High Court rules GC and SC inseparable

The High Court has ruled today that the former company secretary and general counsel of James Hardie Industries, Peter James Shafron, contravened s 180(1) of the Corporations Act 2001, "by failing to discharge his duties as an officer of JHIL with the degree of care and diligence that a reasonable person in his position would have exercised".

The decision comes after months of uncertainty for general counsels who share the dual role of company secretary. According to the Court, Shafron's responsibilities with JHIL as company secretary and general counsel were indivisible and must be viewed as a composite whole.

According to the Australian Corporate lawyers Association (ACLA) this ruling is a clear warning to in-house lawyers who are also company secretary for their company, that the two roles cannot be separated to avoid liability under the Corporations Act by arguing that they are not an “officer” of the company.

Approximately 40 percent of general counsels also act as company secretary, and with these dual roles being pivotal for business, ACLA believes there may be greater onus placed on them to educate their businesses about the way in which a court may perceive their role and the actions of the business.

“It is now clear that the courts will look at the role, not as defined by the tasks and responsibilities given to the position,” said Tony de Govrik, legal affairs and communications director, ACLA. “Accordingly, general counsels should think about tasks their company may ask them to perform and what the implications may be for them and their companies.”


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