HIGH COURT OF AUSTRALIA
GLEESON CJ,
GUMMOW, KIRBY, HAYNE AND CALLINAN JJMICHAEL JOHN COVENTRY AND
LYNETTE HELEN COVENTRY (AS
TRUSTEES OF THE MIKE AND LYNCOVENTRY FAMILY TRUST) & ANOR APPELLANTS
AND
CHARTER PACIFIC CORPORATION
LIMITED & ANOR RESPONDENTSCoventry v Charter Pacific Corporation Limited [2005] HCA 67
15 November 2005
B68/2004ORDER
1. Appeal of the first appellant dismissed for want of prosecution.
2. Appeal of the second appellant dismissed with costs.
On appeal from the Supreme Court of Queensland
Representation:
No appearance for the first appellant
M M Stewart SC with C A Wilkins for the second appellant (instructed by McMahons)
D F Jackson QC with N J Owens for the first respondent (instructed by Allens Arthur Robinson)
No appearance for the second respondent
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
GLEESON CJ, GUMMOW, HAYNE AND CALLINAN JJ. The issue to be decided in this appeal is whether a claim for unliquidated damages for contravention of a statutory prohibition is a debt provable in the bankruptcy of the person who contravened the prohibition and, by that conduct, induced the claimant to make a contract with a third party.
In this case, the statutory prohibition, contained in s 995(2) of the Corporations Law of Queensland, prohibited misleading or deceptive conduct in connection with dealings in securities. The provision for an action for damages was s 1005 of the Corporations Law.
Satisfaction of the criteria for proof of a debt has a significance beyond the allowance of the proof in the administration of the sequestrated estate. As these reasons later demonstrate, the provisions for set‑off engage those criteria. So also do those provisions dealing with the competence of proceedings against the person or property of the bankrupt, and with the consequences of discharge and release of the bankrupt.
If the claim for unliquidated damages made pursuant to the Corporations Law is a debt provable in that person's bankruptcy, discharge from bankruptcy operates to release that person from that claim[1]. If it is not a debt provable in the bankruptcy, discharge from bankruptcy does not operate to release the bankrupt from the claim and, subject to any question of limitation of actions, the claim can be pursued against the former bankrupt after discharge. Moreover, s 58(3) of the Bankruptcy Act 1966 (Cth) does not prevent the claimant, during the bankruptcy, from commencing a legal proceeding in respect of the claim or enforcing any remedy against the person or the property of the bankrupt in respect of that claim. The sub‑section denies such competency to a creditor only in respect of "a provable debt".
[1]Bankruptcy Act 1966 (Cth), s 153(1).
The central question in the appeal hinges on the meaning of s 82(2) of the Bankruptcy Act 1966 and, in particular, what is meant by a demand in the nature of unliquidated damages arising otherwise than by reason of a contract or promise. That expression,…
Keep reading for free
Create a free CaseChat account to read Coventry v Charter Pacific Corporation Ltd and more:
- Read every judgment in full
- Ask AI and get answers linked to paragraphs
- See how each paragraph was cited in later cases
- Download judgments as PDF or Word
One click creates your free account or signs you in.
By continuing you agree to the Terms and Privacy Policy.
- Case
- [2005] HCA 67
- Decision Date
CaseChat Overview and Summary
The central legal issues before the High Court were whether Charter Pacific's claim for unliquidated damages, arising from the misleading and deceptive conduct, constituted a debt provable in the bankruptcy of the appellants under the *Bankruptcy Act 1966* (Cth). Specifically, the court had to determine if the claim arose "otherwise than by reason of a contract, promise or breach of trust" as required by s 82(2) of the *Bankruptcy Act*.
The High Court noted that the outcome of the case was anomalous, stemming from the continued application of language in the *Bankruptcy Act* that originated from an 1869 English Act, without accommodation for the development of statutory causes of action and differing legal outcomes. The court found that the claim for damages for misleading and deceptive conduct, even though it induced Charter Pacific to enter into a contract with a third party, was not a debt provable in bankruptcy. This conclusion was reached despite the anomaly it created, as the court found itself unable to repair such issues through interpretation alone.
The appeal of the first appellant, Michael Coventry, was dismissed for want of prosecution. The appeal of the second appellant, Andrew Coventry, was also dismissed with costs. No order for costs was made against the Coventry Trustees, as the court considered the application of the *Bankruptcy Act* in that context to be problematic.
Orders
Orders of the court
1. Appeal of the first appellant dismissed for want of prosecution.
2. Appeal of the second appellant dismissed with costs.
Background
Background to the litigation
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
Established by: GLEESON CJ, GUMMOW, HAYNE AND CALLINAN JJ, KIRBY J
Full text does not contain this section.