Explanatory note

Overview of Bill

The objects of this Bill are:

(a) to reinstate the right of a defendant in proceedings to claim set-off, by way of defence, against the plaintiff if there are mutual debts between the plaintiff and defendant that are due and payable at that time, and

(b) to make a consequential amendment to the Limitation Act 1969.

Outline of provisions

Clause 1 sets out the name (also called the short title) of the proposed Act.

Clause 2 provides for the commencement of the proposed Act on a day to be appointed by proclamation.

Clause 3 defines certain words and expressions used in the proposed Act.

Clause 4 reinstates, with some minor differences, the right to set off mutual debts that was abolished with the repeal of the Statues of Set-off (2 Geo II c 22 and 8 Geo II c 24) by the Imperial Acts Application Act 1969. The substantive changes are as follows:

(a) Set-off is available for debts that are due and payable at the time the defence of set-off is filed. Under the Statutes of Set-off, set-off was available for debts that were due and payable when the plaintiff commenced the action.

(b) Parties may contract out of the proposed Act. Although this was probably also the case under the Statutes of Set-off, there was no express provision for the exclusion of set-off by agreement. (See proposed section 5)

Clause 6 provides that the proposed Act extends to a debt arising under an agreement entered into before the commencement of the proposed Act and to any other debt arising before that commencement. However, the court in the proceedings in which a set-off claim is made will have the power to order that the proposed Act does not apply to a debt arising under any such agreement if it is satisfied that it would be in the interests of justice to make such an order.

Clause 7 provides that the proposed Act does not affect any other rights or obligations of a debtor or creditor in respect of mutual debts.

Clause 8 is a formal provision that gives effect to Schedule 1, which amends the Limitation Act 1969.

Clause 9 provides for the review of the proposed Act after 5 years.

Schedule 1 makes a consequential amendment to the Limitation Act 1969.

For the purposes of the Limitation Act 1969, section 74 deems a claim for set-off to be a separate action and to have been commenced on the date on which the person against whom the claim has been made became a party to the original action or the date on which the person became a party to the claim (whichever is the earlier).

The amendment to section 74 will ensure that it extends to set-off claims made under the proposed Act even where one of the mutual debts founding the claim arose after the date on which the person becomes such a party.

Civil Procedure (Set-off) Bill 2000

Contents

1 Name of Act

2 Commencement

3 Definitions

4 Right to claim set-off

5 Parties may agree that mutual debts not to be set off

6 Set-off right extends to certain debts arising before commencement of this Act

7 Effect on other rights or obligations

8 Amendment of Limitation Act 1969 No 31

9 Review of Act

No , 2000

A Bill for

An Act to reinstate the right to set off mutual debts; and to make a consequential amendment to the Limitation Act 1969.

The Legislature of New South Wales enacts:

1 Name of Act

This Act is the Civil Procedure (Set-off) Act 2000.

This Act commences on a day to be appointed by proclamation.

In this Act:

court, in relation to any proceedings, means the court or tribunal determining the proceedings.

debt means any liquidated demand.

defendant includes:


(b) a cross-defendant, and

(c) a respondent or cross-respondent.


plaintiff includes:

(b) a claimant or cross-claimant, and

(c) an applicant or cross-applicant.

(1) If there are mutual debts between a plaintiff and a defendant in any proceedings, the defendant may, by way of defence, set off against the plaintiff’s claim a debt owed by the plaintiff to the defendant that was due and payable at the time the defence of set-off was filed, whether or not the mutual debts are different in nature.

(2) This section extends to proceedings where one or more of the mutual debts is owed by or to a deceased person represented by a legal personal representative.

5

This Act does not apply to the extent that the parties have agreed that debts (whether generally or in relation to specific debts) may not be set off against each other.

(1) Subject to subsection (2), this Act extends to the following:

(a) a debt arising under an agreement entered into before the commencement of this Act,

(b) any other debt arising before the commencement of this Act.


(2) The court may order that this Act does not apply to a debt referred to in subsection (1) (a) if it is satisfied that it would be in the interests of justice to make such an order.

This Act does not affect any other rights or obligations of a debtor or creditor in respect of the mutual debts (whether arising in equity or otherwise).

The Limitation Act 1969 is amended as set out in Schedule 1.

(1) The Minister is to review this Act to determine whether the policy objectives of the Act remain valid and whether the terms of the Act remain appropriate for securing those objectives.

(2) The review is to be undertaken as soon as possible after the period of 5 years from the date of assent to this Act.

(3) A report on the outcome of the review is to be tabled in each House of Parliament within 12 months after the end of the period of 5 years.

Schedule 1 Amendment of Limitation Act 1969

Insert at the end of section 74:

(2) Subsection (1) is taken to extend to a claim for set-off made by a person under the Civil Procedure (Set-off) Act 2000 where:

(a) the mutual debts founding the claim consist of the following:

(i) a debt that became due and payable after the date on which the person became a party to the principal action or claim referred to in subsection (1) (the relevant date),

(ii) a debt that became due and payable before the relevant date, and


(b) a claim under the Civil Procedure (Set-off) Act 2000 could have been made by the person on the relevant date had the debt referred to in paragraph (a) (i) been due and payable on that date.