Mr. A in his Statement of Claim, alleged that Mr. B owes him money in the sum of N5,000,
000 (Five Million Naira) only. Mr. B in his Statement of Defence denies that he owes Mr. A, instead that Mr. A owes him the sum of N4,000,000 (Four Million Naira) only.
A set-off generally allows the defendant to subtract from the amount of damages that the Plaintiff claims any amount that the plaintiff owes the defendant. In civil litigation, the application of set-off refers to a legal principle that allows a Defendant to reduce or eliminate the amount of damages they owe to the Plaintiff by asserting their own claim or by offsetting a debt owed to them by the Plaintiff.
The Court of Appeal in Ascort Flowlines Ltd. v. Izu (2015) 14 NWLR (Pt. 1478) 119 at 151 Para B held:
“The fundamental effect of a successful set-off is to reduce the plaintiff’s claim by the cross-claim”.
Indeed, Set-off is a shield and a monetary claim for the recovery of money. See; Order 11 Rule 4; Or 25 R 12(2) and 16; Or 25 R 34, and Or 40 R 5(1) of the High Court of the Federal Capital Territory, Abuja (Civil Procedure) Rules, 2020; and Order 17, Rules 1 (3), 6, and 7 of the High Court of Lagos State (Civil Procedure) Rules 2019.
The application of set-off serves several purposes in civil litigation to wit:
Mitigating Damages: Set-off allows a defendant to mitigate their liability by reducing the amount they owe to the Plaintiff. If the Defendant can establish a valid counterclaim or show that the Plaintiff owes them a debt, they may be entitled to deduct or offset that amount from the damages claimed by the Plaintiff.
Balancing Equities: Set-off helps achieve fairness and equity in resolving disputes. It recognizes that both parties may have legitimate claims against each other, and it allows the court to consider these claims in a comprehensive manner. By allowing the Defendant to offset their own claims or debts against the Plaintiff’s damages, set-off helps balance the interests of both parties and promotes a more equitable resolution.
Avoiding Multiple Litigation: Set-off promotes judicial efficiency by preventing multiple lawsuits or legal actions on related claims between the same parties. Instead of engaging in separate proceedings, set-off allows the court to address all claims and counterclaims in a single litigation, thereby saving time, resources, and effort for all parties involved.
Encouraging Settlement: The possibility of setoff can encourage parties to engage in settlement negotiations. If the Defendant has a valid counterclaim or can establish an offsetting debt, it may create leverage for settlement discussions. Parties may be motivated to reach a mutually acceptable resolution to avoid the uncertainties and risks associated with litigating the counterclaims or debts.
Reducing Financial Burden: Set-off can reduce the financial burden on the Defendant. By offsetting their own claims or debts against the damages claimed by the Plaintiff, the Defendant may ultimately owe a lesser amount or, in some cases, no amount at all. This can help alleviate the financial impact of the litigation and provide some relief to the Defendant.
It is worthy of note that the availability and specific application of setoff can vary depending on the jurisdiction and the particular circumstances of the case. The requirements and limitations for asserting set-off, including the types of claims or debts that qualify, may be governed by applicable laws or procedural rules.
Overall, the application of set-off in civil litigation provides a mechanism for Defendants to reduce their liability by asserting valid counterclaims or offsetting debts owed to them by the Plaintiff.
It helps achieve fairness, efficiency, and equity in resolving disputes while mitigating the financial impact on the Defendant.
LEGAL TIPS is anchored by Ms CIA Ofoegbunam, an Abuja-based lawyer who is passionate about legal practice. LEGAL TIPS offers quick hints on substantive law, as well as rules of practice and procedure, and serves as a handy reference guide to lawyers, especially in court. Published on a weekly basis, the LEGAL TIPS Series is CIA’s modest contribution to legal development in Nigeria.