1. I think the case has been rightly decided, and I would answer the question submitted in the negative.
2. The amount or value of the subject-matter of the suit is Rs. 2,148 and beyond the jurisdiction of the Court, but the plaintiffs deducting by way of set-off a sum of Rs. 500 which was due by them to the defendant on account of a wholly different transaction, reduced their claim to Rs. 1,648. The defendant says that the sum of Rs. 500 is due to him, but he does not agree to its being set-off against the plaintiffs' claim. The question is whether the plaintiffs are entitled to set off this sum so as to give the Small Cause Court jurisdiction, or in other words, whether there is 'a set-off admitted by both parties' within the meaning of Explanation I, Section 18 of the Small Cause Court Act (XV of 1882).
3. Clearly the defendant did not before suit or during the trial agree to the set-off, but he admitted the debt of Rs. 500, if a person can be properly said to admit a debt which is due to himself. The question then seems to be reduced to this, whether the word 'set-off' in the section referred to is equivalent to 'debt.' I know of no authority for holding that it has that meaning, and the words 'an admitted set-off of any debt or demand claimed or recoverable by the defendant,' in the corresponding sections of the County Courts' Acts of 1856 and 1888, certainly do not indicate that the two words moan the same thing. A sum of money due by the plaintiff to the defendant on a transaction independent of the one on which his claim is based is a debt, and a debt may be the subject of a set-off. But it only becomes a set-off under certain circumstances, one of which seems to be indicated by Section 18, which requires that the set-off should be admitted by both parties. The right to sat off a debt against the plaintiff's demand is with the defendant. If he does not choose to claim the set-off he does not forfeit his right to enforce payment of the debt by bringing a separate action. It is beyond controversy that a plaintiff cannot compel a defendant to plead a set-off. I think that Section 18 of the Small Cause Court Act was not intended to, and does not, extend the jurisdiction of the Small Cause Court so as to enable a plaintiff to prefer in it a disputed claim for a very large amount by setting off against that claim without the defendant's consent a debt which he owes to the defendant on a wholly different account, a debt which, if the defendant wished to enforce it, might be the subject-matter of a separate suit.
4. What is required to be admitted by both the parties is a set-off, by which I understand a set-off of a debt or demand, and not the debt or demand itself.
5. Section 47 of the County Courts Act of 1888 enacts that 'where in any action the debt or demand claimed consists of a balance not exceeding 50 after an admitted set-off' of any debt or demand claimed or recoverable by the defendant from the plaintiff, the Court shall have jurisdiction to try such action.' There was a provision to the same effect in the Act of 1856. It is clear that what must be admitted is the set-off of a debt or demand, but there has been some discussion in the Courts as to whether the words 'an admitted set-off' meant a set-off admitted by both parties.
6. The Small Cause Court Act in force in this country places it beyond doubt that whatever may be meant by a set-off, the admission must be by both parties. In Walesby v. Goulston L.R. 1 C.P. 567 the plaintiff brought an action for 51, but recovered judgment for only 19, a set off having been admitted during trial for 32. The question arose whether he was entitled to his costs. Erle, C.J., held that he was entitled, and added: 'I think there is great doubt whether a set-off can be admitted by one party only, but here plaintiff did not admit it himself before action brought.'
7. In Percival v. Pedley L.R. 18 Q.B.D. 635, Mathew and Cave, JJ., overruling Baron Huddleston, held that the words 'admitted set-off' meant a set-off by the plaintiff only. But the words occurred in another section of the Act which allowed the defendant to apply for an order transferring the action for trial in the County Court when the claim 'although it originally exceeded 50 is reduced by payment, admitted set-off, or otherwise to a sum not exceeding 50.'
8. In Hubbard v. Goodley L.R. 25 Q.B.D. 156, Huddleston, B., and Grantham, J., held that the words 'an admitted set-off' in Section 47 meant a set-off the existence of which is admitted by both parties and not merely by the plaintiff, and that the County Court had consequently no jurisdiction to try the action which was one for 56 reduced to 42 by a set-off allowed in the plaint. The defendant, it is true, disputed the amount of the set-off allowed, but the decision did not turn on that. The substantial question raised was whether the set-off having been allowed by the plaintiff, the County Court had jurisdiction to entertain the action. The case of Percival v. Pedley was distinguished. These cases being on a different statute are not of course exactly in point, but Walesby v. Goulston and Hubbard v. Goodley do support the view I take of Section 18 of the Small Cause Court Act, which is that what must be admitted is a set-off of something, and not the same thing which constitutes the set-off. Percival v. Pedley does not conflict with this view, because if the words 'by both parties' had followed the words 'admitted set-off,' the decision might have been different.
9. In my opinion from the facts stated by the learned Chief Judge of the Small Cause Court, the suit should be dismissed.
10. The whole question depends upon the meaning of the words 'set-off admitted by both parties.' The cases cited to us make it clear that the admission must be before the suit. The question remains what must be admitted before suit? One contention is that it is an admission of an ascertained sum of money legally recoverable by the defendant from the plaintiff (see Section 111 of the Civil Procedure Code). The other contention is that it is an admission that such a sum has been set-off against the plaintiff's claim.
11. Of these two contentions I think the latter is preferable.
12. Although one ordinarily speaks of a debtor admitting a debt, it is not usual to speak of the creditor admitting the debt, and therefore it would be straining the meaning of words to say that the section means a debt admitted by both creditor and debtor. On the other hand, without forcing the language of the section, and without putting upon it an interpretation which would give the words other than their ordinary meaning, one might fairly speak of a creditor, as well as a debtor, admitting that a certain sum can properly be set-off against a claim. An admission, to some extent, implies a statement against the interest of the party admitting, and if the latter construction be put on the section, the admission is against the interest of each party. If one admits that his claim is reducible by a certain amount, the other to some extent foregoes his right of suit with respect to his cross-claim.
13. I do not think the question is by any means an easy one, but this is the construction I would put upon the section. It is true that the cases in England have not gone so far, but it has not been necessary in any of them to go so far, and there is not, as far as I am aware, anything in any of them to suggest that such a construction is incorrect.
14. In Turner v. Berry 5 Exch. 858 Pollock, C.B., speaking of a set-off said: 'It is in the nature of a cross action, and you cannot compel a man to sot-off his claim or accept credit for it against another.' These words are cited with approval by Hawkins, J., in Neale v. Clarke L.R. 4 Exch. D. at p. 296. It seems to me that these words are equally applicable whether the debt is or is not admitted by the debtor.
15. In Hubbard v. Goodley L.R. 25 Q.B.D. at p. 158 Huddleston, B., says, with reference to the words admitted set-oft' in Section 57 of the County Courts Act: 'My opinion is that the words mean admitted by both parties--that each party admits there is a set-off.' As far as I can see, in using these words, Baron HUDULESTON had in his mind, the construction which, as above stated, I prefer. It is true that he was construing art act of which the words were somewhat clearer, namely, 'admitted set-off of any debt or demand, claimed or recoverable by the defendant from the plaintiff.' These words point, not to the admission of the debt, but to the admission of the set-off. But the Legislature here, I think, contemplated a similar construction of Section 18, for if you read into that section the provisions of Section 111 of the Civil Procedure Code passed in the same year, you get very near to the words of the County Court Act.
16. I would dismiss this suit with costs including the costs of this reference.
W. Comer Petheram, C.J.
17. In my opinion the answer to the question submitted for the opinion of this Court should be in the affirmative, but before stating the reason for my opinion I find it necessary to examine a little in detail the circumstances under which the question arises, as disclosed in the case prepared by the Chief Judge.
18. It appears that on the 22nd of February 1892, a contract for the sale of some goods was made between the plaintiffs and the defendant, but it does not appear, nor is it material, to consider which was the buyer and which the seller. On the 9th of March 1892 they made another contract by which the seller of the goods agreed with the buyer to buy them back from him at a different price, and upon making up the account, after deducting the price of the goods at the rate mentioned in one contract from the price at the rate mentioned in the other, a balance of Rs. 500 appeared due from the plaintiffs to the defendant.
19. On the 21st of April 1892, the plaintiffs by a contract of that date agreed to sell certain other goods to the defendant for delivery in May and June. The goods were not delivered : the plaintiffs allege that the difference between the contract price of the goods and the market price at the time when the defendant had agreed to deliver them is Rs. 2,148, and they bring this suit to recover the sum of Rs. 1,648, that being the sum Rs. 2,148 after deducting from it the Rs. 5,000 which is due from them to the defendant on the balance of the old account.
20. There can be no doubt that the debt due from the plaintiff's to the defendant on the balance of the old account is a debt which the defendant is entitled to set-off against a claim of this nature under Section 111 of the Civil Procedure Code. The suit is a suit for the recovery of money, and the claim of the defendant against the plaintiffs for the amount which appears to be due to him on the balance of the old account is an ascertained sum of money legally recoverable by him from the plaintiffs, and the next question is whether such a balance, so arrived at, is a set-off' admitted by both parties within the meaning of Explanation I of Section 18 of the Presidency Small Cause Court Act. A debt due from the plaintiff to the defendant is made a set-off by law (Section 111, Civil Procedure Code), so that if a debt exists a set-off exists, and from this I think that it must follow that if an admitted debt exists an admitted set-off exists, inasmuch as a debt and a set-off are in law the same thing. I think that a debt admitted by the parties is one claimed by the creditor and admitted by the debtor, and that is precisely the condition of the defendant here.
21. The parties to the two contracts of the 22nd February 1892 and the 9th of March 1892 have closed them, and the account has been made upon that basis, which it is admitted shows a balance in favour of the defendant: that sum he now claims, and the plaintiff admits that he is entitled to recover it, so that it is a claim made by the defendant and admitted by the plaintiff, which is, I think, a debt admitted by both parties in the strictest sense of the word, and if I am right in thinking that the expression 'set-off' is for the purposes of these sections the equivalent of the word debt,' it must follow that there is a 'set-off' of Rs. 500 admitted by the parties, and that the Small Cause Court has jurisdiction to entertain the suit.
22. The wording of the English County Courts Act is slightly different, and consequently the English cases are not direct authorities on the point, but I should add that I cannot reconcile the decision of Huddleston, B., and Grantham, J., in Hubbard v. Goodley L.R. 25 Q.B.D. 156, with that of Mathew and Cave, JJ., in Percival v. Pedley L.R. 18 Q.B.D. 636, so that there cannot be said to be any current of English decisions in either direction.
23. The answer of this Court to the question stated is in the negative.