Vines v Australian Securities and Investments Commission

The case of *Vines v Australian Securities and Investments Commission* involved an appeal to the New South Wales Court of Appeal from a judgment of Austin J in the Supreme Court of New South Wales. The primary dispute concerned alleged contraventions by Mr Vines, the Chief Financial Officer of GIO, of his statutory duty of care and diligence under s 232(4) of the *Corporations Law* (now s 180(1) of the *Corporations Act 2001* (Cth)). ASIC had sought declarations that Mr Vines had contravened this duty in relation to a profit forecast.

The Court of Appeal was required to determine whether Mr Vines had breached his statutory duty of care and diligence, and in doing so, consider the standard of care required for such contraventions, which is equivalent to the civil standard. The Court also had to consider whether the duty imposed by s 232(4) was owed to the corporation itself, and how principles of procedural fairness applied in the context of civil penalty proceedings. Furthermore, the Court had to address the effect of delay in the delivery of the primary judge's judgment and the principles governing appellate intervention in discretionary judgments.

The Court of Appeal, in a joint judgment, reasoned that Mr Vines, as Chief Financial Officer, bore ultimate responsibility for ensuring that the profit forecast was not misleading. While acknowledging Mr Vines' substantial workload and reliance on others, the Court found that he had been made aware of significant and up-to-date information regarding the potential losses from Hurricane Georges. This information indicated a high degree of uncertainty surrounding the profit forecast, and the Court concluded that reasonable care required Mr Vines to consider all this information and attempt to reach a consensus on the likely losses. The Court found that Mr Vines had contravened s 232(4) of the *Corporations Law* by failing to do so.

The Court of Appeal allowed the appeal in part, setting aside certain declarations made by the primary judge. However, the appeal was dismissed with respect to other declarations, meaning those findings of contravention were upheld. The Court also dismissed a separate appeal concerning a different judgment of Austin J. The parties were directed to file further submissions on the issue of penalty, and no order was made as to the costs of the appeal.