Breaking: Set-off (in 553C) applies to unfair preferences, according to Justice Markovic in the Federal Court proceedings handed down today.
Her Honour was minded to just follow the Re Parker case and the Smith v Bone case, which allowed set-off.
Her Honour did remark that the Liquidator’s submissions did not deal substantially with this issue, because, as was found to be the case, the defendant had knowledge of insolvency.
This meant, on the facts, the exception to set-off applied in s553C(2) and the court ruled the defendant could not rely upon it.
Although I disagree that set-off applies to unfair preferences (which I have written about extensively), this case paints a picture of a movement towards its application.
Time for the High Court to decide!