Facts of the case
This report is the study of the case ASIC v Vines 55 ACSR 617 that was the leading case of Australia. The facts had been analysed in the case introduction that will show that how Mr Vines had been negligent of his duties. The duties and responsibilities of an officer were breached as provided in the Corporations Act. After this case, several developments had been made in the field of Corporation law. The NSW Court of Appeal had given the leading judgement in the case that will be discussed in this report. The importance of Corporation Act and the effect of the decision on the companies and their management will be discussed in this report. The companies have taken several steps to improve their policies so that the breach of the laws of the Corporation Act cannot take place. This case has many contentions and the legal issues on which the court had decided the case will be discussed in this report.
Mr Vines a former GIO officer had been found to be in the contravention of section 180(1) of the Corporations Act to work with due care and diligence on many occasions during the course of AMP’s takeover bid for GIO Australia. Although the profits had been forecasted but due to the catastrophe in America this margin had been substantially reduced. While he was of the situation that the situation was tight in Australia but then also he took a bid and made an expectation that the bid will go beyond from $60-65 million (2006 Cases (a), 2007). However, when the bid was closed it was already reached to $74 million (Jensen, 2017). Thus the offer has been closed with the 57% of the shareholders has accepted the bid. Mr Vines does not know about the increased amount but it was known by some of the people of AMP. ASIC had declared that Mr Vines had breached many of the statutory duties and not shown care and worked with diligence towards the company. He was the officer of the company and he has the duty and responsibilities towards the company. As in the year, 2006 Mr Vines had been disqualified for the notional period of 3 years till 30 June 2007 and had been penalized with $100,000 and was also been ordered to pay the 22% of the ASIC’s Costs (Da Silva Rosa, Filippetto and Tarca, 2008). However, Mr Vines had some relieved in the seven contraventions that had been identified by the trial court judge. Mr Vines and ASIC both had appealed for the penalty that had been imposed by the trial court judge. The lower Court was severe in his rulings against the Vines and the officers of the GIO Australian Holdings. In doing so there has been made a number of observations that have been made by the court (2006 Cases (b), 2007).
Breaches of Duties
The duties had been breached by the Mr Vines in this case that has been given under section 232 (4) of the Corporations Act. Now in the Corporation Act, 2001 it is included under section 180(1) of the Corporations Act. Section 180(1) of the Corporations Act says that the director has the duties and responsibilities towards the Corporation to work with due care and diligence. The breach of these duties can raise the legal issues that what happened in this case. Mr Vines had been found to be in the Contravention of his duties to work with due care and diligence while signing the management sign off had failed to take some of the positive steps in advising the Due Diligence Committee based on assumptions that are underlying the profit forecast (Barker, 2015). He has also contravened his duties to work with care and diligence while supporting the integrity of the forecast of the profit of the GIO profit to the committee of Due Diligence. Mr Vines had also contravened his duties in working with due care and diligence was in the period that was failing in giving the attention to the forecast of the GIO Re profit would be achieved after Part B had been issued. Mr Vines from the evidence had been found that he has breached many of the laws of the Corporations Act and it was mainly the section 180(1) of the Corporations Act. Mr Vines has the duty towards the Corporation and its owner to do his duty with due care and diligence. Therefore, ASIC had found to be in the contravention of his officer duties and for that reasons he faced legal issues (Ahern, 2011).
The Court had given the leading judgement in this case of ASIC v Vines. The Court had given a decision by rejecting many of the contentions of Mr Vines in the case. The contention made by Mr Vines in the case that he has not breached the duty of negligence in establishing the statutory duties was higher than what is required to be breached in accordance with the Common law or tort. The Court of Appeal had rejected the argument and the decision of the Lower Court had been established that the standard care was required. It is well known that the amount of negligence that was required to establish a breach of the statutory duties that was on the context of the statue that had been breached. It means that in the criminal case, the negligence should be proven higher and on the other side the civil liability that had been imposed on the civil cases and it like being in the Corporations Act. The Court of Appeal had also found that with the agreement with the precedent-based law test that the standard related is that of a sensible officer in these circumstances. It becomes necessary to penalize for bringing seriousness. The Court had presumed from the observations that the statutory responsibility of consideration and reliability that has included the carelessness in relation to the precedent-based law. Hence, the Court had found all the defendants guilty under the breach of section 180(1) of the Corporations Act. Mr Vines had given the notional period of 3 years till 30 June 2007 and had been penalized with $100,000 and was also been ordered to pay the 22% of the ASIC’s Costs. Some contraventions that that were given in the favour of Mr Vines and were upheld by the Court of Appeal (Jacobson and Jacobson, 2007).
Court of Appeal Judgment
The Court of Appeal decision, in this case, has opened the eyes of many Corporations who had been governed by the Corporations Act. There are many laws of the Corporations Act that had been breached by the Mr Vines who was an officer under section 9 of the Corporations Act. The Companies who do not take laws of the Corporations Act seriously had been frightened by this decision and had changed many policies in the company. There is an ethical and governance policies had been implemented so that the companies must work with the show due care and diligence towards their work (Cassel, 2016). The companies had started training programs to improve their working culture and to guide their directors and the officers that how to work efficiently and with the work with proper care and diligence. There is required for any Corporation members the duty to work with care and diligence or it can affect the companies functioning. The directors and the officers owe a duty not only towards the Corporations but also towards the shareholders, customers and the investors. Many governance theories had been implemented in the companies that say, directors, officers and the managers are the agents of the Shareholders (Mire, 2016). The companies have set minimum care of standard policies that the directors care towards work till not limited to their knowledge or expertise but they should do more than that by just not merely limited to their field of expertise. The liability of directors cannot be avoided by just lack of skill or the knowledge. The companies had ensured that the directors must monitor and guide the management of the company. The company must ensure that their directors that they make the environment familiar with the management. The companies had ensured that their daily day-to-day activities must be monitored (Kinsey and Dayman, 2007). In the Board Meeting, they must ensure that the regular attendance of the directors, officers regular attendance must be there, must familiarize with the company’s financial position and can review financial statements. The directors cannot take excuse or avoid their liability for the insolvent trading by just saying that they cannot read the financial statements. The Companies also must ensure that the directors of the companies had been up-to-date about the all the characteristics of the company’s operations. The information available to the due to their position cannot be misused by the directors. It can be concluded from all these submission that the companies had been alerted from this case and taken major steps to improve the condition of the working in the company (Hargovan, 2009).
Conclusion
It can be concluded from this case Mr Vines had breached the laws of the Corporations Act. The decision of the Court of Appeal from the evidence it had proved that Mr Vines had not done his with due care and diligence. The importance of the Corporations Act in the Corporation had been proved in this case. Mr Vines was found to be in the contravention of section 180(1) of the Corporations Act by both the Courts. Thus, it becomes an eye-opening case for many Australian Companies. The major change had come in the working of Australian Companies. These case has taught many lessons and mainly for the Corporations that they must work with due care and diligence. Therefore, the companies had implemented many policies that the directors and the management of the companies must ensure with those policies. Thus in the conclusion, this decision was important in the context of the Corporations Act.
References
2006 Cases. (2007) ASIC v VINES, Supreme Court of New South Wales, 23 December 2005. [Online] Available from: https://iknow.cch.com.au/document/atagUio607443sl24303100/asic-v-vines[Accessed 20th September 2018]
2006 Cases. (2007) VINES v AUSTRALIAN SECURITIES AND INVESTMENT COMMISSION , Supreme Court of New South Wales, Court of Appeal, 22 June 2007: [Online] Available from: https://iknow.cch.com.au/document/atagUio1145043sl159836198/vines-v-australian-securities-and-investment-commission. [Accessed 20th September 2018]
Ahern, D. (2011) Guiding Principles for Directorial Conflicts of Interest: Re Allied Business and Financial Consultants Ltd; O’Donnell v Shanahan. The Modern Law Review, 74(4), pp.596-607.
ASIC v Vines 55 ACSR 617
Barker, S. (2015) “Directors’ personal liability for corporate inaction on climate change.” Governance Directions 67(1)
Cassel, D. (2016) Outlining the Case for a Common Law Duty of Care of Business to Exercise Human Rights Due Diligence. Business and Human Rights Journal, 1(02), pp.179-202.
Corporations Act, 2001, (Cth)
Da Silva Rosa, R., Filippetto, J. and Tarca, A. (2008) ASIC actions: canaries for poor corporate governance? Accounting Research Journal, 21(1), pp.67-86.
Hargovan, A. (2009) Company Secretary: Directors and Officers’ Statutory Duty of Care Following James Hardie. Keeping good companies, 61(10), p.586.
Jacobson, D. and Jacobson, D. (2007) ASIC v Vines appeal decided – Australian financial services law and credit law from Bright Law. [Online] Australian financial services law and credit law from Bright Law. Available from: https://www.brightlaw.com.au/corporate-governance/asic-v-vines-appeal-decided/ [Accessed 20 September. 2018].
Kinsey, D. and Dayman, A. (2007) Vines, how much care and diligence is required by executive officers? Keeping Good Companies, 59(5), p.290.
Mire, S.L. (2016) Independent directors: partnering expertise with independence. Journal of Corporate Law Studies, 16(1), pp.1-37.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
