What is the test for a party to plead equitable set-off against a liquidated debt claim?
Alberta, Canada
The following excerpt is from Deuruneft Deutsche-Russische Mineralol Handelsgesellschaft mbH v. Bullen, 2002 ABQB 304 (CanLII):
In order to plead equitable set-off, the party claiming set-off must show an equitable ground for protection, that equitable ground must go to the root of the plaintiff’s claim, and the cross-claim must be so clearly connected to the plaintiff’s demands that it would be manifestly unjust to enforce payment without considering the cross-claim (see Telford v. Holt (1987), 1987 CanLII 18 (SCC), 41 D.L.R. (4th) 385 (S.C.C.) at 398-399). In order to plead legal set-off, a liquidated debt claim cannot be met with a set-off claim against an unliquidated debt claim, since both obligations must be “mutual cross obligations” (at 393).
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