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Elisabeth Sexton
March 3, 2009

THE law firm Allens Arthur Robinson and James Hardie’s public relations department were the focus of closing submissions in the NSW Supreme Court yesterday as lawyers for 10 former James Hardie directors and executives argued their clients were entitled to rely on experts.
The high standing of Allens was emphasised, while James Hardie’s former head of public relations, Greg Baxter, was named as “the real culprit” responsible for a February 2001 media release about a new asbestos compensation trust.

The defendants also said the Australian Securities and Investments Commission had failed to prove its threshhold claim that the board saw and approved the release.

The commission alleges James Hardie issued two misleading documents with the intention of thwarting government intervention on behalf of sufferers of asbestos diseases: the release, which it says contained unjustified “unequivocal assurances” that the trust was adequately funded; and a July 2001 information memorandum about the company’s shift to the Netherlands.

Tom Bathurst, QC, for former directors Michael Brown, Michael Gillfillan, Meredith Hellicar and Martin Koffel, said the memorandum was prepared by the late Peter Cameron, who in his time as an Allens partner was regarded as “one of the most noted corporate lawyers in this state if not in this country”.

A draft August 2001 letter to the court about the Netherlands move was “a very clear indication” of Allens’s advice, Mr Bathurst said.

“That advice might be right, it might be wrong, it doesn’t matter for present purposes. They were entitled to rely upon it.”

Bret Walker, SC, for former general counsel Peter Shafron, said Mr Baxter, who was called as an ASIC witness, had tried to disown “his personal responsibility” to the board for media releases.

“Every element of that part of his lying evidence he eventually recanted under cross-examination,” Mr Walker said.

He said the “social” need to explore the events of the case had been addressed by the 2004 Special Commission of Inquiry headed by David Jackson, QC.

“Lay disgust about a limited liability capitalist business not paying claimants” was “the leitmotiv of this case but not a legally admissible proposition,” he said.

Peter Wood, for former director Dan O’Brien, said there was intensive work on the media release in the 24 hours after the board meeting by Allens partner David Robb, Mr Baxter and other James Hardie line managers.

“If your honour concentrates solely on that conduct, that would be the end of ASIC’s case, we would say,” Mr Wood said.

The commission’s barrister, Tony Bannon, SC, said the defendants who chose to give evidence offered “testimony punctuated by discreditable attempts to deny the inevitable consequences of the documentary trail”.

The defendents included the former chief financial officer Phillip Morley and former directors Mr Brown, Mr Gillfillan, Ms Hellicar, Mr Koffel and Peter Willcox.

Their attempts to “explain the inexplicable” by saying they did not pay attention to critical documents forced them to admit to “the very negligence, breach of duty and incompetence that they otherwise deny,” Mr Bannon said.

Those who chose not to appear were the former chief executive Peter Macdonald, Mr Shafron, Mr O’Brien and former director Greg Terry.

http://business.smh.com.au/business/former-pr-head-real-culprit-say-hardie-lawyers-20090302-8mdu.html?sssdmh=dm16.363963

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