Pyramid Building Society v Terry

Pyramid Building Society (in liq) (appellant) appealed to the High Court of Australia against a decision of the Full Court of the Supreme Court of Victoria. The dispute concerned the liability of the appellant, a building society, to repay deposits made by the respondent, Ms Terry, who had invested in a scheme operated by the appellant. Ms Terry sought to recover her deposits, arguing that the appellant had breached its contractual obligations to her.

The High Court was required to determine whether the appellant had breached its contractual obligations to Ms Terry by failing to repay her deposits. Specifically, the court considered whether the terms of the investment scheme, as represented to Ms Terry, created a contractual right to repayment on demand or at a specified time, or whether the appellant's insolvency rendered repayment impossible.

The majority of the High Court, comprising Gaudron and McHugh JJ, found that the appellant had breached its contractual obligations. They reasoned that the terms of the investment scheme, as understood by Ms Terry, created a contractual right to repayment. The appellant's subsequent insolvency did not extinguish this contractual obligation, but rather meant that Ms Terry, as an unsecured creditor, would have to prove her debt in the liquidation. Kirby J, in dissent, held that the terms of the scheme did not create a right to repayment on demand and that the appellant's insolvency meant repayment was impossible.

The appeal was allowed, and the matter was remitted to the Supreme Court of Victoria for determination of the amount due to Ms Terry.