A receiver appointed at the instance of a secured creditor sought recovery of deferred management fees withdrawn before receivership and operating funds deposited into a new bank account shortly before the appointment.
The Court of Appeal held that both claims were subject to equitable setoff because the respondent's cross-obligations arose from the same management relationship and were closely connected to the receiver's claims.
The court rejected arguments that the new account involved conversion or that the management agreement created a trust excluding the respondent's claims.
The appeal was dismissed and costs were awarded to the respondent.
