Member’s name: Mr Phillip G Morley
Date of Hearing: 28 September 2011
Division: New South Wales
Tribunal: Disciplinary Tribunal
On 28 September 2011 the Disciplinary Tribunal found Mr Phillip G Morley breached Clause 27(1 )(g) of the former Constitution in that he was the subject of an "adverse finding’’... in relation to the Member’s conduct, competence or recognition by any Court, professional body, statutory or other regulatory authority..."
On 23 April 2009 in the Supreme Court of New South Wales, ASIC brought proceedings against Mr Morley for contravening section 180(1) of the Corporations Law. The Supreme Court disqualified Mr Morley from managing corporations for a period of five years and imposed a pecuniary penalty of $35,000. On appeal, on 6 May 2011 the New South Wales Court of Appeal upheld the Disqualification Order but reduced the period to two years effective 27 August 2009 and reduced the pecuniary penalty to $20,000.
Mr Morley had been Chief Financial Officer for James Hardie Investments Limited. The Court found that Mr Morley had failed to advise the Board of James Hardie of the limited nature of reviews of a cash flow model prepared by a third party which was used as a basis to assess the adequacy of funding for a Foundation established to meet compensation claims from persons exposed to asbestos.
The Court of Appeal noted:
Mr Morley was a senior executive in JHIL, a major public company. Although we have found that he acted honestly, it does not appear to us that he ought fairly to be excused, or that he should be relieved from liability for the contravention. Proper corporate governance and business activity depend on business leaders adhering to standards not only of honesty but also of care and diligence, and a failure ofthe nature and seriousness of that of Mr Morley is not in our view one which can properly be excused. It should be subject to whatever may be an appropriate penalty, by disqualification order or pecuniary penalty, in fulfilment of the protective purpose (including personal and general deterrence)’’.
Penalties and costs
The Disciplinary Tribunal imposed the following penalties and costs:
- Forfeiture of Membership for a period of 12 months and that Mr Morley is ineligible for readmission until 30 September 2012.
- Costs of $996.
- Should Mr Morley reapply after 12 months, conditions of readmission are:
- that he may only be readmitted at CPA status,
- he must provide proof to the satisfaction of CPA Australia that the pecuniary penalty of $20,000 has been paid or that arrangements are in place that it be paid, and
- CPA Australia’s costs have been paid.