Robinson v Westpac Banking Corporation

This matter concerned an application for special leave to appeal to the High Court of Australia. The applicant, Mr Robinson, had sought to be relieved of his liability under a guarantee he provided to the respondent, Westpac Banking Corporation, in 1981. Mr Robinson had succeeded at trial, where the judge found the Bank had breached its duty to disclose allegations of fraud made against Mr Robinson's business partner's husband, which were disclosed to the Bank manager shortly before Mr Robinson executed the guarantee. However, the Court of Appeal, by majority, reversed this decision, upholding the Bank's claim.

The central legal issue before the High Court was the extent of a bank's duty of disclosure to an intended surety, specifically whether the Bank was obliged to disclose allegations of fraud made against the vendor of shares, which were known to the Bank manager prior to the surety executing a guarantee for the finance provided to the purchaser. The Court was required to consider whether the unusual nature of these fraud allegations imposed a duty on the Bank to disclose them to Mr Robinson before he signed the guarantee.

The High Court's reasoning, as presented in the transcript, focused on the principles governing a bank's duty of disclosure to a surety. The trial judge had found that the Bank manager deliberately withheld information about the fraud allegations, leading to a breach of duty. However, the majority in the Court of Appeal, in the judgment of Clarke JA, held that while the fraud allegations were unusual, their nature did not, in itself, create a duty to disclose, unless the Bank's conduct suggested the allegations had not occurred. The application for special leave was being heard to consider these competing interpretations of the bank's duty.