Claiming an equitable set-off to reduce the amount you have to pay

It is common in commercial disputes for a party to argue that, because they have a set-off, they are not liable to pay the amount claimed.

The party might argue they have an equitable set-off relying on a claim under a different contract or arising out of other dealings between the parties. But a set-off cannot be claimed in all circumstances.

In a recent decision, the Queensland Court of Appeal clarified the circumstances where claims arising out of different leases between a landlord and tenant can be set-off against each other.

What is a set-off?

A set-off is a legal procedure where two competing claims are 'netted' against each other.

The result of a set-off is that, rather than both sides of a dispute being entitled to obtain judgment against each other for the full amount of their claim, their claims are set-off with the result that there is either a single amount payable by one party to the other or no amount payable at all.