Australian Securities and Investments Commission v Fortescue Metals Group Ltd [2011] FCAFC 19

Australian Securities and Investments Commission v Fortescue Metals Group Ltd [2011] FCAFC 19

FMG contravened s 1041H and s 674 of the Corporations Act by making public statements to the effect that it had executed binding agreements with Chinese contractors to build, finance and transfer the Pilbara project infrastructure, when in truth the framework agreements amounted only to agreements to negotiate and did not bind the contractors to carry out the works or fix essential terms such as price or subject matter. These were statements of fact, not mere opinion, and would have misled ordinary or reasonable investors as to FMG's progress and prospects. Forrest was knowingly involved in the breaches and failed to take reasonable steps to ensure compliance; he did not establish...

Jurisdiction
Australia
Judgment Date
18 February 2011
Procedural Posture
Appeal / Full Court Judgment on Appeal From Trial Decision
Outcome
Appeal allowed. Orders below set aside. Declarations of contravention made against FMG and Forrest. Matter remitted for further determination.
Legal Topics
['continuous Disclosure' 'misleading and Deceptive Conduct' "directors' Duties" 'enforceability of Agreements' 'market Disclosure']
['corporations Law' 'commercial Law' 'securities Regulation'] ['continuous Disclosure' 'misleading and Deceptive Conduct' "directors' Duties" 'enforceability of Agreements' 'market Disclosure']

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Procedural Posture

Appeal / Full Court Judgment on Appeal From Trial Decision

Legal Issues

  1. 1 ['Did FMG and Forrest contravene the continuous disclosure provisions (s 674) and the prohibition on misleading and deceptive conduct (s 1041H) of the Corporations Act 2001 (Cth) by making announcements claiming to have entered binding agreements to build, finance and transfer infrastructure for the Pilbara Infrastructure Project?' 'Were the public statements made by FMG merely expressions of opinion or inaccurate statements of fact?' 'Did the framework agreements amount to binding contracts to build and finance the infrastructure, or were they merely agreements to negotiate?' 'Was Forrest involved in or did he facilitate breaches by FMG and did he comply with his duty of care and diligence under s 180(1)?']

Ratio Decidendi

FMG contravened s 1041H and s 674 of the Corporations Act by making public statements to the effect that it had executed binding agreements with Chinese contractors to build, finance and transfer the Pilbara project infrastructure, when in truth the framework agreements amounted only to agreements to negotiate and did not bind the contractors to carry out the works or fix essential terms such as price or subject matter. These were statements of fact, not mere opinion, and would have misled ordinary or reasonable investors as to FMG's progress and prospects. Forrest was knowingly involved in the breaches and failed to take reasonable steps to ensure compliance; he did not establish...

Court Disposition

Appeal allowed. Orders below set aside. Declarations of contravention made against FMG and Forrest. Matter remitted for further determination.

Orders

  • ['The appeal be allowed.' 'The order made on 23 December 2009 be set aside.' 'Declarations that FMG contravened ss 674(2) and 1041H of the Corporations Act 2001 (Cth).' 'Declaration that Forrest contravened ss 180(1) and 674(2A) of the Corporations Act 2001 (Cth).' "Respondents to pay appellant's costs of and...