Guardian Trust Australia Limited v Swinbank & Ors

Guardian Trust Australia Limited (the appellant) appealed a decision concerning a professional indemnity insurance policy. The dispute involved allegations of a continuing omission to disclose, breach of fiduciary obligations, and the application of a dishonesty exclusion clause. The court was required to determine whether the appellant had breached its duty to disclose material facts relevant to the insurance policy and whether the actions of Mr. Cleary, a partner at Cleary & Hoare, constituted dishonesty or a breach of fiduciary duty that would invalidate the insurance coverage.

The court considered whether Mr. Cleary was sufficiently involved in the transactions, particularly the PMA2 Equity Sharing Agreement, to be held responsible for any omissions or breaches. It examined the extent of his supervision of junior solicitors, his direct involvement in drafting key documents, and the relationship between the PMA1 and PMA2 facilities. The court also had to assess the significance of instructions received from Mr. Richard Lew regarding the non-disclosure of certain agreements and securities, and whether these instructions, when acted upon by Mr. Cleary, amounted to dishonesty or a breach of fiduciary duty.

The court found that Mr. Cleary was intimately involved in the PMA2 transaction from its inception and continued to exercise close supervision. His initials on correspondence and his direct drafting of crucial documents indicated a significant role. Furthermore, the court noted that Mr. Cleary was aware of instructions to omit references to the Equity Sharing Agreement with Weltsbarrd and related securities from correspondence with the trustee, a matter discussed with Mr. Scanlan and reaffirmed by a letter from Mr. Lew. Given the context of the similar and linked PMA1 and PMA2 facilities, and the deliberate omission of information, the court concluded that Mr. Cleary's actions were not merely an oversight but a deliberate withholding of material information. The appeal was dismissed with costs.