Bendigo and Adelaide Bank v Cairncross [2011] NSWSC 610

A group of 300 people who borrowed monies from the bank for the purpose of investing in a failed managed investment scheme (Great Southern Managers Australia Limited) sought to avoid repaying their loans based on breach of Fiduciary Duty and Contracts Review Act. The bank sought summary judgment against these claims.

The Judge found the bank owed no fiduciary duty:

The fiduciary must undertake or agree to act for or on behalf of or in the interests of another person. Here the bank was nothing more than the promoters preferred financier. The investors were not even required to borrow from the bank.

The claim that the bank knew the managed investment scheme wished to make a profit was brushed aside:

No allegation is made that the managed investment scheme wished to obtain or did obtain profits which were not disclosed in the PDS . The mere fact that a promoter wishes to obtain profits does not place the promoter in breach of fiduciary duty. The fiduciary duty is not to obtain unauthorised profits.

The Contracts Review Act claim was based on the managed investment scheme made misleading statements in the PDS and the bank knew or ought to have known this. The Judge found that these “allegations are purely speculative and without sufficient particulars”.

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