Young v National Australia Bank Ltd & Anor

[2004] WASCA 298

Western Australia Court of Appeal

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Interrogate

Catchwords

1. Equity
2. › Set-off
3. › Equitable set-off
4. › Guarantor's right to rely on principal debtor's equitable set-off
5. › Whether causes of action sufficiently connected to creditor's claim on guarantee
6. › Whether post-dating guarantee fatal to equitable set-off
1. Limitation of Actions
2. › Set-off and counterclaim
3. › Whether limitation period applies to equitable set-off
4. › Deemed commencement date of set-off claim
5. › Limitation Act 1935 (WA), s 46
1. Practice and Procedure
2. › Amendment of pleadings
3. › Leave to amend defence and counterclaim
4. › Whether proposed amendment raised claim actually argued on appeal
5. › Whether leave to appeal should be granted

Quick Take

For equitable set-off to be available to a guarantor relying on the principal debtor's claims, the causes of action must impeach the creditor's right to recover or be so directly connected with the creditor's claim that it would be unjust to allow recovery without taking them into account; causes of action that post-date the guarantee and are not contemporaneous with it will not satisfy this test. Under s 46 of the Limitation Act 1935 (WA), a claim by way of set-off is deemed to commence on the same date as the main action, not on the date the pleading is delivered. The question whether s 46 bars equitable set-off based on statute-barred causes of action when raised by a guarantor was left open.