As seen in the Practice Notes: What is set-off and when is it available? and Types of set-off there are different recognised 'types' of set-off, arising in different ways.

With the exception of independent (legal) set-off (see Practice Note: Independent set-off and transaction set-off) a set-off may be asserted and acted upon, such as Y withholding Money it recognises it owes to X on the basis Y is off-setting monies X owes to Y, without the need for court proceedings to have been initiated. By contrast, independent set-off requires the commencement of court proceedings and effectively operates at the time of judgment.

In reality, when it comes to court proceedings, however, both independent or equitable set-off (also commonly known as transaction set-off) are often pleaded with the Defence. In this sense the term 'cross-claim' is often used:

1. •

   X sues Y

2. •

   Y asserts a defence of independent set-off or equitable set-off

3. •

   the existence of Y's cross-claim is either a complete defence to X's claim or will reduce the amount of X's judgment against Y on that claim

In