High Court dismisses appeal: Fortescue Metal and Twiggy Forrest cleared
Commercial law expert, Professor Michael Adams, from the University of Western Sydney’s School of Law says there are lessons to be learnt from the recent Fortescue Metals Group’s ruling to ensure the accuracy in the meaning of agreements and contracts, as well as the importance of continuous disclosure and media releases to the public and the Australian Securities Market (ASX).
Professor Adams says the concept of misleading and deceptive conduct in respect of media releases and ASX announcements was refined today.
“The High Court of Australia has ruled that the 2004 statements made by Mr Forrest, on behalf of FMG, that a state-owned Chinese company would build a rail line for the Pilbara region of Western Australia, were not misleading,” says Professor Adams.
“Unlike the James Hardie litigation, where the directors were held liable for making a misleading statement to the ASX, the HCA today has over-ruled the decision of the Full Bench of the Federal Court,” says Professor Adams.
The Australian Securities and Investments Commission originally brought the case in 2009 and lost, but were successful on appeal in 2011.
Professor Adams says Mr Forrest was facing a fine and a ban – disqualification – as an officer of the company.
“However, the court decided that those hearing or reading the agreements would assume that they were binding and the representation was neither false nor misleading,” says Professor Adams.
The company, FMG, requested a trading halt to await the outcome of the case and today’s ruling means Mr Forrest can continue to be the company chairperson.
2 October 2012