YARROW v WESTPAC NEW ZEALAND LIMITED [2019] NZCA 610

YARROW v WESTPAC NEW ZEALAND LIMITED [2019] NZCA 610 [3 December 2019]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA594/2017[2019] NZCA 610BETWEEN PAUL STEVEN YARROWAppellantAND WESTPAC NEW ZEALAND LIMITEDRespondentHearing: 17 September 2019Court: Brown, Clifford and Collins JJCounsel: M A Corlett QC and D G Collecutt for AppellantR B Stewart QC and S L Hawksworth for RespondentJudgment: 3 December 2019 at 3.00 pmJUDGMENT OF THE COURTA The appellant's application to adduce further evidence is declined.B The appeal is dismissed.C The respondent is entitled to costs for a standard appeal on a band A basiswith usual disbursements. We certify for two counsel.____________________________________________________________________REASONS OF THE COURT(Given by Collins J)Introduction[1] In a judgment delivered on 19 September 2017, Associate Judge Dooguegranted an application by Westpac New Zealand Ltd (Westpac NZ) to adjudgeMr Yarrow bankrupt.1 He appeals that decision.Summary of grounds of appeal[2] The gravamen of Mr Yarrow's appeal is that he should not have been adjudgedbankrupt because he has a clear and persuasive set-off against Westpac NZ that rendersit unjust for him to be adjudged bankrupt without affording him the opportunity tohave his set-off fully considered.[3] Initially, Mr Yarrow's appeal concerned two interconnected elements to hisset-off claims:(a) He contended Westpac NZ owed him a fiduciary duty to disclose to himwhat he alleges were material facts that Westpac NZ knew prior to himguaranteeing a loan from Westpac NZ to Yarrows (The Bakers) Ltd(Yarrows Bakers). Those facts relate to a lease referred to asthe "Minto lease", which we explain at [19] to [22]. Mr Yarrow saysthat had he been aware of the alleged material facts, he would not haveagreed to sign the guarantee.(b) In his written submissions in support of the appeal, Mr Corlett QC,senior counsel for Mr Yarrow, contended that Westpac NZ hadan ongoing fiduciary duty to disclose what Mr Yarrow says were furthermaterial facts that he claims to have been unaware of at a time whennegotiations were being held with a third party to sell two othercompanies associated with Yarrows Bakers.1 Westpac New Zealand Ltd v Yarrow [2017] NZHC 2261.[4] In the hearing before us, Mr Corlett explained that the focus of the appeal wasthat Westpac NZ owed Mr Yarrow a fiduciary duty to disclose to him the details ofthe Minto lease. Mr Corlett did not pursue in the oral hearing the set-off argumentswe have summarised at [3(b)].Application to adduce further evidence[5] On 7 May 2018, Mr Yarrow filed an application for leave to adduce furtherevidence, namely four deeds executed on 13 March 2011, which he contendsundermines a critical part of Westpac NZ's claim against him and supports hisargument that Westpac NZ owed him the fiduciary duty we have summarised at [3(a)].We explain at [28] to [32] that Mr Yarrow has misunderstood the four deeds he nowwishes to adduce.[6] It is convenient at this juncture to provide an overview of the basis upon whichMr Yarrow was adjudged bankrupt and then explain the basis upon which hechallenges the High Court judgment.The basis upon which Mr Yarrow was adjudged bankrupt[7] At all relevant times, Mr Yarrow was a director of Yarrows Bakers, which waspart of an Australasian group of companies that manufactured and distributed foodproducts. The group is referred to as the "Yarrow Group". Approximately 90 per centof the shares in Yarrows Bakers can be linked to Mr Yarrow via a family trust hesettled.[8] In his first affidavit in opposition to the application to have him adjudicatedbankrupt, Mr Yarrow explained that the Yarrow Group "were a reasonably complexgroup of companies operating in the baking industry in Australia and New Zealand".The business had started in Taranaki in 1923. Mr Yarrow is a member of the thirdgeneration of the Yarrow family to be involved in the Yarrow food products business.Mr Yarrow was described as being "an experienced businessman" in the High Courtjudgment.2 He does not challenge that description.2 At [21].[9] On 25 September 2003, Westpac NZ provided financial facilities toYarrows Bakers. Those facilities included a multi option credit facility (credit facility)The credit facility was extended to other entities in the Yarrow Group. The total sumlent by Westpac NZ to the Yarrow Group ultimately exceeded NZD 50 million.[10] The credit facility was amended on 28 March 2008, at which time Mr Yarrowsigned the credit facility on behalf of Yarrows Bakers and four other companies inthe Yarrow Group, as well as one of his family trusts.[11] During the course of 2008 the Yarrow Group experienced difficulties inmanaging its finances. This led to Deloitte being instructed to evaluate the financialposition of the Yarrow Group. This in turn led to the Yarrow Group being placed underthe management of Westpac NZ's credit restructuring group with effect from31 December 2008.[12] On 28 January 2009, Mr Yarrow provided a guarantee to Westpac NZ inrelation to the financial obligations of Yarrows Bakers. The guarantee was limited to$5 million plus interest and costs.[13] On 26 May 2011, Yarrows Bakers advised Westpac NZ that it was unlikely tobe able to meet its obligations under the credit facility and invited Westpac NZ toappoint receivers. The following day Westpac NZ issued demands for Yarrows Bakersto repay NZD 38,846,602.01 and AUD 8,135,399.44 owing under the credit facility.At about this time Westpac NZ also made demand of Mr Yarrow to pay it $5 millionpursuant to the guarantee. When Yarrows Bakers defaulted, Westpac NZ appointedreceivers of Yarrows Bakers and two other companies in the Yarrow Group.[14] The receivers sold a number of assets of the companies in receivership andreturned funds to Westpac NZ. There nevertheless remained a shortfall in excess of$15 million that was owed to Westpac NZ under the credit facility.[15] On 18 August 2016, Westpac NZ made a further demand on Mr Yarrow underthe guarantee. The amount claimed from Mr Yarrow was $14,850,285.71 comprisingthe guarantee sum of $5 million plus $9,850,285.71 in interest and costs. Mr Yarrowdid not pay any of the sum demanded by Westpac NZ.[16] Judgment was obtained against Mr Yarrow by the Bank of New Zealand, oneof his creditors. A bankruptcy notice was issued against Mr Yarrow by the Bank ofNew Zealand, after which his debt to that bank was settled. Westpac NZ then becamethe substituted creditor in the bankruptcy proceedings on 25 August 2016.[17] Mr Yarrow defended the application. He initially claimed that the guaranteewas a forgery. That suggestion was refuted by Ms Roberts, a lawyer, who sworean affidavit saying she had witnessed Mr Yarrow's signature on the guarantee.Mr Yarrow then said the Yarrow Group had paid the sum covered by the guarantee.Mr Hale, a senior employee of Westpac NZ, was able to refute this assertion byMr Yarrow. When Mr Yarrow's first lines of defence became untenable, he allegedset-offs based upon Westpac NZ owing him fiduciary duties. The Associate Judgeobserved that it was difficult to isolate with precision the matters that Mr Yarrow raisedas defences in the High Court.3 Conscious of this criticism, Mr Corlett, who was notcounsel in the High Court, focused on the ground of appeal that we have summarisedat [3(a)].[18] The Associate Judge concluded that Westpac NZ had establishedthe requirements set out in s 13 of the Insolvency Act 2006 to adjudge Mr Yarrowbankrupt. The Associate Judge also concluded that the set-off arguments advanced byMr Yarrow were devoid of merit and that there was no basis for refusing adjudication.4The High Court accordingly decided to exercise its discretion under s 36 ofthe Insolvency Act to grant Westpac NZ's application to adjudge Mr Yarrow bankrupt.Mr Yarrow's set-off contentionsThe Minto leases[19] On 7 August 2007, a company called Yarrows (The Bakers) Holdings Pty Ltd(Yarrows Bakers Holdings) purchased through an investment trust called3 At [14].4 Insolvency Act 2006, s 37.the Minto Investment Trust (Minto Trust), a property in Minto, New South Wales(the Minto property). The Minto property was leased to another company calledYarrows The Bakers Aust Pty Ltd (Yarrows Bakers Australia).[20] Yarrows Bakers Australia was part of the Yarrow Group. All of the shares inthat company were held by another company called P Yarrow Holdings Pty Ltd astrustee of the P Yarrow Bakers Trust, a discretionary trust set up for Mr Yarrow andhis family. Neither Yarrows Bakers Holdings nor the Minto Trust formed part ofthe entities over which Westpac NZ held security.[21] Mr Yarrow argues that there were a number of unusual features to the Mintolease. Mr Corlett distilled the matters relied upon by his client to the followingconcerns:(a) "[T]here was a risk that profits and benefits from the Yarrow Groupcould be diverted to [Yarrows Bakers Holdings] via the lease ofthe Minto property".(b) Westpac NZ had offered to provide up to AUD 8 million for capitalexpenditure for the Minto property even though the lease providedthe landlord with the ability to terminate the lease on six months'notice.(c) There was a likelihood that [Yarrows Bakers Holdings] would obtaina substantial benefit from the AUD 8 million capital expenditureproposed to be spent by the Yarrow Group on the Minto property.(d) As Yarrows Bakers Holdings was not part of the charging group overwhich Westpac NZ held security, Yarrows Bakers Holdings was notbearing the burden of liability for repayment of the AUD 8 millionbeing borrowed by the Yarrow Group for the Minto property.[22] The Minto lease was replaced with a second lease on 30 June 2009. The rentwas retrospectively increased to $3.5 million and then increased from 1 August 2009to $4 million. Provision was made in the second Minto lease for a security deposit of$4.5 million. Mr Corlett submitted that this arrangement compounded the difficultiesof the first Minto lease by generating a yield for the landlord of 18 per cent per annum.He contended that by any analysis this was a very generous return for the lessor,particularly as the lessor had the ability to terminate the lease on six months' notice.[23] Mr Corlett's oral submissions focused on the first Minto lease. It wassubmitted on behalf of Mr Yarrow that it can be inferred Westpac NZ would have beenfully aware of the unusual features of the first Minto lease and that if it was aware ofthese matters then Westpac NZ had a fiduciary duty to warn Mr Yarrow of thosematters before he signed the guarantee.[24] In its evidence in the High Court, Westpac NZ firmly rejected Mr Yarrow'sargument that Westpac NZ was aware of the Minto lease at the time Mr Yarrow signedthe guarantee. The evidence set out in the affidavits of Mr Hale and Mr Chapman,another senior officer of Westpac NZ, can be summarised in the following way:(a) The Minto property was purchased by Yarrows Bakers Holdings withfinance from Westpac Banking Corporation in Australia.Westpac Banking Corporation is a separate legal entity fromWestpac NZ. While there is a level of co-operation betweenWestpac Banking Corporation and Westpac NZ, the Westpac NZofficers who arranged for Mr Yarrow to provide his guarantee were notinvolved in funding the purchase of the Minto property.(b) Yarrows Bakers Australia, the lessee, was owned by one of MrYarrow's family trusts and formed part of the Yarrow Group.(c) No copy of the first Minto lease existed in the records held byWestpac NZ. Mr Hale said he probably became aware of the first Mintolease in April 2011. Mr Hale was certain that "Westpac NZ hadno involvement in the granting of that lease or the terms of that lease".[25] Mr Stewart QC, senior counsel for Westpac NZ, submitted that as it wasa company associated with Mr Yarrow's family trust that signed the Minto leases, itwas highly likely that he had knowledge of the matters, which he now complainsWestpac NZ ought to have disclosed to him. In any event, he had every means to findout about those matters because of his close association with Yarrows BakersAustralia.[26] Mr Stewart submitted it is significant that Mr Yarrow's guarantee did not relateto the obligations of Yarrows Bakers Australia under the Minto leases. Nor did it relateto the Minto Trust's obligation under the mortgage to Westpac Banking Corporation.[27] Mr Stewart noted that the guarantee was signed before the second Minto leasewas agreed to and that the second Minto lease could therefore have had no influenceover Mr Yarrow's decision to sign the guarantee.Application to adduce further evidence[28] On 7 May 2018, Mr Yarrow applied for leave to adduce the four deeds we havebriefly referred to at [5]. Those deeds varied charges held by Westpac BankingCorporation in Australia in respect of securities originally granted in 2000 and 2008.Mr Yarrow has seized upon the fact Mr Chapman signed the variations to the securitycharges as Attorney for the Westpac Banking Corporation and Mr Hale witnessedMr Chapman's signature. Mr Yarrow says the roles of Mr Chapman and Mr Hale inrelation to signing and witnessing the variations of deed underscores his claim thatWestpac NZ would have been aware of the Minto lease at the time it was agreed to,and therefore at the time he signed the guarantee.[29] Mr Chapman has addressed in an affidavit what happened when the four deedsof variation of security were executed on 13 March 2011. He explains that WestpacBanking Corporation in Australia was holding security over Yarrows BakersAustralia's assets in Australia on trust and for the benefit of Westpac NZ pursuant tos 10 of the Westpac New Zealand Act 2006.[30] The four deeds were filed with the Australia Securities and InvestmentsCommission (ASIC) on 18 March 2011 and have been available to the public sincethat date. It was only in 2018 that Mr Yarrow searched the ASIC register and locatedthe deeds he now says undermines the High Court's judgment and support his set-offclaim.[31] There has undoubtedly been a degree of co-operation betweenWestpac Banking Corporation in Australia and Westpac NZ. Mr Chapman andMr Hale's roles in signing and witnessing the variations of deed on 13 March 2011did not, however, have any impact on the evidence presented by Westpac NZ inthe High Court which was accepted by the Associate Judge. In particular, the fourvariations of deed do not call into question the findings of the High Court thatWestpac NZ was unaware of the terms of the first Minto lease at the time Mr Yarrowsigned the guarantee. The four variations of deed provide no basis for Mr Yarrow'sclaim that Westpac NZ was likely to have been aware of what he alleges were unusualfeatures of the Minto leases.[32] The application to adduce further evidence is declined because the evidence inquestion could easily have been obtained before the High Court hearing.More significantly, the four variations of deed do not undermine the High Court'sfactual findings and provide no cogent basis for disturbing the decision to adjudgeMr Yarrow bankrupt.Did Westpac NZ owe Mr Yarrow the fiduciary duties he alleges?[33] Before analysing the factual basis of the claims that Westpac NZ owedMr Yarrow the fiduciary duties he alleges, it is helpful to first examine the legal basisof his claims.Do banks owe fiduciary duties to guarantors?[34] The starting point is that where parties negotiate standard commercialtransactions their legal relationship will usually be governed by the law of contract.Absent the special circumstances that we will briefly explain, "there is no justificationfor fiduciary law to intervene", where the parties have agreed to the terms ofa commercial contract.5[35] In Chirnside v Fay, the Supreme Court confirmed two general circumstancesin which the Courts may find that a relationship gives rise to fiduciary obligations:6(a) First, where there is an established or settled category of presumptivefiduciary relationship.(b) Second, where specific facts and circumstances give rise toa requirement that a fiduciary obligation be recognised.[36] Banks will ordinarily act in their own interest in order to protect their positionas a lender.7 As a consequence, the relationship between a bank and a customer orguarantor does not give rise to presumptive fiduciary obligations on the part ofthe bank.[37] In rare circumstances a bank may be treated as having fiduciary obligations toa prospective guarantor where:8(a) the bank is privy to information that the intended guarantor is unawareof or could not reasonably be expected to discover;(b) the bank assumes a fiduciary role in relation to the intended guarantor;(c) the bank gives advice to the intended guarantor; and(d) the intended guarantor acts upon that advice to his or her detriment.[38] A fiduciary duty will usually only be recognised when the terms of the contract,whether express or implied do not address the matters in dispute and where5 G E Dal Pont Equity and Trusts in Australia (6th ed, Thomson Reuters, Pyrmont, 2015) at [4.265].6 Chirnside v Fay [2006] NZSC 68, [2007] 1 NZLR 433 at [73]–[75].7 Taylor v Bank of New Zealand [2011] 2 NZLR 628 (HC) at [127]; and Commonwealth Bank ofAustralia v Smith (1991) 42 FCR 390 (FCAFC) at 391.8 Taylor v Bank of New Zealand, above n 7, at [138]; Andrew Butler (ed) Equity and Trusts inNew Zealand (2nd ed, Thomson Reuters, Wellington, 2009) at [17.4.1].the information is so material that it would be unconscionable for the bank not to havedisclosed it to the prospective guarantor.[39] This Court has previously accepted that:9[A] defendant may set-off a cross-claim which so affects the plaintiff's claimthat it would be unjust to allow the plaintiff to have judgment without bringingthe cross-claim to account. The link must be such that the two are in effectinterdependent: judgment on one cannot fairly be given without regard tothe other, the defendant's claim calls into question or impeaches the plaintiff'sdemand. It is neither necessary, nor decisive, that claim and cross-claim ariseout of the same contract.[40] We note, however, there is an issue as to whether an equitable set-off is stillavailable in bankruptcy proceedings in New Zealand.10 This point was not raised inthe High Court or before us. We simply record that there may be an issue aboutwhether Mr Yarrow can pursue an equitable set-off, but deal with his appeal byaddressing the substantive issues he has raised.[41] An assessment as to whether or not equity requires a bank to have disclosedmaterial information to a prospective guarantor requires an appraisal of the intendedguarantor's ability to make his or her own inquiries:11 the bank's duty of disclosure must be assessed against what the bank mightreasonably have expected the intending guarantors to know already or to beable to ascertain without difficulty should they have been minded to do so.The terms of the guarantee[42] In assessing the merits of Mr Yarrow's set-off claims it is important to considerthe terms of the guarantee in the context of the very limited scope for a claim whichalleges that a bank owes fiduciary duties to a guarantor.[43] The guarantee is written in very clear English. It was signed by Mr Yarrowafter he received legal advice and against the background of him being an experiencedbusinessman, who was familiar with the affairs of the Yarrow Group.9 Grant v NZMC Ltd [1989] 1 NZLR 8 (CA) at 12–13.10 Paul Heath and Mike Whale Heath and Whale: Insolvency Law in New Zealand (3rd ed,LexisNexis, Wellington, 2018) at [7.27].11 Shivas v Bank of New Zealand [1990] 2 NZLR 327 (HC) at 364.Clause 7[44] Clause 7 of the guarantee sets out in clear and unequivocal terms Mr Yarrow'sprincipal obligations under the guarantee. The relevant paragraphs provide:This document imposes upon you a principal obligation. In addition to yourguarantee obligations you agree to perform the obligations of the Customer asif you were the Customer. This means that the Secured Parties can requireyou to pay the Guaranteed Money whether or not they have made demand onthe Customer.Your liability under this document is independent and unconditional. It doesnot depend on any other right or obligation and is not subject to any condition.Your liability is not affected by anything which might otherwise release youfrom all or part of your obligations or limit them (if this clause was not inthis document).Clause 9[45] Clause 9 of the guarantee makes it clear that, unless the law otherwise requires,Mr Yarrow could not make any deduction from moneys he was required to pay underthe guarantee. The first paragraph of cl 9 provides:You promise not to make any payment subject to any condition, restriction orclaim you may have against the Secured Parties.[46] This Court held in Grant v NZMC Ltd, that parties may agree to exclude whatmight otherwise be a right of equitable set-off in an agreement. Clause 9 ofthe guarantee entitles Westpac NZ to payment from Mr Yarrow without himattempting to reduce his liability by way of set-off.12Clause 12[47] Clause 12 of the guarantee signed by Mr Yarrow sets out what informationWestpac NZ was required to provide to Mr Yarrow. The clause states:The Secured Parties must provide you with a copy of this document and all ofthe information, statements, and other matters disclosed to the Customer underthe Credit Contracts and Consumer Finance Act 2003.12 Grant v NZMC Ltd, above n 9, at 13.Apart from the above, the Secured Parties do not have to do anything inrelation to, or tell you anything concerning the Customer's:• affairs;• finances; or• transactions with the Secured Parties.It is your responsibility to find these things out from the Customer.The above applies both before and after you sign this document.[48] The terms of cl 12 of the guarantee are very clear. The effect is:(a) Even if Westpac NZ knew about the first Minto lease at the timethe guarantee was executed, it was not obliged to inform Mr Yarrowabout that lease.(b) Even if Westpac NZ knew about the second Minto lease at the time itwas executed, it was not obliged to tell Mr Yarrow about that lease.[49] In summary, these terms of the guarantee make clear that Mr Yarrow's liabilitywould not be affected by any condition or obligation, nor would Westpac NZ have tosupply any information beyond what was required by the relevant legislation.The evidence[50] Notwithstanding the clear effect of cls 7, 9 and 12 of the guarantee, we willnow deal with each of the factual arguments raised on behalf of Mr Yarrow, which hesays supports his set-off claims.[51] When analysing the factual basis of Mr Yarrow's set-off claims we bear inmind that once Westpac NZ satisfied the Associate Judge that it had establishedthe requirements set out in s 13 of the Insolvency Act, it was then necessary forMr Yarrow to persuade the High Court to refuse to adjudge him bankrupt. This couldhave been done by him showing that he was able to pay his debts, or by demonstratingthat it was neither just or equitable to make an order adjudicating him bankrupt or bypersuading the Court for any other reason that an order for adjudication should not bemade.13[52] In advancing his defence in the bankruptcy proceedings, Mr Yarrow needed toshow that there were clear and persuasive grounds for his set-off claims.14[53] Mr Corlett submitted that there were similarities between Mr Yarrow's caseand Westpac Banking Corp v M M Kembla New Zealand Ltd.15 In that case, this Courtexplained that summary judgment would be inappropriate where there are materialfacts that need to be ascertained and where ultimate determination of the litigationturns upon a judgement that can only properly be made after a full hearing ofthe evidence.16[54] The circumstances of the Kembla case were vastly different from the factsbefore us. In Kembla, one of the company's former employees had misusedthe company's online banking system to misappropriate substantial sums of money.The company claimed that various banks had knowingly received the misappropriatedmoney or knowingly assisted in its misappropriation. Mr Corlett suggested that someof the directors of the Yarrow Group had unlawfully ensured that significant paymentsof rent and other moneys were paid to Yarrow Bakers Holdings from the way in whichthe Minto property arrangements were structured. Even if there were merit tothis aspect of Mr Yarrow's argument, it is very difficult to see how any allegedirregularities in the Minto property arrangements can be foisted upon Westpac NZ.Yarrows Bakers Holdings[55] It was submitted on behalf of Mr Yarrow that the owner of the Minto propertyhad a name that suggested it was part of the Yarrow Group. In his second affidavit inthe High Court, Mr Yarrow said he "believed the Yarrows group was purchasingthe Minto property". It was suggested that Mr Yarrow thought Yarrows BakersHoldings would have been subject to the security held by Westpac NZ. We note,13 Insolvency Act, s 37.14 Sharma v ANZ Banking Group (New Zealand) Ltd (1992) 6 PRNZ 386 (CA); and Robertson vASB Bank Ltd [2014] NZCA 597 at [27].15 Westpac Banking Corp v M M Kembla New Zealand Ltd [2001] 2 NZLR 298 (CA).16 At [62].however, that when he was cross-examined in the High Court Mr Yarrow said that heprobably became aware in late 2007 that the Minto property had not been purchasedby a New Zealand entity.[56] An outside observer may have had reason to think that Yarrows BakersHoldings was part of the Yarrow Group. Mr Yarrow, however, was not an outsideobserver. His family trust owned Yarrows Bakers Australia, the company that leasedthe Minto property and he was very familiar with the business affairs of the YarrowGroup. We do not accept there is any basis upon which Mr Yarrow could have believedthat somehow Yarrows Bakers Holdings was part of the Yarrow Group and thatWestpac NZ had security over that company. Mr Yarrow's acknowledgement incross-examination that he was likely aware by late 2007 that the Minto property hadnot been purchased by a New Zealand entity substantially undermines his assertionthat he was not aware of the ownership arrangements relating to the Minto property atthe time he signed the guarantee.Diversion of profits[57] It was submitted there was a risk that profits from the Yarrow Group could bedirected to Yarrows Bakers Holdings by the Minto property assets. This submissionwas developed through the contention that the rent charged under the first Minto leasewas unusually high and that this concern was underscored by the even higher rent thatwas to be paid under the second Minto lease.[58] If there were any merit to this submission we would have expected evidenceas to what market rents were payable for comparable properties at the relevant time.As we have noted, Mr Yarrow's family trust owned the company that leased the Mintoproperty. It is very difficult to understand why he now contends that Yarrows BakersAustralia paid excessive rent for the Minto property without providing anyindependent evidence to support his complaint.Capital expenditure for the Minto property[59] It was claimed that Yarrows Bakers Holdings would have obtained asubstantial benefit from the AUD 8 million capital expenditure advanced for plant andequipment for Yarrows Bakers Australia to use in relation to the Minto property. Itwas also argued that this concern was compounded by the terms of the lease that gavethe lessor the ability to terminate the lease on six months' notice.[60] There is, however, a fundamental flaw with this argument. The terms ofthe Minto leases enabled Yarrows Bakers Australia to remove its plant and equipmentfrom the Minto property in the event of the lease being terminated.[61] Thus, there is no basis to the argument that Yarrows Bakers Holdings wouldunreasonably obtain a substantial benefit from any expenditure on plant andequipment in the Minto property by Yarrows Bakers Australia.Security deposit for the second Minto lease[62] It was argued that the security deposit set out in the second Minto lease wasunusual. Westpac NZ has explained however, that this appears to have beena contractual right afforded to the Minto Trust to set-off any securities owed byYarrows Bakers Australia against amounts that the Minto Trust may have owed toanother company in the Yarrow Group. Absent any evidence from Mr Yarrowexplaining these wider commercial relationships we are unable to see any grounds forconcern about the security deposit in the second Minto lease.[63] In summary, we see no merit in the factual arguments relied upon in support ofthe contention that Westpac NZ owed Mr Yarrow a fiduciary duty to disclose toMr Yarrow details of the first Minto lease.[64] The deficiencies in the factual arguments advanced by Mr Yarrow arecompounded when regard is had to the following reasons why we are satisfied thatWestpac NZ plainly did not owe a fiduciary duty to disclose to Mr Yarrow details ofthe first Minto lease at the time he signed the guarantee:(a) As we have previously noted, the purchaser of the Minto property wasfunded through Westpac Banking Corporation in Australia, a separatelegal entity from Westpac NZ. The officers of Westpac NZ whoengaged with Mr Yarrow at the time he signed the guarantee have swornthat they did not know about the first Minto lease at the timethe guarantee was executed. The High Court accepted Westpac NZ'sevidence. Mr Yarrow has provided no basis to doubt the veracity ofthe evidence from Westpac NZ on this issue.(b) Mr Yarrow's guarantee did not encompass the obligations ofYarrows Bakers Australia under either of the Minto leases, orthe lessor's obligations to Westpac Banking Corporation. In thesecircumstances it is hardly surprising Westpac NZ was unaware ofthe terms of the first Minto lease at the time Mr Yarrow signed hisguarantee.(c) There is no evidence that Westpac NZ advised Mr Yarrow in relation tothe guarantee. On the contrary, the evidence establishes beyond doubtthat he was separately advised by his, or his company's, own lawyer.In addition, he was an experienced businessman with knowledge ofthe affairs of the Yarrow Group. He was the antithesis of a vulnerableand uninformed guarantor.(d) Westpac NZ could not have owed any duty to Mr Yarrow at the timeYarrows Bakers Australia signed the second Minto lease. Furthermore,the second Minto lease was executed long after Mr Yarrow had signedhis guarantee. All of the evidence demonstrated the Westpac NZ onlybecame aware of the terms of that lease approximately two years afterit was signed.Conclusions[65] There is no tenable basis upon which it can be said Westpac NZ owedMr Yarrow a fiduciary duty at the time he signed his guarantee. In particular:(a) Westpac NZ was not aware of the first Minto lease when Mr Yarrowsigned his guarantee.(b) Mr Yarrow likely knew, or could easily have discovered, the terms ofthe Minto lease before he signed his guarantee.(c) Westpac NZ did not assume any fiduciary duty to Mr Yarrow when hesigned his guarantee.(d) Westpac NZ did not tender advice to Mr Yarrow in relation tothe guarantee. He was an experienced businessman who received hisown independent legal advice.[66] The Associate Judge carefully analysed all of the evidence and appliedthe correct legal principles when concluding that Westpac NZ owed no fiduciary dutyto Mr Yarrow.Result[67] The appellant's application to adduce further evidence is declined.[68] The appeal is dismissed.[69] The respondent is entitled to costs for a standard appeal on a band A basis withusual disbursements. We certify for two counsel.Solicitors:Simpson Dowsett Meggitt, Auckland for AppellantSimpson Grierson, Auckland for Respondent