On a recent summary judgment application, the High Court has given effect to an anti set-off clause on standard Loan Market Association (“LMA“) terms to prevent the defendant from relying on equitable set-off, as a defence to claims to recover interest and principal under a loan agreement: AMC III Purple B.V. v Amethyst Radiotherapy Limited [2019] EWHC 1503 (Comm).

The commercial aim of such anti set-off provisions in loan agreements is for the lender to secure payment free from potential cross-claims. Whereas legal set-off is only available where the two claims are for liquidated damages which can be readily ascertained, equitable set off is available for unliquidated damages (e.g. damages payable pursuant to a claim in negligence). Equitable set-off may arise where there is a close connection between the claim and cross-claim, such that it would be manifestly unjust to allow a party to enforce payment without taking into account the cross-claim (Geldof Metaalconstructie NV v Simon Carves Ltd [2010] EWCA Civ 667). While previous authority has suggested that the standard form LMA anti set-off clause would be effective in relation to both legal and equitable set-off, this decision is likely to be welcomed by financial institutions as demonstrating the court’s willingness (in appropriate cases) to grant summary judgment to give effect to such clauses.

This decision is in line with other recent authority giving certainty to the effect of anti set-off provisions, such as the Court of Appeal’s decision in Woodeson & Anor v Credit Suisse (UK) Ltd [2018] EWCA Civ 1103 (see our banking litigation blog post).


In 2014, the claimant provided a €21 million mezzanine facility to the defendant (the “First Loan Agreement“). In 2015, under a separate agreement (the “Second Loan Agreement“), the claimant provided a further €4 million loan to the defendant. The defendant failed to make certain interest payments under both loan agreements, and also to repay principal under the Second Loan Agreement.


The claimant applied for summary judgment in the High Court seeking:

  • a declaration that an Event of Default had occurred under the First and Second Loan Agreements; and
  • an order that the defendant pay outstanding interest under the First Loan Agreement and outstanding principal and interest under the Second Loan Agreement.

The defendant contested the summary judgment application on a number of bases. One of the defences, which is likely to be of broader interest to the sector, was an argument that the defendant was not obliged to make interest payments under either of the loan agreements (or principal under the Second Loan Agreement) because it was entitled to set off, by way of equitable set off, various claims against the claimant (the details of those alleged claims are not relevant for the purposes of this post).

In response, the claimant relied on the anti-set-off clauses in the First and Second Loan Agreements which provided respectively: “All payments to be made by the Borrower under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim“; and “Each payment to be made by the [Defendant] under this Agreement will be made in full, without any set-off or deduction“.

The judgment does not expressly state whether the loan agreements were on standard terms, but the anti set-off provision in the First Loan Agreement was in identical form to the LMA standard form version of that clause.


The High Court held that the claimant was entitled to summary judgment as sought.

In particular, it found that a defence based on equitable set-off was not arguable, highlighting the following key points:

  • In respect of the First Loan Agreement (taking standard LMA form), the court had previously considered a clause in identical terms and found it to preclude the application of both an equitable set-off as well as a legal set-off (Credit Suisse International v Ramot Plana ODD [2010] EWHC 2759 (Comm).
  • In respect of both clauses, this outcome was further supported by the Court of Appeal decision in Caterpillar (NI) Ltd v John Holt & Co. (Liverpool) Ltd [2013] EWCA Civ 1232 where it was held that “the average businessman who was told that a clause of this kind applied to legal set-offs but not equitable set-offs would hardly be able to contain his disbelief“.
  • The reference in the more detailed anti-set-off clause in the First Loan Agreement to “payments” being “calculated” without set-off prevented the defendant from arguing that the clause only applied to sums which were “due“, and that there could thus be an equitable set-off where no sums were due.
  • The reference to “any” in the anti-set-off clause in the Second Loan Agreement (there shall not be “any set-off or deduction“) must mean what it says and therefore prevent both equitable and legal set off (as per Caterpillar).