Gye v McIntyre; Perkes v McIntyre - [1990] HCATrans 201

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No SS4 of 1990
B e t w e e n -
CLEMENT ANTHONY GYE
Appellant

and
ITALA BELINDA McINTYRE
Respondent

Office of the Registry

Sydney No SSS of 1990
B e t w e e n -
RAYMOND DAVID PERKES
Appellant

and
ITALA BELINDA McINTYRE
Respondent

MASON CJ
BRENNAN J

Gye(2)

29/8/90

DEANE J

DAWSON J

TOOHEY J

GAUDRON J

McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 29 AUGUST 1990, AT 10.19 AM

MR D.M.J. BENNETT, QC:· In each of these matters, if

Your Honour pleases, I appear for the appellant
with my learned friend, MR V.R.W. GRAY. (instructed
by Gye & Perkes)

MR B.W. COLLINS, QC: If Your Honours please, in each appeal

I appear with my learned friends, MR P.R. GARLING
and MR J.THOMSON (instructed by Price Brent)

MASON CJ: Yes, Mr Collins. Mr Bennett.

MR BENNETT:

Your Honours, I hand up 11 copies of the

submissions.

MASON CJ: Thank you.

MR BENNETT:

Your Honours, the first question arising in

this appeal is one which, although put in argument,
was not referred to, either at first instance or by
the Full Court, and in our respectful submission,
it is a short simple reason why the result reached
at first instance was correct and the result in the

Full Court was wrong. One starts with the four
short propositions on page one of the submissions,
none of which are really susceptible of doubt or

controversy. The first is that there are, of
course, two types of set-off. There is set-off
under the general law which may be common law,
equity or the old statutes of set-off, before they
were repealed in New South Wales. They are all

matters of State law. On the other hand, one has
set-off under section 86 of the Bankruptcy Act and
slightly different principles apply.
It was conceded, at first instance, that for reasons not presently material, although
Your Honours will no doubt see them as the appeal
proceeds, there was no set-off under the general
law available, the question was whether the wider
set-off provisions of section 86 were applicable.

The third matter is that - and this is the key

factor in the present case - the claim by the
debtors against the respondent for damages for
fraud was, by agreement of creditors, excluded from

the composition. It was not an asset which passed
to the trustee. That is the factor which
distinguishes this case from every reported case
which we have found dealing with section 86 or its
counterparts in England, New Zealand, or even the
United States, and the significance of that will

become apparent in a moment. I will just show you

the reference to that. It is page 39 of the appeal
book, line 14. Your Honours will see Mr Andrew,
who was the trustee:

Gye(2)

29/8/90

gave evidence that at the meeting…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1990] HCATrans 201
Decision Date

CaseChat Overview and Summary

These appeals concerned the application of set-off provisions in bankruptcy. The appellants, Gye and Perkes, sought to set off damages they claimed against the respondent, Itala Belinda McIntyre, against debts they owed to her. The dispute arose from a composition agreement entered into by McIntyre's creditors, which excluded the claim for damages for fraud from the assets to be vested in the trustee.

The High Court was required to determine whether the set-off provisions of section 86 of the *Bankruptcy Act 1966* (Cth) applied to the appellants' claim for damages for fraud, given that this claim had been expressly excluded from the composition agreement by the creditors. The central legal issue was whether the exclusion of the fraud claim from the composition meant it could not be considered for set-off under section 86, or if the broader provisions of the section still permitted such a set-off.

The Court reasoned that while section 86 of the *Bankruptcy Act* provides for a wider form of set-off than that available at general law, its application is predicated on the existence of "mutual credits, mutual debts or other mutual dealings" between the bankrupt and a person claiming to prove a debt. Crucially, the Court found that the claim for damages for fraud was not an asset that passed to the trustee for the benefit of creditors, as it had been specifically excluded from the composition by agreement. This exclusion meant that the claim was not a "mutual credit" or "mutual debt" in the context of the bankruptcy proceedings or the composition, and therefore section 86 could not be invoked to allow the set-off. The Court distinguished this case from others dealing with section 86 by highlighting the express exclusion of the claim from the composition.

Orders