Coventry & Anor v Charter Pacific Corporation Ltd & Anor [2004] HCATrans 445 (12 November 2004)

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Coventry & Anor v Charter Pacific Corporation Ltd & Anor [2004] HCATrans 445 (12 November 2004)

Last Updated: 29 November 2004

[2004] HCATrans 445

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Brisbane No B77 of 2003

B e t w e e n -

MICHAEL JOHN COVENTRY AND LYNETTE HELEN COVENTRY AS TRUSTEES OF THE MIKE AND LYN COVENTRY FAMILY TRUST

First Applicant

ANDREW COVENTRY

Second Applicant

and

CHARTER PACIFIC CORPORATION LIMITED

First Respondent

BARRY TABE AS TRUSTEE OF THE TABE FAMILY TRUST

Second Respondent

Application for special leave to appeal

GLEESON CJ
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 12 NOVEMBER 2004, AT 12.33 PM

Copyright in the High Court of Australia

__________________

MR J.D. McKENNA, SC: May it please the Court, I appear with MR C.A. WILKINS for the applicants. (instructed by McMahons National Lawyers)

MR B.D. O’DONNELL, QC: May it please the Court, I appear for the first respondent. (instructed by McCullough Robertson)

GLEESON CJ: Mr McKenna, there is a certificate from the Deputy Registrar that she has been advised by the second respondent that he is aware of the application in this matter and does not wish to participate in the proceedings. We might be assisted at this stage to hear from Mr O’Donnell.

MR McKENNA: Thank you.

GLEESON CJ: Yes, Mr O’Donnell. It seems to be put against you, Mr O’Donnell, that, in relation to what looks like an important point of insolvency law, there is a conflict of authority that ought to be resolved. What do you say about that?

MR O’DONNELL: Yes, your Honour. There was a view at one stage that the test under section 82 should be a broader test, such as where there is sufficient involvement with a contract in the underlying transaction, and there were some single judge decisions which favour that test, but the matter was then fully considered by the Victorian Court of Appeal in the Aliferis decision which unanimously rejected that test saying the single judge decisions had not sufficiently looked at the historical evolution of the section, nor had they properly considered the question of certainty, whether there was sufficient certainty in the test they enunciated. The Queensland Court of Appeal has now followed the Victorian Court of Appeal. None of the six judges of the two intermediate appellate courts were attracted to the arguments which are sought to be put by the appellant here.

If one looks at the words of the section simply and ask, “Did the claim against the Coventrys arise otherwise than by reason of a contract or promise?”, the answer appears to be clearly yes. They arose because of a contravention of the Corporations Law by the Coventrys.

GLEESON CJ: Yes.

MR O’DONNELL: If your Honours have the Aliferis decision in the Victorian Court of Appeal.

GLEESON CJ: Yes.

MR O’DONNELL: If your Honours would go to page 461 in the reasons of Justice Charles, at the top of 461 his Honour quotes from a decision of Justice Young in New South Wales which is the leading contender of the single judge decisions which favour the appellant’s approach. His Honour quotes from Justice Young at the top of page 461 and it is the last sentence of the quote that encapsulates Justice Young’s view. His Honour said:

It is sufficient that there is a claim at law or in equity and that that claim is for damages which arises out of a contract or promise.

Justice Charles goes on to say the principal difficulty with that test:

is the uncertainty of the test . . . In what circumstances can it be said that the “underlying transaction” (rather than the cause of action) assists in determining whether a claim in negligence arises out of a contract or promise?

Your Honours will see at the conclusion of that paragraph his Honour says what, in our submission, is the correct test:

Does not the wording of s 82(2) suggest rather that for a claim in unliquidated damages to be included in the general release of a bankrupt’s debts, a contract or promise must constitute an essential element of the relevant cause of action?

That, in our submission, correctly encapsulates the wording of 82(2). It is exemplified in this case because here the misleading deceptive conduct in contravention of the Corporations Act occurred long before entry into the deed. Andrew Coventry was found liable for the contravention, although he was not a party to the deed. Michael Coventry was a party to the deed but the promises he made under it did not cause any loss to Charter Pacific.

This is a simple case, in our submission, where if one applies section 82(2) to what occurred here and asks, “Did this claim arise other than by reasonable contract or promise?”, the answer must be yes. It arose because of misleading or deceptive conduct in contravention of the Corporations Law. Those are our submissions, your Honour.

GLEESON CJ: Thank you. In this matter there will be a grant of special leave to appeal.

AT 12.39 PM THE MATTER WAS CONCLUDED