Changes in the line of jurisprudence on raising a charge of setoff – Supreme Court resolution of July 2, 2024.

The Supreme Court derived its considerations directly from the nature of the declaration of set-off and the procedural charge of set-off, and from a purposive interpretation of Article 91 of the CCP. If the entitled party did not file a statement of deduction before the initiation of court proceedings, raising a charge of deduction under Article 2031 of the CCP required, in order to be effective, either the filing of a statement of deduction and the subsequent raising of a charge, or the combination of both actions in a single statement. In the previous line of jurisprudence, it was accepted that if such a statement was to be made on behalf of the entitled party by his/her legal representative, he/she should have a separate power of attorney for the disposition of the claim in addition to the legal power of attorney. Failure to meet the substantive requirement resulted in the ineffectiveness of the procedural plea raised.

However, this was not a strict approach. In its judgment of February 4, 2004, Case No. I CK 181/03, the Supreme Court pointed out that in the case of a party’s representation by an attorney at law, the assumption of intentional action by the principal to win the trial allows one to assume that the scope of the power also included the party’s submission of a specific declaration of intent on its behalf, if this is necessary to defend its rights in the trial. However, this applied only to the attorney of the party making the statement of deduction. In a judgment of October 12, 2007, ref: V CSK 171/07, the Supreme Court indicated that the purposive interpretation presented in the aforementioned judgment of February 4, 2004 does not contradict the view expressed in the judgment of October 20, 2004 only when it concerns actions directed at winning a lawsuit. Thus, it does not include the power to accept a statement of set-off when, from a procedural point of view, this would be disadvantageous to the represented party. A possible declaration of set-off should therefore be addressed directly to the party or the person authorized to receive material legal statements on its behalf.

There is also a second, less popular conception, according to which both the statement of intent and and the demand for dismissal of the claim following a set-off co-create a single action in which the procedural and material elements are combined. Assuming that, according to the July 4, 2019 amendment, raising a claim of set-off is a procedural action in which the material and procedural elements are closely linked, and the material statement is an element of the facts forming the basis of the procedural claim, leads to the conclusion that a power of attorney is sufficient to raise a formative claim (see: A. Torbus [in:] Code of Civil Procedure. Court costs in civil cases. Investigation of claims in group proceedings. Transitional provisions. Commentary to the amendments. Volume I and II, ed. T. Zembrzuski, Warsaw 2020, art. 203(1).)

It seems (the justification is to be published later) that the Supreme Court has decided to remove the doubts arising from the divergent concepts. In fact, on July 2, 2024, it leaned over the legal issue presented by the Court of Appeals in Katowice in a decision of December 15, 2023 (file number: V AGa 278/22). The issue presented was as follows:

For the effectiveness of raising a charge of set-off under Article 2031 of the Civil Procedure Code and the receipt of such a statement by the plaintiff’s attorney, is a power of attorney for litigation sufficient, or should a separate power of attorney for substantive actions be granted for this purpose?

In a resolution adopted (Ref: I CZP 2/24), the Supreme Court indicated that a power of attorney is sufficient for the effectiveness of raising a charge of deduction under Article 2031 of the CCP and receipt of such a statement.

The content of the resolution is an obvious departure from the established jurisprudential practice of the Supreme Court and the common courts, and admits the rationale of the hitherto minority view of the close connection of the substantive and procedural elements within the plea of set-off under Article 2031 of the CCP, and thus also the expansion of the powers of the trial attorney.

The resolution adopted by the Supreme Court has significant practical significance. The filing of a charge of set-off has been facilitated, which will have a not inconsiderable impact on, among other things, franking cases and doubts about the application of the law of retention. I look forward to hearing the reasoning behind the resolution under discussion, in particular as to how the extension of the powers of trial attorneys also to the receipt of statements of set-off was motivated. As I mentioned earlier, the Supreme Court has so far been restrained in granting such powers to attorneys because of the unfavorable consequences from the point of view of the trial of the acceptance of such a statement.