National Westminster Bank Ltd v Halesowen Presswork & Assemblies Ltd
| National Westminster Bank Ltd v Halesowen Presswork & Assemblies Ltd | |
|---|---|
Halesowen
|
|
| Court | House of Lords |
| Decided | 26 January 1972 |
| Citation(s) | [1972] AC 785 [1972] 2 WLR 455 [1972] 1 All ER 641 [1972] 1 Lloyd' Rep 101 (1972) 116 SJ 138 |
| Case history | |
| Appealed from | [1971] 1 QB 1 (CA) |
| Court membership | |
| Judges sitting |
Lord Donovan Viscount Dilhorne Lord Simon of Glaisdale Lord Cross of Chelsea Lord Kilbrandon |
| Case opinions | |
| Decision by | Viscount Dilhorne |
| Concurrence | Lord Simon of Glaisdale and Lord Kilbrandon |
| Dissent | Lord Cross of Chelsea (in part) |
| Keywords | |
| set-off, insolvency, banker's right to combine accounts | |
National Westminster Bank Ltd v Halesowen Presswork & Assemblies Ltd [1972] AC 785 is a decision of the House of Lords in relation to a banker's right to combine accounts under English law. It is the leading English case and a banker's right to combine accounts, and also an important decision relating to insolvency set-off.
The case was decided in relation to section 31 of the Bankruptcy Act 1914 (which applied to companies by virtue of section 317 of the Companies Act 1948). Today those provisions have been replaced by section 323 of the Insolvency Act 1986 and rule 4.90 of the Insolvency Rules 1986, but the decision is still treated as authoritative.
Halesowen Assembly & Pressworks Ltd was a small company based in Halesowen, West Midlands. They had an account with National Westminster Bank which in February 1968 was overdraw by £11,339. The bank was concerned, and a meeting was held. An agreement was reached whereby the bank account (which was to be called the "No. 1 account") would be frozen, and a new account (the "No. 2 account") would be opened. All of the company's business would go through the No. 2 account, which needed to kept in credit. The bank agreed that that arrangement should continue for four months "in the absence of materially changed circumstances in the meantime."
On 20 May 1968 the company gave the bank notice of a meeting of creditors to be held on 12 June under sections 294 and 295 of the Companies Act 1948. The bank did not rely on that notice as constituting a material change of circumstances within the terms of their agreement. On 12 June the company paid into the No. 2 account a cheque for £8,611. Later that day, a resolution was passed at the creditors' meeting for the voluntary winding up of the company. The cheque was credited to the No. 2 account on 13 June and cleared on 14 June. In the liquidation, the bank claimed to be entitled to set off the £8,611 against the company's indebtedness on the No. 1 account. The liquidator did not accept that the bank was entitled to set-off in this manner, and the liquidator (through the company) brought an action against the bank.
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