chapter  3
In both Vigers and Mahadeva, it could be said that the consumer received something from the supplier. Ought they to pay for this something? If the houseowner in Mahadeva had brought another firm in to get the heating working for a price of £100 (1972 prices), would it be just and equitable that the owner could obtain a heating system so cheaply? Had he unjustly enriched himself at the expense of the first heating firm? What if the firm had been a cowboy firm of builders: can one unjustly enrich oneself at the expense of a cowboy firm of builders? 4 In Mahadeva, the refusal to pay was a particularly effective remedy. But what if the heating engineers had not only installed a bad system, but also had caused extensive damage to the owner’s house? In this situation, the owner would have had to sue for damages for breach of contract and such a remedy covers only the actual loss suffered by the plaintiff. Would the court, then, have set off the cost of the pipes, radiators, etc, against the loss suffered by the owner? 5 What if this case had come before the courts in the days when there were still juries in civil cases and the jury had decided that the heating engineers had substantially performed the contract: could the Court of Appeal have reversed their finding?
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Hoffmann LJ: The question in this appeal is whether set off against a claim for rent can be invoked against a landlord exercising the ancient common law remedy of distress…

[The] authorities can be understood only against the background of the principles which governed set off at common law and equity before the Judicature Acts. At common law, a defendant could resist a money claim on the ground that he had already paid money to the plaintiffs use… But no cross-claim could be set off in any proceedings until the Insolvent Debtors Relief Act 1729…

Nevertheless, set off under the statute was restricted to mutual debts and did not, for example, allow the set off of a claim for unliquidated damages such as the tenant makes in this case…

So much for the position at common law. The Court of Chancery approached set off on a wider basis and would relieve a debtor against a common law liability when he had a cross-claim ‘so directly connected with [the claim] that it would be manifestly unjust to the claimant to recover without taking into account the cross-claim’ (see Cia Sud Americana de Vapores v Shipmair BV, The Teno [1977] 2 Lloyd’s Rep 289, p 297, per Parker J). The procedural remedy given by the Court of Chancery was to injunct the plaintiff from bringing or proceeding with his common law action until the cross-claim had been taken into account…

What fair dealing requires seems clear enough. It is contrary to principle that a landlord should be able to recover more by distress than he can by action…

In my judgment, therefore, this court is free to hold that set off is available against a claim to levy distress. Mr Philip Wood, in his comprehensive book on English and International Set Off, 1989, para 4.86, says that this is the better view. I agree…

Neill LJ:… It is necessary to remember that before the passing of the statutes of set off in the time of George II there was no right of set off in an action at law…

The introduction of the statutory right of set off represented an important development, but the set off was only available in the circumstances prescribed in the statute, that is, in respect of debts or liquidated demands due between the same parties in the same right. It followed, therefore, that a claim for damages for tort or in pursuit of a remedy in respect of some tortious liability could not be used by way of a set off under the statutes…

It would appear that another effect of the strict rules governing a statutory set off at law was that in the 18th and 19th centuries, before the Judicature Acts 1873 and 1875, courts of equity were very reluctant to intervene where the position of the parties inter se was regulated by their rights at law…

The position was different, however, where the set off relied on was a true equitable set off and one which was not even arguably within the statutes…