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.

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 further held that the operation of the set-off was automatic, and did not require any action on the part of the parties, following National Westminster Bank Ltd v Halesowen Presswork & Assemblies Ltd [1972] AC 785 on this point.

[4] In this respect the House of Lords followed the earlier Australian High Court decision in Gye v McIntyre (1991) 171 CLR 609.

[5] He noted that counsel for Mr Blake had made an appeal to policy that it was unfair that defendants should suffer potential claims by litigants who were bankrupt and supported by legal aid (against whom they could not recover their costs), but he expressed the view that this was a matter for Parliament, and not something which should affect the determination of the issue in the appeal.