It wasn’t the easiest of segues.
I phoned Julie Read on Wednesday so she could expand on her thoughts on the highest-profile case of her career – ASIC’s civil action against James Hardie directors – which she did.
However, breaking news overtook her professional reflections.
Earlier that morning, NBR ONLINE received a tip from a senior legal source that there was a story doing the rounds of Auckland QCs about Ms Read’s comments at an insolvency conference the previous week.
The allegation – also made by South Canterbury Finance defence counsel in Timaru’s High Court – was that Ms Read referred to Justice Paul Heath as “our judge."
Ms Read’s exasperated response was categoric: “That is a totally inaccurate representation of what I said; totally inaccurate.
“Look, I don’t think it’s something I can comment on but, if you were to publish that, it would be wrong.”
Ms Read said the comment was a “courtesy” and, while defence lawyers argued Justice Heath should step aside from the case, the judge issued a written judgment about the comments, including comments from an affidavit by Ms Read.
As noted in Friday’s National Business Review print edition, it’s a shaky start for someone who came into the job last October with an aim of keeping her head down.
Case changed directors' conduct
Ms Read is a Tasmanian who spent a decade in various executive roles with corporate regulator Australian Securities and Investment Commission and, before that, manager of the Commonwealth Director of Public Prosecutions.
Her highest profile case involved civil proceedings taken by ASIC against James Hardie group. While the case related to an ASX announcement in 2001, litigation took place between 2008 and 2012.
The case was appealed to the High Court of Australia, which found the company’s non-executive directors and general counsel/company secretary breached their duty of care, with important implications.
“The James Hardie case changed the conduct of directors,” Ms Read says.
“They put out those false statements to the market, to the ASX, and their defence was they had been advised to do that. And the court said no, you had enough information to form your own view and that should have told you these statements weren’t accurate.
“It had the effect of making directors a lot more careful about statements which were made on behalf of the company, and the way in which they managed high-risk, high-profile things.
“In Australia there was a lot written about it.
“It didn’t get compensation for people with asbestosis – it was about compensation for people with asbestosis – but it was an important case in understanding the scope of directors’ duties in Australia.”
The background is: to address compensation claims of asbestos disease, James Hardie group decided to split the company's operating assets from its asbestos liabilities, with the liabilities to be moved to a foundation.
As outlined by Bell Gully’s David Friar two years ago – the company told the Australian stock exchange in 2001 the foundation was fully funded but it turned out there was an $A1.5 billion shortfall.
Ms Read says running the case for ASIC was a great experience and – in her usual, courteous manner – says it was an opportunity to work with fantastic barristers, including then solicitor-general Stephen Gageler, who is now a High Court judge.
“You learn a lot from working with people of that calibre but it’s also interesting to be involved in forming the law; moving the law along its path.
“It was also just interesting law – it was something that people hadn’t considered in great depth before.”
My face-to-face interview with Ms Read on Monday had a 15-minute diversion into disasters – tsunami, earthquakes, Christchurch’s flooding and bushfires.
Ms Read had just finished talking about potential frauds in the Canterbury earthquake rebuild and she noted New Zealand is much more prepared for tsunamis and earthquakes than Australia, including providing information at hotels.
She recalls a story from the 2004 tsunami of how a schoolgirl visiting Thailand or Indonesia (possibly British girl Tilly Smith, who screamed at her family to get off a beach in Phuket) saved lives by spotting the signs of a tsunami she’d learned about in geography class.
“That would be Australia – no one would know, apart from the girl who had just done it in school, I think.”
Ms Read was in Christchurch between the two major quakes – in September 2010 and February 2011 – and felt a tiny shudder.
Ironically, the biggest quake she has felt was in Melbourne – during an ASIC board dinner, which jolted the table on the 24th floor of a 40-storey office tower on Bourke Street.
Staff affected by fires
The conversation moves through Newcastle’s deadly 1989 earthquake, and flooding in Christchurch and Toowoomba, until we touch on bushfires.
“The fires are frightening,” Ms Read says, revealing that, the summer before last, ASIC staff were caught in Tasmanian bushfires which cut off a peninsula south-east of Hobart and then started burning down the peninsula.
By the time one staff member was told to leave it was too late to try to outrun it, so they took their three-year-old son in a kayak offshore for hours.
“Fortunately for them, on one side of this little bit of land the water was quite shallow so they could just walk out with their son on the kayak and try to entertain him.”
Another ASIC staffer was forced to jump into deep water and hold on to a small jetty with family members.
Ms Read obviously takes a personal interest in her staff but it's a hard situation to adequately summarise.
“It was really hard,” she says.
She talks through how you prepare for bushfires: metal shutters cover windows, water pipes are sent underground so they don't melt, and they're probably connected to an underground “safe room.”
Gutters are blocked and filled with water – because often it’s sparks that get under roofs that burn houses.
Fanned by high winds, fires can travel from the horizon to your house in the same time it takes you to run a few hundred metres.
“Where we lived, we had backpacks filled with water,” she says. “The trees explode – those eucalypts [gum trees] literally go up like a bomb.
"So, yeah, the fires are pretty scary.”
I feel like I should say something reassuring, even though Rangitoto’s volcanic cone dominates views of the nearby harbour: “Well, here you are in benign New Zealand,” I say, unconvincingly.
Unfortunately, the fraud is too obvious.
“Actually, I have to admit I don’t think of New Zealand as being more benign than Tasmania,” Ms Read says, with a chuckle.
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