In 2005, the Supreme Court of NSW found that Mr Vines, a former GIO officer, had breached his duty to act with reasonable care and diligence on certain occasions during the course of AMP’s 1998–99 takeover bid for GIO Australia.
Vines, a chartered accountant and former auditor, was the Chief Financial Officer of the GIO Group, but not a director. At issue was the inclusion of an $80 million profit forecast for GIO Re in the GIO profit forecast at a time when, on ASIC’s case, Vines knew or ought to have known of facts (ie the impact of Hurricane Georges) that should have led him to advise it was improbable that the company would achieve that forecast.
In 2006 Mr Vines was disqualified for a ‘notional’period of 3 years until 30 June 2007, a pecuniary penalty of $100,000 was imposed and he was ordered to pay 22% of ASIC’s costs.
In Geoffrey William Vines v Australian Securities & Investments Commission  NSWCA 75, the New South Wales Court of Appeal partially allowed Vines’ appeal.
Vines sought relief from liability on 7 contraventions identified by Austin J (the trial judge). Both Vines and ASIC appealed from the penalty imposed by Austin J.
The Court of Appeal overturned 2 findings of breaches of statutory duty of care and diligence and 1 finding of negligence and made 1 finding was outside the pleadings but upheld the other 3 findings including that:
- Vines contravened his duty of care and diligence when he signed the Management Sign Off having failed to take positive steps to advise the Due Diligence Committee of the basis of the assumptions underlying the profit forecast;
- Vines contravened his duty of care and diligence when he supported the integrity of the GIO profit forecast to the Due Diligence Committee;
- Vines contravened his duty of care and diligence in the period after the Part B issued by failing to give attention to whether the GIO Re profit forecast would be achieved.
There was no order as to costs and the issue of penalty is still to be decided.
UPDATE 25 June 2007: reduced penalty announced