3.59: Claiming set-off
7.3: Summary Judgment (Application and decision)

Case Summary

The Plaintiffs were placed into receivership as a result of a consent Receivership Order granted by Romaine J. Shortly thereafter, Nixon J. granted a Consent Order allowing the Defendant to pursue its Counterclaim. The Receiver filed an Application seeking approval of the sale of the Plaintiffs’ assets to a third party. The Receiver’s Application was granted, the sale was approved and a vesting Order was granted. The Order approving sale and consequent vesting Order directed that any rights or interests of the Plaintiffs’ creditors were expunged. Romaine J. held further that the Defendant’s Counterclaim was a non-permitted encumbrance.

The Plaintiffs applied before Master Farrington for Summary Judgment against the Defendant respecting two unpaid invoices for seismic services. The Defendant cross-applied for Summary Dismissal of the Plaintiffs’ Claim on the basis that there was proof of defects in the Plaintiffs’ work. The Plaintiffs subsequently applied to strike the Summary Dismissal Application as an abuse of process instead of opposing the Application in the usual way. The Plaintiffs argued that Justice Romaine’s Order to expunge the Counterclaim prevented any arguments of set-off by the Defendant.

Master Farrington noted that Rule 3.59 permits set-off to be raised either by Counterclaim or by Defence. Master Farrington held that, pursuant to Rule 3.59 the Defendants were still entitled to raise set-off, even if the Counterclaim had been expunged. As such, the Order approving sale did not conclusively determine the Plaintiffs’ entitlement to the amounts that they sought.

Master Farrington considered the Parties’ Cross-Applications for Summary Judgment and Summary Dismissal. Master Farrington noted the “identifiable litigation culture shift” which should be applied to Summary Judgment Applications. Master Farrington cited recent Court of Appeal authority which clarified the test for summary determinations and set out that “[s]ummary judgment is one procedure for deciding whether the moving party has proven its case on a balance of probabilities”. Master Farrington added that the “best foot forward” principle was important in such Applications.

Master Farrington granted Summary Judgment in part to the Plaintiffs, and severed the issues that were more suitable to be determined at Trial. Master Farrington dismissed the Defendant’s Application for Summary Dismissal, and dismissed the Plaintiffs’ Application to strike the Defendant’s Summary Dismissal Application.

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