Australian Securities & Investments Commission v Fortescue Metals Group Ltd [No 5] [2009] FCA 1586

Australian Securities & Investments Commission v Fortescue Metals Group Ltd [No 5] [2009] FCA 1586

The Court held that FMG and Forrest honestly and reasonably believed, based on legal advice and approvals from the Chinese contractors, that the framework agreements were binding as described in their disclosures. There was no evidence they held or should have held the contrary opinion propounded by ASIC. Accordingly, they were not in possession of different information which needed disclosure, did not engage in misleading or deceptive conduct, and did not breach directors' duties. ASIC's allegations of dishonesty and its application were dismissed.

Jurisdiction
Australia
Judgment Date
23 December 2009
Procedural Posture
Civil Penalty Proceeding / Trial Judgment
Outcome
Application dismissed
Legal Topics
['continuous Disclosure' 'misleading or Deceptive Conduct' "directors' Duties" 'standard of Proof' 'contract Interpretation']
['corporations Law' 'evidence Law'] ['continuous Disclosure' 'misleading or Deceptive Conduct' "directors' Duties" 'standard of Proof' 'contract Interpretation']

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Procedural Posture

Civil Penalty Proceeding / Trial Judgment

Legal Issues

  1. 1 ['Whether Fortescue Metals Group Ltd (FMG) contravened s 674(2) of the Corporations Act (continuous disclosure) in relation to agreements with Chinese contractors' 'Whether FMG and John Forrest engaged in misleading or deceptive conduct under s 1041H of the Corporations Act and s 52 of the Trade Practices Act' 'Whether Forrest breached his duties as a director under s 180(1) of the Corporations Act']

Ratio Decidendi

The Court held that FMG and Forrest honestly and reasonably believed, based on legal advice and approvals from the Chinese contractors, that the framework agreements were binding as described in their disclosures. There was no evidence they held or should have held the contrary opinion propounded by ASIC. Accordingly, they were not in possession of different information which needed disclosure, did not engage in misleading or deceptive conduct, and did not breach directors' duties. ASIC's allegations of dishonesty and its application were dismissed.

Court Disposition

Application dismissed

Orders

  • ['The application is dismissed.' 'ASIC to pay the costs of each of the defendants.']