A director's breach of duty of care in failing to establish adequate lending procedures will not be held causative of loss where the evidence establishes that the immediate causes of the loss were the fraud of other directors and the incompetence of the administrator, and it cannot be concluded on the balance of probabilities that improved procedures would have prevented the loss. The 'but for' test remains central to causation in directors' duty cases involving omissions, and the court must assess whether the persons responsible for implementing procedures would in fact have acted differently. Where existing procedures were not followed, the inference that more explicit procedures would have been followed is not readily drawn.
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