The Court held that s 553C of the Corporations Act 2001 (Cth) does not permit set-off where the insolvent company is a corporate trustee, because debts owed to the trustee company are held on trust for the beneficiary unitholders, while debts owed by the trustee company are its personal liabilities — there is no mutuality between the creditor partnerships and the beneficiary unitholders. The Court further held that the partnerships' inchoate right of subrogation to the trustee's power of exoneration from trust assets was not sufficiently a claim engaging the beneficiary unitholders to establish mutuality at the relevant date (commencement of winding up). The question whether mutuality might be established upon (rather than immediately prior to) the winding up was expressly left open.
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