The court discussed the application of the equitable doctrine of set-off. Justice Hobhouse said: ‘Equitable principles derive from a sense of what justice and fairness demand. This does not mean that equitable set-off has been reduced to an exercise of discretion. Since the merging of equity and law equitable set-off gives rise to a legal defence. This defence does not vary according to the length of the Lord Chancellor’s or arbitrator’s foot. The defence has to be granted or refused by an application of legal principle.’
When pressed to depart from the rule in Nanfri for fairness, the court said: ‘It is also correct that equitable principles derive from a sense of what justice and fairness demand and should therefore include the capacity to develop and adapt as the need arises . . But this does not mean that equitable set-off has been reduced to an exercise of discretion. Since the merging of equity and law, equitable set-off gives rise to a legal defence. This defence does not vary according to the length of the Lord Chancellor’s foot. The defence has to be granted or refused by an application of legal principle.
The relevant principle is that identified by Lord Cottenham in Rawson v. Samuel (1841) Cr. and Ph. 161, at p. 179: ‘The equity of the bill impeached the title to the legal demand’. What this requires is that the Court or arbitrator should consider the relationship between the claim and the cross-claim. This is why not every cross-claim, even though it arises out of the same transaction, necessarily gives rise to an equitable set-off. This element of the cross-claim impeaching the plaintiff’s demand is to be found in all the modern cases and is a recognition that the principle being applied is essentially the same as that stated by Lord Cottenham.’
Judges:
Justice Hobhouse
Citations:
(1985) 2 Lloyd’s Rep 470
Jurisdiction:
England and Wales
Cited by:
Cited – Geldof Metaalconstructie Nv v Simon Carves Ltd CA 11-Jun-2010
The parties contracted for the supply and installation of pressure vessels by Geldof (G) for a building constructed by Simon Carves (SC). The contract contained a clause denying the remedy of set-off. G sued for the sale price, and SC now sought an . .
Lists of cited by and citing cases may be incomplete.
Equity
Updated: 05 July 2022; Ref: scu.200255
