disqualifying Mr Shafron from managing a corporation for seven years commencing on 27 August 2009 and expiring on 26 August 2016; and * to set aside the pecuniary penalty order made by the Court of Appeal on 6 May 2011 and in lieu thereof order Mr Shafron to pay a pecuniary penalty of $75,000. The joint submission also records the parties' agreement on the costs of the proceedings. 338The joint submission advances two reasons supporting the proposed penalties. First, Mr Shafron has been found to have contravened the Corporations Act in three respects, the same number of contraventions found by the primary Judge. Secondly, the conduct underlying the Cashflow Model contravention (which the primary Judge took into account but which was set aside by the Court of Appeal) was substantially similar to the conduct underlying the Superimposed Inflation contravention (which the primary Judge found had not been made out but which the Court of Appeal found had been established). According to the joint submissions, the conduct in each case involved a failure by Mr Shafron to advise the Board of matters relevant to their consideration of the Draft ASX Announcement. 339The agreement between ASIC and Mr Shafron as to penalty does not absolve this Court of its obligation to determine whether the proposed orders are appropriate in the circumstances of the case: NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285; Australian Securities and Investments Commission v Elm Financial Services Pty Ltd [2005] NSWSC 1020; 55 ACSR 411, at [9], per Barrett J. However, the Court does not ordinarily reject a penalty agreed between the regulator and a contravenor merely because it might have been disposed to select a different penalty. The usual approach is for the court to determine whether the proposed penalty is within the permissible range. However, it is open to a court to consider the appropriate range of penalties independently of the parties' joint proposal and then to determine whether the proposed penalties fall within the range: Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72; [2004] ATPR 41-993, at [51], [54], per curiam; ASIC v Elm Services, at [9]. 340The joint submission takes as its starting point the penalties imposed by the primary Judge. It proceeds on the basis that if the primary Judge had found the Superimposed Inflation contravention against Mr Shafron, rather than the Cashflow Model contravention, his Honour would still have arrived at a disqualification period of seven years and a pecuniary penalty of $75,000. This analysis of what the primary Judge would have done is probably correct. He regarded the DOCI contravention as very serious, itself warranting a period of disqualification of seven years. He attributed five years disqualification as the appropriate penalty for each of the other two contraventions, but considered that the disqualification should be for a period of seven years: Penalty Judgment, at [331]. 341If the question of Mr Shafron's penalty were to be considered without reference to the joint submission, it may be that the starting point would be the CA Penalty Judgment. The Court of Appeal, like the primary Judge, attributed seven years disqualification as the penalty for Mr Shafron's DOCI contravention, since (at [86]) he had been: "the more seriously delinquent in his failure to exercise due care and diligence when the failure was moulded by a desire that an important item of market information not be disclosed". 342The Court of Appeal considered that the Superimposed Inflation contravention was serious, since Mr Shafron knew that the Trowbridge analysis did not allow for superimposed inflation or, if he did not, he should have inquired (at [110]). Further, Mr Shafron's failure left the Board to its own decision-making without having important information before it (at [113]) (although, as I have explained, I do not think that this reduced the seriousness of the appellants' separate contraventions). The Court of Appeal found (at [116]) that Mr Shafron should be disqualified for three years for the Superimposed Inflation contravention, but considered (at [117]) that this period of disqualification should be made concurrent with the longer period imposed for the DOCI contravention. 343It is arguable that the finding that Mr Shafron also committed the Draft ASX Announcement contravention would have led this Court to increase the total period of disqualification beyond seven years. If the matter were to be considered afresh, a longer period of disqualification might well be appropriate, notwithstanding that Mr Shafron was not a director of JHIL. 344Nonetheless, I do not think that a total period of seven years disqualification for Mr Shafron's three contraventions is outside the permissible range. Nor do I think that a pecuniary penalty of $75,000 is inappropriate. Accordingly, in my view the orders jointly proposed by ASIC and Mr Shafron should be made. Costs ASIC's Cross Appeal 345The matters not disposed of by this Court include ASIC's cross-appeals in relation to the costs orders made by the primary Judge. ASIC pursued its cross-appeal only in relation to the costs orders concerning Mr O'Brien and Mr Terry. 346As between ASIC and each of the appellants, the primary Judge made no orders as to costs. He did so on the basis that the proceedings, so far as the appellants were concerned, essentially involved two sets of discrete issues (Penalty Judgement, at [443]). The first set related to the Draft ASX Announcement and the other announcements that followed approval of that Announcement at the Meeting. The second set of issues related to what his Honour described as "the Scheme of Arrangement". Since ASIC had succeeded on the first set of issues and the appellants on the second, and since the costs of each were basically equivalent, it was appropriate to make no order as to the costs of either set of issues. 347ASIC does not contend that the primary Judge's reasoning was erroneous, except in relation to Mr O'Brien and Mr Terry. ASIC points out that neither Mr O'Brien nor Mr Terry was a defendant to ASIC's case relating to the Scheme of Arrangement. Therefore, unlike the other appellants, they did not succeed on the issues relating to the Scheme of Arrangement. ASIC submits that the primary Judge's discretion as to costs miscarried insofar as he declined to make a costs order against Mr O'Brien and Mr Terry, since they had not enjoyed success on the other major issue litigated at the trial. 348Mr O'Brien makes several responses to ASIC's arguments on the cross-appeal: * the costs order sought in ASIC's written submissions in the cross-appeal differed from the order sought in the notice of cross-appeal; * ASIC did not ask the primary Judge to make the order it now seeks; * ASIC sought an order at the trial that the appellants jointly pay 90 per cent of ASIC's costs of the proceedings, but failed to obtain such an order for sound reasons, including the primary Judge's conclusion (at [439]) that in a multi-party, multi-issue case it was inappropriate to make an order against defendants jointly; * ASIC put an alternative submission at the trial that ASIC should be paid part of its costs apportioned to nine separate issues, but the primary Judge declined to take this approach; and * in any event, his Honour's discretion did not miscarry. 349The differences between the orders sought by ASIC in its cross-appeal and in its written submissions do not constitute an obstacle to the success of the cross-appeal. However, ASIC's failure at the trial to seek a costs order of the kind it now seeks against Mr O'Brien and Mr Terry is a greater obstacle. 350The primary Judge approached the question of costs as he did because ASIC's primary contention was that the appellants should be jointly liable for a proportion of ASIC's costs, including the costs relating to the Scheme of Arrangement issues. In effect, his Honour was invited to deal with costs as between the appellants and ASIC on the basis that the appellants were to be regarded as a group. On this basis, it was not material to his Honour's decision that Mr O'Brien and Mr Terry were not parties to ASIC's case based on the Scheme of Arrangement. 351Had ASIC made to the primary Judge the submissions it now makes, his Honour is very likely to have specifically addressed the conduct of the litigation by Mr O'Brien and Mr Terry and the extent to which, if at all, they should be held responsible for the costs of the Draft ASX Announcement issues. Among other matters, his Honour may have wished to take into account his criticisms of the level of detail to which ASIC descended in its presentation of the case (Liability Judgment, at [1260]-[1266]). It is not practicable for this Court to resolve such issues at this stage of the litigation. 352Having regard to the manner in which costs issues were argued, ASIC has not established that the primary Judge erred in declining to make a costs order against Mr O'Brien or Mr Terry. 353The cross-appeal should be dismissed with costs. Costs of the Liability Appeal 354In the High Court appeal, ASIC sought an order that each appellant pay one eighth of ASIC's costs in the Court of Appeal in relation to the issue relating to approval of the Draft ASX Announcement. Heydon J considered (at [312]-[314]) that such an order should be made. However, the orders of the High Court reflected the view of the plurality that the costs of all proceedings in this Court should be in the discretion of the Court. 355In its written submission to this Court, ASIC repeats its contention as to the costs of the Draft ASX Announcement issue, except that it recognises that each appellant should be liable for only one ninth of ASIC's costs incurred in relation to that issue. ASIC also seeks an order that each appellant pay interest on costs pursuant to s 101(1) and (4) of the Civil Procedure Act 2005. 356Mr Brown, Ms Hellicar, Mr Koffel and Mr Gillfillan accept that each of them should be ordered to pay one ninth of the costs of the Draft ASX Announcement issue in this Court. Neither Mr Willcox nor Mr Terry appears to oppose such an order. 357Mr O'Brien submits that if this Court reduces or sets aside the primary Judge's disqualification or pecuniary penalty orders against him, ASIC should pay Mr O'Brien's costs of the appeal. ASIC interprets this submission as intending to contend that if Mr O'Brien's penalties are reduced, ASIC should pay Mr O'Brien's costs of the appeal in this Court insofar as they related to the Draft ASX Announcement issue. 358I doubt that ASIC's reading of Mr O'Brien's submissions is correct. However, if it is, I would reject the submission. It is sensible to treat the Draft ASX Announcement issue as severable, for costs purposes, from the issues of relief from liability and penalty. ASIC succeeded on the Draft ASX Announcement issue in the High Court and the usual consequences of that success should follow. The costs order sought by ASIC should therefore be made. 359The appellants have not made any response to ASIC's claim for interest on costs. Since there are other costs issues to be resolved that may have a bearing on ASIC's claim to interest, this question should await further submissions. Remaining Costs Issues 360ASIC submits that the following costs issues should be deferred until this Court delivers judgment and an opportunity is provided for further submissions to be made by the parties: * the costs in this Court of the issues relating to exoneration and penalties; and * any other costs of the remitted appeals. 361Having regard to the partial success of both ASIC and the appellants on the issues relating to penalties canvassed on the remitted appeals (other than the application by the US Directors to be relieved from liability) there seems something to be said for each party bearing its, his or her own costs in relation to those issues. However, I appreciate that the appellants other than the US Directors withdrew their applications to be relieved from their contraventions at a relatively late stage and that there may be other costs issues to be addressed. If the parties are unable to file agreed short minutes as to costs, further submissions will be required. 362I encourage the parties to attempt to reach agreement on costs. If that is not possible, the appellants' submissions on the subject should avoid duplication. Orders 363I propose the following orders: CA 2012/194824 (Mr Brown's Appeal) 1.Allow the appeal in part. 2.Set aside orders 1 and 2 made on 27 August 2009 against the appellant ("Mr Brown") in SC 1490 of 2007. 3. In lieu thereof, make the following orders: (1)Pursuant to s 1317G of the Corporations Act 2001 (Cth), Mr Brown pay to the Commonwealth of Australia a pecuniary penalty of $25,000. (2)Pursuant to s 206C of the Corporations Act 2001 (Cth), Mr Brown be disqualified from managing a corporation for the following periods: (a)the period commencing on 24 September 2009 and concluding on 17 December 2010; and (b)the period commencing on 3 May 2012 and concluding on 30 April 2013. 4.Mr Brown pay one ninth of the costs of the respondent ("ASIC") in proceedings CA 2009/298408, 2009/298416, 2009/298425, 2009/298427, 2009/298428, 2009/298440, 2009/298441, 2009/298442 and 2009/298524 in relation to the issue of approval of the Draft ASX Announcement. CA 2012/194856 (Ms Hellicar's Appeal) 1.Allow the appeal in part. 2.Set aside orders 1 and 2 made on 27 August 2009 against the appellant ("Ms Hellicar") in SC 1490 of 2007. 3.In lieu thereof, make the following orders: (1)Pursuant to s 1317G of the Corporations Act 2001 (Cth), Ms Hellicar pay to the Commonwealth of Australia a pecuniary penalty of $25,000. (2)Pursuant to s 206C of the Corporations Act 2001 (Cth), Ms Hellicar be disqualified from managing a corporation for the following periods: (a)the period commencing on 24 September 2009 and concluding on 17 December 2010; and (b)the period commencing on 3 May 2012 and concluding on 30 April 2013. 4.Ms Hellicar pay one ninth of the costs of ASIC in proceedings CA 2009/298408, 2009/298416, 2009/298425, 2009/298427, 2009/298428, 2009/298440, 2009/298441, 2009/298442 and 2009/298524 in relation to the issue of approval of the Draft ASX Announcement. CA 2012/194902 (Mr Terry's Appeal) 1.Allow the appeal in part. 2.Set aside orders 1 and 2 made on 27 August 2009 against the appellant ("Mr Terry") in SC 1490 of 2007. 3.In lieu thereof, make the following orders: (1)Pursuant to s 1317G of the Corporations Act 2001 (Cth), Mr Terry pay to the Commonwealth of Australia a pecuniary penalty of $25,000. (2)Pursuant to s 206C of the Corporations Act 2001 (Cth), Mr Terry be disqualified from managing a corporation for the following periods: (a)the period commencing on 24 September 2009 and concluding on 17 December 2010; and (b)the period commencing on 3 May 2012 and concluding on 30 April 2013. 4.Mr Terry pay one ninth of the costs of ASIC in proceedings CA 2009/298408, 2009/298416, 2009/298425, 2009/298427, 2009/298428, 2009/298440, 2009/298441, 2009/298442 and 2009/298524 in relation to the issue of approval of the Draft ASX Announcement. 5.ASIC's cross-appeal in relation to the disposition of the costs of the proceedings be dismissed, with costs. CA 2012/194958 (Mr O'Brien's Appeal) 1.Allow the appeal in part. 2.Set aside orders 1 and 2 made on 27 August 2009 against the appellant ("Mr O'Brien") in SC 1490 of 2007. 3.In lieu thereof, make the following orders: (1)Pursuant to s 1317G of the Corporations Act 2001 (Cth), Mr O'Brien pay to the Commonwealth of Australia a pecuniary penalty of $25,000. (2)Pursuant to s 206C of the Corporations Act 2001 (Cth), Mr O'Brien be disqualified from managing a corporation for the following periods: (a)the period commencing on 24 September 2009 and concluding on 17 December 2010; and (b)the period commencing on 3 May 2012 and concluding on 30 April 2013. 4.Mr O'Brien pay one ninth of the costs of ASIC in proceedings CA 2009/298408, 2009/298416, 2009/298425, 2009/298427, 2009/298428, 2009/298440, 2009/298441, 2009/298442 and 2009/298524 in relation to the issue of approval of the Draft ASX Announcement. 5.ASIC's cross-appeal in relation to the disposition of the costs of the proceedings be dismissed, with costs. CA 2012/195065 (Mr Willcox's Appeal) 1.Allow the appeal in part. 2.Set aside orders 1 and 2 made on 27 August 2009 against the appellant ("Mr Willcox") in SC 1490 of 2007. 3.In lieu thereof, make the following orders: (1)Pursuant to s 1317G of the Corporations Act 2001 (Cth), Mr Willcox pay to the Commonwealth of Australia a pecuniary penalty of $25,000. (2)Pursuant to s 206C of the Corporations Act 2001 (Cth), Mr Willcox be disqualified from managing a corporation for the following periods: (a)the period commencing on 27 August 2009 and concluding on 17 December 2010; and (b)the period commencing on 3 May 2012 and concluding on 31 March 2013. 4.Mr Willcox pay one ninth of the costs of ASIC in proceedings CA 2009/298408, 2009/298416, 2009/298425, 2009/298427, 2009/298428, 2009/298440, 2009/298441, 2009/298442 and 2009/298524 in relation to the issue of approval of the Draft ASX Announcement. CA 2012/194766 (Mr Gillfillan's Appeal) 1.Allow the appeal in part. 2.Set aside orders 1 and 2 made on 27 August 2009 against the appellant ("Mr Gillfillan") in SC 1490 of 2007. 3.In lieu thereof, make the following orders: (1)Pursuant to s 1317G of the Corporations Act 2001 (Cth), Mr Gillfillan pay to the Commonwealth of Australia a pecuniary penalty of $20,000. (2)Pursuant to s 206C of the Corporations Act 2001 (Cth), Mr Gillfillan be disqualified from managing a corporation for the following periods: (a)the period commencing on 24 September 2009 and concluding on 17 December 2010; and (b)the period commencing on 3 May 2012 and concluding on 31 December 2012. 4.Mr Gillfillan pay one ninth of the costs of ASIC in proceedings CA 2009/298408, 2009/298416, 2009/298425, 2009/298427, 2009/298428, 2009/298440 2009/298441, 2009/298442 and 2009/298524 in relation to the issue of approval of the Draft ASX Announcement. CA 2012/195054 (Mr Koffel's Appeal) 1.Allow the appeal in part. 2.Set aside orders 1 and 2 made on 27 August 2009 against the appellant ("Mr Koffel") in SC 1490 of 2007. 3.In lieu thereof, make the following orders: (1)Pursuant to s 1317G of the Corporations Act 2001 (Cth), Mr Koffel pay to the Commonwealth of Australia a pecuniary penalty of $20,000. (2)Pursuant to s 206C of the Corporations Act 2001 (Cth), Mr Koffel be disqualified from managing a corporation for the following periods: (a)the period commencing on 24 September 2009 and concluding on 17 December 2010; and (b)the period commencing on 3 May 2012 and concluding on 31 December 2012. 4.Mr Koffel pay one ninth of the costs of ASIC in proceedings CA 2009/298408, 2009/298416, 2009/298425, 2009/298427, 2009/298428, 2009/298440 2009/298441, 2009/298442 and 2009/298524 in relation to the issue of approval of the Draft ASX Announcement. CA 2012/195077 (Mr Shafron's Appeal) The following orders reflect the joint submissions made by the parties, with some editorial changes. Order 3 has been amended to correspond with the terms of the equivalent orders made in each of the other appeals. 1.Set aside the order made on 6 May 2011 in proceedings CA 2009/298416 that the Appellant ("Mr Shafron") pay to the Commonwealth of Australia a pecuniary penalty of $50,000 and, in lieu thereof, order that Mr Shafron pay to the Commonwealth of Australia a pecuniary penalty of $75,000. 2.Mr Shafron repay the respondent ("ASIC"): (a)the sum of $25,000 representing the payment made to Mr Shafron by ASIC consequent upon orders made on 6 May 2011 in proceedings CA 2009/298416 (Reduced Penalty Amount); and (b)$4,162.05 representing interest paid to Mr Shafron by ASIC on the Reduced Penalty Amount. 3.Mr Shafron pay one ninth of ASIC's costs of the proceedings in relation to the issue of approval of the Draft ASX Announcement in proceedings CA 2009/298408, 2009/298416, 2009/298425, 2009/298427, 2009/298428, 2009/298440 2009/298441, 2009/298442 and 2009/298524 in relation to the issue of approval of the Draft ASX. 4.Mr Shafron pay ASIC's costs of the appeal on penalty and costs in proceedings CA 2009/298416. 5.Each party to pay their own costs of proceedings CA 2012/195077. 6.The appeal be otherwise dismissed. The Court notes the following: 7.Upon payment of the sums referred to in order 2 above, Mr Shafron's pecuniary penalty liability is discharged. 8.In relation to order 3, for the avoidance of doubt, ASIC's costs do not include those costs incurred in proceedings CA 2009/298426. 9.In relation to order 4, for the avoidance of doubt, ASIC's costs do not include those costs incurred in the appeal on penalty and costs in proceedings CA 2009/298408. Directions 364In all appeals, other than Mr Shafron's, directions need to be made for further submissions on costs. In addition, it might be necessary for the parties to draw attention to other orders that should be made. For example, ASIC will need to formulate any orders it seeks for the payment or repayment of interest by the appellants relating to the pecuniary penalty. In addition, it may be necessary to make orders finally disposing of ASIC's various cross appeals (which raised matters not confined to costs). The appellants may also wish to apply for certificates under the Suitors Fund Act 1951. 365I propose the following directions in all appeals (other than Mr Shafron's): 1.The appellants file and serve brief written submissions in relation to remaining costs issues and any further orders that should be made, within 21 days. 2.ASIC file and serve its brief written submissions in response within a further 21 days. ********** 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. Decision last updated: 12 November 2012