Fearns v Anglo-Dutch Paint and Chemical Company Ltd

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Fearns and Anglo-Dutch sued each other. They both won. Fearns was awarded £438,569 for breach of trademark. Anglo Dutch was awarded €594,696 for goods sold to Mr Fearns which he didn't pay for.

Keen observers will note these amounts are in different currencies; one in the heroic currency of the United Kingdom, one in that ghastly monopoly money of those garlic-munching continentals.

What to do? The court concluded the law was as follows:

(1) Where one party has a claim against another party who has a cross-claim, the two claims cannot be netted off so as to extinguish each liability to the extent of the other except by agreement or a judgment of the court and once both liabilities have been established by agreement or judgment.

(2) Where, however, the two claims are for sums of money which are due and certain in amount, each party may raise a defence to the extent of its own claim in proceedings brought by the other (legal set-off).

(3) In addition, where the two claims are (i) made reasonably and in good faith and (ii) so closely connected that it would be manifestly unjust to allow one party to enforce payment without taking into account the cross-claim, neither party may exercise any rights contingent on the validity of its claim except in so far as it exceeds the other party's claim (equitable set-off).

(4) Under CPR r.40.13 and the court's inherent jurisdiction, the court has a discretion to order any judgment sum to be set off (in the sense of netted off) against any other such sum. The date at which such a set-off should be effected is the date on which the existence and amount of the two liabilities is or was established.

(5) The approach which the court should adopt when ordering such a set-off between amounts payable in different currencies is: (i) to assess and add to each principal amount any interest accruing up to the date of the set-off; (ii) to convert the smaller amount into the currency of the larger amount at the exchange rate prevailing at that date; and (iii) to order payment of the balance.

See also

• Judgment transcript from Fearns v Anglo-Dutch
• Set-off