84Duty of care and diligence

84 Duty of care and diligence (1) An office holder of an incorporated association must exercise his or her powers and discharge his or her duties with the degree of care and diligence that a reasonable person would if that person— (a) were an office holder of the association in the circumstances applying at the time of the exercise of the power or the discharge of the duty; and (b) occupied the office held by, and had the same responsibilities within the association as, the office holder. Under section 146, subsection (1) is declared to be an applied Corporations legislation matter in relation to the provisions of Part 9.4B (Civil consequences of contravening civil penalty provisions) of the Corporations Act. The effect of that application is that subsection (1) is a civil penalty provision and a person who contravenes this provision may be ordered to pay a pecuniary penalty of up to $20 000. (2) An office holder of an incorporated association who makes a business judgment is taken to meet the requirements of subsection (1), and his or her equivalent duties at common law and in equity, in respect of the business judgment if the office holder— (a) makes the judgment in good faith for a proper purpose; and (b) does not have a material personal interest in the subject matter of the judgment; and (c) informs himself or herself about the subject matter of the judgment to the extent that he or she reasonably believes to be appropriate; and (d) rationally believes that the judgment is in the best interests of the association. (3) For the purposes of subsection (2)— (a) a ***business judgment*** means any decision to take or not take action in respect of a matter relevant to the operations of the incorporated association; (b) an office holder's belief that a business judgment is in the best interests of the incorporated association is a rational belief unless the belief is one that no reasonable person in the position of the office holder would hold. (4) This section— (a) has effect in addition to, and not in derogation of, any rule of law relating to the duty or liability of a person because of their office or employment in relation to an incorporated association; and (b) does not prevent the commencement of civil proceedings for a contravention of a duty or in respect of a liability referred to in paragraph (a). (5) Subsection (4) does not apply to subsections (2) and (3) to the extent to which they operate on the duties at common law and in equity that are equivalent to the requirements under subsection (1).