Guardian Trust Australia Limited v Swinbank & Ors - [2000] NSWCA 345 - NSWCA 2000 case summary — Zoe

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Guardian Trust Australia Limited v Swinbank & Ors

[2000] NSWCA 345

Court of Appeal (NSW)|2000-11-09|Before: Mason P, Stein JA, Heydon JA, Einstein J

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Source facts

Court

Court of Appeal (NSW)

Decision date

2000-11-09

Before

Mason P, Stein JA, Heydon JA, Einstein J

Catchwords

INSURANCE - Professional Indemnity insurance policy - continuing omission to disclose - breach of fiduciary obligations - dishonesty exclusion clause - ND DECISION : Appeal dismissed with costs

Source

Original judgment source is linked above.

Catchwords

INSURANCE - Professional Indemnity insurance policy - continuing omission to disclose - breach of fiduciary obligations - dishonesty exclusion clause - ND DECISION : Appeal dismissed with costs

Judgment (32 paragraphs)

[1]

CITATION : Guardian Trust Australia Limited v Swinbank & Ors [2000] NSWCA 345 revised - 5/12/2000 FILE NUMBER(S) : CA 40954/99 HEARING DATE(S) : 8 and 9 November 2000 JUDGMENT DATE : 30 November 2000

[2]

Guardian Trust Australia Limited (in its capacity as Trustee of Meridian Investments Trusts No. 1, 2, 3, 4, 5 & 6) (Appellant) Christopher Mark Swinbank (sued on his own behalf and on behalf of Michael Payne & Ors (now known as R J Wallace) and A M Sharpe & Ors (now known as David Marshall & Ors) (First Respondent) Aegon Insurance Company (UK) Limited (Second Respondent) PARTIES : HIH Winterthur Underwriting and Agency Services Limited (formerly CE Heath Underwriting Agency and Services Limited) On behalf of HIH Casualty and General Insurance Limited (formerly CE Heath Casualty and General Insurance Limited) (Third Respondent) FAI General Insurance Company Limited (Fourth Respondent) Royal & Sun Alliance Insurance Australia Limited (formerly Sun Alliance Australia Ltd) (Fifth Respondent) MMI General Insurance Limited (formerly Switzerland General Insurance Limited (Sixth Respondent) GIO Insurance Limited (formerly the GIO) (Seventh Respondent) JUDGMENT OF : Mason P at 1; Stein JA at 2; Heydon JA at 62

[18]

The finding of dishonesty 9 The respondent insurers relied on the exclusion. Their principal case at trial was that liability was brought about by the dishonest act or omission of Mr Donald Cleary, a founding and senior partner of the firm Cleary & Hoare. The same allegation was made against Mr Peter Scanlan, a solicitor employed by the firm, who had become a non-equity partner by June 1990. 10 Einstein J found that both Mr Cleary and Mr Scanlan were relevantly 'dishonest' within the exclusion in respect of both PMA1 and PMA2. 11 As I have mentioned, the appellant does not challenge these findings in so far as they concern the PMA1 advance. However, with regard to Mr Cleary, it is contended under ground 9 that he was not relevantly involved in the PMA2 loan facility. Alternatively, it is submitted that his Honour erred in finding that Mr Cleary's dishonesty was of a continuing nature and relevant to the advances made under PMA2 (ground 10). 12 The relevant finding of his Honour was as follows: My finding is that the solicitors [Cleary and Scanlan] deliberately kept secret from BPTC, or failed to disclose, their knowledge or suspicion of the Lews' financial involvement in the PMA1 and PMA2 transactions. The non-disclosure was a continuing non-disclosure and occurred throughout the course of both PMA1 and PMA2 transactions. The non-disclosure was not confined to the occasions when the various solicitors' certificates were provided to BPTC. I accept as correct the Insurers' submission that 'dishonesty' within the meaning of the exclusion clause, may consist of 'acts or omissions'. My finding is that the dishonesty, although evidenced by the act of providing false certificates, was not confined to those acts and that there was a continuing omission to disclose. 13 The central finding against the solicitors (Cleary and Scanlan) was that they deliberately kept secret from BPTC, or failed to disclose, their knowledge or suspicion of the financial involvement in the PMA1 and PMA2 transactions of Mr Reuben Lew and his wife, Sandra Lew. His Honour emphasised that the 'non-disclosure' was not confined to the occasions of the giving of solicitors' certificates but was a continuing non-disclosure which occurred throughout the course of both transactions. 14 The thrust of the appellant's submission is that there was no evidence that Mr Cleary was involved in PMA2, at least from 29 or 30 April 1986. In particular, the point is made that the final solicitors' certificate given by Cleary & Hoare with regard to PMA2 (and which did not disclose the existence of an Equity Sharing Agreement with Yossarian Nominees Pty Ltd [Yossarian]) was not signed by Mr Cleary. The submission is that the two transactions (PMA1 and PMA2) were distinct and separate and his Honour failed to look at them separately and to critically examine the evidence, particularly with regard to PMA2. It is maintained that his Honour rolled-up his consideration of the transactions into one and that his finding that Mr Cleary was dishonest with regard to PMA1 infected his decision regarding PMA2. The submission that separate acts of non-disclosure are necessary with regard to each transaction is also relied on to attack his Honour's finding of continuing dishonesty on the part of Mr Cleary under PMA2. 15 Notwithstanding the understandable attempt by counsel for the appellant to quarantine PMA2 from PMA1, it is necessary to advert to PMA1, and Mr Cleary's part in it, in order to understand his role in PMA2 and its context.

[20]

17 The PMA1 facility included an arrangement reflected in an Equity Sharing Agreement dated 13 November 1985 whereby Weltsbarrd Pty Ltd (Weltsbarrd) would become the holder of 50% of the issued capital of PMA Development Company No 1 Pty Ltd and be entitled to 50% of the profits from the Southport development. The Lews held all of the shares in Weltsbarrd. By October 1986 the loan facility had been increased to $30 million. 18 Mr Cleary was primarily responsible for preparing the documentation for the PMA1 transaction, including the Equity Sharing Agreement, until about 14 November 1985 when Mr Scanlan took over the day to day conduct of the transaction. Mr Scanlan had joined the firm early in 1985, fresh out of articles of clerkship. Mr Cleary was his supervising solicitor. 19 On 14 November 1985 Cleary & Hoare gave a solicitors' certificate to satisfy a condition precedent to PMA1 in EMM's letter of approval dated 22 October 1985 for the loan advance. The letter stated in part: It is a condition precedent to the advancing of any monies by the Trustee that the Trustee's Solicitors investigate at your expense and in their absolute discretion approve not only the title of the property over which the Mortgage is to be given, but also all matters which in their opinion are incidental to the giving to the Trustee of an adequate and proper security, including any special insurance and your compliance with the terms of your application for this loan advance … [Emphasis added] 20 In a letter dated 31 October 1985 EMM instructed Cleary & Hoare to act on behalf of the trustee on the transaction. The letter of instruction stated in part: We are authorised by the Trustee/Mortgagee to instruct you to act on its behalf in respect of this transaction. In so acting, you are to take all steps necessary to fully protect the position of the Trustee and Manager keeping both parties fully informed on all matters relating to this transaction. 21 However, the certificate given by Cleary & Hoare omitted any mention of the Equity Sharing Agreement with Weltsbarrd which Mr Cleary had prepared. 22 The trial judge found that the BPTC was unaware of the involvement of Mr Reuben Lew and Mrs Sandra Lew in the Equity Sharing Agreement. His Honour accepted the insurers' case that Cleary & Hoare deliberately kept secret from BPTC, or failed to disclose, their knowledge or suspicion of the Lews' financial involvement in the transactions. At or about the same time, the solicitors made detailed reference to EMM of the Equity Sharing Agreement and to the securities collateral to that agreement (including a second mortgage over Southport). It is common ground that BPTC would not have entered into the transactions if it knew that the Lews were to be involved as equity participants. 23 The second solicitors' certificate given in late November 1985, on the occasion of the increase in the PMA1 advance, is significant. As first drafted and forwarded to EMM, it included a reference to 'Bill of Encumbrance (Equity Sharing Agreement)'. Following its receipt, Mr Richard Lew telephoned Mr Scanlan and told him that there was to be no reference to the Equity Sharing Agreement in correspondence for the Trustee. All letters about that agreement were to be kept separate. Mr Scanlan discussed this instruction with Mr Cleary. As a result, Cleary & Hoare revised the wording of the certificate to remove the reference to the Equity Sharing Agreement. Each of the later certificates (including the one for PMA2) omitted reference to any Equity Sharing Agreement and to the securities collateral to them. Mr Lew's instruction (in the telephone call) was reaffirmed by his 'reminder' letter of 30 December 1985 to Mr Cleary. 24 In February 1986 Cleary & Hoare were retained by EMM to act for the trustee in relation to a loan facility for PMA Development Company No 2 Pty Ltd for up to $14,000,000 to purchase and develop a property at Fairfield, Brisbane, as a shopping centre. Again they were retained to prepare the loan and security documents on behalf of the trustee. An Equity Sharing Agreement (dated 28 July 1986) was prepared, primarily by Mr Scanlan, by which Yossarian became a 50% shareholder in PMA2 and entitled to 50% of the profits of the project. Weltsbarrd held a controlling interest in Yossarian. Again, no reference was made to this Equity Sharing Agreement in the solicitors' certificate given on 1 August 1986 to BPTC.

[21]

Credit findings regarding Mr Cleary 25 His Honour made adverse credit findings regarding Mr Cleary and specifically rejected his evidence that he did not know at the time of the PMA1 transaction that Reuben Lew was in effective control of or involved in Weltsbarrd. His Honour rejected Mr Cleary's evidence that he did not know that Reuben Lew could obtain a substantial economic benefit from the transaction. These matters were central to Mr Cleary's defence. They are not challenged on the appeal. 26 In his evidence, Mr Cleary accepted that the PMA1 transaction continued from 14 November 1985 right through to the further advances made on 30 May 1986 and up to the additional advances made in late October 1986. PMA1 straddled PMA2. In effect, the transactions overlapped and were occurring more or less simultaneously. Mr Cleary said that throughout this whole period he did not know or suspect that Reuben Lew had any involvement or practical control of Weltsbarrd. He was not believed by the trial judge and this finding is not contested. 27 Of Mr Cleary his Honour said: My assessment of Mr Cleary as an unreliable witness takes into account that in my view he denied the obvious and was unwilling to make frank admissions in relation to documents which were not referred to in his statement or which he had not seen in preparation for his evidence. This includes: (a) His unwillingness to accept that he received the draft Deed of Assignment in relation to the syndication of a loan [see Exhibit DX 5, T 131-133 and 158-160] (b) His unwillingness to agree that the Sandy Point Certificate provided no sensible point of comparison with the Certificate dated 14 November 1985 because there was no Equity Sharing Agreement involved in the Sandy Point transaction [see Exhibit DX 6 and T 169-170] (c) His denial of knowledge of the involvement of Mr Lew or EMM, notwithstanding his annotation on the copy of the letter of 15 November 1985 recording with an arrow pointing to Weltsbarrd, the words 'interest held beneficially for EM'. (d) His denial of knowledge of the involvement of Mr Lew in Weltsbarrd, notwithstanding his own annotation on the letter of 25 February 1986 from 'Weltsbarrd care of R & S Lew' - see transcript 205-206.

[22]

(e) His supplementary statement which implausibly propounded the theory that 'you' where appearing in any letter addressed to Reuben Lew, did not in fact mean 'Reuben Lew'. (f) His evidence given late in his cross-examination (T 207-208) that the reference to 'side agreement' in his diary notes of 24 October 1985, should read 'site agreement'. 28 Einstein J's conclusion regarding the conduct of Mr Cleary with regard to the 'dishonesty' exclusion is as follows: … His actions in participating in the issue of Solicitors' Certificates which failed to disclose the Equity Sharing Agreements and ancillary encumbrances and in failing to disclose his knowledge or suspicion of the Lew's or at least Mr Reuben Lew's, financial involvement in the PMA 1 and PMA 2 transactions, were conscious and deliberate. The Certificates included deliberately false representations. His conduct was clearly, as the Trustees concede, in breach of the fiduciary obligations owed by Cleary and Hoare to the BPTC. But it went further. It involved a degree of moral turpitude or delinquency which clearly went well beyond and transcended that breach of duty. This was a failure to adhere to professional standards which involved an express obligation to attest to the truthfulness of a matter and to disclose particular facts and to act honestly in certifying as to the agreements and encumbrances prepared and executed as part of the transaction. In Mr Cleary's case, his own conduct and the conduct in which he participated, went well beyond mere recklessness or thoughtlessness. Mr Cleary was clearly placed in a situation in which he either well knew or alternatively had strong grounds for suspecting and actually suspected, that the Lews were, or at the least Mr Reuben Lew was, financially interested in Weltsbarrd and Yossarian as part of a side arrangement documented by the Equity Sharing Agreement. He clearly knew also that BPTC would rely on the Solicitor's Certificates and knew that the Certificates were false in that they omitted material information. Mr Cleary's conduct was 'dishonest' within the meaning of the clause 5(e)(v) dishonesty exclusion.

[23]

PMA2 29 To address the appellant's contention that his Honour erred in finding that Mr Cleary had been relevantly guilty of dishonest conduct under the exclusion clause with regard to PMA2, it is necessary to examine the facts relating to that transaction. In this regard, it needs to be noted that his Honour found that where Mr Scanlan wrote a letter in draft and submitted it to Mr Cleary, or collaborated with Mr Cleary in the drafting, his initials PJS or PS would appear on the letter alongside DJC, Mr Cleary's initials. For example, the letter reference would be DJC:PJS, followed by the typist's reference. 30 Further, Mr Cleary had personally sought out the Estate Mortgage Group work in 1985. It was one of his largest clients. 31 Mr Cleary accepted that he was 'the creator' of the provisions of the Equity Sharing Agreement for PMA1 (Weltsbarrd), which was used by Mr Scanlan as a precedent for the agreement he drafted for PMA2 (Yossarian). Mr Cleary accepted that the effect of the agreement was to produce a second mortgage over the land. He knew that the agreement was to introduce a new shareholder into the transaction (Weltsbarrd) and that no guarantees were obtained from those who stood behind the new shareholder. 32 In relation to PMA2, Mr Cleary was the supervising partner. As such he agreed that he supervised the drafting of the documentation carried out by Mr Scanlan. He said that he looked at some of the documents (prepared by Mr Scanlan) and some more carefully than others. He was unable to recall which documents he looked at. 33 In examining the PMA2 transaction, it is necessary to keep the context outlined above firmly in mind. 34 The first document concerning PMA2 appears to be a letter dated 11 February 1986 from Mr Cleary to Mr Reuben Lew at EMM. It refers to the contract for sale of the Fairfield Road property to PMA Development Company No 2 Pty Ltd. Mr Lew is informed that a deposit of $500,000 is to be paid forthwith. 35 On 24 February 1986 Mr Cleary again wrote to Mr Reuben Lew at EMM. The letter concerns the on-lending of $500,000 by PMA1 from the advances by BPTC for the Southport project. On the next day (25 February 1986) Mr Reuben Lew wrote to Mr Cleary on behalf of Weltsbarrd ('c/- RA & S Lew Unit 5, 4 Maple Grove, Toorak Vic 3142'). Mr Lew advised that the sum of $500,000 had been transmitted to Cleary & Hoare's trust account for the deposit to purchase the Fairfield site. The moneys were part of the advance by the trustees to PMA1. Mr Cleary wrote on the foot of the letter 'P[eter] please discuss'. That is a reference to Mr Scanlan.

[24]

36 On 26 February 1986 Cleary & Hoare wrote an urgent letter to Mr Lew about the matter, referring in particular to a further payment of $74,000 to be made under the contract for sale and purchase of the Fairfield property. This letter has only Mr Scanlan's initials on it, as do some others. By letter of the next day it appears that Mr Scanlan obtained the $74,000 from Mr Lew and forwarded it on to the vendor to comply with a condition in the contract. A letter from Mr Reuben Lew to Cleary & Hoare of the same date (again headed Weltsbarrd c/- RA and S Lew) records the transfer of the $74,000 from the PMA1 facility. 37 On 14 March 1986 Mr Cleary wrote to Mr Richard Lew regarding the proposed advance to PMA2 seeking urgent instructions regarding the preparation of the necessary security documents. Mr Richard Lew telephoned Mr Scanlan on 21 March 1986 indicating that instructions would be forthcoming. Mr Scanlan advised Mr Cleary accordingly. 38 On 24 March 1986 Cleary & Hoare, under letter bearing Mr Scanlan's initials, forwarded the Equity Sharing Agreement for PMA1 to Weltsbarrd c/- EMM. 39 By letter dated 8 April 1986 EMM wrote to Cleary & Hoare instructing them to act on behalf of BPTC to lend PMA Development Company No 2 Pty Ltd moneys to acquire the Fairfield land and erect a shopping centre. The instructions were 'to take all steps necessary to fully protect the position of the Trustee and Manager keeping both parties fully informed on all matters relating to this transaction'. The next day (9 April 1986) Mr Cleary wrote to Mr Remo at PMA Development Co No 2 Pty Ltd advising of his instructions to prepare the security documents for an advance of $14,000,000 for PMA2. 40 On or about 29 April 1986 Mr Cleary sent a file note to Mr Scanlan regarding PMA2 attaching the 'draft Deed of Loan' and requesting him to peruse it 'and the instructions' and to let him have comments as soon as possible. The memorandum also asked Mr Scanlan to prepare other documents for the loan facility. 41 In the meantime (and on 30 April 1986) Weltsbarrd forwarded to Cleary & Hoare the executed Equity Sharing Agreement regarding PMA1. It was signed and executed by Reuben and Sandra Lew. 42 Also on 30 April 1986, Cleary & Hoare (under initials DJC and signed by Mr Cleary) wrote to Mr Richard Lew at EMM enclosing a draft Deed of Loan for PMA2 and seeking certain instructions with regard thereto. In particular, he asked 'Is there to be any Equity Sharing Agreement'? Thus, up to and including 30 April 1986, Mr Cleary was firmly in control of the transaction at Cleary & Hoare. 43 Late in May 1986 Mr Richard Lew gave instructions to Cleary & Hoare to act for BPTC on the increase of the PMA1 facility to $24.6 million. This led to the solicitors providing a third certificate, dated 30 May 1986, which also made no reference to the Equity Sharing Agreement involving Weltsbarrd. Mr Scanlan accepted in evidence that by this time (end of May) he more than likely knew of the involvement of the Lews in Weltsbarrd. 44 On 18 June 1986 Cleary & Hoare (under reference DJC:PS) wrote to EMM confirming the settlement date for PMA2 had been set for 28 July 1986. A revised Deed of Loan and other documents were to be forwarded separately. 45 On 23 June 1986 Cleary & Hoare wrote to Mr Richard Lew enclosing, inter alia, an amended Deed of Loan for PMA2. The letter was referenced DJC:PJS. It concluded that advices were awaited on whether an Equity Sharing Agreement was required. The question was repeated for the third time in a letter dated 26 June 1986. 46 The Deed of Loan and other collateral documents for PMA2 were apparently executed on 26 June 1986, whereby BPTC agreed to advance $14 million to PMA Development Company (No 2) Pty Ltd. The loan followed hot on the heels of Cleary & Hoare's third certificate regarding the increase in the PMA1 facility to $24.6 million (30 May 1986) mentioned above. 47 On 24 July 1986 Cleary & Hoare, by Mr Scanlan, wrote to Mr Richard Lew at EMM confirming that settlement would occur on 28 July. The letter again noted (for the fourth time) that Cleary & Hoare were 'yet to receive your instructions in respect of the preparation of any Equity Sharing Agreement like that which is in place in respect of the Southport development'. The emphasis I have added is to a reference to the Equity Sharing Agreement for PMA1.

[25]

48 Cleary & Hoare prepared an 'Epitome of Loan and Conditional Solicitors' Certificate' dated 25 July 1986 regarding the advance. The last condition noted was '5. That Equity Sharing Agreement is not in place'. This certificate was signed by Mr Hoare. According to Mr Scanlan, instructions were received from Mr Lew at 4.30 pm on 25 July 1986 to prepare an Equity Sharing Agreement for PMA2. Because the instructions were received late on Friday, Mr Scanlan worked over the weekend to produce the agreement. He used the initial Equity Sharing Agreement in PMA1, drafted by Mr Cleary, as a precedent. He said that he 'copied and adopted [sic] the wording of the original'. 49 By letter dated 25 July 1986 (but probably not forwarded until the following Monday) Cleary & Hoare (reference DJC:PJS) sent, inter alia, the Equity Sharing Agreement to the directors of PMA No 2, together with documents collateral to that agreement. 50 On 28 July 1986 (at 9.15 am) Mr Scanlan faxed the Equity Sharing Agreement to Mr Richard Lew at EMM 'for your urgent perusal and comment. Please ring Don Cleary upon receipt'. He also faxed a 'final solicitors' certificate' for PMA2 to be onforwarded to BPTC. Unlike the certificate dated 25 July 1986 this certificate omitted any reference to the Equity Sharing Agreement with Yossarian. The certificate dated 28 July 1986 was signed by Mr Isles, a partner of Cleary & Hoare. It also appears that Mrs Judith Remar transferred her share in PMA Development Company No 2 Pty Ltd to Yossarian Nominees Pty Ltd on 28 July 1986. On 1 August 1986 Mr Scanlan faxed a copy of the solicitors' certificate to Ms Varga at BPTC and also sent it by courier to the trustee on the same date. 51 The address of Yossarian in the Equity Sharing Agreement was care of 84 William Street Melbourne. This was the address of EMM. Recital F in the agreement stated that Yossarian owned 50% of the shares of PMA2. It is identical in terms (save for names) to recital F in the first Equity Sharing Agreement for PMA1. It came as no surprise to Mr Scanlan that when the share transfer was returned by EMM, Mr Reuben Lew had signed for Yossarian. 52 On 6 August 1986 Mr Scanlan wrote to Coopers & Lybrand advising with regard to PMA2. The letter indicated that Cleary & Hoare acted for 'both Yossarian Nominees Pty Ltd and PMA Development Company No 2 Pty Ltd in respect of the purchase of property at Fairfield Road Fairfield'. The letter indicated that Yossarian and PMA2 had entered into an Equity Sharing Agreement in respect of the development of a shopping centre at the property to be acquired and enclosed a photocopy of the agreement. 53 On 27 August 1986 Mr Scanlan wrote to the directors of Yossarian 'c/- Mr Richard Lew, Estate Mortgage Managers Limited', enclosing the Equity Sharing Agreement for PMA2 for execution by Yossarian. On 7 October 1986 Mr Scanlan sent to Mr Richard Lew a copy of the Equity Sharing Agreement for 'your safe keeping'. On 16 October 1986 Cleary & Hoare wrote to Coopers & Lybrand advising of the transfer of shares in PMA2. It referred to their firm acting on behalf of Yossarian in respect of the Equity Sharing Agreement between it and PMA No 2. 54 This letter was sent just before a further Equity Sharing Agreement was entered into between PMA1 and Weltsbarrd. This included the forwarding of a further solicitors' certificate on 22 October 1986 for stage 2 of PMA1. This certificate was signed by Mr Cleary, and as before, made no reference to the Equity Sharing Agreement concerning Weltsbarrd. 55 On 9 December 1986 Cleary & Hoare wrote to the Directors of Yossarian, again 'c/- Mr Richard Lew, EMM', in relation to the PMA2 Equity Sharing Agreement indicating that all requisitions had been answered with regard to the transfer of shares in PMA2 to Yossarian.

[31]

(v) The background to the involvement of Mr Reuben Lew and the 'sanitising' of the solicitors' certificate in late November 1985 cannot be ignored in considering Mr Cleary's part in PMA2. When the original certificate made a reference to a 'Equity Sharing Agreement' Mr Richard Lew told Mr Scanlan that there was to be no reference to the agreement in correspondence for the trustee and all letters about the agreement were to be kept separate. Mr Scanlan discussed the instruction with Mr Cleary. This lead to the revision of the certificate sent to the trustee, by the omission of any reference to the Equity Sharing Agreement with Weltsbarrd and to the securities collateral to it. Mr Lew's instruction was reaffirmed by his letter to Mr Cleary of 30 December 1985. 57 On his Honour's findings against Mr Cleary, which are unchallenged, he patently knew or had very good reason to suspect, that Mr Reuben Lew controlled both Weltsbarrd and Yossarian and stood to gain substantial economic benefit from the transactions. The findings were equally open with regard to each transaction, PMA2 and PMA1. Mr Cleary's knowledge and participation in both transactions was obviously conscious, deliberate and ongoing. At all relevant points of time Mr Cleary failed to disclose to the trustee the existence of the Equity Sharing Agreements and the involvement of the Lews in the transactions. His breach of fiduciary duty to the trustee did not occur only at the time of the giving of the misleading and incomplete certificates. His Honour was right to describe Mr Cleary's conduct as a continuing failure to disclose his knowledge or suspicion throughout the whole of the transactions. As his Honour said, Mr Cleary was guilty of a continuing omission to disclose the true situation. 58 In my opinion, his Honour did not err in either of the ways put in grounds 9 or 10 of the Amended Notice of Appeal. 59 The two transactions, and the role of Mr Cleary in them, cannot be conveniently isolated and compartmentalised. It matters not that Mr Cleary did not sign the final certificate provided to the trustee on 1 August 1986 regarding PMA2. The transactions were in fact not so distinct as to require a completely separate examination by his Honour, putting PMA1 to one side. His Honour's conclusion regarding Mr Cleary's conduct regarding PMA2 was not infected by his findings regarding PMA1. 60 In any event, I am unconvinced that his Honour rolled-up his consideration of the transaction into one and failed to critically examine the evidence regarding PMA2. When that is done, it is obvious that his Honour's findings were open on the evidence. Mr Cleary was patently involved in PMA2 all the way to settlement. His finger prints are well and truly on the documentation and process. 61 The result is that it is unnecessary to consider the other grounds of appeal. The appeal should be dismissed with costs. 62 HEYDON JA: I agree with Stein JA. oOo

Guardian Trust Australia Limited v Swinbank & Ors

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