Clarification on Equitable Set Off

In a series of earlier posts, we had discussed some principles in relation to equitable set-off and retention. One of the issues which came up in the comments was in relation to how equitable set-off is distinct from a counter-claim. The leading commentary on the subject (Rory Derham, The Law of Set-Off) discusses this in some detail, and I was recently able to access a copy of the book. On this point, the author notes that the principal difference is as follows:

“(A counter-claim) differs from a set-off in that it does not give rise to a defence, but rather it constitutes a procedural device by which the court may consider independent cross-actions in the same proceedings. The cross-actions are treated as independent actions for all purposes except execution…”

We had also discussed a recent decision in the English Courts on the requirement of “close connection” in order to successfully claim an equitable set-off. I had noted that the “impeachment of title” test laid down by Lord Denning was no longer followed; and had highlighted some observations of a subsequent judgment which do not at first glance lend themselves to application in concrete cases. The treatise (by Derham) analyses the law in this aspect in great detail. It covers the law till the Bim Kemi case (at least in the edition which I was able to access); and in a subsequent post I will discuss the cases and the principles emerging from them in greater detail. For those interested in this area of law, information about the treatise can be found here.