Two recent Supreme Court of Canada decisions demonstrate that the corporate attribution doctrine is not a one-size-fits-all approach.

Court approval of a sale process in receivership or Bankruptcy and Insolvency Act (“BIA”) proposal proceedings is generally a procedural order and objectors do not have an appeal as of right; they must seek leave and meet a high test in order obtain it. However, in Peakhill Capital Inc. v.

Morton as Liquidator of MJ Woodman Electrical Contractors Pty Ltd v Metal Manufacturers Pty Limited [2021] FCAFC 228.

In a resounding judgment delivered last week, the Full Federal Court has confirmed that a statutory set-off under section 533C is not available to a defendant in unfair preference proceedings.

Key Takeaways

The High Court decision in Re All Star Leisure (Group) Limited (2019), which confirmed the validity of an administration appointment by a qualified floating charge holder (QFCH) out of court hours by CE-Filing, will be welcomed.

The decision accepted that the rules did not currently provide for such an out of hours appointment to take place but it confirmed it was a defect capable of being cured and, perhaps more importantly, the court also stressed the need for an urgent review of the rules so that there is no doubt such an appointment could be made.

In certain circumstances, if a claim is proven, the defendant will be able to offset monies that are due to it from the claimant - this is known as set off.

Here, we cover the basics of set off, including the different types of set off and key points you need to know.

What is set off?

Where the right of set off arises, it can act as a defence to part or the whole of a claim.

In our update this month we take a look at some recent decisions that will be of interest to those involved in insolvency litigation. These include:

Creditor not obliged to take steps in foreign proceedings to preserve security

The Court of Appeal - Supreme Court of Western Australian has delivered a decision confirming that a statutory set-off under s 553C of the Corporations Act can still be available to a creditor where a general security interest has attached to the amounts it is seeking to set-off (provided those amounts are circulating assets of the insolvent company), whilst leaving the door open for creditors to rely upon set-off rights at general law in those instances where set-off under s 553C is unavailable.

The High Court recently handed down its much anticipated judgment in Mighty River International Limited v Hughes, confirming that deeds of company arrangement which have the effect of extending the administration period can be valid under the Corporations Act 2001 (Cth) (the Act).

Key takeaways

No duty of care owed for negligent bank reference to undisclosed principal

The Supreme Court has held that a bank which negligently provided a favourable credit reference for one of its customers did not owe a duty of care to an undisclosed principal who acted on that reference.