On 17 March, in Hambleton v Finn [2017] QDC 61, McGill SC DCJ of the District Court of Queensland applied the section 553C(1) setoff under the Corporations Act 2001 to a liquidator’s insolvent trading claim against a director.

His Honour followed the earlier decision of the District Court of Queensland in Morton v Rexel Electrical Supplies Pty Ltd. In that case, the set-off provision was applied where the liquidator was seeking the recovery of unfair preference payments.

His Honour noted that an application for leave to appeal the Rexel decision was refused by the Court of Appeal, where the correctness of the conclusion in relation to setoff was not in issue.

The concern for liquidators is that, unless the controversy in relation to section 553C is otherwise determined by a superior court, the Rexel decision will continue to be relied upon by defendants in proceedings in the District Court of Queensland.