Hamersley Iron Pty Ltd v Forge Group Power Pty Ltd (in liq)  WASC 152
STATUTORY SET-OFF under s 553C Corporations Act reigns supreme in liquidation matters. The Western Australian Supreme Court was asked to consider whether contractual or equitable set-off was available in insolvency, but chose to give precedence to set-off under s 553C.
Tottle J held that in a liquidation it does not matter what the contract between the parties is as to set-off, it is ultimately s 553C that applies.
The Court ultimately found that:
- The contract term would have allowed for set-off;
- Parties couldn’t rely on it because of s 553C; and
- There was no mutuality of dealings because of the security interests of ANZ.
This case complicates proof of debt issues for liquidators.
This is a single judge decision of the Western Australian Supreme Court, so it will be interesting to see if it is appealed or followed in other jurisdictions regarding the mutuality issue.
Consider also the recent decision of the Federal Court in Hussain v CSR Building Products Limited (in liq)  FCA 392. Justice Edelman (prior to his High Court appointment) provided some pertinent comments on the law of set-off in relation to liquidation matters where preference payments were involved.
To access the full judgment, follow this link – http://decisions.justice.wa.gov.au/supreme/supdcsn.nsf/PDFJudgments-WebVw/2017WASC0152/%24FILE/2017WASC0152.pdf
- S 553C Corporations Act 2001 (Cth)