By Arian Bahmiyari, Law Clerk at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group.
In the past, set-off has been used as a defence against unfair preference (and other insolvency) claims with some uncertain and inconsistent outcomes. This ends now in relation to unfair preferences with a major win in favour of liquidators and will most likely lead to a similar outcome with other insolvency proceedings.
In Metal Manufactures Pty Limited v Morton [2023] HCA 1 (“Metal Manufacturers v Morton”), the High Court held that set-off is not available as a defence to a creditor being sued for an unfair preference by a liquidator. The High Court found that the debt owing by the company in liquidation had no mutuality with the unfair preference claim by the Liquidator in the winding up. [...]
