The company went into insolvent liquidation. The secretary of state was to make payments to employees and there were other state preferential creditors. At the same time a refund of VAT was due from the Commissioners of customs and Excise.
Held: The sums paid out and preferential debts could be set off against the VAT refund. It was not necessary that the debt should have been due and payable before the insolvency date. It is sufficient that there should have been an obligation arising out of the terms of a contract or statute by which a debt sounding in money would become payable upon the occurrence of some future event or events. The appeal was allowed.
Judges:
Lord Nicholls of Birkenhead, Lord Hoffmann, Lord Hope of Craighead, Lord Phillips of Worth Matravers, Lord Brown of Eaton-under-Heywood
Citations:
[2004] UKHL 24, Times 14-May-2004, [2004] 2 AC 506, [2004] BPIR 841, [2004] 2 BCLC 1, [2004] 2 WLR 1279, [2004] 2 All ER 1042
Links:
Statutes:
Jurisdiction:
England and Wales
Citing:
Cited – Stein v Blake HL 18-May-1995
Where A and B each have claims against each other and A is insolvent, the common amount is set off, and the net difference remains as a debt due.
Hoffmann L said: ‘It is a matter of common occurrence for an individual to become insolvent while . .
Cited – In re Charge Card Services Ltd ChD 1987
The court discussed the historic availability of set-off in an insolvency: ‘By the turn of the [20th] century, therefore, the authorities showed that debts whose existence and amount were alike contingent at the date of the receiving order, and . .
Cited – In re Fenton CA 1931
A surety under a pre-insolvency guarantee, had not actually paid, and could not pay, being bankrupt with his assets vested in the trustee. The creditor was still owed the money and entitled to prove in the liquidation.
Held: One could not have . .
Incorrect – In re A Debtor (No 66 of 1955), Ex parte The Debtor v Trustee of Waite (A Bankrupt) CA 2-Jan-1956
Waite owed the debtor andpound;101 for goods sold and delivered. He was bankrupted, having previously guaranteed the debtor’s overdraft and deposited the deeds of his property as security. Waite’s trustee paid the bank andpound;133 out of the . .
Cited – In re A Debtor (No 66 of 1955), Ex parte The Debtor v Trustee of Waite (A Bankrupt) ChD 1956
Waite owed money and guaranteed a debt before being made bankrupt. Waite and his trustee were not for this purpose the same person. Waite had held his assets for his own benefit. The trustee paid the debt.
Held: The trustee held the assets . .
Cited – In re Moseley-Green Coal and Coke Co Ltd, Ex parte Barrett 1865
Mr Barrett owed the company money on his partly-paid shares for which calls were made after it went into insolvent liquidation. He had also guaranteed the company’s liability for the purchase price of a coal mine, for which the vendor held security . .
Cited – Mann and others v Secretary of State for Employment HL 8-Jul-1999
When acting effectively as a guarantor of a company’s obligations to its employees upon insolvency in paying unpaid wages, the Secretary of State for Employment was entitled to set off against those payments, payments made by way of compensation by . .
Cited – In re D H Curtis (Builders) Ltd ChD 1978
Debts were, on the one side, the liability of the company to the Inland Revenue and the Department of Health and Social Security for PAYE and National Insurance contribution respectively and, on the other, the liability of HM Customs and Excise to . .
Cited – Swain v The Law Society HL 1983
The Solicitors’ Practice Rules had the force of a statute, being rules made by the Council of the Law Society with parliamentary sanction for the protection of that section of the public who might be in need of legal advice, assistance or oversight. . .
Cited – Booth v Hutchinson 1872
The additional words in the new Act relating to set-off ‘were intended to give a more extended right of set-off than previously existed’ . .
Cited – Peat v Jones and Co 1881
Sir George Jessel MR said: ‘Now the enactment as to ‘mutual credits’ is a very old one, first appearing in 5 Geo 2, c 30, but the whole tendency of the subsequent legislation, as of the legislation respecting proveable debts, has been to extend the . .
Cited by:
Cited – Wilkinson, Regina (on the Application Of) v Inland Revenue HL 5-May-2005
The claimant said that the widows’ bereavement tax allowance available to a wife surviving her husband should be available to a man also if it was not to be discriminatory.
Held: Similar claims had been taken before the Human Rights Act to the . .
Cited – McCartney and Unite The Union and Another v Nortel Networks UK Ltd (In Administration) ChD 22-Apr-2010
The administrators gave employees of the company notice of termination of their employment. Then administrators refused consent under para 43(6) to actions against the company in the Northern Ireland Industrial Tribunal for protective awards, unfair . .
Cited – In re Kaupthing Singer and Friedlander Ltd SC 19-Oct-2011
The bank had been put into administrative receivership, and the court was now asked as to how distributions were to be made, and in particular as to the application of the equitable rule in Cherry v Boultbee in the rule against double proof as it . .
Cited – In re SSSL Realisations (2002) Ltd and Another; Squires and others v AIG Europe (UK) Ltd and Another CA 18-Jan-2006
A creditor claiming an equity in a debt but who himself owed money to the debtor, could not pursue his claim without first contributing the sum due. A person could not take an aliquot share out of a fund without first contributing what he owed to . .
Cited – In re Nortel Companies and Others SC 24-Jul-2013
The court was asked as to the interrelationship of the statutory schemes relating to the protection of employees’ pensions and to corporate insolvency.
Held: Liabilities which arose from financial support directions or contribution notices . .
Lists of cited by and citing cases may be incomplete.
Benefits, Insolvency
Updated: 10 June 2022; Ref: scu.196759