Case Study Analysis: Shafron v ASIC [2012] HCA 18 and Corporate Law

This case study analyzes the Shafron v ASIC [2012] HCA 18 case, involving Mr. Shafron, the secretary and legal counsel of James Hardie Industries Limited (JHIL). The case revolves around Mr. Shafron's role in creating actuarial reports and his failure to account for superimposed inflation when estimating asbestos-related claims. The analysis covers the relevant facts, legal issues, including the failure to exercise due care and diligence as an officer, and the application of S180 of the Corporations Act. The court found Mr. Shafron in breach of his duties, leading to disqualification and compensation orders. The study also references legal precedents and highlights the implications of the decision on corporate officers' responsibilities, specifically concerning the disclosure of information and the exercise of due diligence. The document includes references to relevant academic articles, offering a comprehensive understanding of the case and its implications.

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Corporate law (Case study Shafron v ASIC [2012] HCA 18)
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a) The relevant facts of the case
In Shafron v ASIC case, Mr Shafron was employed by the organization as the secretary and the
legal counsel of James Hardie industries Limited (JHIL). 1He was involved in the creation of the
actuarial reports through use of the cash flow model. He did not take into the account the
superimposed inflation when it came to estimation of the amount which, was needed to fund
asbestos related claims. He selected and presented the report to the JHILboard and failed to
disclose the estimates which included the superimposed inflation. Additionally, he released
misleading information to the Australian Stock Exchange (ASX). 2The ASIC commenced on the
proceedings against Mr Shafron on the basis that he was an officer of the JHIL and he breached
his duties as an officer under the Act. According to the high court he was an officer of JHIL
since he had participated in decision making which affected the substantial part of the business
of JHIL during the vetting of the reports which he presented to the board.
b) The major legal issues
The main legal issue was the failure of Mr Shafron to exercise his power and dis-charge his
responsibilities as an officer with the standard of care in addition to diligence which a reasonable
individual would exercise as the officer of the corporation as required under S180 of the Act, the
failure to disclose the key omissions in the estimates to the board. Based on the law an individual
can be held as an officer of the corporation even if they are not staff or one of the formally
appointed directors.
c) The relevant law relied on by the judge(s) in making their decision
1 Barber, Fran. "Indirectly directors: Duties owed below the board." Victoria U. Wellington L. Rev. 45 (2014): 27.
2 Scott, Peter Dominick. "Shafron v Australian Securities and Investments Commission (2012) 286 ALR 612." U.
Tas. L. Rev. 31 (2012): 155.

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The judge relied on the S 180(1) of the corporation Act 2001 which highlights that individuals
should exercise due care and diligence when it comes to release of information so that they do
not breach their duties as the officers of the company.
d) The actual decision of the case.
The court found Mr Shafron to have breached his responsibility of care as an officer, by the point
that he failed to recommend the board on the ideal approximate in the actuarial estimates of the
subjection to the asbestos claims to obtain into the account the superimposed inflation.3 This was
vital especially to their assessment of adequacy of funding to the foundation. Furthermore, he
needed breached his duty of care as an officer by providing misleading announcement to the
ASC. Mr Shaffron was disqualified from managing the corporations for seven years, acting as an
officer and he was order to pay JHIL compensation.
All the responsibilities Mr Shafron carried out were performed in relation to his fulfilment of his
duties as the general counsel in addition to the organization secretary.4 This really is as a result of
his qualifications in addition to the position he was used. His duties as the counsel along with the
organization secretary extended to the proffering advice on almost all the duties of the disclosure
that need to be met.
3 Adams, Michael. "Lessons for non-executives from James Hardie." Keeping Good Companies 64, no. 5 (2012):
263.
4 Hargovan, Anil. "Company officers in the judicial spotlight." Keeping Good Companies 64, no. 6 (2012): 365.

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References
Adams, Michael. "Lessons for non-executives from James Hardie." Keeping Good Companies
64, no. 5 (2012): 263.
Barber, Fran. "Indirectly directors: Duties owed below the board." Victoria U. Wellington L. Rev.
45 (2014): 27.
Hargovan, Anil. "Company officers in the judicial spotlight." Keeping Good Companies 64, no.
6 (2012): 365.
Scott, Peter Dominick. "Shafron v Australian Securities and Investments Commission (2012)
286 ALR 612." U. Tas. L. Rev. 31 (2012): 155.