The Court held that a claim for compensation under s 236(1) of the ACL against directors for being 'involved in' a company's misleading or deceptive conduct, where the conduct induced the plaintiffs to enter a contract with the company rather than with the directors, is not provable in the directors' bankruptcies under s 82(2) of the Bankruptcy Act, following Coventry v Charter Pacific. This anomaly permits such claims to be pursued against bankrupt directors without leave. On the assessment of damages, the Court awarded the plaintiffs the full amount paid under the contract ($221,200) plus pre-judgment interest, applying a restitutionary/rescission measure rather than a loss-of-bargain measure, on the basis that the plaintiffs were misled into entering the contract and had received nothing in return.
The full text is available to signed-in members.