Defense of Set-Off (Limitations)

Eftimovski v. Faris, 2014 ONSC 2476 (CanLII)

[44] First, as noted above, Justice Rady cross-referenced and incorporated, as a further independent reason for dismissing the motion for summary dismissal of the defendant’s counterclaim, her reasons and decision in relation to the pleading amendment issue. In that regard:

• As a limitation period could not bar assertion of a defence, as confirmed by authorities such as Pierce v. Canada Trustco Mortgage Co. (2005), 2005 CanLII 15706 (ON CA), 197 O.A.C. 369 (C.A.), Justice Rady properly granted leave permitting amendment of the defendant’s pleading to advance a defence of equitable set-off, and the corresponding request for an accounting to determine the merits and extent of that defence.

• No steps were taken to appeal Justice Rady’s decision permitting that amendment. Nor has there been any suggestion, (let alone a formal motion), that the defence of equitable set off is amenable to determination by way of summary judgment. The defence of equitable set off and the issues it raises, (i.e., the merits of the defendant’s claims vis-à-vis the plaintiffs), therefore now will form part of the issues for trial. To use the wording of Rule 20.04(1)(a), there apparently is no dispute that they effectively constitute “genuine issues requiring a trial with respect to a … defence”.

• The defendant’s counterclaim involves and reflects the same issues raised by the defence of equitable set off, and to me it seems somewhat axiomatic that matters already forming genuine issues requiring a trial cannot simultaneously be characterized as issues not requiring a trial. As emphasized by our Court of Appeal in Pipeline Mechanical Services Ltd. v. Metro Capital Management Inc., [2006] O.J. No. 4582 (C.A.), where there is a triable issue in relation to the matters underlying both the claims in a counterclaim and a defence of equitable set off, both should proceed to trial as far as summary judgment is concerned.

[45] Having regard to such considerations, I am far from persuaded that there is room for “very serious debate” as to the correctness of Justice Rady’s decision permitting the defendant’s counterclaim to proceed to trial on that alternate basis.