Case No. CL-2019-000290

[2013] UKSC 52. Lord Neuberger PSC (with whom Lord Mance, Lord Clarke and Lord Toulson JJSC joined) held at [77] that “at least normally, in order for a company to have incurred a relevant “obligation” under rule 13.12(1)(b), it must have taken, or been subjected to, some step or combination of steps which (a) had some legal effect (such as putting it under some legal duty or into some legal relationship), and which (b) resulted in it being vulnerable to the specific liability in question, such that there would be a real prospect of that liability being incurred”. The Supreme Court overruled previous cases, which had held that the prospective liability of a bankrupt to a future discretionary costs order in legal proceedings in which the bankrupt was involved on the date of bankruptcy did not arise from obligations which had arisen before the issue of the bankruptcy proceedings. Lord Neuberger PSC held at [89]: “In my view, by becoming a party to legal proceedings in this jurisdiction, a person is brought within a system governed by rules of court, which carry with them the potential for being rendered legally liable for costs, subject of course to the discretion of the court. An order for costs made against a company in liquidation, made in proceedings begun before it went into liquidation, is therefore provable as a contingent liability under rule 13.12(1)(b), as the liability for those costs will have arisen by reason of the obligation which the company incurred when it became party to the proceedings”. 56.This is a difficult issue, and one on which I did not receive argument. In these circumstances, I will proceed on the basis that a claim for the future exercise of discretionary relief based on existing facts which, once exercised, would place the claimant under a monetary obligation to the defendant is capable of being relied upon as an equitable set-off. The question, therefore, is whether EIGL has shown that it has a realistic prospect of obtaining such relief.