3.58: Status of counterclaim
7.3: Summary Judgment (Application and decision)

Case Summary

The Plaintiff sued the Defendant for outstanding invoices (the “Old Invoices”). Before litigation commenced, the Plaintiff and Defendant agreed that all new orders made by the Defendant would be subject to an additional fee that would be applied to the Old Invoices. When the Plaintiff eventually sued for the Old Invoices, the Defendant claimed that the two year limitation period had expired for all but one of the Old Invoices. The Defendant also filed a Counterclaim alleging that the Plaintiff breached an exclusive dealership agreement by marketing its products to the Defendant’s competitors. The Plaintiff argued that the monies owing under the Old Invoices were due and that Summary Judgment should be granted.

One issue before the Court was whether the partial payments extended the limitation period for all of the outstanding invoices, or only the one against which the payments were applied (the Defendant maintained that this was the earliest of the Old Invoices). The issue relating to the Rules was whether Summary Judgment should be granted in light of the nature of the Counterclaim.

Master Hanebury cited Manufacturers Life Insurance Co v Executive Center at Manulife Place Inc, 2011 ABQB 189, stating that in order to grant Summary Judgment, the Court must be satisfied that there is no genuine issue for Trial, which in this case would be that there were no triable issues in relation to the limitations defences raised by the Defendant. After a detailed interpretation of the Limitations Act, RSA 2000, c L-12, the Court granted Summary Judgment only for the earliest of the Old Invoices, stating that there was a genuine issue for Trial as to whether there was a single claim or several claims. 

Addressing the second issue of whether the Counterclaim barred an Order for Summary Judgment, Master Hanebury stated:

Rule 3.58 provides that a counterclaim is an independent action. It will not, in and of itself, prevent a plaintiff from obtaining summary judgment, unless the counterclaim constitutes a defence. A legal or equitable setoff, as defences, may prevent summary judgment. Procedural setoff does not.

The Court noted that legal set-off applies between Liquidated Claims, which was not the situation in this case. Equitable set-off requires a Counterclaim to be so clearly connected with the Plaintiff’s demand that it would be manifestly unjust to allow the Plaintiff to enforce payment without taking the Counterclaim into account.

The Defendant filed no evidence supporting the allegations set out in the Counterclaim. Further, the Counterclaim did not indicate that there was an agreement for an exclusive distributorship or that there was a breach of the alleged agreement. For these reasons, the Court found that the Defendant’s Counterclaim did not preclude Summary Judgment as granted.

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