Totally confused by "Set Off" and when/if it applies when defending a claim?

[LegalBiggles]

Hi all

I'm currently defending a claim for non-payment. We had some work done on the house, and we believe it was to a poor standard. Some of the contracted work was also not completed. We therefore did not pay the full amount and the trader has taken legal action. I have submitted my defence.

I've been doing some further reading on the subject and am trying to get my head around "set-off" and whether it applies in my circumstance. In the defence, I part admitted and calculated the amount owed by deducting:

- the amount it would take for another trader to undo and redo the work completed poorly
- the amount to rebuy the materials needed
- the amount for a trader to do the uncompleted work
- a small amount for materials taken from the premises that the claimant didn't own.

The left a small balance of c£50, which is why I part admitted.

What I'm confused about is whether the sum I'm defending is literally just that, or whether it is "set-off".

Any help would be most appreciated.

Many thanks

[R0b]

When defending a claim based on set-off, the 'set-off' is the amount you are seeking to reduce in relation to the alleged debt either partially or in full. If the court accepts your defence of set-off, then the amount claimed by the trader is reduced accordingly and then you are left with the amount owed (if any) to the claimant. Assuming you are not defending the remaining balance after the set-off, that is what you would need to pay the claimant within 30 days from the date of the judgment in order to avoid a CCJ on your credit file.

Using your example, if the set-off amount was accepted, you would have to pay the claimant £50 as the debt amount the court deems you to be liable for.

Does that make sense now?

[LegalBiggles]

Hi R0b

Many thanks for taking the time to reply.

I think it makes a bit more sense now, but not total sense tbh.

You said "When defending a claim based on set off..." But I'm not sure if I have done that or not. And/or whether "set-off" is simply a way of describing the defence, or something I would have had to lay out in the defence and make clear that I was basing my defence on set-off. Which I didn't (I didn't even mention set-off in the defence).

Sorry if I'm not being clear. I guess ultimately I don't know whether set-off is simply a term used to describe a defence such as mine, or one of several/many routes (tools? laws?) you can take when defending? And if the latter, have I made a mistake by not using "set-off" or at least mentioning it in the defence?

Or am I totally overthinking it?!?!

I've read all I can find online RE set off but it has left me none the wiser unfortunately.

Many thanks

[R0b]

Set-off is the legal term used to reduce any liability you may have and doesn't just apply in a defence for legal proceedings but also in a contractual situation where the terms may or may not allow you to set-off your liability with any liability of the other party.

In the context of legal proceedings it is not necessary for you to specifically say you are seeking to set-off against the sum being claimed. So long as you make it sufficient clear in your defence that is what you are trying to do, the court should accept that position. Here's a couple of examples:

Example 1

The Claimant has failed to carry out the repairs on the house in breach of contract, in particular clauses 3 and 4 of the contract. As a result, the property has become full of water and damaged the structural integrity of the house. The cost of the repairs is estimated to be £XXXX.XX and the Defendant is entitled to set-off this amount against the sums claimed.

Example 2

The Defendant admits that the full price of the goods has not been paid. However, the Defendant will say that the goods were not of satisfactory quality contrary to the Consumer Rights Act 2015, in that the goods were damaged at the corners of the goods resulting in chipping and other marks. There are also several scratches on the goods and the condition of the goods suggest that it has been used and is not "new" as described and advertised by the claimant on its website. In the circumstances, the Defendant is entitled to withhold £XXX.XX until the Claimant has replaced the goods or that such sum represents a reduction in price to reflect the condition of the goods that have been delivered, in accordance with the Defendant's rights under the Consumer Rights Act 2015.

So you can see Example 1 refers to set-off specifically and Example 2 does not but you get the gist of what you are trying to say by saying you are entitled to withhold a certain sum of money because the the defects or breach of contract caused by the Claimant.

If your defence is described something along these lines you should be fine but if you said that you are simply withholding the money without explaining why, then a court may not accept your set-off right because it could be argued that you have not properly pleaded a defence of set-off. However, that all depends on the day of the hearing and how nice the judge is and if the claimant objects.

[LegalBiggles]

That's great R0b and makes total sense. I was panicking for a minute there, but your explanations have helped calm me down

Example 2 certainly seems to fit my situation, albeit a service in my case rather than goods. But the general situation is the same.

Regarding my defence, I put in a lot of details as to why I believe the work was not completed "with reasonable care and skill". In fact, I listed every aspect. But I didn't make it clear that I was withholding the money due to the defects and breach of contract. It is clearly implied though, so hopefully that's ok? The angle that I took was more along the lines - I don't think I breached the contract for non-payment, but rather that the claimant breached the contract by not using reasonable care and skill (CRA, Sec 49), and not completing all parts of the contract.

Thanks again

[R0b]

It sounds like you have covered yourself so it shouldn't be an issue unless the claimant objects that it wasn't pleaded. I assume you have written correspondence with the trader indicating your intention to withhold money for breach of contract so just make sure it all goes in your witness statement and clarify that is what you were doing.

[LegalBiggles]

Thanks, you've been a tremendous help.

Apologies in advance for harping on about this, but could I ask the question from a different angle, just to get it straight in my head? If CRA Section 49 applies (not completed with reasonable care and skill), and Section 56 is sought as a remedy (price reduction), does that price reduction still count as set-off?

Many thanks

[LegalBiggles]

Perhaps I'm overthinking it and if that's the case with my previous post then my apologies. I just find it all rather confusing!

Have a great weekend everyone.

Cheers