An analysis of the Vines appeal

Directors and officers are required to engage in a delicate balancing act where error or omission can incur significant losses of (largely) other peopleââ"šÂ¬Ã¢"žÂ¢s money. As a society we accept a certain degree of risk in the hope that such entrepreneurial behaviour will generate greater benefits for the community through successful, competitive corporations, greater employment and competitive markets. What role does the law have to play in this? When does an error of judgment (even through omission) justify regulatory prosecution? This note examines the recent decision by the New South Wales Court of Appeal in Vines v Australian Securities and Investments Commission (2007) 62 ACSR 1; [2007] NSWCA 75 in order to draw out the tensions involved in encouraging managerial discretion with the enforcement of benchmark norms of ââ"šÂ¬Ã…"reasonableââ"šÂ¬Ã‚ corporate decision-making.