THE SCOPE OF EQUITABLE SET-OFF

The Court of Appeal in Geldof Metaalconstructie NV v Simon Carves Ltd [2010] EWCA Civ 667, [2010] BLR 401 reconsidered the authorities which define the scope of equitable set-off. The Court of Appeal held that the crucial question to ask, when considering whether it is possible to set off a claim, is to consider whether the cross claim is so closely connected with the claimant’s claim for payment that it would be manifestly unjust to allow it to enforce payment without taking into account the cross-claim. On the facts the Court of Appeal held, allowing the appeal, that the requirements of the test had been satisfied so that the defendant was held to be entitled to set off its claim against the claimant.