Stein v Blake
| Stein v Blake | |
|---|---|
.svg) |
|
| Court | House of Lords |
| Decided | 18 May 1995 |
| Citation(s) | [1995] UKHL 11 [1996] 1 AC 243 [1995] 2 All ER 961 |
| Transcript(s) | BAILII |
| Case history | |
| Appealed from | [1994] Ch 16 |
| Subsequent action(s) | [2001] All ER (D) 94 |
| Court membership | |
| Judges sitting |
Lord Keith of Kinkel Lord Ackner Lord Lloyd of Berwick Lord Nicholls of Birkenhead Lord Hoffmann |
| Case opinions | |
| Decision by | Lord Hoffmann |
| Keywords | |
| set-off, insolvency, contingent claims | |
Stein v Blake [1995] UKHL 11 is a decision of the House of Lords in relation to the effect of automatic set-off in bankruptcy, and the power of a bankruptcy trustee to assign rights in action after the operation of such set-off under English law.
The only judgment was given by Lord Hoffman. He commenced his speech by summarising the issues as follows:
Section 323 provides as follows:
Mr Stein was declared bankrupt by court order on 16 July 1990. At that time he was the recipient of legal aid, and was in litigation with Mr Blake. Mr Stein was suing for breach of contract, and Mr Blake had various counterclaims, including claims under costs orders which Lord Hoffman described "indisputable". Mr Stein's trustee in bankruptcy executed a deed of assignment on 4 April 1991 under which he assigned the benefit of those claims back to Mr Stein in return for 49% of the net proceeds. Mr Stein once again obtained legal aid in relation to those claims, and Mr Blake brought this action to have the proceedings dismissed on the ground that the effect of the statutory set-off under section 323 meant that the claims could not validly be assigned.
In the Court of Appeal, where Millett LJ had given the lead judgment, it had been held that the operation of insolvency set-off was procedural. Accordingly, because the assignment had taken place before an account had been taken, the full amount of the claim had been assigned without any deduction for set-off. Against this decision Mr Blake appealed.
Lord Hoffman gave a long and careful exposition of the law relating to both procedural and insolvency set-off as it had developed from the time of Queen Anne. He noted that whilst procedural set-off required the claims to be a definite amount at the time the claims merged into a cause of action by way of issuing legal proceedings, insolvency set-off was not so limited. It was possible to set-off claims which were unliquidated, future or subject to contingencies under the insolvency set-off regime.
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