Macks v Viscariello

The Full Court of the Supreme Court of South Australia, comprising Lovell J, Corboy AJ, and Slattery AJ, considered an appeal concerning alleged contraventions of the *Corporations Act 2001* (Cth) by a former director of a company. The dispute involved allegations that the director had breached their duties of care and diligence, acted in bad faith, for an improper purpose, and improperly used their position. The core of the appeal related to the application of sections 180, 181, and 182 of the *Corporations Act*, as well as the business judgment rule defence.

The legal issues before the Court included whether the director had contravened section 180(1) by failing to exercise the requisite degree of care and diligence, and whether the director had contravened section 181(1) by failing to act in good faith in the best interests of the corporation or for a proper purpose. The Court also had to determine if the director had contravened section 182(1) by improperly using their position to gain an advantage or cause detriment to the corporation. A further issue was the applicability and proper construction of the business judgment rule under section 180(2) as a defence to these alleged contraventions.

The Court's reasoning focused on the statutory duties imposed on directors. It affirmed that section 180(1) requires directors to act with the care and diligence a reasonable person would exercise in their position and circumstances. The Court clarified that the business judgment rule under section 180(2) provides a defence if the director makes a business judgment in good faith for a proper purpose, without a material personal interest, after informing themselves appropriately, and rationally believing the judgment to be in the corporation's best interests. The Court emphasised that the belief in the corporation's best interests is rational unless no reasonable person in that position would hold it. The Court also considered the principles governing appeals against findings of fact, noting the limited scope for appellate interference with a trial judge's factual determinations.