In Torque 3.3, the drop table statement was changed from
drop table $table.Name if exists;
drop table $table.Name if exists CASCADE;
This does not work with HSQLDB 1.7.x any more. For supporting drop table statements in HSQLDB 1.7.x, remove the "CASCADE" from the file sql/base/hypersonic/drop.vm in your templates jar and repackage the jar file.