Meredith –v- Eggins
[2005] QDC 26
•15 February 2005
DISTRICT COURT OF QUEENSLAND
| CITATION: | Meredith –v- Eggins [2005] QDC 026 |
| PARTIES: | MEREDITH, Louis John 1st Plaintiff And MEREDITH, Louis John as executor of estate of Samuel Joseph Meredith 2nd Plaintiff Against EGGINS, Stephanie Defendant |
| FILE NO: | 259 / 04 |
| PROCEEDINGS: | Application by pls to strike out part of defence. |
| DELIVERED ON: | 15 February 2005 |
| DELIVERED AT: | Townsville |
| HEARING DATE: | 7 February 2005 |
| JUDGE: | CF Wall QC |
| ORDERS: | Application granted with leave to the def to re-plead the set-off relied upon. |
| CATCHWORDS: | PRACTICE – PLEADING – distinction between set-off and counterclaim – equitable set-off – nature of – available as a defence only to pls claims for damages Cases referred to: Legislation referred to: |
| COUNSEL: | Mr A. J. Moon for the Plaintiffs / Applicants Mr W. Elliott for the Defendant / Respondent |
| SOLICITORS: | Alex Nelson & Associates for the Plaintiffs / Applicants MacDonnells Solicitors for the Defendant / Respondent |
HIS HONOUR: This is effectively an application by the plaintiffs to strike out paragraph 14 of the further amended defence which purports to plead a set-off.
In paragraph 14 of the further amended defence the defendant purports to plead a set-off amounting to $69,170.03 for work carried out by the defendant on the fishing vessel Shanendale and payments made by the defendant in the mistaken belief that they were payments towards the purchase of the vessel. The set-off as pleaded is said to be an equitable set-off because it relies upon a matter of equity (unjust enrichment) and is said to be closely connected with the plaintiffs' claim for damages.
The plaintiffs' claim is for the return of the vessel and unliquidated damages for detinue and conversion.
The plaintiffs contend that the defendant's claim is a counterclaim not a set-off and that by reason of a consent order made on the 4th of October 2004, the defendant is precluded from making any counterclaim against the plaintiffs.
In my view paragraph 14 does in fact, albeit inadequately, attempt to plead a set-off. The ground relied on is a recognised equitable ground capable of impeaching the plaintiffs' damages claims and it does have a sufficiently close connection with those claims.
The essential distinction between a set-off and a counterclaim is that a set-off is in the nature of a defence, whereas a counterclaim is in the nature of a cross-action. Under a set-off, the defendant can recover nothing against the plaintiffs, for he can only use the set-off as a defence or answer to the plaintiffs' claim equal to the amount of the set-off.
Should the defendant succeed in his set-off, judgment would be given for the plaintiff only for any amount in excess of the amount found due to the defendant on the set-off.
An equitable set-off is one where the defendant has some equitable ground (as is alleged here) for being protected against the plaintiffs' claim. A set-off can only be used as a defence.
The question of what is a set-off is to be determined as a matter of law and is not in any way governed by the language used by the parties in their pleadings. See Bullen and Leake (12th edition) pages 92-95.
In Walker v. Secretary, Department of Social Security (1995) 129 ALR 198 at 210 Drummond J said:
"Legal and equitable set-offs differ in that while only debts or liquidated demands can be set-off at law, any money claims, liquidated or unliquidated, can be the subject of an equitable set-off."
Mr Justice Drummond dissented as to the result in that appeal, but there can be no doubt as to the correctness of this statement.
In an article in (1994) 68 ALJ331 at 332 Dr Rory Derham says:
"Unlike the statutes of set-off, which were confined to mutual debts, equitable set-off is available in the event that one of the demands is unliquidated, but only if the cross-demands are so closely connected that it would be unjust or inequitable for one party to proceed with his claim without giving credit for the other."
The set-off relied on in the present case, whilst deficient in that it does not plead the facts relied upon to support the defendant's claim, is nevertheless similar to that relied on in Lord Cawdor v. Lewis (1835) 160 ER175 (noted in Meagher, Gummow and Lehane "Equity Doctrines and Remedies" (Third Edition) paragraph 3708) where a person sued for mesne profits was allowed to plead by way of equitable set-off that the plaintiff at law owed him compensation for improvements effected by him to the land, being encouraged thereto by the plaintiff's intentional representation that the defendant was the owner of the land.
Subject to being properly pleaded, the bare set-off pleaded by the defendant does provide a sufficient connection with the plaintiffs' claims for damages for detinue and conversion.
The set-off is not a defence to the plaintiffs' claim for the return of the vessel and related claims. It can only be a defence to the claims for damages for detinue and conversion. Were the plaintiff to abandon those claims, the set-off would come to an end and could not be pursued as it can only be pleaded as a defence.
Because of the consent order, the defendant is precluded from pleading the set-off also as a counterclaim and for the same reason the defendant cannot rely on rule 173(2) of the Uniform Civil Procedure Rules.
So far as paragraph 14 of the further amended defence is concerned, the set-off relied upon cannot be a defence to the matters pleaded in sub-paragraphs (a) and (b), but only to the plaintiffs' claim for damages for detinue and conversion. Sub-paragraphs (a) and (b) should therefore be struck out. Paragraph 14 also does not comply with rule 149 of the Uniform Civil Procedure Rules, in that it does not contain a statement of all the material facts relied upon. Mr Elliott for the defendant conceded the claim required re-pleading. The particulars pleaded in paragraph 14 add nothing to the claim; they merely specify by reference to paragraph 2(a)(iv) and 2(a)(v) of the pleading the amount said to be a reasonable value for the work performed on the vessel and the amount of the payments made towards the purchase price.
For these reasons, the orders I make are these:
(1)That paragraph 14 of the further amended defence be struck out with leave to the defendant to re-plead the set-off relied upon;
(2)That the defendant file and serve a further amended defence properly pleading the set-off relied upon within 14 days of today;
(3)That each party pay the party's own costs of the application.
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